Strategic Flexibility and Organizational Performance: Mediating Role of Innovation

Abstract

Strategic flexibility is deemed to be an important organizational capability for enhancing innovation and improving organizational performance (OP) in uncertain, turbulent, and ever-changing business environments. Many studies have investigated the impact of strategic flexibility on innovation and OP in various contexts and found that strategic flexibility enhances innovation and improves OP. Other studies have found negative association or no association between strategic flexibility and OP. Therefore, it is not much clear whether strategic flexibility improves OP directly or through innovation. Especially, the mediating role of innovation in the association between strategic flexibility and OP in engineering project-based organizations has not been fully grabbed in prior literature and Pakistan remained unexplored. This study has strived to examine the mediating role of innovation in the association between strategic flexibility and OP in this context. Drawing upon resource based and dynamic capability views, an explanatory model was developed and tested by applying PLS-SEM higher order component modeling approach using sample data from 184 organizations in Pakistan. The results revealed that strategic flexibility is positively associated with innovation and OP. Innovation is positively associated with OP. The association between strategic flexibility and OP is partially mediated by innovation. The study promotes academic rigor and provides a new theoretical model. Mangers, decision-makers, and policy-makers can utilize the results to update their plans to achieve sustainable OP. The other organizations in various countries operating under similar conditions can also take the advantage of this study.

Mediating Role of Knowledge Management and Innovation in the Relationship between Supply Chain Management and Organizational Performance: An Empirical Test in the Fast-Moving Consumer Goods (FMCG) Industry of Pakistan

“…The "Harman's single factor test" estimates two things: 1) emergence of a single factor, and 2) total variance of a single factor. If a single factor does not emerge or total variance of a single factor is higher than 50% then common method bias exists in the collected data (Awais et al, 2023). The results of "Harman's single factor test" in this study indicated that a single factor emerged and total variance of a single is 41.77%.…”

“…Usually a p-value is tested to see the significance of differences in the early and late responses. If p > 0.05 then there is no significant difference in early and late responses whereas if p < 0.05 then there is a significant difference between early and late responses (Awais et al, 2023). In this study, the researcher applied "Levene's Test for Equality of Variances".…”