SUPPLY CHAIN DRIVERS OF ORGANIZATIONAL FLEXIBILITY-A STUDY OF US MANUFACTURING INDUSTRIES

In this article, we investigate supply chain-related drivers that contribute to organizational flexibility (i.e., the ability of top management to be responsive to a firm's internal and external needs). Organizational flexibility occurs when a firm outsources manufacturing and operates with a more flexible structure. Drawing upon the supply network perspective, this study develops hypotheses relating attributes of the supplier, customer, and focal industries to the use of a flexible organizational strategy. Using an industry-level data set to test the hypotheses, we show that heterogeneity of supply sources and scale economies (in the focal and downstream industries) are positively associated with a greater degree of organizational flexibility, in terms of contract manufacturing in the focal industry. However, industry concentration levels in the focal and downstream industries are negatively associated with organizational flexibility.