Abstract: Purpose: The purpose of this paper is to empirically test a research model exploring the complex links between internal and external manufacturing flexibility capabilities (IF and EF) and competitive advantage (CA). Design/methodology/approach: A survey approach with responses from 266 Spanish manufacturing firms from different industries was used. Structural equation modelling and SPSS macro PROCESS were used to test the hypotheses. Findings: Manufacturing flexibility (MF) is a dual-dimensional concept composed by IF and EF, which are complementary and hierarchical in its development. Contrary to previous assumptions, IF does not always express its final competitive effect through EF, which only partially mediates the IF?CA relationship. Thus, IF and EF independently can positively enhance a firm's CA, being the direct effect of the IF being stronger than EF. Practical implications: This study offers practical insights supporting a guide for prioritising flexibility capabilities through the holistic MF implementation, thus assisting managers wishing to formulate MF strategies seeking efficiency and customer value advantages relative to competitors. Originality/value: The main novelty of this work is to explore for the first time the direct and indirect role of IF on CA, enlarging the assumptions of the flexibility funnel framework (FFF) and the strategic view of MF. The study is also unique due to both the depth and breadth of the investigation of the basis of the use of resource-based theory (RBT) and by employing a recent and comprehensive MF conceptual systematisation to guide the measurement approach.

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