Strategy, flexibility and performance: how cost leaders’ lack of structural flexibility negatively impacts nonfinancial performance

Abstract

Purpose This study analyzes strategic flexibility with a two-dimensional approach (structural and decisional flexibility). It also investigates the relationships among competitive strategy, structural flexibility, decisional flexibility, and financial and nonfinancial performance.Design/methodology/approach The authors collected data from members of 16 chambers of commerce in the United States and used PLS-SEM (partial least squares structural equation modeling) to test the hypotheses.Findings The findings suggest that strategic flexibility impacts financial and nonfinancial performance in different ways. While financial performance is influenced by both the structural and decisional dimensions of strategic flexibility, nonfinancial performance is impacted only by structural flexibility. In addition, the research indicates a negative relationship between cost leadership and structural flexibility and positions structural flexibility as a mediator between cost-leadership and nonfinancial performance.Originality/value The authors contribute to strategic flexibility research in the following ways: (1) analyzed the impact on nonfinancial performance; (2) examined structural and decisional elements and (3) identified cost leadership as a potential barrier.