Exploring the Roles of Social Networks and Absorptive Capacity in Local Firms’ Strategic Flexibility: An Empirical Investigation of Chinese Firms

Abstract

In an era of VUCA, strategic flexibility may play a greater role for a company to achieve competitive advantage than innovation. Based on an integrated social network and absorptive capacity perspective, this article proposes a conceptual model in which the local firm’s strategic flexibility is affected by its position in global production network and its internal absorptive capacity. Using a sample of 276 local manufacturers located in the Yangtze River Delta, China, the roles of social networks and absorptive capacity in strategic flexibility are identified, and the results indicate that by occupying a central and strong-tie-abundant network position, local firms can gain more resource flexibility; and absorptive capacity possessed by a local firm plays an active role in coordination flexibility.