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Manufacturing Letters 2 (2014) 100103
www.elsevier.com/locate/mfglet

Research Letters

A note on manufacturing exibility as a rm-specic

dynamic capability
Stefan Genchev 1, Geo Willis
University of Central Oklahoma, College of Business, 100 North University Drive, Edmond, OK 73034, United States
Received 7 September 2013; accepted 16 July 2014
Available online 30 July 2014

Abstract
This paper addresses the important concept of exibility in the context of the manufacturing rm. We identify a gap in previous eorts
to directly connect the uncertainty in the environment and the exibility of the rm. To address this gap, a new denition of manufacturing exibility is proposed.
2014 Society of Manufacturing Engineers (SME). Published by Elsevier Ltd. All rights reserved.

Keywords: Flexibility; Resource based view; Manufacturing

Previous research related to dening manufacturing exibility focuses on either extreme of the exibility spectrum;
the rm itself or the supply-chains collective eorts as the
only way for companies to achieve operational exibility.
While there is value in these approaches, we propose
that projecting the rms exibility as its specic dynamic
capability can unify them. As an internal capability, exibility enables the company to act independently to reduce
uncertainties in the market. As an external capability, exibility provides a dierent set of managerial levers for participation in a supply chain. This duality has the potential
to turn into a signicant competitive advantage.
1. Literature review and theoretical conceptualization
1.1. Overview
The increasing complexity of customer requirements
along time and product dierentiation denes the
Corresponding author. Tel.: +1 405 974 5345; fax: +1 405 974 3821.

E-mail addresses: sgenchev@uco.edu (S. Genchev), gwillis@uco.edu

(G. Willis).
1
Tel.: +1 405 974 5555.

competitive landscape for the supply chain [1]. And yet,

whoever provides the nal product to the customer gains
leverage against the uncertainties of time and customer
demands. This member of the supply chain may capitalize
on this advantage both nancially, by squeezing lower margins from the manufacturers and distributors, and operationally, by more accurately forecasting the needs of the
market.
Manufacturers have not been accustomed to this
secondary role in the process of providing value to the
customers. Initiatives regarding new product development,
expansion of product lines [2], developing processes,
and responding to regulatory changes [3] were their
bailiwick.
Retailers typically provide the nal link to the customer
[4]; our focus is on the potential for manufacturers to reorganize their business processes and regain their strategic
leadership role in the supply chain. We provide a contingency perspective on the exibility construct and its relationship with forecasting customer needs and serving them
promptly. Our main proposition is that manufacturers performance within a dynamic environment is determined by
their exibility and that this improved performance may
manifest itself in myriad ways [5].

http://dx.doi.org/10.1016/j.mfglet.2014.07.002
2213-8463/ 2014 Society of Manufacturing Engineers (SME). Published by Elsevier Ltd. All rights reserved.

S. Genchev, G. Willis / Manufacturing Letters 2 (2014) 100103

We use a theoretical regression model to highlight two

types of errors: improper environmental uncertainty scanning [6] and misidentication of reactions to these environmental forces [7]. Together, these errors solidify the case
for manufacturing exibility as a rm-specic dynamic
capability that can ameliorate the impact of these errors
and provide a unique competitive weapon.
Daugherty [8] recognizes the importance of building
similar capabilities focusing on logistics as the last source
of dierentiation between companies. We argue that exibility for manufacturing companies should also be viewed
as a dynamic capability providing a competitive edge.
1.2. Manufacturing exibility
The literature is replete with studies detailing demands
on manufacturing companies for exibility and product
customization [2] from retailers and consumers. A companys adaptability to environmental uncertainties is governed largely by their exibility [4]. Refer to [2,9] for a
review of sources of environmental or market variability
[2,10,11], uncertainty in relation to exibility, and types
of manufacturing exibility in response to uncertainty
[12,13].
We consider exibility as a rm-specic dynamic capability that is built upon the interaction between (1) individual rms manufacturing exibility, and (2) their exibility
in the context of their relations with other rms [7,11,14].
1.2.1. Company-specic manufacturing exibility
Manufacturers are faced with unprecedented complexity
and increasing customer demands for their products [2].
Improving a companys ability to accommodate changes
in environmental conditions can take many forms, all
requiring considerable investment [15,16].
To reduce uncertainty in product demand, manufacturers are developing modular product architectures [17] with
product model variety as a mediating variable. From
Upton [18] and others [19], manufacturing exibility is
the ability to produce large variation on key product characteristics. At the aggregate level, manufacturing exibility can be viewed as purely output oriented [20]. In
dynamic environments, organizational eciency is dened
by the rms reaction time to deliver value. A manufacturer
may amass stocks of resources, components and systems to
reduce their vulnerability to environmental uncertainty.
1.2.2. Intercompany manufacturing exibility
The fact that many manufacturing companies do not
deal directly with the end user underscores the essential
requirement of building both internal and supply chain
exibility [21]. There has been increased attention to the
topics of environmental uncertainty and the competitive
environment and how networks of companies can address
changes in both simultaneously. Whether these relationships are determined by technological requirements [22],
information technology alliances [14] or encompass two

101

or more functions along the supply chain [23], they all contribute to building manufacturing exibility. The unique
resources of the rm [24] can provide the necessary structure and measurement systems related to exibility, but
these structures must be aligned with the entire supply
chain to serve the consumer [25].
1.3. Environmental uncertainty
Researchers have explored the exibility-customer
demand relationship with mixed results [2628]. Environmental uncertainty is a continuum from immediate to evolutionary, but change is a continuous process [29]. This
research issue can be summarized as a trade-o between
generalizability and accuracy in the conceptual disagreement of whether a single dimension, like timing, can represent such a multidimensional construct [30]. Environmental
variability is therefore dened by the dierence between the
anticipated performance results and its actual performance
over the planning horizon.
1.4. Firm-specic dynamic capabilities
The Resource based view (RBV) of the company is a
theoretical framework developed as a complement to the
traditional industrial economic perspective [31]. The RBV
investigates the rm as a collection of unique skills and
capabilities that enable a rms evolution and maximize
strategic growth alternatives [24].
Comparatively little work has been done to assess the
inuence of dierent levels of environmental uncertainty
on the development of resources and skills [32]. The
emphasis of the RBV will be investigated through its contemporary developments in the concept of dynamic capabilities and how they are accumulated. Consequently, we
adopt the Teece [33] denition of dynamic capabilities as
the ability to integrate, build, and recongure internal
and external competences to address rapidly changing
environments.
Dynamic capability can be an outcome of the exibility
process; we investigate the other possible loop, linking this
construct with improved exibility as the dependent variable. This logic implies that the process of dynamic capability creation must be explained without focusing
explicitly on rm-specic exibility. In this model, the
focus is the resource-integrative perspective on dynamic
capabilities [34] which are viewed as the product of intersecting ows and stocks of resources [35]. Thus, a higher
level of uncertainty is theorized to support the ows of
resources, in the absence of developed strategic factor
markets [24] and a lower level of stocks [35]. Due to high
level of environmental uncertainty, it is not possible to
establish eective strategic factor markets [24], hence
the company cannot attach a specic value to the resources
and readily implement them as dynamic capabilities. Interaction with stocks [35] of strategic resources is needed in
order to outline the specicity of the model, connecting

102

S. Genchev, G. Willis / Manufacturing Letters 2 (2014) 100103

Flows of
Resources

Environmental
Uncertainty

Manufacturing
Flexibility as a
Dynamic Capability

Stocks of
Resources

Figure 1. Theoretical model of ows and stocks of resources.

4. Conclusion
This paper lls a gap in the literature addressing the
relationship between environmental uncertainty and
improved manufacturing exibility. The proposed model
consists of two incremental steps building stocks and
ows of resources to develop manufacturing exibility as
a dynamic capability. While each of these steps has already
been addressed in the literature, there is no unifying perspective connecting such inuential research streams as
the RBV and dynamic capabilities and exibility and environmental uncertainty. The relationship between environmental uncertainty and improved organizational
exibility is the appropriate setting for this unication.
References

uncertainty with manufacturing exibility. This process is

summarized in the following theoretical model:
2. Theoretical model
In this model (Figure 1), exibility is an interaction
point between company-specic stocks of resources and
leveraged ows of resources accessed through the rm
involvement in a supply chain. Only a similar interaction
will provide us with a more concise understanding of the
manufacturing exibility construct. Measuring this interaction eect becomes feasible by projecting the dierence
between perceived and actual rm performance through
scalable resource allocations.
Consequently, we can dene manufacturing exibility as
a unique dynamic capability of the company built upon
internal stocks and external ows of resources allocated
to reduce environmental uncertainties.
3. Results
The rms ability to reduce environmental uncertainties
both within its organization and in conjunction with other
rms in a boundary-spanning business [36] is undermined
by a lack of concrete measurements. The primary justication for greater supply chain involvement by manufacturers is providing the necessary ows of resources toward
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One avenue for further research will be accommodating dierent rates of technology adoption between manufacturing rms and their partners. This dierentiation can
possibly determine the signicance of the interaction eect
between stocks and ows of resources, resulting in building exibility as a dynamic capability, by providing a
common platform for comparison. Moreover, there is
now universal recognition of the critical role technology
can play in the ability of manufacturing companies to
react exibly to environmental change in order to customize their oerings [37].

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