Using evidence from exporting firms in China, this research aims to determine the conditions that foster manufacturing flexibility and the way in which firms support it. The contingency perspective and the competence and capability theory are utilized to develop a framework to enhance the knowledge of internal competence, external flexibility, and manufacturing performance, and the understanding of the moderating roles of strategic and organizational choice on the competence–flexibility and flexibility–performance relationships. Empirical evidence from a sample of 222 export product/market ventures confirmed the main effect that manufacturing, assembly outsourcing, and marketing competencies support a firm's manufacturing flexibility and in turn enhance manufacturing performance. Several notable moderating effects were also identified. Although a strategic emphasis on low-cost manufacturing and long-term contracting weakens a firm's transformation of core competencies into flexible capabilities, specific organizational choices regarding private ownership and direct exporting strengthen the conversion of manufacturing flexibility to superior manufacturing performance.
- Flexibility; Competence and capability theory; Contingency perspective; Firm performance