Value chain flexibility: A dichotomy of competence and capability

Abstract

Increasing global competition, accelerating technological change and expanding customer expectations are creating a turbulent environment. Flexibility is a mechanism that enables firms to cope with this increasing uncertainty because it facilitates a quick response, which is strategically important as an order-winning criterion. To meet customer needs, flexibility must be across the value chain and it should include product development, manufacturing, logistics and spanning activities. The paper applies competence and capability theory to value chain flexibility and it explores the relationships among environmental uncertainty, value chain flexibility and competitive advantage. It provides a framework for understanding these relationships and builds a theoretical foundation for developing and testing relationships among these constructs. The research should help managers identify the flexible capabilities that impact relationships with their customers and the flexible competences that support these capabilities.