Building new competitive advantage through match between specific types of strategic flexibility and sourcing strategy
by Haim Hilman; Zainal Abidin Mohamed
J. for Global Business Advancement (JGBA), Vol. 4, No. 4, 2011

Abstract: Strategic flexibility, sourcing strategy and organisational performance are often a source of contention among firms in manufacturing sector. This paper explores the effects of specific types of strategic flexibility – related and unrelated product diversification – that matched with specific types of sourcing strategy – make and buy. Questionnaires were sent to respondents who were top management officers of firms from four major manufacturing sectors: electrical and electronics, chemicals including petroleum, food and beverages, and fabricated metal. The results confirmed that a specific type of sourcing strategy (make or buy) mediated a specific type of strategic flexibility (related or unrelated product diversification). Specifically, the make strategy partially mediated the relationship between related product diversification strategy and organisational performance, whereas the buy strategy partially mediated the relationship between unrelated product diversification strategy and organisational performance. These findings go along with the theories that support both constructs: industrial organisation theory, transaction cost theory and resource-based view. All these findings would enable practitioners to make better manufacturing and sourcing decisions.

Online publication date: Fri, 04-Nov-2011

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