Implementing labor flexibility: A missing link between acquired labor flexibility and plant performance

The existing studies conceptualize a direct relationship between acquired labor flexibility and plant performance, producing inconsistent empirical results, which makes the topic ripe for further inquiry. We believe acquiring labor flexibility is not sufficient; its implementation is an important intervening step when companies have to tackle accompanying technical and behavioral side effects of labor flexibility. In this paper, we develop and test a theoretical model in which we introduce an intervening variable to capture the implementation of labor flexibility. In addition, evolving human resource management practices that promote acquisition of labor flexibility are also examined in our model. Case studies in ten printed circuit board plants validated our model. Subsequently, survey data collected from 74 PCB plants was analyzed using Partial Least Squares method. Supporting the proposed model, the results show that the impact of acquired labor flexibility on plant performance is not direct but experienced through the sophistication of labor flexibility implementation exercised by the plant. Our findings also suggested that plants that emphasized process‐focused training, provided greater job‐rotation training, and designed positive reward structures, acquired higher labor flexibility.