Performance implications of the fit between suppliers' flexibility and their customers' expected flexibility: A dyadic examination⋆

DOIhttp://doi.org/10.1016/j.jom.2018.05.002
AuthorDavid Gligor
Published date01 March 2018
Date01 March 2018
Contents lists available at ScienceDirect
Journal of Operations Management
journal homepage: www.elsevier.com/locate/jom
Performance implications of the t between suppliers' exibility and their
customers' expected exibility: A dyadic examination
David Gligor
University of Mississippi, 253 Holman, Oxford, MS, 38655, United States
ARTICLE INFO
Accepted by: T Browning
Keywords:
Buyer-supplier exibility t
Firm performance
Municence
Dynamism
Complexity
ABSTRACT
Although an increase in exibility for rms usually entails further investments and higher operating overhead
for their suppliers (Sheikhzadeh et al., 1998Koste and Malhotra, 1999), most studies have focused exclusively on
the benets derived from additional exibility enjoyed by the buyer rms neglecting the impact on the nancial
performance of their suppliers (e.g., Malhotra and Mackelprang, 2012; Gligor, 2014; Mandal, 2015). To explore
the complex supplier-customer interplay, we introduce the concept of buyer-supplier exibility t(i.e., the match
between the level of exibility the customer expects from its supplier and the supplier's level of exibility) and
explore its impact on the supplier's nancial performance (i.e., ROA). We collected dyadic archival and survey
data from 638 rms (319 supplier-customer dyads) to test these relationships. Our results indicate that buyer-
supplier exibility t has a direct and positive impact on the supplier's ROA. Further, the strength of the re-
lationship increases when rms operate in municent and/or dynamic environments but does not change sig-
nicantly in complex environments. The relationship also becomes stronger as the exchanged business volume
increases between the customer and its supplier, and as the relationship progresses in age. In addition, our
ndings indicate that rms with perfect buyer-supplier exibility t perform best, followed by rms with ne-
gative mist (i.e., the supplier's level of exibility is lower than its customer's expected level of exibility), while
rms with positive mist (i.e., the supplier's level of exibility is higher than its customer's expected level of
exibility) are the laggards. Interestingly, positive mist has a stronger negative impact on suppliers' ROA
compared to mist in general and negative mist. Key corresponding managerial implications are derived.
1. Introduction
The trend of product proliferation has been fueled by customers'
increasing expectations for customized products (Malhotra and
Mackelprang, 2012). For example, in the auto industry, Ford oered the
F-150 XL in over four billion dierent congurations (Appel, 2016)
while Volkswagen oered its Polo brand to U.K. consumers in up to
52.6 billion dierent congurations (Felipe Scavarda et al., 2010).
Firms, such as Ford and Volkswagen, rely on their suppliers to provide
the level of exibility required to meet such diverse customer demands.
To further illustrate rms' increasing reliance on their suppliers' ex-
ibility, it has recently been reported that Apple acquired tens of millions
of dollars' worth of production equipment for the iPhone 8 to lease it to
its suppliers. The suppliers' limited exibility prompted Apple to invest
directly in increasing its suppliers' capacity to ensure the demand for
the iPhone 8 would be met (Roston, 2017).
Within the supply chain context, several studies have explored the
relationship between various aspects of exibility and rm performance
(e.g., Malhotra and Mackelprang, 2012;Gligor, 2014;Mandal, 2015).
These studies provide valuable insights on the benets of exibility.
However, they do share some signicant limitations. Although an in-
crease in exibility for focal rms usually entails further investments
and higher operating overhead for their suppliers (Sheikhzadeh et al.,
1998;Koste and Malhotra, 1999), most studies have focused exclusively
on the benets derived from additional exibility enjoyed by the buyer
rms neglecting the impact on the nancial performance of their sup-
pliers (e.g., Malhotra and Mackelprang, 2012;Mandal, 2015). This is a
noteworthy gap considering that the long-term performance of focal
rms is contingent upon the sustainability of their supply chains and,
implicitly, the nancial performance of their suppliers (Christopher,
2000;Gligor, 2015). To our knowledge, this is the rst study to address
the impact of exibility from the suppliers' perspective. Further, most
studies exploring the topic of exibility in a supply chain context have
focused on a single focal rm, in isolation from other members of the
supply chain. As such, research has yet to address the interplay between
the suppliers' levels of exibility and their respective customers'
https://doi.org/10.1016/j.jom.2018.05.002
Received 11 May 2017; Received in revised form 23 April 2018; Accepted 11 May 2018
This manuscript was handled by Department Editor Gopesh Anand.
E-mail address: dgligor@bus.olemiss.edu.
Journal of Operations Management 58–59 (2018) 73–85
Available online 24 May 2018
0272-6963/ © 2018 Elsevier B.V. All rights reserved.
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