Building organizational capabilities for managing economic crisis: The role of market orientation and strategic flexibility

Firms around the world often must manage and survive economic crises. Recen t cases in Asia, Eastern Europe, and South America bear testimony to this p oint. As economic weak spots are integrated into the global economy, it is timely to develop an understanding of organizational capabilities that can help firms manage their way through such crises. The authors investigate th e role of market orientation and strategic flexibility in helping Thai firm s manage the recent Asian crisis. The results demonstrate the contingent na ture of the influence of market orientation and strategic flexibility on fi rm performance after a crisis has occurred. As hypothesized, market orienta tion has an adverse effect on firm performance after a crisis. This effect is moderated by demand and technological uncertainty and is enhanced by com petitive intensity. In contrast, strategic flexibility has a positive influ ence on firm performance after a crisis, which is enhanced by competitive i ntensity and moderated by demand and technological uncertainty. It seems th at market orientation and strategic flexibility complement each other in th eir efficacy to help firms manage varying environmental conditions.