Performance implications of the fit between suppliers' flexibility and their customers' expected flexibility: A dyadic examination⋆
DOI | http://doi.org/10.1016/j.jom.2018.05.002 |
Author | David Gligor |
Published date | 01 March 2018 |
Date | 01 March 2018 |
Contents lists available at ScienceDirect
Journal of Operations Management
journal homepage: www.elsevier.com/locate/jom
Performance implications of the fit between suppliers' flexibility and their
customers' expected flexibility: A dyadic examination
☆
David Gligor
University of Mississippi, 253 Holman, Oxford, MS, 38655, United States
ARTICLE INFO
Accepted by: T Browning
Keywords:
Buyer-supplier flexibility fit
Firm performance
Munificence
Dynamism
Complexity
ABSTRACT
Although an increase in flexibility for firms 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 benefits derived from additional flexibility enjoyed by the buyer firms neglecting the impact on the financial
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 flexibility fit(i.e., the match
between the level of flexibility the customer expects from its supplier and the supplier's level of flexibility) and
explore its impact on the supplier's financial performance (i.e., ROA). We collected dyadic archival and survey
data from 638 firms (319 supplier-customer dyads) to test these relationships. Our results indicate that buyer-
supplier flexibility fit has a direct and positive impact on the supplier's ROA. Further, the strength of the re-
lationship increases when firms operate in munificent and/or dynamic environments but does not change sig-
nificantly 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
findings indicate that firms with perfect buyer-supplier flexibility fit perform best, followed by firms with ne-
gative misfit (i.e., the supplier's level of flexibility is lower than its customer's expected level of flexibility), while
firms with positive misfit (i.e., the supplier's level of flexibility is higher than its customer's expected level of
flexibility) are the laggards. Interestingly, positive misfit has a stronger negative impact on suppliers' ROA
compared to misfit in general and negative misfit. 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 offered the
F-150 XL in over four billion different configurations (Appel, 2016)
while Volkswagen offered its Polo brand to U.K. consumers in up to
52.6 billion different configurations (Felipe Scavarda et al., 2010).
Firms, such as Ford and Volkswagen, rely on their suppliers to provide
the level of flexibility required to meet such diverse customer demands.
To further illustrate firms' increasing reliance on their suppliers' flex-
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 flexibility 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 flexibility and firm performance
(e.g., Malhotra and Mackelprang, 2012;Gligor, 2014;Mandal, 2015).
These studies provide valuable insights on the benefits of flexibility.
However, they do share some significant limitations. Although an in-
crease in flexibility for focal firms 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 benefits derived from additional flexibility enjoyed by the buyer
firms neglecting the impact on the financial 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
firms is contingent upon the sustainability of their supply chains and,
implicitly, the financial performance of their suppliers (Christopher,
2000;Gligor, 2015). To our knowledge, this is the first study to address
the impact of flexibility from the suppliers' perspective. Further, most
studies exploring the topic of flexibility in a supply chain context have
focused on a single focal firm, in isolation from other members of the
supply chain. As such, research has yet to address the interplay between
the suppliers' levels of flexibility 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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