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Firm Agility and Business Performance

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In the contemporary society that is characterized by unstable economy, firms must deal with the multifaceted circumstances, which arise quickly and impact their performance. International competition, new technologies, consolidation, outsourcing and shifting consumer preferences are merely some instances of the factors, which impact business environments, wherein modern companies are operating (Sambamurthy et al., 2003). According to Bharadwaj (2000), it is very essential to initiate abilities, which will allow companies to deal with such fast occurring and uncertain modifications. Contemporarily, business agility has attracted the attention of business leaders and scholars as a key differentiator in presently speedily modifying business environment. According to Sambamurthy et al. (2003), it is the capability of detecting innovation opportunities and seizing those competitive market chances by assembling knowledge, requisite assets, and linkages with surprise and speed. In the literature, firm agility has been scrutinized from different viewpoints, including business function, enterprise, system and project (Henderson and Venkatraman, 1993). Agility, as a notion, encompasses the capability of detecting, anticipating, evolving conditions, sensing market opportunities amongst other environmental modifications. Apparently, agility relates to both operational and strategic levels within a company. This paper focuses on firm agility and business performance. In particular, the paper will explain what theory is, and illuminate various variables, linked with the project and relate to issues/problems, found in international management. In addition, the paper will offer specific and operational recommendations for the managers and future research direction.

Variables, Linked With Firm Agility

It is true that an agile firm responds speedily to modifications for its business setting. These modifications can be competitive, regulatory, customer attitude or market driven (Henderson and Venkatraman, 1993). For instance, the introduction of a new product by a rival or a novel law in a specific state could represent a big modification in the operation of a business. In the past, firms have addressed this issue by introducing novel technology that may generate a report that indicates that customers are more concerned, regarding such modifications. Apparently, such modification in a business environment necessitates a modification in the manner, in which it does business.

Certainly, most firms have admitted that they are not agile enough to be able to compete efficiently. Whilst the vast majority of the managers perceive that firm agility is an essential competitive requirement, real business willingness is nevertheless more mixed. As noted from a report of the Economist Intelligence Unit (2009), some individuals believe that most companies are at a competitive disadvantage due to the fact that they are not sufficiently flexible to forestall important shifts in the marketplace (Johnson et al., 2003). According to the head of innovation management at Fujifilm Europe, Stefan Kohn, the fear of modification is part of this predicament. He puts forth that, in some cases, some firms neglect change, whilst those that are actually flexible embrace change, even though it seems to be risky towards a subsisting product (Hitt et al., 1998).

In the contemporary society that is characterized by globalization, and a free-market setting, the capacity of satisfying the expectations of consumers is essential for business performance (James, 2004). It is true that companies that are not agile may not satisfy their customers fully due to the fact that the expectations of consumers are not static. In order to be able to satisfy customers fully, firms must be able to identify their clientele, know their needs and produce products, which are desired by the consumers. This is a difficult action to carry out, but with competent employees and managers and efficient tools, companies may be able to succeed in this (Hitt et al., 1998).

Another major problem, facing companies currently, is the increased competition (Bruno and Joey, 2008). Apparently, firms necessitate modification in order to adapt in the highly competitive business environment if they have to remain in the market place. For instance, in case a competitor launches novel merchandise into the market, this represents a large change in the operation of a business, and thus, companies must modify accordingly. To be competitive, firms might find themselves in a Houdini-like twist (Braganza and Korac-Kakabadse, 2000). Such firms may be incapable of responding nimbly and speedily to the modifying business setting without being caught in knots. In this case, firms must come up with ways of making their procedures more flexible (James, 2004). Certainly, the performance of a firm is determined by the degree of agility of such a firm. Companies that are not flexible enough to cope with the increased competition in the contemporary society, usually find themselves deteriorating in terms of performance (Lee et al., 2009). Therefore, it is essential for firm managers to come up with strategies, which will assist in the same.

Besides, agile modifications endeavors are stalled by internal barriers. Apparently, most people in an organization have undertaken various steps of change initiatives with an aim of improving their firm’s agility (Overby et al., 2006). Nevertheless, a number of them have not delivered the anticipated benefits. According to the research, enhanced business responsiveness is impended by various factors, including conflicting departmental priorities and objectives, slow decision-making, silo-based information and risk-averse cultures (Weill et al., 2001).

Technology is evidenced to play a major supporting responsibility in assisting firms to become agile. According to Braganza and Korac-Kakabadse (2000), technology should work as a change agent in employment and adoption of knowledge sharing procedures in order to ensure that the use of essential data in such firms is improved. Information Technology infrastructure that is not flexible or consistent across the firm may be a major challenge in improving the agility of a company, and this is a major hindrance to agility.

Firms across the globe are challenged to turn out to be more agile in the face of modification. In addition to this, the market volatility in the contemporary society has highlighted the need for firms to forestall and address pivotal issues that impact their businesses (Lee et al., 2009). Nevertheless, planning for the unforeseeable might seem to be difficult; however, most companies appear to distinguish that, firm’s capability to respond and be flexible is important for business performance (Menor et al., 2001).

Recommendations for Managers

Studies have proven that managing in the contemporary society is not an easy task (Economist Intelligence Unit Limited, 2009). According to Kohn, firms necessitate refining their organizational procedures and leveraging outside and institutional knowledge efficiently in order to compete effectively in the market place and emerge successful. Besides, he puts forth that it isn’t enough to keep up with the large quantity of information in the workplace. Key information is essential for any improved performance (Menor et al., 2001). The burden will be on arming employees and decision makers with efficient instruments to find the required content. In order to meet the impulses of the market place, companies should restructure, simplify and incorporate the procedures that assist in improving their performance (Lee et al., 2009).

As explained above, technology is a major factor that support and improve the agility of a company, and hence, its performance. In this case, managers should adapt processes and technologies that will enhance agility. This is based on the fact that companies with a higher level of procedures and technological standardization have been evidenced to be more agile. It is apparent that, agile firms center on standardizing the procedures that cannot be modified, freeing up their resources with an aim of developing value added structures, which responds efficiently to the modifying business environment. In general, managers should make sure that they adapt new technologies and together with the existing ones for their firms to become more agile and assist in improving their business performance (Lee et al., 2009).

In order to overcome various internal barriers that hinder firm agility, managers should take various steps in order to curb such impediments (Overby et al., 2006). For instance, such hindrances may be prevented by improving and solidifying the core competencies of various persons in the company. This can be achieved by emphasizing on outsourcing, change management, automation amongst other procedure efficiency enhancements. In addition to this, making efficient employment of information sharing and knowledge management systems is also beneficial (Overby et al., 2006).

In addition to this, managers should come up with strategies in order to be able to respond nimbly and speedily to the modifying business setting without being caught in knots. This can be attained by coming up with ways of making their procedures more flexible. It is apparent that the performance of a firm is determined by the degree of agility of such a firm (Economist Intelligence Unit Limited, 2009). Companies that are not flexible enough to cope with the increased competition in the contemporary society, usually find themselves deteriorating in terms of performance. Thus, it is essential for the firm managers to come up with strategies, which will assist in improving the flexibility of their companies that as a result will assist in improving the competitive nature of such firms. Certainly, when a firm is more competitive in the market, its performance both in terms of productivity and financially is good, and this is an indication of good business performance.  In order to avoid the problems, which have disrupted most change programs, managers should sharply consider focusing on these enhancements in order to make such changes sustainable (Overby et al., 2006). Apparently, this will not only improve the business performance of a company but will also improve all the determinants of a company overall performance.

Future Research Direction

It is true that in the modern business environment, agility is essential to the competitive performance and innovation of companies. In fact, firm agility has been considered as one of the most vital resources for allowing better performance of a firm (Dunlop-Hinkler et al., 2011). Companies currently are greatly depending on information technologies, encompassing communication technology and knowledge process with an aim of enhancing their agility. In this case, further research can be carried out, focusing on the introduction of technology agility as a precursor to firm agility, that consequently, affect business procedures and eventually the performance of a company. Technology agility is described as the capability of a company to respond speedily to various technological modifications (Dunlop-Hinkler et al., 2011). It is true that in the contemporary society is characterized by rapid technological changes. In this case, in order to be successful and compete efficiently in the market place, companies must adapt the new technologies and combine them with the existing ones.

However, such firms must be agile enough in order to be able to cope with the rapidly changing technologies. Research has proven that companies, which have been able to cope with the rapidly modifying technological environment, have been able to emerge successful in the market place (Dunlop-Hinkler et al., 2011). The conceptual framework, employed in this study, will link the dynamic abilities framework with the procedure-based perception of the firm. It is true that technology agility is an essential precursor to the fundamental firm agilities, and in turn, these agilities affect both market and financial performance via intermediary business procedures. In conclusion, technology agility has a major responsibility in shaping the dynamic abilities of a firm that further improve its performance. 

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