Employment relationships as drivers of firm flexibility and learning

Purpose - This paper seeks to analyse whether the firm model of employment relationships is associated with functional flexibility and organisational learning (exploratory versus exploitative). It also aims to assess the mediating effect of functional flexibility in the relationship between a specific employment mode (mutual investment) and organisational learning. Design/methodology/approach - This research was conducted using a sample of Spanish companies in the food industry, from which data from FIR managers and production managers in each firm were collected. Cluster analyses, MANOVA and regression analyses were applied to test the hypotheses. Findings - The results suggest that those firms developing a mutual investment employment relationship outperform other firms in terms of functional flexibility and organisational learning (both exploitative and exploratory learning). The paper also finds a mediating effect of one dimension of functional flexibility (range-number of activities) between mutual investment and exploitative learning. Research limitations/implications - The principal limitation of this paper is the cross-sectional study design, because the dynamic character of learning would require a longitudinal study design. The main research implications are derived from the combination of employment relationships, variety of dimensions of flexibility and learning, and identification of a model of direct and mediating effects among variables. Practical implications - The results of this paper suggest that a model of employment relationships (mutual investment) favours not only functional flexibility but also ambidextrous learning. Thus, the findings not only provide a broader understanding of the variables associated with FIRM, employment relationships and/or flexibility, but also reinforce the strategic role of FIRM through its contribution to the development of such a relevant organisational capability that learning represents. Originality/value - The paper combined a series of variables that previous studies have rarely treated in combination: employment relationships, functional flexibility and exploitative versus exploratory learning. This paper also discusses different dimensions of functional flexibility (range-number of activities, heterogeneity, mobility, and uniformity), demonstrating the association of some of these dimensions with exploratory or exploitative learning.