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

Purpose - The 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/approach - The 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. Findings - From 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/implications - Given 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 implications - Managers 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/value - This 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.