Analysing the Problem
In the current organisational scenario, it is widely accepted that many organisations face difficulties in responding to changes in the working environment, which is increasingly becoming more dynamic, complex and uncertain. These difficulties are consequences of demographic changes, a global economy, the “hyper-competition, or knowledge-based competition (Daft & Lewin, 1993).
A company’s competence will depend not only on being efficient in their organisational routines but also on their innovative ability at the same time (Abernathy, 1978; Hayes and Abernathy, 1980) which represents the notion of balance between exploration (be innovative – radical change) and exploitation (be efficient in organizational routines – incremental change). This is a common topic in literature related to organizational adaptation (Benner and Tushman, 2001). Such balance allows the firm to obtain and sustain its competitive advantage which, according to Sommer has to be redefined in terms of organizational speed and flexibility (Sommer, 2003).
The interest on organizational flexibility has been growing in the last decades and different approaches have emerged with focus on dimensions of organizational flexibility (e.g. Eppink (1978); Volberda (1996); Sanchez (2004); Verdú-Jover et al. (2005); Hatum and Pettigrew (2006)), on the interaction between firm size and organizational flexibility (e.g. Kraatz and Zajac (2001), Ebben and Johnson (2005)), on context specificity of flexible capabilities (e.g. Eppink (1978); Volberda (1996);; Verdú-Jover et al. (2005), Nadkarni and Narayanan (2007)). Literature in organizational flexibility is still lacking of comprehensive modelling which explains the relationships between its key variables and consequent side effects of such iterations.
The aim of this research is to explore the main contributions in the area of organizational flexibility, by emphasizing a multidimensional perspective. It also intends to underline the fact that flexibility is an important source to obtain competitive advantage. Another concern for this research is how performance and size of an organisation impact flexibility and vice versa.
What is Organisational Flexibility?
Published studies and researches emphasize the importance of flexibility, as a natural source to obtain competitive advantage and also as a management instrument for rapid change situations which come from organization environment. Organizational learning has an essential role in obtaining flexibility, in substantiation competitive strategies and establishing organization performances. Deepening flexibility issues, renowned professor Henk Volberda differentiates four types of flexibility: conservatory, operational, structural and strategic. Conservatory flexibility resides in static procedures of organizational performances optimization while the results remain constant in time, operational flexibility, most frequent, is an ensemble of abilities, almost entirely routine, which mainly follows increase of activity volume, structural flexibility aims for changes on organizational and decisional level, in order to adapt to environment evolution, while strategic flexibility generates modifications within inside objectives and activities, manifesting especially when novel changes upon the environment. Strategic flexibility presents a double dimension: quality and novelty (Volberda, 1996).
In reality, organization flexibility aims to following main directions: specialization of employees’ knowledge horizon in order to fulfil objectives; the existence of a permanent communication between organizational subdivisions, as well as inside them; moving authority centre towards the area which carries complex tasks; constantly redefining tasks, competencies and responsibilities by adjustment and interaction; supporting human resources in their approach to reaching specific job objectives, by sending useful information and consultancy.
Nadkarni and Narayanan (2007) Positive empirical relationship between strategic flexibility and performance in fast-clock speed industries.
Volberda (1991, 1996)
Flexibility is derived from the repertoire of managerial capabilities and the responsiveness of the organization.
Bercovitz and Mitchell (2007)
Literature lacks a conceptual understanding of the underlying benefits of business size for long-term survival.
A holistic view of the above theories shows the amount of contributions in this area. Each theory provides insights from a different dimension.
The purpose of the research is the answer the following questions that arise by analysing the above known facts of Organisational Flexibility and corresponding theories:
1. How does organizational flexibility affect firm performance in turbulent markets?
2. Which factors in the business environment moderate the performance consequences of dimensions of organizational flexibility?
3. How does firm size affect organizational flexibility and performance?
4. What are performance consequences of differences in organizational flexibility due to firm size?