This study examines how strategic flexibility (SF) influences firm performance through the dimensions of speed and variety in turbulent business environments. The results advance the contingency theory by refining the understanding of the interplay between SF, environmental dynamism and complexity.
After conducting a multi-informant survey of 399 computer manufacturing and service industry firms across 14 European countries, we perform hierarchical regression analysis of time-lagged financial data to test the moderating effects of environmental turbulence on financial performance.
The results show that speed improves performance in dynamic but not in complex environments, whereas variety improves performance in complex environments but reduces it in highly dynamic ones. The results demonstrate the need to align the dimensions of SF with environmental conditions.
As the findings are limited to the technology sector, further research should explore other industries and long-term effects.
Managers should tailor flexibility strategies to environmental conditions, prioritizing speed in dynamic markets and variety in complex ones.
Distinguishing between speed and variety advances the contingency theory, providing a more precise framework for aligning SF with environmental turbulence.
