Abstract
Is flexibility or formality more useful for organizations that are pursuing improved performance? Organizational structure scholars offer opposing answers to this question, and empirical results have been mixed. Our study contributes to this research by describing a mediational model that links organizational flexibility to performance via opportunity exploitation. Specifically, we argue that flexible firms are able to exploit a greater number of opportunities, which, in turn, can improve performance. We also argue that the indirect effect of flexibility on performance via opportunity exploitation is stronger when top executives display higher affective commitment for their firms, meaning that they have a positive emotional attachment to their firms. Top executives with higher affective commitment can mitigate the downsides experienced by the staff of flexible firms, such as uncertainty and negative affect, which improves the outcomes of flexibility. Drawing on a sample of 211 firms and their founders, we find support for our hypotheses.
Highlights
A long-running debate among organizational structure scholars has concerned the benefits of flexibility, relative to more rigid formality (Stinchcombe, 1965; Fredrickson, 1986; Adler and Borys, 1996; Pertusa-Ortega et al, 2010; Herhausen et al, 2021)
We propose that the indirect effect of flexibility on performance via opportunity exploitation will be stronger for founders who have higher affective commitment to their firms
Hypothesis 4 predicted that the relationship between flexibility and opportunity exploitation would be stronger when founders’ affective commitment to their firms was higher
Summary
A long-running debate among organizational structure scholars has concerned the benefits of flexibility, relative to more rigid formality (Stinchcombe, 1965; Fredrickson, 1986; Adler and Borys, 1996; Pertusa-Ortega et al, 2010; Herhausen et al, 2021). Research has found that when the leaders of a firm exhibit high affective commitment, their pleasure of working can spread throughout the workforce, fostering an overall level of happiness among the staff (e.g., Sy et al, 2005; Netemeyer et al, 2010), and positive emotions have been linked to improved innovative performance (e.g., Baron and Tang, 2011). Flexible firms may have greater learning capacity than more formalized firms, and their workforces will display greater levels of heterogeneity, both of which have been found to positively affect firms’ innovative outputs and consequent ability to exploit opportunities. While staff in flexible firms may experience higher levels of uncertainty, which can harm their ability to perform, this uncertainty can be partly mitigated when founders demonstrate a strong affective commitment to the firm For these reasons, we propose that the relationship between flexibility and opportunity exploitation will be stronger when founders have higher affective commitment. We hypothesize: Hypothesis 5: The indirect effect of flexibility on performance via opportunity exploitation will be stronger for firms led by founders with higher affective commitment
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