Companies performance management: the role of operational flexibility

Allam Yousuf,Serhii Kozlovskyi,Vahid Zeynvand Lorestani,Tetiana Zatonatska,Oleksandr Dluhopolskyi,Janos Felföldi

doi:10.21272/mmi.2021.1-03

Abstract

The article summarizes the arguments on minimizing the uncertainty level caused by numerous unforeseen circumstances due to using operational flexibility to increase companies' efficiency (example of small and medium enterprises in the pharmaceutical sector of Iran). The research aims at investigating the relationship between operational flexibility and a company's performance to examine the impact of environmental uncertainty on these relationships. This study was conducted as quantitative. The deductive method using the synergy of systematization of scientific background on the problem and the empirical proof of the formulated hypotheses became a methodological study tool. The article provides evidence of the economic-mathematical model based on data from small and medium-sized pharmaceutical Iranian companies. The study hypotheses are as follows: 1) operational flexibility has a positive effect on the productivity of the pharmaceutical sector of Iran, represented by small and medium-sized companies; 2) uncertainty determines the relationship between the operational flexibility and efficiency of small and medium-sized pharmaceutical companies in Iran. The model constructed by the authors allowed measuring the relationship between variables using regression analysis and moderation analysis (Hayes model). The total number of companies included in the sample is 113. In turn, 228 managers of these pharmaceutical companies took part in the surveys (Iran example). The empirical analysis results showed that the mix flexibility indicator has practically no effect on companies' efficiency, and the volume flexibility and product development flexibility indicators generally have a positive effect on the performance of companies in the pharmaceutical sector. On the other hand, the environmental uncertainty indicator does not help reduce the relationship between the operational flexibility indicator and companies' performance in the pharmaceutical sector of Iran's economy. The study results could be useful for planning small and medium enterprises' activities in the context of improving their performance.

Highlights

Uncertainty cannot be accurately understood because it results from unforeseen circumstances
Uncertainty does not moderate the link between operational flexibility and company performance, which means that the relationship between operational flexibility and company performance would not be affected or changed in uncertain situations
Operational flexibility relates to the manufacturing process inside the company, which means it would be limited to the internal business environment, which is totally under company management control

Summary

Introduction

Uncertainty cannot be accurately understood because it results from unforeseen circumstances. Many researchers have referred to the fact that uncertainty (UN) is a source of instability for businesses. A high degree of uncertainty would motivate companies to concentrate more and more on flexibility in the supply chain in a hyper changing business environment (Vickery et al, 1999). In this regard, flexibility at the operational level could be one of those mechanisms. The researchers suggested using flexibility as a moderating mechanism to reduce the uncertainty effect on companies' performance. Many researchers refer to the fact that flexibility has a major effect on companies' performance in an unstable environment (Volberda, 1998; Miller and Shamsie, 1996)

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Conclusion