BUSINESS STRATEGY, MANUFACTURING FLEXIBILITY, AND ORGANIZATIONAL PERFORMANCE RELATIONSHIPS: A PATH ANALYSIS APPROACH

TLDR

Literature suggests business strategy and manufacturing flexibility independently affect organizational performance, yet no empirical study has examined their interrelationship. The study aims to test a theoretical model linking business strategy, manufacturing flexibility, and organizational performance using path analysis. The authors conducted a field study of 269 manufacturing firms to collect data for the path analysis. The analysis reveals that business strategy directly and indirectly improves organizational performance, with direct effects on manufacturing flexibility and on performance, and that manufacturing flexibility directly enhances performance.

Abstract

It has been argued in the literature that business strategy and manufacturing flexibility independently affect the performance of an organization. However, no empirical examination of the interrelationship among these three constructs has been performed. In this paper, based on a field study of 269 firms in the manufacturing industry, the identified constructs have been used to test a theoretical model using path analysis techniques. Our results indicate that business strategy contributes both directly and indirectly to organizational performance. The findings provide evidence of direct effects of (i) business strategy on manufacturing flexibility and (ii) manufacturing flexibility on organizational performance.