Supply Chain Drivers of Organizational Flexibility—A Study of U.S. Manufacturing Industries

Abstract

In this article, we investigate supply chain–related drivers that contribute to organizational flexibility (i.e., the ability of top management to be responsive to a firm's internal and external needs). Organizational flexibility occurs when a firm outsources manufacturing and operates with a more flexible structure. Drawing upon the supply network perspective, this study develops hypotheses relating attributes of the supplier, customer, and focal industries to the use of a flexible organizational strategy. Using an industry‐level data set to test the hypotheses, we show that heterogeneity of supply sources and scale economies (in the focal and downstream industries) are positively associated with a greater degree of organizational flexibility, in terms of contract manufacturing in the focal industry. However, industry concentration levels in the focal and downstream industries are negatively associated with organizational flexibility.

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