Cross-Sectional Analysis of Strategic Agility and Firm Performance

Thesis Abstract

This study investigates how strategic agility relates to firm performance across a cross-section of manufacturing and services firms operating in diverse market environments, addressing the empirical gap on comparative effectiveness of agile capabilities under varying competitive pressures. The problem addressed is the inconsistent evidence on the impact of sensing, seizing, and reconfiguring capabilities on financial and non-financial performance metrics, and the lack of cross-sector validation. The aim is to quantify the relationship between strategic agility and firm performance, and to identify contingent factors that shape this relationship. The specific objectives are (1) to measure the three dimensions of strategic agility (sensing, seizing, reconfiguring) using a validated multi-item scale; (2) to assess overall firm performance via market-based indicators (total return to shareholders, revenue growth) and operational indicators (market share, customer satisfaction); (3) to examine moderating effects of environmental dynamism and industry type; (4) to compare results between manufacturing and service sectors; and (5) to provide actionable insights for managers on strengthening agile routines. The study employs a cross-sectional survey research design, targeting middle- and senior-management respondents from 320 firms drawn from a stratified random sample of 160 manufacturing and 160 service firms across developed and emerging markets. Data collection used a structured, self-administered questionnaire validated through a pilot test with 40 respondents, resulting in Cronbach’s alpha values above 0.84 for all main constructs. Complementary firm-level performance data were obtained from annual reports and third-party databases for the most recent completed fiscal year. To enhance construct validity, confirmatory factor analysis (CFA) was used to verify the measurement model, and composite reliability and average variance extracted (AVE) were reported to satisfy convergent and discriminant validity criteria. Analytical procedures include hierarchical multiple regression to test direct effects of strategic agility dimensions on firm performance, with control variables including firm size, age, and capital intensity. Interaction terms were incorporated to examine moderating effects of environmental dynamism and industry type. Robustness checks employed, including alternative proxies for performance (economic value added) and a common method variance assessment using Harman’s single-factor test. Additional subgroup analyses compared manufacturing versus service firms, and cross-country comparisons were conducted to explore contextual variation. The theoretical framework integrates the Dynamic Capabilities View (DCV) and the Resource-Based View (RBV), complemented by the Real Options perspective to explain how sensing, seizing, and reconfiguring create value under uncertainty. The analysis also references contingency theory to rationalize sectoral differences. Expected findings indicate that all three dimensions of strategic agility positively relate to overall firm performance, with seizing and reconfiguring exerting stronger effects on operational performance, while sensing more strongly influences market-based performance in volatile environments. Environmental dynamism is anticipated to moderate these relationships, strengthening the agility–performance link in high-dynamism contexts. Sectoral differences are expected, with service firms showing a greater impact of sensing and reconfiguring on customer-centric metrics, and manufacturing firms showing stronger links between seizing capabilities and efficiency-based performance. The study contributes to knowledge by providing empirical, cross-sectional evidence of how strategic agility translates into performance across distinct sectors and environments, integrating DCV, RBV, and Real Options to explain contingent effects. It offers a validated measurement instrument for strategic agility applicable across industries, and delineates practical implications for managers in prioritizing agile investments, restructuring processes, and nurturing dynamic capabilities under varying competitive pressures. The conclusion highlights that sustained competitive advantage depends on a balanced development of sensing, seizing, and reconfiguring capabilities aligned with environmental cues, with tailored emphasis by sector. Recommendations include prioritizing investment in sensing infrastructure for service-oriented firms operating in dynamic markets, and accelerating reconfiguring routines in manufacturing firms facing rapid technological shifts, alongside policy implications for regional innovation ecosystems.