Manufacturing flexibility, business model design, and firm performance

With the increasing significance of the business model in a connected economy, a new stream of literature has turned to explore the antecedents of business model design. Beyond external antecedents derived from a rational positioning view, little research has investigated the role of internal manufacturing flexibility. Based on theory of constraints and business ecosystem theory, this examines how manufacturing flexibility affects efficiency- and novelty-centred business model designs and consequent firm performance. We propose and test eight hypotheses using data from one hundred and eighty-six manufacturing firms in China. The results indicate that manufacturing flexibility promotes both efficiency- and novelty-centred business model designs and subsequent firm performance. Furthermore, the relationship between manufacturing flexibility and an efficiency-centred business model design is strengthened by competitive intensity but weakened by demand heterogeneity. In contrast, the relationship between manufacturing flexibility and novelty-centred business model design is weakened by competitive intensity but strengthened by demand heterogeneity.