THE ROLE OF STRATEGIC FLEXIBILITY IN MINIMIZING RESPONSE UNCERTAINTY OF PERCEIVED RISKS FACING MANUFACTURING SMES IN PAKISTAN

The performance of manufacturing SMEs has declined in Pakistan. The task environment of manufacturing SMEs in Pakistan was studied for two main purposes: to identify the perceived environmental risks and to investigate if response uncertainty is a major issue for management while dealing with perceived risks. In the context of Pakistan, this study maintains that higher level of response uncertainty in task environment creates the condition to adopt more flexible structures, practices and strategies. To assess the existence of response uncertainty, three dimensions of uncertainty: state, effect, and response were examined in four manufacturing SME clusters. 65 semi-structured interviews were conducted with senior level managers and owners of the manufacturing SMEs. Analysis of the data demonstrated that the situation of state and effect uncertainty is not so alarming, but, the major problem for management to deal with perceived risks is response uncertainty. This article suggests that adopting flexibility in different organizational constituencies like structure, functions, HR practices, marketing, and most importantly in management will provide appropriate ways to ameliorate response uncertainty and deal effectively with perceived environmental risks. This modified ontology provides better application of flexibility in manufacturing SMEs in Pakistan.