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...practices opposed large firms, as well as observing the differential effects on performance when there are discrepancies in the coalignment levels between a firm's actual flexibility and that required by the environment. The hypotheses are tested using data from 417 European firms. The results reveal that (1) good coalignments between actual and required flexibility (flexibility fit) have a greater influence on business performance in the case of small firms; (2) there are significant differences between small and large firms as regards operative flexibility, strategic flexibility, financial flexibility (organizational slack), and performance. The large firms analyzed coalign their flexibility fit better in their various dimensions (structural, operative, and strategic); (3) the degree of metaflexibility can be greater among small firms, which represents a greater information processing capacity, thus enabling the flexibility fit to be constantly coaligned to changes in the environment. However, a greater metaflexibility is not immediately reflected in the flexibility fit; and (4) this greater flexibility fit among large firms can be favored by their greater financial flexibility.
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Flexibility arose as a strategic imperative in the 1970s and, particularly, as a result of the instability the increase in competitiveness on a global level brought about in the 1980s and 1990s. Ansoff and Brandenburg (1971) pointed out that the rapid changes in client needs and product-process technologies called for organizations that were both flexible and sensitive. Aaker and Mascarenhas (1984) defined flexibility as an organization's ability to adapt to substantial and uncertain changes in the environment that require rapid reactions and that have a significant impact on performance. Nowadays, flexibility is considered an essential requisite for firms wishing to survive (Sanchez 1995). The concept of flexibility represents a fundamental development for environmental uncertainty management (Sanchez 1993).
Research work on flexibility has concentrated on various areas of study looking at organizations (Brews and Hunt 1999; Ghemawat and Del Sol 1998; Evans 1991; Harrigan 1985). However, most of the studies on flexibility have been based on samples containing large firms. Few contributions have shown how small firms react to changes in the environment (Miles, Covin, and Heeley 2000; Wiklund 1999; Zahra and Pearce 1994; Box, White, and Starr 1993). Nor is there a substantial theoretical corpus in the academic literature regarding the effect that flexibility has on performance in small firms. This approximation to the flexibility-performance relationship in small firms has been made from various angles: strategic flexibility (Schindehutte and Morris 2001; Miles, Covin, and Heeley 2000; Stoica and Schindehutte 1999; Woo, Cooper, and Nicholls-Nixon 1991), structural flexibility (Chaston 1997; Ackroyd 1995; Randolph, Sapienza, and Watson 1991), or operative flexibility (Chappell, Mayer, and Shughart II 1993). Most researchers use flexibility or adaptation indices that measure the number of times firms have changed, modified or adopted different components or conducts (products or services offered, target customer profile, facility or space requirements, etc.) in an attempt to explain performance. In addition to this, these research studies include causal analyzes that explain the influence of the environment on the flexibility or adaptation capability indices. However, the coalignment between the actual flexibility level and that required by the environment (flexibility fit) has not been analyzed as an explanatory variable of performance, as is apparent from the contributions made by Rowe and Wright (1997), Sanchez (1995), or Wright and Snell (1998). Thus, a situation is possible in which a firm's actual flexibility does not reach the required level, even though, from management's point of view, the absolute flexibility level or the number of changes made is high. In this case, the coalignment is insufficient and flexibility management inefficient. In other cases, a firm may be more flexible than the sector's demands, which could have a negative effect on the costs that the firm has to bear.
Keeping in mind that small-firm management basically differs from that of large firms, we cannot apply many of the conclusions drawn from numerous studies to small firms. To this we should also add the problems surrounding the accurate measurement of flexibility among small firms. This fact highlights the need to carry out research work which, using small firms as the sample base, will generate new ideas on the impact of the environment-flexibility coalignment on business performance. The research we describe in this document takes a wide transnational look, within the framework of the European Union (EU), at the differences between large and small firms, based on flexibility practices. More specifically, the aim of our research is to evaluate whether small firms form a homogeneous group, as opposed to large firms, in applying flexible practices. Secondly, we intend to study the differential effects on performance between large and small firms when faced with differences in the coalignment levels between a firm's actual flexibility and that required by the environment.
Fit and Flexibility
The flexibility that firms require, in the widest sense of the word, is always closely related to the environment. One of the angles from which it can be approached is by comparing it with the concept of coalignment or congruency. Venkatraman and Prescott (1990) operationalize coaligment through the concept of fit. According to the literature, fit is understood to be the internal consistency between a set of fundamental variables that are theoretically related (Venkatraman 1989), or else as the degree to which a component's needs, demands, objectives, and structure are consistent with the needs, demands, goals, objectives, and structure of another component (Wright and Snell 1998). On the contrary, flexibility has been defined as an entity's ability to quickly and easily change its policies, practices or procedures in order to adapt to the diverse and changing demands of the environment (Rowe and Wright 1997).
The conclusions reached by Milliman, Von Glinow, and Nathan (1991) on the relationship between fit and flexibility are particularly illustrative. These authors consider that both concepts are the extremes of a continuum and are therefore opposed, which means that coalignment and flexibility cannot coexist in the same firm. Other authors (Wright and Snell 1998; Rowe...
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