The Role of Flexibility in Enhancing Operational Performance Through Sustainability Practices

Abstract

Flexibility and Sustainability are two philosophies that the original equipment manufacturers (OEMs) invested heavily in since the 21st century. The impact of these two philosophies exceeds operations and extends to customers, communities, employees, and innovation. This thesis identified the lack of empirical research investigating the relationship between flexibility and sustainability and their combined interactions with operational performance metrics. Very few studies investigated this relationship in limited depth and breadth. Therefore, this thesis aims to investigate the interaction between flexibility, sustainability, and their impact on operational performance in the United States (US) and European (EU) OEMs. Based on the contingency theory and resource-based view theory, a conceptual model linking flexibility, sustainability, and operational performance was developed and empirically tested. After reviewing previous literature and consulting academicians and practitioners experienced in the topic, a survey was developed. The survey was conducted with a total of 140 respondents. The respondents are managers at OEMs facilities in Europe and the US. The results indicated a significant and positive relationship between flexibility and operational performance, flexibility and sustainability, and sustainability and operational performance. The results also revealed that sustainability mediates the relationship between flexibility and operational performance. This study can help managers know what flexibility and sustainability practices optimize operational performance.