Understanding organisational improvisation: foundations and performance implications

This research is grounded in strategy process theory and contingency theory and the main research aims are to investigate the antecedent factors affecting organisational improvisation and to identify how improvisation determines firm performance. This study is the first to examine the antecedent factors, which are categorised onto managerial and organisational factors that drive improvisation. The managerial factors contain the reasoning ability of managers (intuitive and rational) and managers’ characteristics (selfconfidence, manager’s expertise and attitude towards risk‐taking). Whilst the organisational factors include organisational structure and characteristics (goal clarity, organisational structure, organisational flexibility and organisational risk‐taking), and information processing (organisational information and organisational memory). Environmental turbulence (technology, market and competitive) is examined as an external moderating factor to the improvisation–performance relationship. Fifteen hypotheses were developed and examined in this study. A cross sectional survey methodology was used to test the hypotheses of this study. A postal questionnaire primary data was collected from 128 top management executives of high technology‐based companies in Malaysia. In summary, the findings confirm that a total accumulated variance in organisational improvisation was collectively explained by managerial factors and organisational factors; thus confirming that those aforementioned factors have statistically significant associations with organisational improvisation. Based on the study of the improvisation–performance relationship, the results revealed a positive significant relationship between both factors. Surprisingly, once the environmental turbulence factors were introduced as a moderator, the result on the association between improvisation and firm performance was greater than before; thus demonstrating a significant moderating effect on the relationships between organisational improvisation and firm performance. However, mixed results were identified when the association between each antecedent and improvisation was tested and the effect of each moderating factor was individually examined. This study on the effect of internal and external factors on organisational improvisation and firm performance makes novel contributions to the existing body of knowledge as well as to practitioners. It is noticeable that organisational improvisation in strategic management is crucial as a decision‐making mechanism for improving organisational performance. Hence, managers themselves as well as other relevant factors within firm hierarchy should facilitate and induce necessary condition that may drive organisational improvisation to happen.