Environment-Flexibility Coalignment and Performance : An Analysis in Large Versus Small Firms

Flexibility has become a strategic imperative asa result of the instability arising from theincrease in globalcompetitiveness. This study attempts: (a) to determine whether small firms forma homogenous body in applying flexible practices, compared to large firms, and(b) to observe the effects on performance when discrepancies exist in thecoalignment levels between a firm's actual flexibility and that required by theenvironment. Examining small firms will generate new ideas about environment-flexibilitycoalignment on business performance. This study was based on replies toquestionnaires by 417 firms in the European Union, collected in 2001. Measuredwere flexibility mix, financial flexibility, metaflexibility, andperformance. Large firms were found to have a better coalignment of actual flexibilitywith that required by environment in structural, operative, and strategicdimensions. Small firms had higher levels of metaflexibility but had lesscoalignment of their flexibility mix, which was linked to lower performancelevel. The differences in coalignment may be due to financial flexibility. The mostimportant coalignment between actual and required flexibility had a greaterrelation to performance in small firms, especially in operative, strategic, andfinancial flexibility. Conclusions confirm that small firms are more vulnerableto fluctuating demands of the environment, whereas large firms are moreflexible in responding to environmental constraints. (TNM)