Strategic flexibility in product competition

Abstract

This paper investigates competition in dynamic product markets from combined resource base and strategic flexibility perspectives. A concept of strategic flexibility in product competition is developed in which flexibility depends jointly on (1) the resource flexibility of the product creation resources avaialble to a firm and (2) the coordination flexibility of the firm in using its available resources in product markets. Two recent technological innovations affecting product creation processes—CADD/CIM systems and modular product design—are argued to have greatly increased the potential flexibilities of key product creation resources. Managerial innovations in the use of these technologies have also led to important new coordination flexibilities. The combination of recently achievable resource and coordination flexibilities is argued to have transformed the competitive environments of many product markets, leading to new kinds of product strategies, new organizational forms, and a new dominant logic for competing in dynamic product markets.