The Effect of Operational Flexibility on Performance: A Field Study on Small and Medium-sized Industrial Companies in Jordan

Abstract

In the context of an unstable business environment, companies should be looking for a mechanism to deal with uncertainty. Flexibility maybe one of those mechanisms which can help company to cope with instability in the best way possible. As one of the basic types of flexibility, operational flexibility has become an essential capability which an organization seeks to acquire because it enables companies to respond quickly and effectively to dynamic environments, and as a result, improve firm performance. The aim of this study is to investigate the relationship between operational flexibility and firm performance. The sample consists of 90 industrial companies in Jordan, and the questionnaire has been developed for and distributed to senior managers and managers in operations, product development, financial and marketing departments. Descriptive analysis was also correlated and regression techniques used to obtain the results. Our field study showed that operational flexibility positively affects both the operational and the financial performance of small and medium industrial companies in Jordan. More specifically, volume flexibility as a type of operational flexibility does not affect the performance of these companies in Jordan, but both mix flexibility and new product flexibility positively affect the operational and financial performance of these companies.