STRATEGIC FLEXIBILITY, TMT COGNITIVE CAPABILITY AND FIRM PERFORMANCE: A REVIEW OF LITERATURE
Abstract
Purpose: The dynamism experienced in the business environment has led to unprecedented levels of unpredictability, volatility and intense competition among firms. The strategies that were employed previously in stable environments have become unviable in this dynamism. This has placed a strain on firms to implement strategies that enable them to survive and achieve superior performance. Strategic flexibility has been proposed as a strategic option for firms operating in this ever turbulent circumstances. It enables firms to adapt and adjust as a response such changes. However, a number of challenges confront both scholars and practicing managers regarding this concept. One of the most outstanding is that there is no clear identification of the dimensions and indicators for its measurement.
Methodology: Consequently, this study undertook a systematic review of extant theoretical and empirical literature on strategic flexibility, top management team (TMT) cognitive capability, environmental dynamism and firm performance. The relevant theories and constructs to the study were examined, operational indicators identified and both theoretical and conceptual gaps highlighted.
Conclusion: This paper makes theoretical contributions in strategic management because the inclusion of the moderating variable, environmental dynamism and the mediating variable, TMT cognitive capability, has led to the development of a proposed theoretical model that is expected to guide future studies examining the effect of strategic flexibility on firm performance.
Recommendation: This paper recommends that an empirical study should be conducted using the proposed theoretical model in order to establish the relationship between the variables in order to contribute to the consolidation of knowledge on the construct of strategic flexibility.
Key words: Environmental Dynamism, Firm Performance, Strategic Flexibility, TMT Cognitive Capability, Resource Flexibility, Strategic Action Flexibility
References
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Gavrea, C., Ilies, L. & Stegerean, R. (2011). Determinants of organizational performance: The case of Romania. Management &Marketing Challenges for the Knowledge Society, 6(2), 285-300.
Gazzaniga, M., Heatherton, T., & Halpern, D. (2010). Psychological Science, Norton: New York.
Grewal, R., & Tansuhaj, P (2001). Building Organizational Capabilities For Managing Economic Crisis: the role of market orientation and Strategic Flexibility. Journal of Marketing, 65(2), 67-80. https://doi.org/10.1509/jmkg.65.2.67.18259.
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Haleem, F., Jehangir, M., & UlHaq, Z. (2018). Link between environmental dynamism and firm performance: The role of strategic planning. Journal of Managerial Sciences, 12 (3), 260-272.
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Harrison, J. S., & Wicks, A. C. (2013). Stakeholder Theory, Value, and Firm Performance. Business Ethics Quarterly, 23 (1), 97-124.
Harrigan, K. R. (1985a). Exit barriers and vertical integration. Academy of Management Journal, 28, 686–697.
Helfat, C. E., & Peteraf, M. A. (2015). Managerial cognitive capabilities and the microfoundations of dynamic capabilities. Strategic Management Journal, 36(6), 831-850. https://doi.org/10.1002/smj.2247.
Hitt, M. A., Keats, B. W., & DeMarie, S. M. (1998). Navigating in the new competitive landscape: Building strategic flexibility and competitive advantage in the 21st century. Academy of Management Perspectives, 12(4), 22-42.
Johnson, J. L., Lee, R. P. W., Saini, A., & Grohmann, B. (2003). Market-focused strategic flexibility: Conceptual advances and an integrative model. Journal of the Academy of Marketing Science, 31(1), 74-89.
Kaplan R.S. & Norton D.P. (1992). The Balanced Scorecard: Measures that Drive Performance, Harvard Business Review, 83 (7), 71-79.
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Kim, K. (2014). Strategic flexibility. PhD thesis, Open Access Dissertations. 305. https://docslib.purdue.edu/open_access_dissertations/305.
Martínez, D., Rodríguez, J., & Torres, J. (2010). ICT-specific technological change and productivity growth in the US: 1980-2004. Information Economics and Policy, 22(2), 121- 129.
Matthyssens, P., Pauwels, P., & Vandenbempt, K. (2005). Strategic flexibility, rigidity and barriers to the development of absorptive capacity in business markets: Themes and research perspectives. Industrial Marketing Management, 34(6), 547-554.
Mbengue, A & Ouakouak, M. L (2011). Strategic planning flexibility and firm performance: the moderating role of environmental dynamism. 20e Conférence Internationale de Management Stratégique, Nantes, France, 07-09.
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Muchemi, A. W. (2013). Top management team diversity and performance of commercial banks in Kenya. Unpublished PhD Thesis, University of Nairobi.
Nadkarni, S., & Barr, P. S. 2008. Environmental context, managerial cognition, and strategic action: an integrated view. Strategic Management Journal, 29(13), 1395-1427.
Nadkarni, S., & Herrmann, P. (2010). CEO personality, strategic flexibility, and firm performance: the case of the Indian business process outsourcing industry. Academy of Management Journal, 53 (5), 1050-1073. https://doi.org/10.5465/AMJ.2010.54533196.
Nadkarni, S. & Narayanan, V. K. (2007). Strategic schemas, strategic flexibility, and firm performance: The moderating role of industry clockspeed. Strategic Management Journal, 28 (3), 243-270.
Namusonge, A., Mukulu, E., & Mokaya, S. (2017). Relationship between strategic product development practices and financial performance of telecommunication firms in Kenya. International Journal of Academic Research in Business & Social Sciences, 7 (11), 309-326.
Neely, A., Adams, C. & Crowe, P. (2001). The performance prism in practice. Measuring Business Excellence, 5 (2), 6-12.
Nowotny, H., Scott, P. and Gibbons, M. (2001). Rethinking Science. Knowledge and the Public in an Age of Uncertainty. Cambridge: Polity Press.
Ogunmokun, G. O. & Li, L. (2012). The effect of manufacturing flexibility on export performance in China. International Journal of Business and Social Studies, 3 (6), 7-12.
Okeyo, W. O. (2014). The influence of business environmental dynamism, complexity and munificence on performance of small and medium enterprises in Kenya. International Journal of Business and Social Research (IJBSR), 4, (8), 59-73.
Peteraf, M. A. (1993). The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14(3), 179–191.
Petrus, B. (2019). Environmental dynamism: The implications for operational and dynamic capabilities effects. Management Sciences. Nauki o Zarządzaniu, 24(1), 28-36.
Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press.
Richard, P. J., Devinney, T. M., Yip, G. S. & Johnson, G. (2009). Measuring organizational performance: Towards methodological best practice. Journal of Management, 35 (3), 718-804.
Selvam, M., Gayathri, J., Vasanth, V., Lingaraja, K., & Marxiaoli, S. (2016). Determinants of firm performance: A subjective model. International Journal of Social Science Studies, 4 (7), 90-100.
Sanchez, R. C. (1995). Strategic flexibility in product competition. Strategic Management Journal, 16 (S1), 135-159.
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Published
2020-10-16
How to Cite
Kahingo, C. M. K., & Muchemi, A. W. (2020). STRATEGIC FLEXIBILITY, TMT COGNITIVE CAPABILITY AND FIRM PERFORMANCE: A REVIEW OF LITERATURE. African Journal of Emerging Issues, 2(11), 53 - 78. Retrieved from https://ajoeijournals.org/sys/index.php/ajoei/article/view/141
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