Abstract:To reveal how failure-tolerant cultures affect manufacturing firms’ organizational agility. Drawing on organizational design theory, this study investigates the antecedents of opportunity identification, the contingency effects of policy support, and the mechanism between failure-tolerant cultures and organizational agility. Survey data from 206 manufacturing firms in Guangdong province shows that failure-tolerant cultures have positive effects on opportunity identification. Policy supports positively moderate failure-tolerant cultures effects on opportunity identification. Opportunity identification has positive effects on both operational adjustment and market capitalizing agility. Opportunity identification mediates the effects of failure-tolerant cultures on both operational adjustment and market capitalizing agility. Consequently, manufacturing firms should strive to cultivate failure-tolerant cultures, keep an eye on policy support in their dominant industry, and make full use of the positive effects of opportunity identification on both operational adjustment and market capitalization agility.