Organisational agility and firm's performance: the impact of organisational agility in business excellence models used by Australian SMEs

The Australian business environment, like most advanced economies, has felt the impact of globalisation and events such as the global financial crisis. Businesses are constantly looking to differentiate themselves and become more competitive. High Performance Theories and Business Excellence Models as espoused by popular books such as 'Good to Great' and government quality and productivity agencies, were touted as ways for firms to achieve this by implementing business excellence enablers such as leadership, people, strategy, partnership and resources, process, product and services . Recent events such as the global financial crisis, where firms who were touted as examples of 'great' organisations that have successfully applied high performance theories required government intervention to avoid bankruptcy, have questioned their validity and usefulness. This dissertation examines business high performance theories and their relationship with business excellence models such as the Malcolm Baldrige National Quality Awards, European Federation of Quality Management (EFQM), organisational improvement initiatives such as Total Quality Management (TQM), Lean, and Just In Time (JIT) manufacturing. Anomalies in Australian industries have led to the suggestion that the current EFQM model should include Agility as an additional enabling factor. Many researchers have examined concepts such as supply chain agility, manufacturing agility, and network agility with respect to organisational performance. This dissertation examined the relationship between Organisational Agility and Performance as defined by the EFQM. A theoretical construct for agility was developed based on existing literature and Performance from the EFQM assessment questions. This model was tested using Partial Least Squares Structural Equation Modelling. Data was obtained via telephone surveys from COO's and CFO's of 150 small to medium sized (50 to 250 employees) Australian firms. The results demonstrated that Organisational Agility is a second order formative construct comprised of flexibility, responsiveness, competency, speed, competition, market conditions and regulations, and technology. The research also confirmed that organisational agility has a positive impact to a firm's performance as measured by EFQM's financial, customer, process, and supplier results. These results contribute to high performance theories and business excellence models suggesting that firms seeking to become more competitive should include organisational agility capabilities in conjunction with the established EFQM enablers.