The purpose of this paper is to investigate the impact of behaviour-based and buffer-based management mechanisms on enterprise agility using the lens of the agency theory.
This study is based on data collected from 185 manufacturing enterprises using a survey instrument. The authors employ structural equation modelling for data analysis.
The results of this study show that buffer-based mechanisms used for dealing with agency uncertainty of supplier/buyer not only have a positive impact on agility of enterprises, but are also contingent on the behavioural interventions used in the relationship with a supplier/buyer. Behaviour-based mechanisms also positively impact enterprise agility through mitigating the likelihood of supplier/buyer opportunism.
This study demonstrates that buffer- and behaviour-based management mechanisms can be used as complementary approaches against agency uncertainties for enhancing enterprise agility. Therefore, for enterprises to boost their agility, it is vital that their resources and capabilities are fairly distributed across entities responsible for creating buffers through functional flexibility, as well as individuals and teams dealing with stakeholder engagement, in particular, suppliers and buyers.
The authors use the lens of the agency theory to assimilate and model characteristic agency uncertainties and management mechanisms that enhance enterprise agility.