Fits and misfits of supply chain flexibility to environmental uncertainty

Abstract

Purpose The purpose of this paper is to compare the effects on performance of two types of misfits (overfit vs underfit) as well as two types of fits (high-high fit vs low-low fit) between environmental uncertainty and supply chain flexibility. Design/methodology/approach The two asymmetry hypotheses have been tested with survey data from 212 Chinese manufacturing firms. Findings The results in general provided empirical evidences for the asymmetric effects in the fits and misfits between environmental uncertainty and supply chain flexibility. For the same degree of misfit, underfit deteriorates performance more than overfit. In addition, high supply chain flexibility fitting high environmental uncertainty (i.e. high-high fit) results in a higher performance than low supply chain flexibility fitting low environmental uncertainty (i.e. low-low fit). Practical implications It suggests that managers should strive to avoid the underfit of supply chain flexibility rather than the overfit, if the perfect fit is impossible to achieve. In addition, as it is beneficial to realize the fit of supply chain flexibility to high levels of environmental uncertainty, managers should probably embrace the highly uncertain environment and enhance the supply chain flexibility of their organizations to meet the increasing uncertainty of environment. Originality/value Fit and misfit are the core concepts to understand the relationships among environmental uncertainty, supply chain flexibility strategy, and performance. While the existing literature highlights the differential performance consequences of fit vs misfit between environmental uncertainty and supply chain flexibility strategy, the effects on performance are assumed to be the same for the two types of misfits, and two types of fits. The authors challenge these symmetry assumptions by arguing that overfit has a less negative effect on performance than underfit, and high-high fit has a stronger positive effect than low-low fit. The authors found empirical evidence in a large sample of Chinese manufacturing firms.