Understanding Dynamic Capabilities at the Subunit Level: Operational Flexibility and the Crucial Role of Organization Design and Information Sharing

Abstract

Organizations are currently facing increasingly dynamic environments that require fast action in high-velocity settings. Recent research on dynamic capabilities purports that organizations need to build these capabilities to successfully confront increasing uncertainty. Among these capabilities, authors suggest that flexibility may be a key ingredient needed to adapt to uncertainty and change. Yet, a review of the literature reveals that there is a gap that neglects subunit level activities at the lower levels of the firm, and thus it is difficult to determine how to build flexibility at this level. In this study, I examined key factors related to operational flexibility, defined as the ability of subunits to change day-to-day or within a day with the operational problems and changes.

Utilizing organizational design, information theory, and organizational learning theory, I developed and tested a model of subunit design factors and information sharing relationships with operational flexibility and in turn subunit performance. I conducted a national field study of emergency departments in level I and II trauma centers examining these relationships. Data were collected from 110 trauma centers throughout multiple levels in the emergency department within each participating organization. Using hierarchical regression analysis, results indicate that subunit design factors and information timeliness and accessibility are significantly related to operational flexibility. Additional analyses further show that these subunit design factors are also related to subunit performance. Results also indicated that operational flexibility was not related to subunit performance, yet a combined operational flexibility index was.

The findings contribute to the emerging field of dynamic capabilities by establishing operational flexibility as one of these important qualities at the subunit level. Second, this study furthers research at the meso or subunit level of the organization supporting the notion that organizational functioning is a combination of micro and macro concepts as well as contextual issues. Moreover, the results help identify possible antecedents of operational flexibility, yet fall short of empirically linking the separate dimensions with performance. Finally, the field setting of this dissertation provides a distinct contribution through the examination of concepts in a rarely studied setting: emergency departments in level I and II trauma centers.