IDEAS home Printed from https://ideas.repec.org/a/taf/ijecbs/v13y2006i3p429-446.html
   My bibliography  Save this article

Cost Flexibility and Firm Size: An Application to Spanish Manufacturing

Author

Listed:
  • Nuria Villalba Villalba

Abstract

This paper examines the relationship between flexibility and the size of establishments for Spanish manufacturing industry. This relationship is examined using the Encuesta Industrial, an annual survey which provides manufacturing sectorial information for six size categories over the period 1980-92. The theoretical framework is that proposed by Mills and Schumann (1985), finding in the evidence related to technological flexibility and demand fluctuations a greater capacity of small firms to adapt to environmental changes, allowing them, in addition, to resist competition based on costs, such as that stemming from scale economies. The results emerging from the estimations confirm that small establishments show greater production variability, employment variability and profit variability than large establishments. That is to say, small establishments are more flexible than large ones due to their greater capacity to absorb demand fluctuations.

Suggested Citation

  • Nuria Villalba Villalba, 2006. "Cost Flexibility and Firm Size: An Application to Spanish Manufacturing," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(3), pages 429-446.
    • Handle: RePEc:taf:ijecbs:v:13:y:2006:i:3:p:429-446
    DOI: 10.1080/13571510600961460
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/10.1080/13571510600961460
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13571510600961460?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mills, David E & Schumann, Laurence, 1985. "Industry Structure with Fluctuating Demand," American Economic Review, American Economic Association, vol. 75(4), pages 758-767, September.
    2. Taymaz, Erol, 1991. "Flexible automation in the U.S. engineering industries," International Journal of Industrial Organization, Elsevier, vol. 9(4), pages 557-572, December.
    3. Sheshinski, Eytan & Dreze, Jacques H, 1976. "Demand Fluctuations, Capacity Utilization, and Costs," American Economic Review, American Economic Association, vol. 66(5), pages 731-742, December.
    4. White, Lawrence J, 1982. "The Determinants of the Relative Importance of Small Business," The Review of Economics and Statistics, MIT Press, vol. 64(1), pages 42-49, February.
    5. Levy, Margi & Powell, Philip, 1998. "SME Flexibility and the Role of Information Systems," Small Business Economics, Springer, vol. 11(2), pages 183-196, September.
    6. George Stigler, 1939. "Production and Distribution in the Short Run," Journal of Political Economy, University of Chicago Press, vol. 47(3), pages 305-305.
    7. Mills, David E, 1984. "Demand Fluctuations and Endogenous Firm Flexibility," Journal of Industrial Economics, Wiley Blackwell, vol. 33(1), pages 55-71, September.
    8. Francisco Javier Velázquez Angona, 1993. "Economías de escala y tamaños óptimos en la industria española (1980-1986)," Investigaciones Economicas, Fundación SEPI, vol. 17(3), pages 507-525, September.
    9. Zimmermann, Klaus F., 1995. "Flexibility in the face of demand fluctuations: Employment, capacity utilization, and industry structure," International Journal of Industrial Organization, Elsevier, vol. 13(2), pages 179-193.
    10. Donald Gerwin, 1993. "Manufacturing Flexibility: A Strategic Perspective," Management Science, INFORMS, vol. 39(4), pages 395-410, April.
    11. Carrie, A. S. & Macintosh, R. & Scott, A. & Peoples, G. A., 1994. "Linking strategy to production management structures and systems," International Journal of Production Economics, Elsevier, vol. 34(3), pages 293-304, June.
    12. Carlsson, Bo, 1989. "Flexibility and the theory of the firm," International Journal of Industrial Organization, Elsevier, vol. 7(2), pages 179-203, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zimmermann, Klaus F., 1995. "Flexibility in the face of demand fluctuations: Employment, capacity utilization, and industry structure," International Journal of Industrial Organization, Elsevier, vol. 13(2), pages 179-193.
    2. Swetlana Renner & Thomas Glauben & Heinrich Hockmann, 2014. "Measurement and decomposition of flexibility of multi-output firms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 41(5), pages 745-773.
    3. Manu Goyal & Serguei Netessine, 2011. "Volume Flexibility, Product Flexibility, or Both: The Role of Demand Correlation and Product Substitution," Manufacturing & Service Operations Management, INFORMS, vol. 13(2), pages 180-193, March.
    4. Bruun, Madalene C. & Adelaja, Adesoji O., 1990. "Economies Of Scale And Output Flexibility In Northeastern U.S. Dairy," 1990 Annual meeting, August 5-8, Vancouver, Canada 270871, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Renner, Swetlana & Pieniadz, Agata, 2008. "Conceptualisation of family farms’ flexibility," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44126, European Association of Agricultural Economists.
    6. Yang, Liu & Wang, Yonggui & Ma, Jun & Ng, Chi To & Cheng, T.C.E., 2014. "Technology investment under flexible capacity strategy with demand uncertainty," International Journal of Production Economics, Elsevier, vol. 154(C), pages 190-197.
    7. Fluet, Claude & Phaneuf, Louis, 1997. "Price adjustment costs and the effect of endogenous technique on price stickiness," European Economic Review, Elsevier, vol. 41(2), pages 245-257, February.
    8. Swetlana Renner & Thomas Glauben & Heinrich Hockmann & Pierre Ouellette, 2015. "Primal and dual multi-output flexibility measures," Journal of Productivity Analysis, Springer, vol. 44(2), pages 127-136, October.
    9. De Toni, Alberto & Tonchia, Stefano, 2005. "Definitions and linkages between operational and strategic flexibilities," Omega, Elsevier, vol. 33(6), pages 525-540, December.
    10. Guven Sak & Erol Taymaz, 2004. "How Flexible are Small Firms? An Analysis on the Determinants of Flexibility," Working Papers 0416, Economic Research Forum, revised Aug 2004.
    11. Weiss, Christoph R., 2001. "On flexibility," Journal of Economic Behavior & Organization, Elsevier, vol. 46(3), pages 347-356, November.
      • Weiss, Christoph R. & Briglauer, Wolfgang, 2000. "On flexibility," FE Working Papers 0003, Christian-Albrechts-University of Kiel, Department of Food Economics and Consumption Studies.
    12. Vivek Anand Asokan & Masaru Yarime & Miguel Esteban, 2017. "Introducing Flexibility to Complex, Resilient Socio-Ecological Systems: A Comparative Analysis of Economics, Flexible Manufacturing Systems, Evolutionary Biology, and Supply Chain Management," Sustainability, MDPI, vol. 9(7), pages 1-17, June.
    13. Bernadette Power & Gavin C Reid, 2003. "Turbulence, Flexibility and Performance of the Long-lived Small Firm," Tinbergen Institute Discussion Papers 03-039/3, Tinbergen Institute.
    14. Yang, L. & Ng, C.T. & Cheng, T.C.E., 2011. "Optimal production strategy under demand fluctuations: Technology versus capacity," European Journal of Operational Research, Elsevier, vol. 214(2), pages 393-402, October.
    15. Antoci, A. & Sacco, P.L. & Scarpa, C., 2005. "Flexibility choices and oligopolistic competition in an evolutionary environment," Journal of Economic Dynamics and Control, Elsevier, vol. 29(10), pages 1643-1671, October.
    16. Dhawan, Rajeev, 2001. "Firm size and productivity differential: theory and evidence from a panel of US firms," Journal of Economic Behavior & Organization, Elsevier, vol. 44(3), pages 269-293, March.
    17. repec:zbw:iamost:199947 is not listed on IDEAS
    18. Yanmin Jiang & Rui-Na Fan, 2022. "Capacity Investment and Process Efficiency at Flexible Firms," Mathematics, MDPI, vol. 10(10), pages 1-17, May.
    19. Waka Cheung & Yew-Kwang Ng, 2007. "Duality in an Industry with Fluctuating Demand," Annals of Economics and Finance, Society for AEF, vol. 8(2), pages 229-250, November.
    20. Sophie Lecostey, 1992. "Incertitude, concurrence entre grandes et petites firmes et altération de la relation structure-performance," Économie et Prévision, Programme National Persée, vol. 102(1), pages 11-25.
    21. Renner, Swetlana, 2014. "Flexibilität von Unternehmen: Eine theoretische und empirische Analyse," Studies on the Agricultural and Food Sector in Transition Economies 199947, Institute of Agricultural Development in Transition Economies (IAMO).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ijecbs:v:13:y:2006:i:3:p:429-446. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CIJB20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.