Fit, Flexibility and Performance in Manufacturing: Coping with Dynamic Environments

Abstract

This research develops the notion of environmental fit and flexibility and illustrates the importance of such fit empirically using survey data from 101 manufacturing firms. Two dimensions of environmental dynamism are identified and the fit between them and different approaches to flexibility are assessed. Hierarchical regressions provide evidence that flexibility is a stronger predictor of performance in more dynamic environments. Specifically, presence of the unpredictability or the volatility aspects of environmental dynamism each warrant the use of different types of manufacturing flexibility strategies. Statistical results are interpreted with the caveat that while implemented capability must be used to study performance effects, this study uses perceived importance scales for flexibility.

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