Flexibility of manufacturing systems, strategic change and performance

The past decade has witnessed an increase of interest in flexibility, which bestows on a firm the ability to respond promptly to market opportunities and changing technologies. The development of capabilities to be flexible rests on the mandate of top management, helps firms manage environmental uncertainty, and tends to enhance firm performance. This research paper aims to establish an analytical approximation that considers how the determinants of manufacturing flexibility at the system level affect the desired strategic change in organizations, as well as subsequent performance. We propose the hypotheses that both environmental factors and internal resources affect flexibility, this latter aspect influencing the organization's performance. The problems that stem from measuring manufacturing flexibility in terms of fit were also analyzed. In order to do this, we have made a wide-ranging trans-national study, within the framework of the European Union, using data from 403 European firms. The Structural Equation Model (SEM) technique has been used to contrast the hypotheses. The results show that manufacturing flexibility at system level can be a critical factor in the process of strategic change, which means that it can have an impact on the desirability of strategic change or on the more specific strategic fit. (c) 2004 Elsevier B.V. All rights reserved.