Strategic change and firm performance: the moderating effect of organisational learning

Abstract

PurposeThe primary purpose of this research is to review and discuss the potential associations among strategic change, organisational learning, and firm performance, and to propose a conceptual model to investigate such relationships.Design/methodology/approachThe literature on the strategic change‐performance relationship was explored with the emphasis on elaborating the effects of frequency of strategic change on firm performance. In addition, a moderating role of organisational learning on such a relationship is introduced.FindingsFrom the literature review, it is proposed that the relationship between strategic change and firm performance is an inverted U‐shape. Extremely frequent and infrequent strategic changes are deemed to be detrimental to firm performance. However, the research reveals that the strategic change‐performance relationship may alter due to the moderation of organisational learning.Research limitations/implicationsGiven the conceptual nature of this paper, a review of relevant literature and a conceptual model are presented with suggestions for future empirical study. This paper also extends the strategic change‐performance research by advocating an inverted U‐shape relationship as one plausible explanation for inconsistent findings found in past literature.Practical implicationsManagers should try to understand their organisations and implement an appropriate level of strategic change in order to maximise the firm's overall performance. In addition, a significant role of organisational learning in supporting firms to manoeuvre in today's increasingly dynamic and competitive environment is highlighted to managers.Originality/valueThis paper attempts to explain: why firms might attain different levels of performance provided that they undergo various degrees of strategic change (in terms of frequency); and what factors contribute to the variations in organisational performance among firms that have undertaken the same number of strategic changes during a given period of time.