In search of profitable growth in volatile and unpredictable environments: the role of supply chain structural adaptability

What is it about?

This study examines the long-held belief in the adaption-related literature that a firm’s ability to adapt organizational structure to changing environments is related to superior performance. We create and test a construct that reflects an organization’s ability to change structure, which we call Supply Chain Structural Adaptability (SCSA), rather than relying on proxies (e.g., structural form or organizational modularity) used in prior studies. Measuring structural adaptability in this manner is more consistent with how it is defined, namely, as a management capability (versus a structural form attribute). We test the SCSA construct and propose a framework for examining two elements of dynamism, volatility and unpredictability. While research has often treated these elements independently, our framework proposes an interaction and demonstrates a more comprehensive understanding of dynamism. We find that SCSA has a mixed effect on profitable growth under various environmental conditions. Interestingly, we find that the general assumption found in management literature—the need for adaptive capabilities increases as environmental dynamism increases—is not universal. In the case of SCSA, investing in adaptive capabilities is least likely to result in performance improvements in high dynamism environments.

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