Organizational flexibility and project portfolio performance: the roles of innovation, absorptive capacity and environmental dynamism

The aim of the current study is to empirically assess the effects of organizational flexibility on project portfolio (PP) performance, with the mediating role of innovation and moderating effects of environmental dynamism (ED) and absorptive capability (AC).

Data were collected from 173 manufacturing firms and analyzed using structural equation modeling (SEM) with the help of a partial least squares (PLS) approach.

Results show that innovation partially mediates the relationship between organizational flexibility and PP performance. Furthermore, the moderating effect of ED between organizational flexibility and innovation was analyzed. Additionally, AC also observed as a moderator between innovation and PP performance.

Based on the resource-based view, this study contributes to the literature by addressing the roles of innovation, ED and AC in the relationship between organizational flexibility and PP performance. Implications for managers also discussed in the end; for example, to be more competitive, they should incorporate flexibility into the firm to encourage innovation. It also emphasizes to select new innovative opportunities that correspondingly have effects on the PP performance.