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3 Inter-Firm Responses to Heterogeneity of Demand over Time
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Published:June 1997
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Abstract
This chapter examines the effects of heterogeneity of demand over time on modes of economic co-ordination in organizational markets. Departing from a discussion of different sources of heterogeneity of demand, the objective of the chapter is set in terms of examining the intra-and inter-organizational effects of coping strategies or response modes to short-term heterogeneity of demand over time. This perspective is contrasted with traditional approaches to the discontinuity-flexibility debate as in the manufacturing flexibility and strategy, and organizational change literatures. The discussion of firms’ responses to heterogeneity of demand over time is organized under a framework provided by the flow through nodes model of change in industrial networks. Six categories of response—selection, reflection, adaptation, absorption, transmission, and configuration—are discussed in turn and implications derived for modes of economic coordination. In particular, we argue that the transmission and configuration response modes are more likely to give rise to the formation of inter¬organizational networks, whilst other response modes tend to rely on either intra-firm or market mechanisms to deal with heterogeneity of demand over time.
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