Empirical Analysis of the Determinants of Organizational Flexibility in the Construction Business

Abstract

Flexibility has been touted as an important requirement for firms to survive and prosper in turbulent and volatile economic environments. The aim of this research is to investigate the relevance of organizational flexibility management to construction firms, because firms that are more flexible are more likely to survive and prosper than less flexible firms. More specifically, the objectives are to define a model that will allow contractors to understand the complex factors that contribute to organizational flexibility; ascertain whether organizational flexibility should be treated as a uni- or multidimensional construct; and identify the key determinants that drive organizational flexibility. A two-pronged research method with exploratory interviews and an industrywide survey was adopted. Data were collected from face-to-face interviews with construction industry experts. The data collection instrument for the survey was a structured questionnaire specifically designed for this study. By using structural equation modeling, the study empirically investigated the key dimensions and determinants of organizational flexibility. The results showed that organizational flexibility should be treated as a multidimensional concept, comprising operational flexibility, tactical flexibility, and strategic flexibility. The key determinants—employees’ skills and behavior, supply chain capabilities, and business strategies—were found to have the highest positive impacts on operational flexibility, tactical flexibility, and strategic flexibility, respectively. The structural equation model developed from this research provides guidance to practitioners on the organizational attributes that they could improve to achieve organizational flexibility, which would help them to survive and grow.