The flexible firm: a multi-dimensional conceptualisation and measurement model

There is wide agreement that economic changes during the 1970s and 1980s have had significant impact on organisations. General agreement has led to debate about the nature, ramifications and organisational response to these events. A major theme to emerge is organisation 'flexibility1 and in particular, a continuing interest in what comprises the 'flexible firm1. This paper firstly, reviews Atkinson's (1987) 'flexible firm' model - a multi-dimensional conceptualisation of labour flexibility, but a uni-dimensional conceptualisation of organisation flexibility suggesting that labour flexibility is but one dimension of 'the flexible firm'. This paper offers a more thorough conceptualisation of the 'flexible firm' by incorporating three additional dimensions representing the traditional factors of production - technology, management and land. Building upon Atkinson, labour flexibility can be more clearly conceptualised at three levels - the organisation as it intersects with the external labour market; the manpower configuration of the internal organisation; and the skill profile of jobs. Measures include for example workforce numbers, characteristics of the labour force (i.e. permanent, contract, part-time), the fluidity of internal manpower structures, levels of multiskilling and cross skilling. Flexible technology is often defined narrowly as physical machinery or 'hardware' characterised by 'soft automation* - reprogrammable equipment with the potential to reduce the gap between product design and production process and the opportunity to reduce machine changeover time. This paper develops a broader conceptualisation which defines technology as a system or body of knowledge about techniques - methods employed to accomplish tasks. This includes machinery ('hardware') and human activity systems whose primary function is the imposition of form or order to a set of materials (i.e. raw materials in manufacturing) or to specific human activity (i.e. the implementation of a tax system). Different technologies will vary in the level of rigidity and flexibility imposed in the creation of form (Winner 1977). Measures include speed of response to change (time), variety and customisation of products, services and systems and the accommodation of specialised requirements and tastes (i.e. number of discrete, distinctive outputs). Both flexible technology and labour provide the potential to modify and transform the technological and manpower configurations of organisation. Decisions about these configurations come from management processes and initiatives, the third dimension of flexible organisation. This paper suggests a way to conceptualise 'flexible management* that examines how exposed or open the organisation is to the environment - knowledge resulting in exposure rather than protection. This builds on Stinchcombe's (1990) idea that it is important for organisations to be where "news" breaks. Flexible management involves processes which facilitate this ability to ascertain signs about the future and to convey this 'information' to relevant organisation parts. The search for and handling of news becomes the 'information* used in making decisions about the other dimensions of the 'flexible firm*. Measures include examination of activities in forecasting, market intelligence, competitive analysis and factors leading to similarities in form between firms, isomorphism (i.e. normative and mimetic activities). The final dimension of 'flexible organisation* to be examined is land. Land is conceptualised as the variation in the extent to which assets are available to the market. Indicators of this dimension include investment in plant (i.e. ownership of land and buildings as opposed to leasing), the degree of vertical integration and other aspects of 'structural inertia' as described by population ecologists. This paper presents an integrated multi-dimensional conc eptualisation of 'the flexible firm' and develops the foundations of a measurement tool. It is based on the four traditional factors of production and integrates a wide literature.