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Strategic
Bottom-up learning, strategic flexibility and
flexibility and strategic change strategic
change
Yaqun Yi, Meng Gu and Zelong Wei
School of Management, Xi’an Jiaotong University, Xi’an, China
161
Abstract
Purpose – How do firms make effective strategic change when competitive advantage deteriorates fast in a
dynamic environment? Based on information-processing theory and organizational inertia theory, the
purpose of this paper is to investigate how bottom-up learning affects the speed and magnitude of strategic
change and if these relationships are contingent on strategic flexibility.
Design/methodology/approach – Using data of 213 firms in China, the authors conduct an empirical test
of hypotheses through a stepwise multivariate regression approach.
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Findings – The empirical study suggests that resource flexibility weakens the positive relationship between
bottom-up learning and the speed of strategic change while strengthens the impact of bottom-up learning on
the magnitude of strategic change. In addition, coordination flexibility strengthens the positive impact of
bottom-up learning on the speed and magnitude of strategic change.
Originality/value – The findings not only provide a more nuanced and in-depth understanding of strategic
change, but also offer strong guidance for firms on how to make better use of strategic flexibility in order to
benefit from bottom-up learning.
Keywords Organizational inertia, Strategic change, Strategic flexibility, Bottom-up learning
Paper type Research paper
Introduction
In the past few decades, digital technologies (e.g. peer-to-peer network, virtualization, cloud
computing) have reshaped traditional business environment to a more complex and
dynamic digital ecosystem (Bharadwaj et al., 2013; Kane, 2016; Pagani, 2013). Digital
technologies are making the traditional competitive advantage deteriorate rapidly by
breaking down industry barriers, destroying long-successful business models and changing
the ways to learn (Bharadwaj et al., 2013; Rometty, 2016; Weill and Woerner, 2015).
Therefore, to thrive in an increasingly digital ecosystem, firms are urged to make fast and
effective strategic change. The efforts to address the issue have dominated existing studies
(Bruch et al., 2005; Hawk et al., 2013; Kraatz and Zajac, 2001). The extensive literature has
emerged from two perspectives: content and process. The former focuses on changes in the
content of strategy while the later emphasizes strategic change process (e.g. speed and
magnitude) (Rajagopalan and Spreitzer, 1997).
The process perspective has endeavored to explore the ways of top manager’s
sensegiving, middle managers’ sensemaking and senseselling (Fiss and Zajac, 2006;
Gioia and Chittipeddi, 1991; Lüscher and Lewis, 2008; Rouleau, 2005; Sharma and Good,
2013) under the assumption that strategic change is a top-down learning process. From this
perspective, strategic change is initiated by top managers, then relayed to middle managers
and ultimately cascaded down to employees (Brady and Walsh, 2007; Cronin, 2014;
Kim et al., 2014; Ward and Duray, 2000). However, the increasing complexity in an open
environment makes it more difficult for the top managers to collect enough information for
strategic change. Furthermore, in top-down hierarchical learning process, top managers’
strategic intent is often not totally and accurately grasped by middle managers because
of information asymmetry (Balogun and Johnson, 2004; Gioia and Chittipeddi, 1991; Journal of Organizational Change
Management
Vol. 30 No. 2, 2017
The authors would like to thank Professor Slawomir Magala and two anonymous reviewers for their pp. 161-183
constructive comments and suggestions on an earlier version of this paper and National Natural © Emerald Publishing Limited
0953-4814
Science Foundation of China (No. 71272135, No. 71672142 and No. 71572142) for financial support. DOI 10.1108/JOCM-12-2015-0241
JOCM Lüscher and Lewis, 2008), and is not well implemented by the employees due to nonlocality.
30,2 Therefore, the final strategic change may deviate from the previous one and the total time of
strategic change will be prolonged.
The increasing openness starts to challenge the traditional perspective and an alternative
bottom-up approach that relies on bottom-up learning has attracted more research attention
(Barnes, 2002; Kim et al., 2014; Slack and Lewis, 2011; Swamidass et al., 2001; Wei et al., 2011).
162 Bottom-up learning refers to the process that lower-level employees gather information and
express their opinions to top managers for strategic decision (Wei et al., 2011). Unfortunately,
the existing literature on strategic change offers little insight into how bottom-up learning
affects strategic change (e.g. speed and magnitude).
Furthermore, existing literature have conflicting views on the impact of bottom-up
learning on strategic change. Studies stemming from information-processing theory suggest
that bottom-up learning is beneficial for top managers to gather divergent information
needed in the new strategy, including technological evolution, customer demands, market
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competition and so on (Alexiev et al., 2010; Beer et al., 1990; Mom et al., 2007). Conversely, the
studies based on organizational inertia believe that new information derived from
bottom-up learning may conflict with existing processes, politics and procedures
(Gilbert, 2005; Hannan and Freeman, 1984).
To address the conflicts, we argue that the impact of bottom-up learning on strategic
change depends on the speed and magnitude. Furthermore, the effects of bottom-up learning
are contingent on strategic flexibility (Sanchez, 1995, 1997), a type of dynamic capability
that enables firms to reallocate and reconfigure their resource and processes (Baldwin, 1959;
Gilbert, 2005; Li et al., 2011; Minbaeva et al., 2003).
We find that bottom-up learning has an increasingly positive impact on the speed of
strategic change, but an inverted U-shaped effect on the magnitude of strategic change.
Additionally, our results show that the relationship between bottom-up learning and the
speed of strategic change is weakened by resource flexibility, whereas strengthened by
coordination flexibility; the inverted U-shaped linkage of bottom-up learning on the
magnitude of strategic change is positively moderated by both resource flexibility and
coordination flexibility.
Our study has three contributions. First, according to the characteristics reflected in the
process of changing strategy, this study simultaneously examines the antecedents of two
dimensions of strategic change: the speed and the magnitude, which contributes to current
empirical research on strategic change and deepens our understanding of the speed and
magnitude of strategic change. Second, based on organizational learning theory, this paper
adds the importance of bottom-up learning to the studies that explore the influence factors
of strategic change, responding to the latest requirements of Kim et al. (2014). Third, our
result suggests that the effect of bottom-up learning is contingent on strategic flexibility.
The findings show that two kinds of strategic flexibility differentially moderate the main
effects. In essence, this study provides a more nuanced and deeper understanding on the
factors that determines strategic change speed and magnitude within a complex and
dynamic environment.
Theoretical background
Strategic change speed and magnitude
Strategic change, through which firms can survive and succeed by adjusting strategic
directions, necessary resources and capabilities in a fast-paced environment, has long been
considered as an important field of strategic management (MacKay and Chia, 2013;
Rajagopalan and Spreitzer, 1997). Recently, more scholars of process perspective
have begun to explore the phenomenon of strategic change from a dynamic process
perspective (Feldman, 2004; Tsoukas and Chia, 2002; Zhou et al., 2006), in which the speed
of strategic change (Gersick, 1994; Kelly and Amburgey, 1991; Li et al., 2011; Murray and Strategic
Richardson, 2003) and the magnitude of strategic change (Boeker, 1997; Cho and flexibility and
Hambrick, 2006; Golden and Zajac, 2001; Zajac et al., 2000) are two important characteristics strategic
that play a crucial role in an organization.
On the one hand, the speed of strategic change indicates the length of time spent on the change
process of strategic change (Gersick, 1994). Scholars have found that speed is a powerful
factor for firms to gain competitive advantage (Baum and Wally, 2003; Eisenhardt, 1989; 163
Smith et al., 1989; Stalk and Hout, 1990; Yi et al., 2015). For example, Eisenhardt (1989) indicated
that quick strategic decision making achieves better firm performance, especially in a dynamic
environment. That is mainly because firms with higher speed of strategic change may rapidly
respond to the competitive rivalry’s actions (Bourgeois and Eisenhardt, 1988; Souitaris and
Maestro, 2010), gain first-mover advantages by introducing new products, technologies and
business models (Makadok, 1998) and exploit strategic opportunities before their disappearance
(D’Aveni et al., 2010). Consequently, the speed of strategic change becomes a critical contributor
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to the firm performance (Kim and McIntosh, 1999; Kraatz and Zajac, 2001).
On the other hand, the magnitude of strategic change indicates the business scope of
strategic change (Cho and Hambrick, 2006; Wu et al., 2011). With a reasonable scope
of strategic change, firms can be flexible to adjust their strategy by increasing their
accommodation to the environment and reducing business risks in the process of decision
making (Zajac et al., 2000). Previous research has asserted that not all large-scale change
projects can succeed, and some of them may induce unintended consequences to
organizational performance (Farias and Johnson, 2000; Stensaker et al., 2001). Thus, the
magnitude of strategic change also has important performance implications (Scifres, 1994).
Because of the significant performance implications, how firms can change their strategy
quickly and adaptively becomes a relevant issue which is worth investigation.
strategic change more effectively. At the same time, increasing levels of new information
obtained from bottom-up learning also need to match existing organizational resources and
capabilities so the new strategy can work better. Therefore, strategic flexibility may
moderate the impact of bottom-up learning on strategic change. Based on above
discussions, we have developed a conceptual framework as shown in Figure 1.
Hypotheses
Bottom-up learning and strategic change
Bottom-up learning focuses on executives’ knowledge integration behavior through
communication with lower-level employees (McDonald and Westphal, 2003; Mom et al., 2007;
Wei et al., 2011). In response to dynamic environment, top managers play a unique role in
making strategic decisions. However, they also face increasing challenges in identifying
opportunities of customers, technology and environment unless they closely contact with
employees who have detail information about internal and external stakeholders and customers
(Castanias and Helfat, 2001; Tushman and O’Reilly, 1996).
We argue that bottom-up learning increases the speed of strategic change for
several reasons. First, bottom-up learning is beneficial to hierarchical communication
and work efficiency. As the level of bottom-up learning increases, top managers may
acquire extensive real-time information and knowledge about technology trends, customer
demand and competition changes through informal or formal approaches. In this case,
more real-time information can extend top managers’ understanding of particular
Resource flexibility
Speed of
strategic change
Bottom-up
learning
Magnitude of
strategic change
Figure 1.
Conceptual model Coordination flexibility
industrial environment, which can lead to quick formulation of new strategy to adapt to Strategic
dynamic environment (Eisenhardt, 1989; Gilbert, 2005). flexibility and
Second, the positive impact of bottom-up learning on the speed of strategic strategic
change occurs because it promotes communication between different levels.
Communication may relieve employees’ and even middle managers’ anxiety, suspense change
and defensiveness raised by strategic change (Huy, 2002; Lüscher and Lewis, 2008),
improve the implementation efficiency of strategic change, and thus shorten the time of 165
implementing strategic change.
Third, bottom-up learning can promote employees’ sense of participation, which can
mitigate the employees’ negative resistance to new strategy due to lack of understanding,
and promote the quick implementation of new strategy. This argument is consistent with
the current research which suggests that bottom-up learning can help firms to move quickly
toward new opportunities (Birkinshaw and Gibson, 2004; Wei et al., 2011) and to accelerate
strategic change.
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In addition, the speed of strategic change can be accelerated by the increasing level of
bottom-up learning. First, bottom-up learning may be internalized as a new process due to
its positive impact, which can help managers code and better understand the relevant
information in certain ways (Wei et al., 2011), so the communication between executives and
employees may become more effective. The more effective of communication, the faster the
real-time information/knowledge about internal and external changes can be transferred to
top managers, which will lead to faster strategic change.
Second, the positive impact of bottom-up learning on the speed of strategic change may
enhance and reinforce the managerial capabilities of information/knowledge assimilation,
absorption and integration. Improved managerial capabilities, in return, can promote top
managers’ understanding of markets shift, provide insights into new opportunities for
strategic development and thus facilitate strategic change. Then, the self-reinforcing nature
can make the firms rely more on bottom-up learning to collect information of environmental
changes and foster the speed of strategic change.
Therefore, we propose that:
H1a. Bottom-up learning has an increasingly positive relationship with the speed of
strategic change.
Different from speed of strategic change, magnitude of strategic change emphasizes the
change of business scope, which is promoted by more heterogeneous information and
information exchanges (Bharadwaj et al., 2013; Lavie, 2006; Simons, 2012). Bottom-up
learning may increase magnitude of strategic change for three reasons. First, bottom-up
learning increases employees’ sense of participation. It encourages employees to discover
misalignments among existing products, services, technologies and environment. Therefore,
bottom-up learning can promote employees to collect useful information and formulate
incremental changes in production design, administration and operational processes (Brady
and Davies, 2004; Fuentes-Henríquez and Del Sol, 2012). For instance, employees engaged in
after-sales maintenance may hold the most specific information about the customers’
complaints about product and technology, and then they can give advice on how to change
existing products, technology and services.
Second, bottom-up learning may create an open atmosphere for employees to share new
ideas generated from emerging changes in product/technology development, competition
trends and also customer demands (Brady and Davies, 2004; Branzei et al., 2004; Floyd and
Lane, 2000). Subsequently, equipped with new ideas and rich information gathered from
employees, top managers are willing to initiate strategic changes in different ways, such as
developing new products, investing in new technologies and exploring new markets, which
means higher magnitude of strategic change (Gilbert, 2005; Lavie, 2006).
JOCM Third, bottom-up learning may trigger top managers to revise their cognition of
30,2 environmental trends by adding new knowledge to executives’ existing knowledge base
(Mom et al., 2007; Pettigrew, 1987). By revising current beliefs and cognitive structure, top
managers may develop and experiment with various new solutions to solve emerging issues
(Bartlett and Ghoshal, 1993; Floyd and Lane, 2000; Kimberly, 1979; Quinn, 1985), which
yields high-magnitude strategic change. As a result, top managers with a higher level of
166 bottom-up learning tend to undertake proactive and aggressive approaches to respond to
environmental changes (Atuahene-Gima and Ko, 2001), which apparently increases the
magnitude of strategic change.
However, the positive effect of bottom-up learning may decline when bottom-up learning
is too high. Over bottom-up learning will increase the difficulties of integrating diversity of
information (Katila and Ahuja, 2002; Wei et al., 2011). With the same phenomenon or
environmental change, employees with different traits may offer heterogeneous views or
ideas. In order to integrate these diverse views, firms have to input much resource and cost,
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which increases investment risk and hinders high magnitude of strategic change.
In addition, employees are often specialists in specific fields, who are alert to
opportunities in their own fields and tend to search locally. This characteristic may often
make them miss information and opportunities about change far from their expertise,
leading to more incremental improvements and less strategic change (Gilbert, 2005;
Kang and Snell, 2009). Furthermore, employees often lack strategic foresights, which causes
difficulties of acutely predicting or exploring the potential opportunities (Wei et al., 2011).
Therefore, too high level of bottom-up learning may induce lower magnitude of strategic
change. Therefore, we propose that:
H1b. Bottom-up learning has an inverted U-shaped relationship with the magnitude of
strategic change.
Methodology
Sample and data collection
To test the hypotheses, we collected data through an interview survey and selected a broad
scope of industries and regions in China, including the Pearl River Delta located in south, the
Yangtze River Delta in east, the Bohai Economic Rim in north and the Northwest Inland Strategic
Regional Economic Zone in mid-west, to reduce system error caused by difference in flexibility and
economy and culture. The sample companies were randomly selected out of a list of strategic
registered corporations provided by the Economy Commerce Committee of local
governments, a special Chinese Governmental administrative department to manage firms. change
We first designed an English version of the questionnaire based on several previous
studies about organizational learning, strategic flexibility and strategic change. 169
Subsequently, four bilingual experts translated the questionnaire into Chinese, and then
a third-party Chinese-English translation was conducted to ensure the accuracy of
translation (Brislin, 1970). Next, a pilot test was conducted with ten firms. During the
process, pre-testers thoroughly explained each item and the instructions of the
questionnaire to respondents to make them understand every question accurately.
The respondents were top managers who were knowledgeable with accurate information
about their strategic management practice. Then, the data collection was initiated on site.
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At the end, a total of 650 firms were approached and 232 firms participated. Because of
missing data, our final sample includes 213 firms, which represents a response rate of
32.77 percent. Our sample profile is shown in Table I. To check for non-response bias, we
compared the responding and non-responding firms from the aspects of firm size,
ownership status, sales and age by t-tests. All t-statistics were insignificant, which
indicates a low possibility of non-response bias.
Measures
In Table II, we provide the measurement items and their validity assessments, of
which almost all measures were adapted from the extant literature and some items
were modified to reflect the specific context of the study. All items were answered on a five-
point Likert scale.
Location
Yangtze River Delta 46 21.60
Pearl River Delta 31 14.55
Bohai Economic Rim 59 27.70
Mid-west inland areas 77 36.15
Ownership
State owned 55 25.82
Private owned 96 45.07
Collectively owned 24 11.27
Foreign owned 38 17.84
Industry type
Non high-tech manufacturing industry 94 44.13
High-tech manufacturing industry 56 26.29
Real estate industry 23 10.80
Service and other industries 40 18.78
Firm size (number of employees)
o100 60 28.16
100-200 28 13.15
200-400 19 8.92
W400 97 45.54 Table I.
Missing 9 4.23 Sample profile
JOCM Variables Items Loading α
30,2
The speed of strategic change (Kim and We design strategic plans very quickly 0.86 0.87
McIntosh, 1996; Kraatz and Zajac, 2001) We implement strategic plans very quickly 0.90
Our top managers agree with each other very
quickly on design and implementation of new
strategies 0.86
170 Our employees accept firms’ new strategies or
strategic adjustments very quickly 0.78
The magnitude of strategic change We diversifying our product and/or service
(Golden and Zajac, 2001; Barker and continuously 0.86 0.80
Duhaime, 1997) We continue to work on the market promotion of
new product/service 0.90
We continue to expand our scope of business 0.77
Bottom-up learning (McDonald and Top managers and employees directly share
Westphal, 2003; Mom et al., 2007; various information through communication 0.71 0.79
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founded and firm size is measured by calculating the natural logarithm of annual revenues
(Cao et al., 2009). Additionally, we also control organizational slack, competitive intensity and
organizational formalization, whose significant roles have been proved (Auh and Menguc, 2005;
Pacheco-de-Almeida et al., 2013; Voss et al., 2008; Wei et al., 2011). The organizational slack is
measured by asking the respondent to indicate the extent to which the firm can provide enough
financial resources on a one-to-five Likert scale. Competitive intensity is measured by asking the
respondent to indicate the intensity of the price competition. Organizational formalization is
measured by a one-to-five Likert scale which reflects the extent to which organizational rules,
job description, procedures and communications are formalized or written down. Non-high-tech
manufacturing industry, high-tech manufacturing industry and real estate industry are dummy
variables (“1” ¼ presence; “0” ¼ absence).
30,2
172
JOCM
Table III.
Descriptive statistics
and correlation matrix
Variables Mean SD 1 2 3 4 5 6 7 8 9 10 11 12 13
Results
In Table III, we present the descriptive statistics and correlations of the variables in the
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regression analysis. No inter-factor correlations are above the 0.65 threshold, suggesting
that our estimations are not likely to be biased by multi-collinearity problems in accordance
with the standards proposed by Tabachnick and Fidell (1996).
Following recommendations by Aiken and West (1991), we first mean-centered each
scale that constitutes an interaction term and created the interaction terms by multiplying
the relevant mean-centered scales to deal with possible multi-collinearity in equations before
analysis (Aiken and West, 1991).
Then, in order to test our hypothesis, we adopted a stepwise multivariate regression
approach to assess the explanatory power of each set of variables (Aiken and West, 1991;
Baron and Kenny, 1986). Table IV presents the steps performed and the results of each step.
Model 1 contains only the control variables and the subsequent models add the main and
moderating effects. To test the impact of bottom-up learning on the speed of strategic
change, we ran Model 2 and Model 3. Our study added the bottom-up learning dimension in
Model 2 and then the square of bottom-up learning dimension in Model 3. As shown in
Model 3, bottom-up learning and bottom-up learning square are both positively related to
the speed of strategic change ( β ¼ 0.432, p o0.001; β ¼ 0.273, p o0.001). Therefore,
bottom-up learning has an increasingly positive relationship with the speed of strategic
change, which supports H1a. To test the impact of bottom-up learning on the magnitude of
strategic change, we ran Model 6 and Model 7 in the same way. In Model 7, bottom-up
learning positively relates to the magnitude of strategic change ( β ¼ 0.228, p o0.001), while
bottom-up learning square negatively relates to the magnitude of strategic change
( β ¼ −0.170, p o0.01). Hence, bottom-up learning has an inverted U-shaped effect on the
magnitude of strategic change, which supports H1b.
Furthermore, to test the moderating effect of strategic flexibility on the effect of bottom-
up learning, we ran Model 4 and Model 8, respectively. Model 4 shows that the interaction
between resource flexibility and bottom-up learning is positive ( β ¼ 0.102, p o0.1), while the
interaction between resource flexibility and bottom-up learning square is negative
( β ¼ −0.162, p o0.01), which confirms the prediction of H2a. Meanwhile, the interaction of
coordination flexibility with bottom-up learning square is positive ( β ¼ 0.399, p o0.001),
and then H3a is supported. Model 8 shows that the interaction of resource flexibility with
bottom-up learning is significantly negative ( β ¼ −0.301, p o0.001), whereas the interaction
of resource flexibility with bottom-up learning square is significantly positive ( β ¼ 0.231,
p o0.001), which supports both H2b and H2c. The interactions of coordination flexibility
with bottom-up learning and bottom-up learning square are positive ( β ¼ 0.330, po 0.001;
β ¼ 0.400, p o0.001), which supports both H3b and H3c.
In addition, following the advice by Aiken and West (1991), we show the interaction
effects in Figures 2(a)-(d) to evaluate the moderating effects of resource flexibility and
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30,2
174
JOCM
Table IV.
The results of
regression analyses
Speed of strategic change (SSC) Magnitude of strategic change (MSC)
Variables Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8
Firm age −0.131* −0.068 −0.066 −0.070 0.011 0.063 0.069 0.052
Firm size −0.058 −0.012 −0.007 −0.014 −0.064 −0.039 −0.026 −0.060
Competitive intensity 0.077 −0.067 −0.063 −0.076* 0.226**** 0.192**** 0.182**** 0.141***
Organizational slack 0.395**** 0.265**** 0.266**** 0.155**** 0.202**** 0.172**** 0.160**** 0.109**
Formalization 0.218**** 0.131** 0.125** 0.068 0.219**** 0.185**** 0.191**** 0.170***
Non high-tech manufacturing industry 0.112 0.051 0.052 0.020 0.166* 0.160* 0.154* 0.171**
High-tech manufacturing industry 0.030 0.000 0.001 −0.029 0.156* 0.063 0.121 0.174**
Real estate industry 0.050 0.045 0.035 0.030 −0.077 −0.066 −0.049 −0.053
Bottom-up learning 0.464**** 0.432**** 0.348**** 0.197**** 0.228**** −0.112
Bottom-up learning2 0.273**** −0.049 −0.170*** −0.439****
Resource flexibility (RF) 0.359**** 0.135**
Coordination flexibility (CF) 0.227**** 0.289****
Bottom-up × RF 0.102* −0.301****
Bottom-up × CF −0.124* 0.330****
Bottom-up2 × RF −0.162*** 0.231****
Bottom-up2 × CF 0.399**** 0.400****
2
R 0.302 0.454 0.463 0.609 0.217 0.243 0.253 0.449
2
Adjusted R 0.254 0.406 0.400 0.534 0.153 0.168 0.171 0.324
R2 change 0.152**** 0.009* 0.146**** 0.026*** 0.011* 0.196****
F-value 6.225**** 9.543**** 7.355**** 8.168**** 3.412**** 3.241**** 3.056**** 3.596****
Notes: n ¼ 213. Standardized regression coefficients are reported. *p o0.10; **po 0.05; ***po 0.01; *****p o0.001
(a) 2.5
(b) Strategic
Resource Flexibility 3
Coordination Flexibility
flexibility and
2 Low
strategic
Speed of Strategic Change
2.5
1.5 High 2
High
change
1.5
1
1
0.5
0.5
175
0
0
–0.5 –0.5
Low High Low High
(c) 0
(d) 0.35
Resource Flexibility Coordination Flexibility
Magnitude of Strategic Change
–0.005 0.3
Low
Low
–0.01 High 0.25
High
–0.015 0.2
–0.02 0.15
–0.025 0.1
–0.03 0.05
–0.035
Figure 2.
0
Low High Low High The moderating
Bottom-up Learning Bottom-up Learning effects of strategic
flexibilities
Notes: (a) H2a; (b) H3a; (c) H2b and H2c; (d) H3b and H3c
coordination flexibility. As Figure 2(a) shows, the marginal positive effect of the bottom-up
learning on the speed of strategic change increases much more slowly (the slope decreases)
or even decreases as the level of resource flexibility shifts from low to high. This result
indicates that resource flexibility weakens the positive impact of bottom-up learning on the
speed of strategic change, which supports H2a. However, Figure 2(b) shows that when the
level of coordination flexibility shifts from low to high, the slope of strategic change speed
on bottom-up learning increases. Therefore, the positive effect of bottom-up learning is
strengthened by coordination flexibility, which supports H3a. As shown in Figures 2(c) and
2(d), when bottom-up learning is low, the positive effect of bottom-up learning on strategic
change magnitude increases more rapidly as the level of resource flexibility or coordination
flexibility shifts from low to high (the slope increases), whereas the negative effect decreases
as bottom-up learning passes the reflection point if the level of resource flexibility or
coordination flexibility shifts from low to high (the slope decreases). Therefore, all of H2b,
H2c, H3b and H3c are supported.
Discussion
Theoretical implications
Based on information-processing theory and organizational inertia theory, this research
explores the impact of bottom-up learning on strategic change and also the moderating
effects of strategic flexibilities. We find that bottom-up learning has an increasing positive
effect on the speed of strategic change although it has an inverted U-shape effect on the
magnitude of strategic change. We further find that resource flexibility weakens the positive
role of bottom-up learning on the speed of strategic change, while coordination flexibility
strengthens the positive effect of bottom-up learning on the speed of strategic change; both
resource flexibility and coordination flexibility have a positive moderating effect on the
JOCM relationship between bottom-up learning and the magnitude of strategic change.
30,2 Our findings thereby contribute to the existing literature in three ways.
First, our study deepens the understanding of the strategic change process.
By characterizing the strategic change process, we examine the antecedents of two
dimensions of strategic change (i.e. the speed and the magnitude of strategic change) to have
a better understanding of how firms can change their strategies quickly and properly.
176 Second, this paper enriches extant strategic management literature by uncovering the
possible impact of bottom-up learning on strategic change. Although the speed and
magnitude of strategic change have drawn more attention from organizational learning
scholars, there is a limited discussion on the role of managerial bottom-up learning. With
insights from Kim et al. (2014) and Wei et al. (2011), we structure a conceptual model to
examine the relationships between bottom-up learning and strategic change. Our findings
suggest that bottom-up learning can not only enable firms to gain necessary information in
order to accelerate strategic change, but also help firms to find new opportunities to change
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their strategies. In particular, we find that bottom-up learning influences the speed and
magnitude of strategic change in different ways.
Third, this study contributes to the literature on strategic flexibility by providing a
deep understanding on how different types of strategic flexibility moderate the
relationship between bottom-up learning and strategic change. In this paper, we discuss
the moderating roles of resource flexibility and coordination flexibility. Our findings not
only show that different strategic flexibility plays different roles on the effect of
bottom-up learning, but also indicate that the effects of resource flexibility are
significantly different when they come to different characteristics of strategic change.
Therefore, this paper enriches our understanding of the role of strategic flexibility
during the process of strategic change, and enables firms to better explore the potential
impact of bottom-up learning. Meanwhile, the different moderating effects of resource
flexibility and coordination flexibility reveal that strategic change relies on a firm’s
capability to integrate, build, and reconfigure resources, rather than merely own such
resources (Li et al., 2010; Sirmon et al., 2007; Teece et al., 1997), which is consistent with the
essence of the dynamic capability literature.
Managerial implications
Besides theoretical contributions, this study also provides some important managerial
implications. First, our findings strongly suggest that bottom-up learning is positively
related to the speed of strategic change, while it has an inverted U-shaped influence on the
magnitude of strategic change. Therefore, top managers should pay close attention to
building bottom-up learning to better benefit from the insights and information created and
gathered collectively by employees.
Second, we find that the strategic flexibility moderates the effect of bottom-up learning
on the speed and magnitude of strategic change differently. Thus, firms should match the
strategic flexibility to leverage the positive effect of bottom-up learning. Moreover, we find
that the increased coordination flexibility, instead of resource flexibility, facilitates the
positive linkage between bottom-up learning and strategic change. It is, therefore, important
for top managers to improve their coordination flexibility by efficiently finding new
applications and/or new synthesizations of existing and external resources, while rapidly
deploying resources and effectively coping with emerging problems.
In addition, the negative moderating effect of resource flexibility on the speed of strategic
change suggests that possessing flexible resources may not help firms to enjoy the benefits of
bottom-up learning. If resource flexibility is high, top managers may rely on their confidence
of making fast strategic change and ignore the environmental changes. In this case, even if the
level of bottom-up learning is high, the speed of strategic change cannot be facilitated.
Limitations and future research Strategic
Our study has the following limitations. First, in spite of little trace of common method bias, flexibility and
we cannot completely rule out its potential influence. Future research needs to use strategic
secondary data or some procedural remedies to overcome this problem in the data-collection
stage. Second, this study only examines the impact of bottom-up learning on the strategic change
change together with the moderating effects of resource flexibility and coordination
flexibility. Future research may gain a deeper understanding of the antecedents of strategic 177
change by incorporating other relevant factors (e.g. entrepreneurial orientation) and thus
can expand into integrations of other important theoretical constructs. Third, future
research may further extend this research by investigating operational flexibility.
Fredericks (2005) suggested that both strategic flexibility and operational flexibility are
crucial for firms’ adaptability in a dynamic environment. Furthermore, strategic flexibility
and operational flexibility differ in resource utilization and coordination, and capability to
deal with different types of dynamism. Therefore, strategic flexibility and operational
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flexibility may have different moderating effects on the role of bottom-up learning.
This study also has the limitation with empirical studies based on multiple industry data.
We mainly focus on the general logics on how bottom-up learning affects strategic change.
The methodology limits further contextual investigation on micro-process of bottom-up
learning and content of strategic change. Future research may further investigate the types
of micro-processes of bottom-up learning process and also the content of strategic change
with case study method, which may offer more practical insights.
Conclusion
Bottom-up learning is an alternative recipe to effectively change strategies, but there is a
lack of study on this. To fill the gap, our study examines the relationship between bottom-up
learning and strategic change as well as the different moderating effects of both resource
flexibility and coordination flexibility. Our results indicate that the relationship between
bottom-up learning and the speed of strategic change is weakened by resource flexibility,
but strengthened by coordination flexibility; the inverted U-shaped linkage of bottom-up
learning on the magnitude of strategic change is positively moderated by both resource
flexibility and coordination flexibility. In general, our findings not only provide a more
nuanced and in-depth understanding of strategic change, but also offer a strong guidance
for firms to make better use of strategic flexibility to benefit from bottom-up learning.
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About the authors Strategic
Yaqun Yi is a Professor of Strategic Management at the School of Management, Xi’an Jiaotong flexibility and
University. He received the PhD degree from the Xi’an Jiaotong University. His research interests focus
on strategic innovation, dynamic capability of organization and technology innovation in emerging strategic
markets. His research work has been published in Management and Organization Review, Asia Pacific change
Journal of Management, Journal of Product Innovation Management, Journal of Organizational Change
Management and IEEE Transactions on Engineering Management.
Meng Gu is a PhD Candidate at the School of Management, Xi’an Jiaotong University. She received 183
her Master’s Degree from the Xi’an Jiaotong University. Her research interests focus on strategic
management and technological innovation in emerging economy. Her research work has been received
by R&D Management.
Zelong Wei is an Associate Professor in the Management School, Xi’an Jiaotong University. His
current research interests include strategic management, innovation and entrepreneurship in an
emerging economy. His research work has been published in a range of journals including Journal of
Business Ethics, Journal of Management Studies, International Journal of Production Economics,
Journal of Product Innovation Management, IEEE Transactions on Engineering Management and
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Journal of Organizational Change Management. Zelong Wei is the corresponding author and can be
contacted at: wzlxjtu@mail.xjtu.edu.cn
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