Towards strategic flexibility: social networks, climate and uncertainty

Abstract

Purpose – The purpose of this paper is to study how the size of social networks and the strength of their ties can help CEOs acquire understanding and information from external sources to enable their firms to achieve greater strategic flexibility and the moderating role of organizational climate and uncertainty. Design/methodology/approach – The hypotheses were tested using the data provided by 203 managers of medium-sized and large Spanish firms using regression analysis. Findings – The paper shows that firms have higher levels of strategic flexibility when their CEOs’ social networks are larger. Furthermore, CEOs have more incentives to use strong social-networking ties to develop strategic flexibility when there exists a positive organizational climate and a high degree of environmental uncertainty. Practical implications – An understanding of these issues offers opportunities to assist CEOs embarking on a new strategic option or to become more effective in building and utilizing their networking activities or organizational climate. Originality/value – This study explores the paradox over the role of social networks regarding strategic flexibility in uncertain environments. Prior research has presented arguments that uncertainty may be addressed through a wide range of responses, from the promotion of entrepreneurial activities to the adoption of conservative attitudes. The multisector sample reveals evidence of both types of behavior, with each playing a different role with respect to strategic flexibility.