Perspectives on organizational agility
The existence of various generic terms for OA indicates significant dissent in understanding the concept and show several different perspectives on OA. For construct clarity and further research, it is very important to recognize the different understandings and to agree on a unified view (Podsakoff et al. 2016). Sharp et al. (1999) considered OA as a ‘management philosophy’. Bernades and Hanna (2009) referred to it as a ‘philosophical approach’. Other researchers have referred to OA as a ‘manufacturing paradigm’ (e.g., Meade and Sarkis 1999; Narasimhan et al. 2006; Vázquez‐Bustelo et al. 2007), a ‘performance capability’ (e.g., Cho et al. 1996; Sambamurthy et al. 2003), a ‘strategic capability’ (e.g., Chakravarty et al. 2013), a ‘dynamic capability’ (e.g., Bessant et al. 2001; Chakravarty et al. 2013), a ‘management strategy’ (e.g., Paixão and Marlow 2003), and even a ‘certain system propert[y]’ (e.g., Giachetti et al. 2003). Narasimhan et al. (2006) illustrated fundamental differences between the most widespread umbrella terms, i.e., ‘manufacturing paradigm’ and ‘capability,’ and the serious consequences of mixing them. If OA is seen as a paradigm of manufacturing, OA is treated as a ‘system of practices’ (Narasimhan et al. 2006, p. 441) and includes the firm's philosophy, values, and culture. Understanding OA as a paradigm is a representation of a high level of abstraction, with particular characteristics disappearing (Narasimhan et al. 2006). This extensive approach bears the risk of confusing definitions and mixing up 'what' with 'how' (Narasimhan et al. 2006). Not only is this a difficult foundation for further research into OA, but, also, differences between two similar concepts are not very clear. Thereby, distinguishing between two similar concepts becomes difficult. This can weaken discriminant validity (Podsakoff et al. 2016). Thus, the paradigm approach is considered too superficial (Narasimhan et al. 2006) and not suited to conceptualization.
Considering OA as a capability, performance capabilities are conceptually and clearly separated from practices (Narasimhan et al., 2006). This allows for a more precise definition of the terminology. In the following, with the aim of developing an applicable definition and a concept that reflects the application of OA in an organization, OA is considered a capability, as it is common in recent literature (Hazen et al. 2017; Lu and Ramamurthy 2011; Tallon and Pinsonneault 2011; Teece et al. 2016; Vickery et al. 2010). The following section describes OA as a dynamic capability in greater detail.
Organizational agility as a dynamic capability
Dynamic capabilities are ‘the firm´s capacity to innovate, adapt to change, and create change that is favorable to customers and unfavorable to competitors’ (Teece et al. 2016, p. 18). Teece et al. (2016) regarded dynamic capabilities as a collection of processes, routines, knowledge, and entrepreneurial capabilities attributable to the management team. Looking at routines alone does not seem to be in line with the current highly competitive environment, as routines tend to adapt too slowly to changes (Teece et al. 2016). Therefore, the dynamic capabilities approach is useful in the context of agility. Further, entrepreneurial capability, as part of a dynamic capability, is critical to the harmonization of individual components and essential to the ability to anticipate developments and trends in a company´s environment, which is an important feature of an agile organization. In conclusion, for the purpose of competitiveness, it is advantageous to consider the above-mentioned aspects of a dynamic capability together, as the set is 'not only scarce, but also often difficult to imitate' (Teece et al. 2016, p. 19). Teece et al. (2016) emphasized that firms with strong dynamic capabilities can assess the need for agility and implement it more easily and with less loss of efficiency.
Overby et al. (2006) differentiated dynamic capabilities from OA, as the dynamic capabilities-concept is more wide-ranging. OA can be realized by a ‘specific subset’ of dynamic capabilities (Overby et al. 2006, p. 121). Teece et al. (2016) defined OA as ‘the capacity of an organization to efficiently and effectively redeploy/redirect its resources to value creating and value protecting (and capturing) higher-yield activities as internal and external circumstances warrant’ (p. 17). Consequently, an agile organization can manage demand shocks and uncertainties and adapt its strategy accordingly (Teece et al. 2016). Lee et al. (2003) considered OA as a ‘two-dimensional’ dynamic capability: an offensive entrepreneurial dimension and a defensive adaptive dimension. Therefore, an organization can operate agilely and successfully only if the two crucial dimensions of the dynamic capability of OA are well-developed. Building on this, Lee et al. (2015) conceptualized OA as a ‘higher-order dynamic capability to configure and reconfigure organizational resources in response to the environment or emerging competitive realities’ (p. 400). The integration of lower-order, functional capabilities facilitates new higher-order dynamic capabilities (here, OA), which, in turn, enable innovative competitive actions. This means that a combination of various methods enables the building, integration, and reconfiguration of internal and external resources with the aim of sustaining and improving the firm´s competitiveness. Lee et al. (2015) concluded that organizations with high OA—and, thus, strong higher-order dynamic capabilities—are able ‘to detect opportunities and threats, assemble the needed assets and capabilities to launch an appropriate response, judge the benefits and risks of initiating an action, and execute actions with competitive speed and success’ (p. 400). OA as a specific dynamic capability is difficult to copy and not easily acquired by an organization (Teece et al. 1997). This creates a competitive advantage. In the following, OA is regarded as a specific dynamic capability that constitutes one option for prospering in a volatile, unpredictable, and uncertain environment (Teece et al. 2016).
Definition of organizational agility and effects on performance
Scientists offer various understandings of agility. The following table provides an overview of exemplary definitions. It also shows the characteristics of the business environment and the goal of agility (Table 1).
Previous definitions of OA have significant differences but shared characteristics of the construct are observable regarding the following aspects:
OA is seen as a response to continual and unpredictable changes and is, therefore, particularly necessary and effective in a constantly changing, volatile, and unpredictable business environment (Iyer and Nagi 1997; Lu and Ramamurthy 2011; Sindhwani and Malhotra 2017; Teece et al. 2016; van Oosterhout et al. 2006; Vinodh and Aravindraj 2015; Yusuf and Adeleye 2002).
A functional focus is on speed and responsiveness (Gunasekaran and Yusuf 2002; Lu and Ramamurthy 2011; Sambamurthy et al. 2003; Tallon and Pinsonneault 2011; Vickery et al. 2010; Zhang and Sharifi 2007).
The main objective of OA is increased competitiveness (Bernardes and Hanna 2009; Bottani 2009; Cao and Dowlatshahi 2005; Giachetti et al. 2003; Lin et al. 2006; Vázquez‐Bustelo et al. 2007; Vinodh et al. 2008; Yusuf and Adeleye 2002; Zandi and Tavana 2011).
Agile organizations strive for maintenance and enhancement of their competitive position (Bottani 2009; Gunasekaran et al. 2018) by rapid and efficient production of high-quality products and reduced costs (Bottani 2009; Cheng et al. 2000; Lin et al. 2006; Mishra et al. 2014), customer satisfaction (Cao and Dowlatshahi 2005; Lin et al. 2006; Mishra et al. 2014), employee satisfaction (Lin et al. 2006), improved velocity in the introduction of new products (Sharifi and Zhang 2001), and the elimination of non-value-adding processes (Lin et al. 2006; Mishra et al. 2014). Additional frequently mentioned aims of OA are increased performance (Narasimhan et al. 2006; Wang et al. 2014), profitability (Chakravarty et al. 2013), and an increase in market share (Lin et al. 2006; Mishra et al. 2014). Vázquez-Bustelo et al. (2007) added environmental objectives. Multiple studies support OA’s positive impact on a firm’s performance (Hazen et al. 2017; Inman et al. 2011; Tallon and Pinsonneault 2011; Vickery et al. 2010; Wang et al. 2014; Yusuf and Adeleye 2002). Vázquez-Bustelo et al. (2007) found that a higher level of OA has a positive impact on operational, financial, and market performance through improved manufacturing strength.
Categories of organizational agility
In the following, I systematize the core areas of OA to classify the key findings of the reviewed literature. The categories presented here are necessary properties that are an essential part of the OA concept (Podsakoff et al. 2016). The subsequent systematic content analysis focuses primarily on the definition of the individual agility categories within the reviewed papers (Randolph 2009). This establishes the basis upon which to present the findings in a systematic and meaningful way. The developed conceptual map is based on the original framework of Sharifi and Zhang (1999), which is expanded; individual categories are enriched with new insights. Vinodh (2010) noted that ‘the drawback in this work is that there is a need for improvement of the agility model's comprehensiveness’ (p. 3). Yet, the concept is considered good preparation for companies to deal with uncertain and complex situations (Vinodh 2010) and provides a good foundation for the theoretical concept derived in chapter five. Sharifi and Zhang (1999) have studied the concept of agility in the manufacturing industry in depth and developed a methodology for assembling and understanding the concepts of agility in order to achieve agility in a company. An empirical study was then carried out to verify the developed methodology. The results of the study are reported in detail, and the conceptual model is explained, in Zhang and Sharifi (2000). Their concept consists of three interacting core areas: agility drivers, agility capabilities, and agility providers (Sharifi and Zhang 1999; Zhang and Sharifi 2000). These are the starting points for analyzing the relevant literature and, thus, for systematizing the key findings.
Agility drivers constitute environmental changes that put organizations in a new, vulnerable position and necessitate searching for competitive advantages. Statements and information identified as 'driving forces for agility' (Zhang and Sharifi 2007, p. 353) are associated with this core area.
Agility capabilities are specific abilities for providing the required power and competence to react to changes; they include responsiveness, competency, flexibility, and speed. Zhang and Sharifi (2000) described agility capabilities as ‘essential capabilities that the company needs in order to positively respond to and take advantage of the changes’ (p. 498). Lin et al. (2006) denoted agility capabilities as ‘vital abilities that would provide the required strength to make appropriate responses to changes taking place in its business’ (p. 358). Thus, agility capabilities represent the company’s ‘fitness’ to handle changes and uncertainties (Lin et al. 2006, p. 356). In this core area, agility attributes appear as a synonym for agility capabilities (Bottani 2009; Nejatian et al. 2018).
Agility enablers describe methods, tools, practices (Sharifi and Zhang 1999) and crucial technologies facilitating OA (Gunasekaran 1998; Lin 2004; van Oosterhout et al. 2006). Agility enablers are utilized as leverage (Nejatian et al. 2018) at multiple organizational levels (Sharifi and Zhang 1999) and enable the realization of agility capabilities (Sharifi and Zhang 2001). This core area contains information about the above points of interest and is also described in the literature as agility providers (Lin et al. 2006; Zhang and Sharifi 2000, 2007) or agile practices (Bessant et al. 2001; Vázquez‐Bustelo et al. 2007).
In addition, I consider agility dimensions as part of the analysis. The use of the terminology ‘agility dimensions’ is contentious and inflationary; thus, a precise definition of the core area is difficult. The contents of this core area have two things in common. One is the naming. The other is the goal of structuring agility in an organization with regard to operationalization. This means determining which dimensions of the organization must be agile to achieve organizational agility at a higher level.
In this article, the identified core areas of OA are summarized as agility categories. Thus, the conceptual map contains the four agility categories: agility drivers, agility enablers, agility capabilities, and agility dimensions. Figure 1 provides a simplified overview showing the agility categories and their relationships with each other. The agile organization is surrounded by a volatile, uncertain, and turbulent business environment. Agility drivers induce the need for agility capabilities of the organization. These are realized by agility enablers. Agility capabilities are implemented in various agility dimensions, resulting in an overall enhanced organizational agility level. An increased OA level of the organization can contribute to an increase in competitiveness.
The key findings and critical developments, over time, of each agility category are now presented consecutively. Therefore, the following subchapters address the second research question with regard to the definition and delineation of the individual agility categories. Based on this, the results are summarized in chapter 5.3, set in relation to each other, and aggregated into a holistic concept.
Until 2001, the focus was exclusively on external agility drivers, with an emphasis on customer-driven agility drivers. Then, researchers began regarding internal agility drivers as well. Eisenhardt and Martin (2000), who more closely investigated dynamic capabilities, supported this view, arguing that the competitive advantage of a firm in a high-velocity environment can be threatened internally as well as externally. In the following, findings are classified by the following types of environments: external changes only, external changes focused on customers, and external and internal changes.
Most researchers have confined agility drivers to the external environment. External changes occur continuously and unpredictably (Sharifi and Zhang 1999; Lu and Ramamurthy 2011) and lead to a highly competitive environment (Gunasekaran 1998) at a high frequency (Cao and Dowlatshahi 2005; Giachetti et al. 2003; Gunasekaran 1998; Mishra et al. 2014; Zhang and Sharifi 2000). Market changes, technology changes, and globalization are agility drivers that exemplify the external environment (Aravindraj et al. 2013; Cheng et al. 2000; Feng and Zhang 1998; Ganguly et al. 2009; Gunasekaran 1998; Gunasekaran et al. 2018; Quintana 1998). A notable number of researchers regard changes in customer demand as a driver of OA (Coronado Mondragon et al. 2002; Guisinger and Ghorashi 2004; Katayama and Bennett 1999; Sieger et al. 2000; Vickery et al. 2010). A high customer orientation in the agile setting could justify the approach.
In 2001, Sharifi and Zhang (2001) and Bessant et al. (2001) started considering internal and external environments. These are characterized by unpredictability (van Oosterhout et al. 2006) and potential disruptiveness (Overby et al. 2006). Van Oosterhout et al. (2006) identified fierce price competition and declining margins as the most significant agility drivers. The following table summarizes previously identified external and internal agility drivers and provides a selection of references (Table 2).
Sharifi and Zhang (2001) introduced an alternative classification of agility drivers and assigned changes to the marketplace, competition, customer requirements, technology, social factors, suppliers, and internal complexity. Lin et al. (2006) grouped agility drivers as social/legal changes, business network changes, competitive environment changes, customer need changes, technology, and internal changes.
Gunasekaran (1998) identified seven key enablers: virtual enterprise formation tools and metrics; physically distributed manufacturing architecture and teams; rapid partnership-formation tools and metrics; concurrent engineering; an integrated product, production, and business-information system; rapid prototyping tools; and electronic commerce. Sharp et al. (1999) added a focus on core competencies; a multi-skilled, flexible, and empowered workforce; continuous improvement and change and risk management; and information technology. The following enablers were also identified: the use of internet-based and advanced technology, the modularization of products, cross-functional integration, a culture of market orientation, the improvement of supplier relationships, customized manufacturing, service management, the active support of top management, a supportive organizational structure, optimal manpower and machine utilization, pull production, optimal inventory, and an agile strategy (Brown and Bessant 2003; Cheng et al. 2000; Guisinger and Ghorashi 2004; Lin 2004; Sindhwani and Malhotra 2017).
In literature addressing agility enablers, a special emphasis is placed on information technology, information systems, and virtual enterprises (Gunasekaran and Yusuf 2002). Several authors have identified IT as a significant agility enabler (Cao and Dowlatshahi 2005; Coronado Mondragon et al. 2004; Guisinger and Ghorashi 2004; Gunasekaran et al. 2018; Lee et al. 2015). Van Oosterhout et al. (2006) regarded IT as having either an enabling or an impeding effect and, therefore, emphasized its special meaning in an agile setting. Cao and Dowlatshahi (2005), Guisinger and Ghorashi (2004), Paixao et al. (2003), and Sieger et al. (2000) highlighted virtual enterprises and partnerships as agility enablers. While focusing on core competencies, an agile organization can compensate for its own weaknesses by taking advantage of the strengths of others to realize market opportunities (Sieger et al. 2000). Cooperation between organizations is regarded as a must-have criterion; realizing OA to its fullest requires cooperation (Gunasekaran et al. 2018). Consequently, the special emphasis on virtual enterprises as agility enablers becomes plausible. Lin et al (2006) referred to the integration of applied enabler and synchronization as the 'most important point' (p. 357) with the aim of transforming the applied agility enabler into strategically advantageous capabilities.
There are several frameworks for subdividing agility enablers. Bessant et al. (2001), Lin et al. (2006), and Meade and Sarkis (1999) assigned agility enablers to four groups, aimed at ‘leveraging the impact of people and information’ (p. 242), ‘mastering change and uncertainty’ (p. 242), ‘enriching the customer’ (p. 242), and developing collaborative relationships ‘to enhance competitiveness’ (p. 242). Van Oosterhout et al. (2006) identified six categories: business network governance, business network architecture, information technology, organization governance, organization architecture, corporate culture, and workforce. Vázquez-Bustelo et al. (2007) distinguished between practices related to HR, the application of advanced design, manufacturing, and administrative technologies related to internal and external structures and relations, product development and processes aimed at concurrent engineering, and practices relating to the knowledge management system. Zhang and Sharifi (2007) identified six groups of agility enablers that must adapt to develop an agile organization: relationships with supplier, customer, and competitors, technology, integration, organization, customer relationships, and information systems. Vinodh et al. (2008) divided agility enablers into five subclasses and provided illustrative criteria for each subclass. According to them, OA can be achieved by focusing on the following enabler subclasses: organizational structure enabler, manufacturing management enabler, workforce enabler, technology enabler, and manufacturing strategy enabler (Vinodh et al. 2008). Aravindraj et al. (2013), Vinodh and Aravindraj (2012), and Vinodh et al. (2010a) identified five major enablers: management responsibility agility, manufacturing management agility, workforce agility, technology agility, and manufacturing strategy agility.
The systematic review of previous literature reveals four generic agility capabilities that provide a basis for several researchers (Lin et al. 2006; Sharifi and Zhang 1999, 2001; Zhang and Sharifi 2000, 2007). Major agility capabilities are responsiveness, competency, flexibility, and speed. Sharifi and Zhang (1999) provided a proper definition of each capability and enumerated sub-capabilities. Responsiveness is defined as ‘the ability to identify changes, respond rapidly to changes either reactively or proactively, and recover from changes’ (Sharifi and Zhang 1999, p. 17). The respective sub-capabilities are sensing, perceiving and anticipating changes, an immediate reaction to changes, and recovering from changes. Sharifi and Zhang (1999) defined an organization´s competency as ‘abilities that provide a company with productivity, efficiency, and effectiveness in achieving its aims and goals’ (p. 17). Through high competence, an organization is able ‘to operate efficiently, produce high-quality and high-performance products, deliver on time, innovate, and manage core competency’ (Zhang and Sharifi 2007, p. 354). To develop the respective capability, Sharifi and Zhang (1999) identified the following sub-capabilities: strategic vision; appropriate technology or sufficient technological capability; products/service quality; cost-effectiveness; high rate of new products introduction; change management; knowledgeable, competent, and empowered people; operations efficiency and effectiveness (leanness); co-operation (internal and external); and integration. The agility capability flexibility is defined as ‘the ability to carry out different work and achieve different objectives with the same facilities’ (Sharifi and Zhang 1999, p. 18) and includes multiple types of flexibility: product volume flexibility, product model/configuration flexibility, organization and organizational issues flexibility, and people flexibility. The fourth fundamental agility capability, speed, is ‘the ability to carry out tasks and operations in the shortest possible time’ (Sharifi and Zhang 1999, p. 18). According to Sharifi and Zhang (1999), this is realized by three sub-capabilities. The first is quickness in new products’ time-to-market, while the second is quickness and timeliness in product and service delivery. Equally important is the third sub-capability, i.e., quickness in operations (short operational lead times). Zhang and Sharifi (2007) extended the list by adding the capabilities of proactiveness, focus on the customer, and partnership. Proactiveness is the organization’s ability to behave anticipatorily toward threats and market opportunities. Partnership capability enables the building of concrete relationships with suppliers and partner organizations. Gunasekaran and Yusuf (2002) agreed with the ‘traditional’ agility capability approach but emphasized that OA should not be built solely on responsiveness and flexibility; rather, they said, it should also focus fundamentally on cost-effectiveness and high-quality products and services (Gunasekaran and Yusuf 2002).
Contrary to previous approaches, Lee et al. (2015) derived another set of relevant agility capabilities from previous literature: proactiveness, radicalness, responsiveness, and adaptiveness. Proactiveness constitutes forward-looking anticipation and responsiveness in order to seize new market opportunities ahead of competitors (Lee et al. 2015; Lumpkin and Dess 1996; Miller and Friesen 1983). The organization’s ability to ‘initiate radical strategic movements by implementing new business models to penetrate new markets’ (Lee et al. 2015, p. 405) is labeled radicalness (Lee et al. 2015; Miller and Friesen 1983; Zahra and Covin 1995). Responsiveness enables a quick response to opening market opportunities caused by changes in customer demand or the environment (Hult et al. 2005; Lee et al. 2015; Tracey and Vonderembse 1999). Adaptiveness relates to business models and includes keeping pace with best practices on the market (Jarrar and Zairi 2000; Lee et al. 2015; Rindova and Kotha 2001; Subramaniam and Youndt 2005).
Overby et al. (2006) derived two key components of OA: sensing change and responding to it. The sensing ability enables the firm to recognize ‘competitor’s actions, consumer preference changes, economic shifts, regulatory and legal changes, and technological advancements’ (Overby et al. 2006, p. 121). Enabling capabilities are, for example, market intelligence, government relations, legal expertise, research and development, and information technology. The responding ability offers three response options that vary in their scopes: a complex move, a simple move, or no move (Overby et al. 2006 according to Ferrier et al. 1999). The third option is calculated inactivity that demonstrates a firm’s ability ‘to be agile but not necessarily display its agility at every opportunity’ (Overby et al. 2006, p. 124).
In comparing diverse approaches regarding agility capabilities, a particular focus on responsiveness and speed becomes obvious. Zhang and Sharifi (2007) identified responsiveness as the ‘most frequently cited capability in the literature’ (p. 354). Even more radically, Zhang and Sharifi (2000) labeled responsiveness as ‘the essential capability for any organisation which needs to be agile’ (p. 354). Competency, flexibility, and speed are necessary prerequisites for gaining responsiveness (Zhang and Sharifi 2000). Lin et al. (2006) agreed about the importance of responsiveness in all areas of a company (strategy, technology, HR, business processes, and facilities). The analysis of the development of agility capabilities shows a shifting scope of responsiveness. In the beginning, the focus is on reacting to environmental change. Over time, researchers realized the equal importance of perceiving and recognizing change as a crucial part of responsiveness (Huang et al. 2014; Overby et al. 2006). Neglect of the recognition component is reckless because it is an indispensable prerequisite and basis for reacting to change. Companies should recognize market changes before their competitors do in order to exploit the market opportunity, which is a major advantage of a highly agile company.
The least clear and most controversial category is that of agility dimensions. In this matter, Zhang and Sharifi (2007) unfavorably mixed agility dimensions and agility capabilities. A confusing usage of the term ‘agility dimensions’ and a lack of a lucid meaning remain worthy of criticism. In addition to the ‘classical’ approach, alternatives are introduced below.
Notable authors (e.g., Coronado Mondragon et al. 2002, 2004; Eshlaghy et al. 2010; Iyer and Nagi 1997; Meade and Sarkis 1999; Paixão and Marlow 2003; Potdar et al. 2017a; van Oosterhout et al. 2006; Yusuf and Adeleye 2002) referred to the ‘classical’ approach of agility dimensions, the origin of which is the practitioner-based Lehigh Report (Industry Team and Facilitators 1991). Although various articles refer to the particular source, an explicit meaning of agility dimensions does not become apparent and the function remains unclear. In the early years of OA research, the dimensions are also referred to as ‘competitive foundations’ (Sharp et al. 1999, p. 160), which are understood as being ‘interrelated and overlapping’ (Sharp et al. 1999, p. 160) principles. These are to be pursued at the same time and can therefore contribute to an improvement of the manufacturing company (Sharp et al. 1999). Goldman et al. (1995) classified four dimensions as competitive foundations or ‘underlying principles’ (Katayama and Bennett 1999, p. 44). One is ‘mastering change and uncertainty’ (control dimension), which expects a constantly changing, demanding environment that calls for change. Another, ‘customer enrichment’ (output dimension), means that organizations must respond rapidly to consumer demand with customized, high-quality products. The third and fourth dimensions—‘cooperating to enhance competitiveness’ (input dimension) and ‘leveraging the impact of people and information’ (mechanism dimension)—represent the realization of OA by the integration of technology and HR through an adaptable organizational structure, an appropriate management style, and internal and external cooperation (Industry Team and Facilitators 1991). Sharp et al. (1999) regarded the following major points as competitive foundations: a continuously changing environment, a rapid response with customized, high-quality products, and social responsibility.
Alternatively, scholars have classified specific parts of an organization as dimensions. Bessant et al. (2001) described ‘four major dimensions’ of OA as follows: an agile strategy, agile processes, agile linkages, and agile people. Monplaisir (2002) subdivided OA into the key dimensions of management, technology, and workforce, each with its own characteristics that can be realized through the application of various enabling systems. According to Vinodh and Aravindraj (2012), agility should be integrated into technologies, skills, and external cooperations. Brown and Bessant (2003) extended these pillars by including strategies, corporate culture, and business practices. Lin et al. (2006) did not title the organization areas agility dimensions but their segmentation aligns with those of the above-mentioned authors. To be able to respond quickly and effectively to changing market demands, all corporate sectors require agility enablers (Lin et al. 2006). Therefore, OA should be developed in strategies, technologies, people, business processes, and facilities (Lin et al 2006). Vázquez-Bustelo et al. (2007) regarded OA as a ‘multidimensional concept’ (p. 1305) in five dimensions: agile human resources, agile technologies, value chain integration, concurrent engineering, and knowledge management.
Another approach is the differentiation regarding various types of OA. Sambamurthy et al. (2003) classified three different types of OA: customer agility, partnering agility, and operational agility. Zandi and Tavana (2011) divided OA into three parts: strategic agility, operational agility, and functional agility. Several agility criteria facilitate agility in each dimension. Agility criteria are individual and, thus, differ from company to company (Zandi and Tavana 2011). Lu and Ramamurthy (2011) distinguished between market-capitalizing agility and operational-adjustment agility. Both imply a constant readiness for change. According to Tallon and Pinsonneault (2011), agile organizations must be able to ‘easily and quickly change their strategy’ (p. 473) regarding customer responsiveness, business partnerships, and operations. This requires customer agility, business-partnering agility, and operations agility (Tallon and Pinsonneault 2011). Chakravarty et al. (2013) conceptualized OA, with reference to Overby et al. (2006) and Lee et al. (2003), as a two-dimensional dynamic capability composed of an entrepreneurial offensive part and an adaptive defensive part. Aligning with Overby et al. (2006), Huang et al. (2014) regarded OA as an organizational capability comprising a sensing component and a responding component. Subordinately, five major agility dimensions exist: management agility, product-design agility, processing-manufacture agility, partnership-formation agility, and the integration of information systems (Huang et al. 2014).
Differentiation from other concepts
A clear delimitation of related concepts in the following contributes to a clear understanding of OA and is the basis for a successful implementation in the company (Paixão and Marlow 2003). Because OA builds on previous concepts in management theory, similarities exist (Overby et al. 2006). Nevertheless, there are crucial differences that should be considered. While Overby et al. (2006) stated that OA is built on other concepts, Katayama and Bennett (1999) determined that OA and similar concepts—here leanness and adaptability—are not alternatives but, rather, ‘mutually supporting concepts’. To achieve the aims of being highly responsive to changing customer demands, being cost-sensitive, and gaining high resource efficiency and corporate performance, these concepts should be implemented together (Katayama and Bennett 1999).
Organizational agility and flexible organization
Flexibility is an ‘inherent property of systems which allows them to change within pre-established parameters’ (Bernardes and Hanna 2009, p. 30). This capability exists ex ante to environmental change. Thus, flexibility, as an option for adaptation to change, is characterized by the properties of being pre-established and limited in scope and achievability. Flexibility operates as a buffer to stabilize manufacturing processes in uncertain environments. Thereby, uncertainty is absorbed and potential negative impacts reduced (Bernardes and Hanna 2009).
A notable difference is that flexibility aims to absorb and buffer environmental uncertainty, whereas OA aims to exploit environmental changes and to use them as market opportunities (Bernardes and Hanna 2009). Exploitation is facilitated by an agile organization’s ability to quickly reconfigure itself (Bernardes and Hanna 2009). OA comprises several agility capabilities, one of which is flexibility (Bernardes and Hanna 2009; Yao and Carlson 2003). Hence, flexibility can be seen as an integral part of OA. Overby et al. (2006) highlighted the types of issues (according to Porter 1987) to which OA and flexibility can respond. While flexibility can cope with strategic issues, OA can respond to strategic, operational, and tactical issues. And while the speed of response plays a crucial role in the concept of OA, it does not in flexible systems (Ganguly et al. 2009). Moreover, flexibility is described as ‘planned responsiveness,’ while agility can cope with ‘continuous, accelerated and often unpredictable changes’ (Ganguly et al. 2009, p. 413). Overby et al. (2006) regarded OA as an envelopment and extension of strategic flexibility. Lin (2004) confirmed a significant relationship between manufacturing flexibility and market orientation (here regarded as one of the agility capabilities). Consequently, to enhance OA, an organization should focus on manufacturing flexibility (Lin 2004). By contrast, Giachetti (2003) considered both as two distinct system properties sharing the same objective of responding to environmental changes and uncertainty to gain a competitive advantage.
Organizational agility and lean manufacturing
OA, as well as lean manufacturing, strive for efficiency in the production process by minimizing waste. While the minimization of waste is the top goal of lean companies, agile organizations reduce waste only, without offering a quick and efficient response to unexpected changes at risk (Ganguly et al. 2009). This difference might be justified by different competitive objectives. Gunasekaran and Yusuf (2002) summarized the elimination of waste as the main goal of lean manufacturing, whereas the main goal of agile manufacturing is flexibility and customer responsiveness. Lean manufacturing strives for production efficiency by aiming for continuous improvement processes concerning resource and process usage. By contrast, OA pursues customer enrichment through the quick utilization of organizational competencies (Yusuf and Adeleye 2002). That means a more comprehensive competitive focus, including a high responsiveness of OA, in contrast to leanness (focus on low cost and high quality, respectively) (Gunasekaran and Yusuf 2002; Yusuf and Adeleye 2002). Further, the concepts can be distinguished with respect to the ability to exploit upcoming market opportunities. While this particular ability is a key characteristic of OA, it is not a focus of leanness (Paixão and Marlow 2003). Narasimhan et al. (2006) and Yusuf and Adeleye (2002) identified substantial differences in market conditions, competitive objectives, core capabilities, management styles, operations control, IT architecture, logistics, work organization, machine characteristics, the nature of automation, core training requirements, and overriding limitations. An exemplary representative of crucial differences is a different focus concerning machine characteristics and employees. Leanness stands for simple machines that can easily be reconfigured by ‘multi-skilled operatives’ (Yusuf and Adeleye 2002). OA capitalizes on knowledge workers who continually reconfigure programmable machines (see Yusuf and Adeleye 2002 for the complete list of differences).
Inman et al. (2011) outlined three fundamental views concerning the relationship between OA and lean manufacturing. First, OA and lean manufacturing are regarded as mutually exclusive concepts (Hallgren and Olhager 2009; Narasimhan et al. 2006). Ganguly et al. (2009), Paixao and Marlow (2003), and Yusuf and Adeleye (2002) suggested applying leanness in predictable environments with almost consistent demand and to implement OA in volatile environments. OA has a competitive advantage over leanness (Narasimhan et al. 2006; Yusuf and Adeleye 2002). It can outperform leanness in the following performance capabilities: conformance quality, design quality, delivery reliability, delivery speed, new product flexibility, and process flexibility (Narasimhan et al. 2006). Here, the last four provide major advantages (Narasimhan et al. 2006). Hallgren and Olhager (2009) found a higher impact of OA on the flexibility dimensions; further, the authors advised firms that employ a cost-leadership strategy to adopt leanness, while firms striving for a differentiation strategy were advised to adopt OA. The second approach is to consider OA and lean manufacturing as mutually supportive concepts, as Zhang and Sharifi (2000) and Yao and Carlson (2003) do. Lastly, leanness is regarded as an antecedent of OA (Gunasekaran 1999; Gunasekaran and Yusuf 2002; Paixão and Marlow 2003; Sharifi and Zhang 2001; Zhang and Sharifi 2000). Gunasekaran (1999) and Gunasekaran and Yusuf (2002) regarded agility as an advanced development of leanness with regard to flexibility and responsiveness. Zhang and Sharifi (2000) agreed with this view but also suggested that leanness is a potential enabler of OA, especially with regard to production techniques (Sharifi and Zhang 2001). Narasimhan et al. (2006) refined the relationship between the two concepts this way: ‘While the pursuit of agility might presume leanness, pursuit of leanness might not presume agility’ (p. 440). Yao and Carlson (2003) suggested a simultaneous pursuit of agility and leanness.
Organizational agility and adaptability
Adaptability can be seen as a feature of an organization’s production system. It is defined as the ‘ability to adjust or modify its cost performance according to demand’ (Katayama and Bennett 1999, p. 44) and is associated with increased cost sensitivity. The reorganization of the cost structure is the main instrument used to convert fixed costs into variable costs. By contrast, OA focuses on reducing fixed costs and, thus, lowering the break-even point. Adaptable firms apply both organizational and technological solutions to improve profitability. As customer demand falls, adaptability is measured more cost-effectively compared to leanness, as the flexibility costs are higher (Katayama and Bennett 1999).
Organizational agility and responsiveness
Responsiveness ‘refers to the actions or behavior of a system using a series of capabilities to address changes triggered by stimuli’ (Bernardes and Hanna 2009, p. 42). The purpose of responsiveness is to determine the appropriate time and extent of competence and capability utilization. Responsiveness depends on an external driver and aims to control the stimuli. Bernardes and Hanna (2009) described responsiveness as a further developed concept and regarded it as superior, meaning that responsiveness subsumes flexibility and agility. Contrary to this view, responsiveness is one of the four agility capabilities.
Organizational agility and absorptive capacity
Overby et al. (2006) defined absorptive capacity according to Zahra and George (2003), as ‘a set of organizational routines and processes by which firms acquire, assimilate, transform, and exploit knowledge to produce a dynamic organizational capability’ (p. 121). As in the OA concept, absorptive capacity emphasizes a focus on knowledge. The authors compared the acquisition and assimilation of external knowledge to the sensing part of OA, while comparing the latter dimensions of the absorptive capacity of a firm to the responding part of OA. Nonetheless, OA’s focus remains on managing change instead of managing knowledge, as in the concept of absorptive capacities. Another significant difference is the continuity of the application of the concepts. While absorptive capacity performs more continuously, OA is applied solely in response to environmental changes (Overby et al. 2006).
Organizational agility and market orientation
Market orientation is, by definition, according to Kohli and Jaworski (1990), ‘reflected in the organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organization-wide responsiveness to it’ (Overby et al. 2006, p. 121). The objective is to use resources more efficiently and effectively to satisfy customers’ needs (Lin 2004). Similar to OA, market orientation relies on external information, focuses on responsiveness, and considers environmental changes (Overby et al. 2006). A major difference appears regarding its relationship to information. While comprehensive information processing plays a crucial role in an organization with the goal of "market orientation", an agile organization does not necessarily rely on information processing (Overby et al. 2006). Information processing is complex and often leads to a time loss, which can hamper OA. (Overby et al. 2006). Yet, a positive relationship could be validated between market orientation and manufacturing flexibility as an integral part of OA (Lin 2004).