Differences in adaptations between service and manufacturing firms

This paper studies the differences in adaptation to the environment of service, mixed, and manufacturing companies. Adaptations are contingent on the characteristics of the environment and technology. By them, companies try to manage environmental uncertainties. The latter are subjectively perceived amplifications of small scale multi-level, lagged, nested, and nonlinear changes. Companies intend to manage perceived environmental uncertainties. They facilitate adaptations that either reduce environmental uncertainties or make an efficient reaction to unexpected external developments possible. First type of adaptations is explained by resource dependence theory transaction-cost economics: the second one is explained by contingency theory. Strategic choice theory incorporates both types of adaptations. On the grounds of those four theoretical perspectives, we constructed a research model of organizational adaptations to environmental change. The focus is on exploration of differences in adaptations among service, mixed, and manufacturing companies. Organizational adaptations are studied from internal as well as external perspective. Research is based on a survey conducted on the sample of 236 medium and large companies in the period 2000–2005 in Slovenia. Findings confirmed that companies with different technology adapt differently. Mixed companies adapt mainly through external relationships, manufacturing companies adapt mainly internally, while service companies use both types of adaptations in congruent proportions. Adaptations of mixed companies are best explained by resource dependence theory, adaptations of manufacturing companies by environmental contingency theory, and adaptations of service companies are best explained by strategic choice theory.