Abstract
Absorptive capacity is an important organizational capability constituted by exploratory, transformative, and exploitative learning processes. Leadership has been shown to affect such processes, but little is known about how the combined leadership styles of top and middle management influence absorptive capacity. This theory-building, exploratory qualitative case study discusses the need for top and middle management to be ambidextrous and to change their styles to better facilitate the three different learning processes. We found that an exploratory learning process was facilitated when both top and middle management used a transformational style, a transformative learning process was facilitated when top management used a transformational style while middle management used a transactional style, and an exploitative learning process was facilitated when both top and middle management used a transactional style. Furthermore, for each of the three learning processes, the leadership styles of top and middle management operated more effectively when certain attributes of the organizational context were emphasized.
Keywords
Leadership and organizational learning are both fundamental to effective organizational functioning (Berson et al., 2006). A growing body of work investigates the relationship between these two—specifically, questions of how leadership affects organizational learning (e.g. Berson et al., 2006; Jansen et al., 2009; Yukl, 2009). Several studies, for example, have examined how different leadership styles promote the processes of exploration (the search for new and innovative products and practices) and exploitation (increasing the efficiency of existing products and practices). Research has found that when top leadership exercises a transformational style, it encourages learning that is radical (Berson et al., 2006; Jansen et al., 2009; Vera and Crossan, 2004), and this facilitates exploratory learning. When top management exercises a transactional style, it facilitates learning that reinforces existing practices and exploitative learning (Jansen et al., 2009; Vera and Crossan, 2004).
Yet while existing work relating leadership to organizational learning has provided certain valuable insights, critics have pointed to three key limitations. One limitation is that existing work generally examines leadership at a single level in the organization, and researchers have argued that understanding leadership requires going beyond leadership at only one level (Hannah and Lester, 2009; Yukl, 2009). Indeed, scholars have recognized the influence of all levels of management on organizational learning (Berson et al., 2006), noting that middle management acts as a conduit and filter for information flowing between the top and lower levels within organizations (Nonaka and Takeuchi, 1995). A second limitation concerns the dichotomy of transformational and transactional leadership. This is problematic because studies have shown that leaders can adopt both styles and that both can be effective and impact performance (Denison et al., 1995; Judge and Piccolo, 2004). Because the specific dimensions of both transformational and transactional leadership likely affect both exploration and exploitation learning (Jansen et al., 2009; Yukl, 2009), there is a need to examine how leaders alter their leadership styles to influence different types of learning. A third limitation is that it is increasingly clear that conceptualizing organizational learning using the dichotomy of exploration and exploitation is problematic, because long-term success requires that organizations pursue both types of learning (Crossan et al., 1999; Gibson and Birkinshaw, 2004).The ability to appropriately balance exploratory and exploitative learning is defined as organizational ambidexterity (Holmqvist, 2004; Tushman and O’Reilly, 1996), and this has been found to be important for organizational success (He and Wong, 2004).
Absorptive capacity (Cohen and Levinthal, 1990) has recently been recognized as a specific type of organizational learning (Lane et al., 2006; Sun and Anderson, 2010). Absorptive capacity concerns an organization’s relationship with external knowledge (Sun and Anderson, 2010) and incorporates both the exploratory and exploitative learning processes in equal measure. Absorptive capacity therefore promotes organizational ambidexterity (Zahra and George, 2002). It is a routine and process-based capability (Todorova and Durisin, 2007; Zahra and George, 2002) constituted by exploratory, transformative, and the exploitative learning processes (Lane et al., 2006; Lichtenthaler, 2009). An exploratory learning process seeks to recognize and understand the value of new external knowledge. A transformative learning process seeks to combine existing knowledge with externally-acquired knowledge so that a new collective schema emerges. An exploitative learning process seeks to apply the acquired and transformed knowledge (Lane et al., 2006). This notion of absorptive capacity is similar to the feed-forward and feedback learning processes of an organization (Crossan et al., 1999; Sun and Anderson, 2010).
Our study seeks to address the three limitations described above by not only considering both top and middle management but also how their leadership styles vary as they seek to influence the three learning processes of absorptive capacity. In the sections that follow we first comment on the collective leadership of top and middle management. We then briefly review transformational and transactional leadership styles. Following that we present a case study and develop a theory that relates these leadership styles of both top and middle management to the exploratory, transformative, and exploitative learning processes of absorptive capacity. We conclude with a discussion of the theoretical and practical implications of our study.
Collective influence of top and middle level management leadership styles
Prior studies have illustrated the influence of top managers on explorative, transformative, and exploitative learning processes (e.g. Amitay et al., 2005; Elenkov et al., 2005; Jansen et al., 2008, 2009; Vera and Crossan, 2004). However, these studies have not given consideration to middle management, or more importantly the collective influence of both top and middle management.
Research has clearly delineated top management from middle-level management (Carmeli and Halevi, 2009; Hambrick and Mason, 1984). Top management’s social and task-specific processes (such as their information sharing, collaboration, and joint decision-making processes) have been found to influence organizational outcomes. These outcomes, such as enabling an organization to react to market needs (Hambrick, 1998) and increasing innovative intensity (Li and Zhang, 2002), have an organization-wide impact. However, middle management’s influence is narrower, to aspects where small group leadership is more relevant (Yukl, 1994).
Middle management plays an important role in organizational learning by acting as a conduit and filter for information flowing between the top and lower levels of the organization (Nonaka and Takeuchi, 1995). Managers at this level can often have a greater influence on subordinates than top management due to their proximity. For example, Bass et al. (2003) found that the sergeants’ influence on the performance of US army platoons was greater than that of the senior platoon leaders. They attributed this difference to sergeants having daily contact with the platoon members and having a greater influence on their training. Due to the closer proximity that middle management has with subordinates, they exert an influence on subordinate behaviour that can either complement or counteract top management influence. Therefore, we suggest it is the collective influence of top and middle management’s leadership styles that is important for the learning processes constituting absorptive capacity, and prior studies have not given this due consideration.
A leadership style is a consistent pattern of attitudes and/or behaviour displayed by a leader (Bass, 1995). The leadership styles of both top and middle managers can be transactional and/or transformational (Bass, 1985, 1998; Lowe et al., 1996). A transactional leadership style usually motivates subordinates through two processes. The first is contingent reward, where leaders articulate what is explicitly required from their subordinates and what rewards they will receive if the expected level of performance is met. The second is active management-by-exception, where leaders specify what constitutes a performance failure, closely monitor behaviour for deviance and mistakes, and oftenpunish non-compliance (Bass et al., 2003; Howell and Hall-Merenda, 1999). This transactional style, when exercised by top management, facilitates learning that reinforces existing practices and therefore the exploitative learning process (Jansen et al., 2008; Vera and Crossan, 2004).
In contrast, a transformational leadership style involves four higher-order behaviours (Bass et al., 2003): idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration. Idealized influence means that leaders are admired, trusted, and respected by their followers, which results in followers desiring to emulate and to be identified with their leader. Leaders who consider their followers’ needs above their own, share risk with their followers, and are consistent in their underlying ethics, principles and values, promote idealized influence (Bass et al., 2003). Inspirational motivation means that leaders motivate their followers by giving meaning and challenge to their work. Followers are encouraged to envision an attractive future that the leader envision, and this can result in increased team spirit, enthusiasm, and optimism. Idealized influence and inspirational motivation reflect the charisma of the transformational leader (Bono and Anderson, 2005). Through intellectual stimulation, leaders challenge their followers to question long-held assumptions, reframe problems, and approach old situations in new novel ways. Through these actions, followers are stimulated to be innovative and creative and are encouraged to be involved in the process of addressing issues and finding solutions. Individualized consideration is where leaders act as coaches and mentors by paying attention to each individual’s need for achievement and growth. Leaders consider each follower’s unique needs and desires, and help them achieve their true potential by providing new learning opportunities and a supportive climate to develop and grow. Top managers exercising such a transformational style encourage learning that is radical (Berson et al., 2006; Jansen et al., 2009; Vera and Crossan, 2004) and thereby facilitate the exploratory learning process. Nemanich and Vera (2009) have empirically shown that teams involved in trying to integrate a recently acquired organization displayed higher levels of exploratory and exploitative learning behaviours when leadership was transformational and when the team operated in a learning culture (i.e. a culture characterized by psychological safety, openness to diverse opinions, and participatory decision making).
Transformational and transactional leadership styles are sometimes viewed as opposite ends of a continuum, but many scholars consider them as distinct styles such that leaders can exhibit both (i.e. be ambidextrous) (e.g. Bass, 1985, 1998; Judge and Piccolo, 2004). Such an ambidextrous capability of leaders permits them to perform leadership roles differently depending on the situation at hand (Carmeli and Halevi, 2009; Denison et al., 1995).
While studies have looked at the influence of leadership styles on exploratory and exploitative learning processes, few if any have considered the combined impact of leadership styles of top and middle level management on all three learning processes of absorptive capacity (i.e. exploratory, transformative, and exploitative learning processes). This, along with the need to address the three limitations described previously, provides the motivation for our study. The primary research question we examine is:
How do the combined leadership styles of top and middle management influence the exploratory, transformative, and exploitative learning processes?
Research methods
Yin (1994) suggests that a case study method is more appropriate when “how” or “why” questions are asked in research. Since our goal in this study is to understand how the combined leadership styles of top and middle management influence the exploratory, transformative, and exploitative learning processes constituting absorptive capacity, we needed a rich description of the leadership influence process in order to build theory (Parry, 1998). For this reason we employed an interpretive case study method.
Research setting
We selected an organization called Brandix, one of the largest apparel manufacturers in south east Asia (over 10,000 employees) with apparel manufacturing units in India and Sri Lanka. Brandix is divided into several clusters: Textile; Active Wear and Intimates; Casual Wear; Finishing; Hangers; Comfort Wear; and College of Clothing and Technology. Each cluster has several companies that are independent entities. The only centralized operations for the entire group are finance, shipping, and human resource administration. Brandix does not have a centralized R&D unit and each company carries out its own innovation activities.
Our study focused on one company in the Active Wear and Intimate cluster called Brandix Active Wear (BAW). BAW is one of three companies in this cluster that collectively have five manufacturing facilities based in India and Sri Lanka, all of which focus on manufacturing intimate garments such as women’s briefs for large retailers based in the US and Europe. The cluster is headed by Mr Udena, a group director who sits on the main board of Brandix.
We selected BAW for two reasons. First, it was an organization in an industry that was deemed suitable for our study. The apparel manufacturing industry faces growing pressure by major apparel retailers like Gap, Nike, and Marks & Spencer to drive down manufacturing costs. To remain competitive, the apparel manufacturing industry is known to innovate by assimilating technology and practices from other industries. Second, we wanted an organization that actively sought and implemented external knowledge, reflecting an absorptive capacity capability (Zahra and George, 2002), and BAW met this criterion. For example, after several employees of BAW visited a cigarette manufacturer and attended trade exhibitions, the company initiated projects that implemented a decentralized cutting operation, developed a production-planning and monitoring system based on counting cartons instead of individual pieces of garments, and designed and developed a complex machine attachment that reduced manual handling of garments when sewing and helped to significantly reduce production time.
BAW has a front-end operation that deals with customers and the sourcing of fabric and accessories and a back-end operation that handles manufacturing. The front-end operation is structured in a matrix form. It is broken into multiple customer teams, and each customer team has individuals from merchandizing, sourcing, and industrial engineering. The pricing of the garments is handled by the front-end operations team. Once the pricing is accepted by a customer and the order is placed, the customer submits a technical pack with the colour and size breakdowns. This triggers the development of the patterns for the garment, the placing of the orders for fabric and accessories, a breakdown of manufacturing steps by the industrial engineering team, and the establishment of quality evaluation criteria. Every critical activity is listed on a time and action calendar and is closely monitored by the front-end operational team. Every customer order has a delivery date, and missing the delivery date is often penalized by the customer. On-time delivery and quality are two of the most critical operational criteria.
The back-end operation is also structured in a matrix form and includes several manufacturing teams, each of which has a cluster of 12 sewing modules (a sewing module consists of 8–12 sewing machines). All cutting, sewing, computer aided design operations, and maintenance, and factory Human Resources (HR) are decentralized to these manufacturing teams.
BAW’s top management is a cross-functional team (CFT). The team is headed by the CEO, and consists of the chief operating officer, the chief financial officer, and the heads of Operations, Marketing, Sourcing, and Technical. The CEO reports to Mr Udena, the group director. Middle management consists of matrix team managers and functional managers/assistant managers. All subordinates under middle management (i.e. executives and supervisors) have dual reporting lines—one to their matrix team manager and one to their functional manager.
Method
Access to the organization was granted by the group director through personal contact with the first author. Prior to the site visit, we developed semi-structured interviews which addressed the influence of top and middle management on the exploratory, transformative, and exploitative learning. The first author developed the semi-structured interview questions, which were refined by the second author. We then pilot tested the questions by conducting an interview with a former employee of Brandix (currently studying for his PhD in chemistry at the first author’s university), and then asked him to comment on the questions. Ambiguous questions were subsequently revised. Examples of the semi-structured interview questions are: How does your organization go about acquiring new external knowledge? How does your organization go about ensuring that people understand the need and implications of the new knowledge? How does the organization go about implementing and exploiting the new knowledge? What role does top and middle management play in these processes?
The site visit occurred in August 2008. The first author travelled to India and Sri Lanka and spent a total of three continuous weeks at BAW interviewing, observing, and analysing company documents and records. Based on the organizational chart that was supplied to us prior to the site visit, we selected 25 employees across the levels of the hierarchy. The first author interviewed 22 of these employees (6 from staff, 10 from middle management, and 6 from top management), while the other three were not available for interviews. Each interview averaged around 60–90 minutes and was digitally recorded (Appendix I shows the backgrounds of the interviewees).
At the end of each day spent on the site, the first author carefully listened to the digitally recorded interviews, and made note of any repeating ideas with the research question in mind (note: the initial coding thus started early in the data-gathering stage). To confirm these repeating ideas, we asked further questions in subsequent interviews. These repeating ideas also set the agenda for observation and document analysis on the following day. For example, two repeating ideas that emerged were ‘commitment to key deliverables’ (such as on-time delivery, quality standards, etc.) and ‘encouraging information sharing’. To verify these, we looked at one year’s worth of production records and monthly profit and loss accounts, and found that on-time delivery exceeded 96 percent (which is excellent for apparel manufacturing industries) and there were no quality issues raised by customers that resulted in penalties to BAW. We also observed that all production and relevant financial information was freely available, and displayed prominently on the production and staff office floors. The first author also attended the daily production meetings (as a non-participating observer) and observed the free sharing of information. A third example of a repeating idea is the ‘disciplined process in monitoring innovation projects’. The first author attended a special projects team meeting (held every other Tuesday from 2–4pm) as a non-participating observer. He observed Mr Udena, the group director, monitoring and evaluating the progress of every key innovative project of the organization, and the processes he used to record progress (e.g. the use of Microsoft Project as a monitoring tool).
Apart from these, the first author also engaged in several informal conversations with employees in the dining room during tea and lunch breaks, and observed them in their normal work interactions. These observations and informal discussions were noted and this process resulted in a 21-page typed document (with 8499 words). About eight hours per day were spent over the three-week period at the organization.
Following data gathering, a more thorough data analysis was done of the interviews and observation and discussion notes with the research questions and concerns in mind. The primary concern was to find evidence for leadership styles of top and middle management at each stage of the absorptive capacity learning processes. We began by extracting statements/sentences from the data (i.e. from interviews and observation and discussion notes), and each extraction was marked with a relevant code. We generated a list of 34 codes (or repeating ideas), some of which were identified during the data gathering stage. Because the semi-structured interviews were based on the three absorptive capacity learning processes, some codes were specific to a learning process while others concerned multiple learning processes. Table 1 presents these codes.
Codes, themes and abstract concepts
(I, D, O) – I means evidence from interviews, D means document evidence, O means evidence from observation
In order to group the codes and categorize them into relevant themes, we drew a causal map incorporating all 34 codes. By drawing the causal map, we were able to consider the meaning of each code and their interrelationships, and this ensured theoretical sensitivity when trying to cluster the codes into themes (Strauss and Corbin, 1998) (see Table I). For example, Figure 1 shows a section of the causal map related to the leadership actions of top and middle management at the exploratory learning process stage. By clustering certain codes, a transformational leadership style among both top and middle level management emerged as themes during the exploratory learning stage of absorptive capacity (see dotted box in Figure 1).
A section of the causal map
By considering the themes, we discovered how the leadership styles of top and middle management combined and/or complemented one another in the learning processes constituting absorptive capacity, and this enabled the development of a theoretical narrative.
The procedure we followed for this within-case study analysis mirrored Auerbach and Silverstein’s (2003) process for constructing a theoretical narrative from texts. To increase the credibility of our case study, we followed the three tactics identified by Collis and Hussey (2009): prolonged engagement, triangulation, and peer critique. Although the first author spent only three weeks at the site, the time spent was extensive (about 8–10 hours per day). This time period spent in conducting interviews, observing meetings and interactions, and document analysis was sufficient to ensure that an in-depth understanding had been achieved. Second, we achieved some degree of triangulation by examining documents, observing participants, and asking interviewees the same questions in different ways at different times to confirm their opinions. Finally, we used peer debriefing to confirm that the subject was correctly identified and described. We presented the findings to the management of BAW (where some of the interviewees also participated in the presentation), and discussed key ideas and themes. There was general agreement that our findings were valid, increasing our confidence in them.
Case study findings
Our study showed that leadership influence on the three learning processes is a collective influence. Neither the top nor middle management used either an exclusively transformational or transactional style. Styles varied as a function of the type of learning being addressed (see column 3 of Table I). In the sections to follow we discuss these aspects under each of the learning processes, and conclude with the theoretical framework that emerged from the study.
Exploratory learning process
This learning process consists of two stages: recognizing the value of new external knowledge and understanding it in the context of the organization (Lane et al., 2006; Lichtenthaler, 2009). To recognize the value of new external information, one has to have prior related technological and market knowledge (Lichtenthaler, 2009; Zahra and George, 2002). Once recognized, the external knowledge has to be actively acquired and then understood in the context of the organization (Lichtenthaler, 2009; Zahra and George, 2002). Consistent with the theorizing of Sun and Anderson (2010), we found that this learning process spans the individual and group levels. At the individual level, active scanning and acquiring external information take place through self-generated initiatives, and at the group level the acquired information is assimilated and understood in the context of the organization through collegial discussions.
Self-generated initiatives
For individuals to succeed in generating initiatives, they must generate new insights by intuitively recognizing past patterns and making new connections with new external information (Crossan et al., 1999; Sun and Anderson, 2010). This requires prior technological and market-related knowledge (Lichtenthaler, 2009). Individuals must be intrinsically motivated to engage in generating insights for the sake of the activity itself (Utman, 1997). Intrinsic motivation, more than extrinsic motivation, drives individuals’ self-generated initiatives. Several comments from our interviews illustrated this. For example, Jagath, an industrial engineer (IE), said:
No one tells me to bring in new ideas and innovate, I do it myself…this is my attitude.
Madura, a senior IE executive said:
I’m not looking for any financial gains through new ideas and innovation…it is my self-motivation that drives me…after I see it implemented it gives me self-satisfaction.
While it is true that intrinsic motivation is important for self-generated initiatives (Utman, 1997), management encouragement and support that positively influences intrinsic motivation is crucial. It is a reciprocal appreciation by management of the initiator’s self-generated activities. This cements the socio-emotional ties the initiator has with the organization and management (Rousseau and McLean Parks, 1993), which is necessary for ongoing self-generated initiatives. Top management support and encouragement for self-generated initiatives was clearly seen. Madura, the IE executive, said:
Management is very supportive of innovation. Whenever Udena [group director] visits BAI, he visits me, talks to me, discusses new ideas and pays attention [italics added].
Heminda, the HR and administration manager, said:
Encouragement for innovative thinking comes from the top. This is seen in the action and behaviour of Ravin [head of operations] and from Udena [group director] and Ranga [CEO] [italics added].
Top management influenced self-generated initiatives by reaching across the levels of hierarchy. This reach was not only to middle management, but also to staff below middle management. Duminda, an assistant manager of operations planning, said:
Management gives 100 percent freedom for new idea generation…anyone can come up with new ideas. Even if supervisors [staff level] have good ideas this management is keen on taking it up. The CEO often visits the factory floor and makes it a point to discuss new initiatives of people and then take it across to other companies[italics added].
This ability to reach down the hierarchy and support initiatives is consistent with a transformational leadership style of top management (Vera and Crossan, 2004). It is individually directed and positively impacts direct reports’ intrinsic motivation to be creative (Tierney et al., 1999). Top management was also seen in this study to intellectually stimulate individuals by listening to new ideas, providing guidelines, and challenging assumptions through use of metaphors. In our informal conversations with employees, we recorded stories of how Ravin (head of operations) challenged assumptions of the industry. In one instance he challenged technicians to convert a single-needle sewing machine to a flat-seam sewing machine. In another he challenged supervisors and technicians to develop a non-sewing machine to train the essential hand movements of operators. We also overheard Ravin using metaphors to challenge subordinate thinking. For example, he used the illustration of training a bullfighter to challenge a training unit to begin training at the highest possible machine speed (which was unconventional). He also used a metaphor of airlines to challenge the technicians to achieve 100 percent reliability with sewing machines.
An important observation of top management’s transformational leadership style was that it was externally oriented. Mr Udena, the group director, spends about one hour each day searching the Internet for interesting articles and technologies and forwards them to the managers. For example, Mr Udena read about a one-megawatt solar power plant and challenged his managers to see how it could be applied in their apparel factories. Mr Udena’s behaviour is emulated by the top management team. Ravin, the head of operations, frequently arranges visits to factories outside of the apparel industry to learn how techniques foreign to their industry could be applied. From a recent visit to a cigarette manufacturer, the organization changed its method of monitoring production from pieces to a carton basis, reducing the complexity of shop floor monitoring.
We found that such transformational leadership behaviours of top management—involving intellectually stimulating individuals to be idea seekers and to be creative—appeared to operate best when a certain organizational context attribute was emphasized. Organizational context is an objective and higher level attribute of an organization that encompasses its structure, culture, and climate. Organizational context is ‘the systems, processes, and beliefs that shape individual-level behaviors in an organization’ (Gibson and Birkinshaw, 2004: 212), and is created and reinforced by micro- and macro-level actions of organizational managers (Ghoshal and Bartlett, 1994; Gibson and Birkinshaw, 2004). Ghoshal and Bartlett (1994) conceptualized organizational context as consisting of four behaviour-framing attributes of discipline, stretch, support, and trust. The organizational context attribute of discipline involves the establishment of a clear standard of performance measurement, a system of rapid and honest feedback, and consistency in the application of sanctions. The attribute of stretch is seen when individuals in the organization strive to set and reach ambitious goals and objectives. A shared sense of ambition, a sense of collective identity, and a sense of personal involvement in the overall purpose and direction of the organization contribute to this attribute of stretch. The attribute of support induces members to lend assistance and countenance to others. This attribute is created when senior managers give priority to providing support and guidance rather than exercising authority, and individuals at lower levels are given freedom to take initiative. Finally, the attribute of trust is seen when individuals in the organization can rely on the commitment of one another. Trust is established when individuals are involved in decisions and activities that affect them, and when positions are staffed with people who possess the required capabilities to execute their tasks. These four attributes are interdependent (Ghoshal and Bartlett, 1994), and managers can influence the learning processes in their organization by emphasizing appropriate aspects of the organizational context (Berson et al., 2006).
In this instance, top management emphasized the organizational context attribute of stretch when encouraging initiatives. This attribute of stretch was created by the charismatic influence of Mr Udena, the group director, who articulated a desire to be ‘incomparable’. Mr Udena stated:
Most company vision has a finite ending, however big the vision is. We want to get to a state where we are incomparable, where we don’t have to look behind our shoulders at the competitors and compete. To be incomparable as an organization, individuals have to be kings or queens in their area of competency and then work together to tip the organization. Individuals can make the difference. I used the Gladiator film and the Aids epidemic to convey these ambitions.
This ambition is widely embraced by the individuals in the organization. It has increased the cooperativeness of employees and there is a shared sense of searching for ambitious goals and objectives. Ruchika, the product development manager, said:
In the last management conference we were told to be incomparable and to be world class…in my job I have to reduce fabric consumption to meet price targets and this is not always easy. When we get a new style and a new type of fabric we never say no now. If we do not have any solutions in-house, we look for new ideas from outside the industry.
This sense of incomparability has led the organization to an impressive sales growth of 300 percent over the financial year 2007–8, while maintaining a very high level of on-time delivery and quality performance.
An interesting observation from this study is that while top management’s transformational style was exercised across a broad spectrum of individuals and reached across most levels in the hierarchy, middle management’s transformational style was more narrowly focused towards certain individuals in the exploratory learning process stage. It was focused on individuals the middle managers had confidence in, and who had proven themselves in the past. Middle management’s transformational style was seen by their ability to intellectually stimulate such proven individuals, and by encouraging them to take risks and make decisions on their own. Middle managers also acted to enhance the self-confidence of such individuals by supporting them in their decision making. This is closely linked to the intellectual stimulation and individualized consideration dimensions of transformational leadership. For example, Chandana, the IE manager, said:
Because the ultimate responsibility is mine, I do not give them the responsibility to take risky decisions unless I’m confident about them. I look at their past performance, their commitment, their competency and then give them a free hand and encourage them to take risks, make decisions on their own, and generate initiatives.
Dinuka, the HR executive, said:
There is a general feeling in this organization that the lower level staff is allowed to take decisions. Failure is accepted but cannot be repeated. Those who have proven themselves are generally more encouraged than others by their bosses (i.e. by middle management).
We found these trusted individuals to have an intersection of technological as well as product-related knowledge and this was an important factor in their ability to generate new initiatives. Madura, an IE executive, had solid product knowledge and had some prior knowledge in technologies such as electronics and pneumatics. He was able to generate many new insights and one such insight led to a development of an electronically-controlled attachment to a sewing machine that is currently being patented. This observation is consistent with previous studies that suggest that prior knowledge of products and technologies are required for successful acquisition (Cohen and Levinthal, 1990; Lichtenthaler, 2009; Todorova and Durisin, 2007). However, technological knowledge, which is less common in the organization than product knowledge, is more important in the acquisition and assimilation of new external knowledge (Lichtenthaler, 2009). Jagath, the assistant manager IE, said:
Technology provides us with greater scope for improvement of the factory rather than through changes in processes.
The transformational style of middle management, which was focused on certain individuals, was found to operate effectively when the organizational context attributes of support and trust were emphasized by middle management. Such individuals require time to be involved in self-generated initiatives (Shalley et al., 2004). Madura, the IE executive (staff), said:
I need time to think of innovation and should not be forced with lots of production pressures.
This time is released when middle management supported the exploratory process by releasing such individuals. Channa, the IE manager, said:
I formalized a process where every month I released some of my IE executives for a whole afternoon to discuss ideas and innovation.
When time is released for such individuals, co-workers are trusted to deliver on operational expectations, reducing the initiator’s involvement in fire-fighting, rechecking, and follow ups. Ravin, the head of operations, made this observation:
I see lower level employees increasing their competencies and this has released people like the supervisors and executives to be more involved in creative work.
Nuwan, the assistant manager sourcing and logistics said:
We support each other when it comes to innovation and people who are released trust that others will take on some of their workload… unlike my previous company, I don’t see any politics or divisiveness here.
Collegial discussions
Apart from time availability, the individuals who are involved in generating new initiatives also require support from their colleagues in trying to understand the relevance of the externally acquired knowledge to the organization. This is the process of assimilation, and it happens through collegial discussions where multiple views are brought out. Heminda, the HR and administration manager, said:
All new initiatives are discussed in group meetings. Only after buy-in is obtained that we take it to the next level.
Some collegial discussions happen informally with relevant individuals in the organization. For example, Madura, an IE executive, mentioned new ideas he had when visiting an exhibition in Singapore:
In the JAIM exhibition in Singapore I took some videos of interesting exhibits. I then asked Sanjeewa who had good knowledge of electronics, a welder, and a carpenter to join me in the board room to discuss these ideas. After about three hours we saw how a new conveyor system can be applied in our organization and we took the immediate decision to try implementing it in our organization.
Some collegial discussions happen in more formal settings. One important formal setting is the cross-functional monthly meeting that is chaired by Ravin, the head of Operations. In this meeting, no operational issues are discussed. Individuals are given opportunities to share any new ideas or initiatives, and this is a forum where the relevance of such initiatives is understood in the context of the organization. Such a formal forum can be regarded as a collaborative space. A collaborative space is similar to Nonaka and Konno’s (1998: 40) concept of ‘ba’, which is a ‘shared space for emerging relationship’. This shared space represents patterns of physical, virtual, and mental interactions among individuals (Nonaka and Konno, 1998). It can evolve into a context that harbours rich tacit meaning for the organization (Cook and Brown, 1999). For example, in the study of IDEO by Hargadon and Sutton (1997), brainstorming sessions were collaborative spaces harbouring a pattern of interaction and having meaning. Individuals participating in such sessions intuitively understood that they were supposed to combine existing technologies in a novel fashion to design a new product, and certain routines were followed to extract existing declarative memories in the organization (e.g. using prototypes, toys, etc.). Similarly, the monthly cross-functional meeting at BAW is a ‘ba’ that held tacit meaning for individuals in the organization. Those attending such a meeting knew that new initiatives were openly discussed and assimilated in the context of the organization. Ravin, the head of operations who chairs this meeting, says that dialogue and open discussions are valued and people are encouraged to think creatively.
Collegial spirit is encouraged in such meetings. The vision and drive of the organization to be incomparable appears to be an important integrative mechanism in collegial discussions. It enables collegial discussion without functional fractions or divisions. Nuwan, the assistant sourcing manager, said:
When new ideas come up, nobody tries to protect their own territory. There are no politics and we support one another to be incomparable and world class.
Trust in the initiator is vital in this assimilation process. Jagath, the assistant IE manager, said:
The background of the initiator must be credible. When the initiator comes up with an initiative and if he has proven himself in the past, then it is looked upon favourably.
Since we observed that the middle management is selective in encouraging certain individuals to come up with self-generated initiatives, trust in the initiator is more likely to be present in collegial discussions.
To summarize the finding, we suggest that the combined transformational leadership styles of top and middle management influence subordinates’ behaviour that enhances the exploratory learning process of absorptive capacity. This influence is enhanced when certain attributes of the organizational context are emphasized. The organizational context attribute of stretch, when emphasized, enhances the impact of top management’s transformational leadership on the exploratory learning process. The organizational context attributes of trust and support, when emphasized, enhance the impact of middle level management’s transformational leadership style on the exploratory learning process. We offer the following proposition for testing by future studies:
Proposition 1: The exploratory learning process is facilitated when both top management and middle management use a transformational leadership style.
How did the wider influence of top management exercising transformational leadership style, combined with a narrower focus on certain individuals by middle management exercising a transformational behaviours, influence the exploratory learning process? It appears that the organization context attributes of stretch, support, and trust were essential for this combined influence of top and middle level management to be effective. The actions of middle-level management to selectively focus on certain individuals can result in jealousy leading to mistrust by the rest who are not involved. However, this can be counterbalanced by effective systems and processes such as a fair and just reward and recognition mechanism. We note that the organization in our study had company-wide goals and objectives, with common key performance indicators (KPIs) for all employees. Team-based financial rewards were given based on achievement of the common KPI while individual initiatives were recognized in non-monetary ways. These actions of management, along with the emphasis on being incomparable, had an influence on the organizational context attributes of trust and support. However, our study did not consider these aspects in detail, and we suggest that future studies take these into account.
Transformative learning process
In the transformative learning process, a new shared understanding develops prior to the application of the newly acquired and assimilated knowledge. This entails developing a shared understanding of how to exploit newly acquired and assimilated technologies into market and product applications (Crossan et al., 1999). This learning process involves the reactivation of retained knowledge so that it can be combined with the newly acquired and assimilated knowledge in order for a new collective schema at the organizational level to evolve (Lane et al., 2006; Sun and Anderson, 2010; Zahra and George, 2002).
Unlike the exploratory learning process, which is primarily at the individual and group level, this transformative learning process requires interaction between individuals at the organizational level (Crossan et al., 1999; Sun and Anderson, 2010). In this study we found the interactions to be more about ‘selling’ the acquired and assimilated idea. Mr Udena, the group director, said:
The team having the idea needs to sell the idea to the operations people as they need their support to get it implemented.
Selling the idea is an example of issue selling, a process that has been studied by Dutton and colleagues (e.g. Dutton and Ashford, 1993; Dutton et al., 2001). Although their studies have been primarily based on the upward selling of issues (i.e. selling issues to top management), the selling strategies identified in their studies are relevant in our context. Dutton et al. (2001) identified three categories of moves in issue selling: involvement, packaging, and process-related moves. In an involvement move, the issue sellers involve significant others in the organization to support their effort. In a packaging move, the issue seller can either present the issue by using the logic of a business plan, or bundle it with a valued goal or objective of the organization (Dutton et al., 2001). In a process-related move, the issue is sold using a formal communication process where preparation and timing are critical.
In this study, the team used packaging moves most frequently to sell the acquired and assimilated ideas. By using packaging moves, ideas were often presented and justified using financial and/or quality parameters. Duminda, the assistant manager of operations planning, said:
All new ideas need to have justification, whether there is budget for it or not. As long as people see benefit then there is support from others to buy into it.
However, if issues became contentious, a bundling strategy was followed by tying it to the valued goal of the organization to become incomparable. For example, Chandana, the manager IE, said:
In our Indian plant we wanted to implement some changes to bring our cost per minute down. These suggested changes did cause problems with many people. Because we all wanted to be ‘incomparable’, we used it to obtain support from others to get this done.
Occasionally involvement moves were used, where top managers were involved in the ‘selling’ process. Group director Mr Udena said:
Sometimes we get involved if needed by influencing a bit, coercing a bit, and we use our power.
Top management’s leadership style was found to be transformational in the transformative learning process stage. Their transformational style was seen in their intellectual stimulation. Transformational leaders are known to facilitate conversations and storytelling, and to encourage individuals to question current practices (Berson et al., 2006). They also stress the overall vision and goal of the organization and by doing so they encourage the necessary cooperation so that new ideas could be assessed and clarified in order for a new collective cognitive schema to evolve (Kahai et al., 2003).
In our study, such conversations and interactions happened between colleagues, primarily those who would be affected by the implementation of the newly acquired and assimilated knowledge. One common practice in BAW is to use the monthly non-operational cross-functional meeting to discuss the implications when implementing the newly acquired and assimilated ideas. In our non-participant observation role, we saw Ravin, the head of operations, encouraging different streams of thought when discussing the implementation of an idea. His ability to stimulate such diverse streams of thought and then integrate them is because of his systemic knowledge (Ravin has had experience of and exposure to most functions in the apparel industry from the sample room, to work study, to production and sourcing, and this has given him a systemic knowledge of the operations of the industry). The systemic knowledge of a transformational leader is critical to synergize and make connections with existing knowledge bases (Smith and Tushman, 2005). The practice of using the monthly non-operational cross-functional meeting as a formal forum to discuss new ideas is not only seen in BAW but also in another company in the group called Brandix Intimate Apparel (BIA). Emerick, the CEO of BIA said:
When we meet it is important that we challenge the ingrained mindset of the individuals. Whenever we discuss an innovation implementation, I focus on challenging them to see how such implementation can improve execution in my company in a novel way and I’m less interested in the bells and whistles it can bring in.
In order to help integrate the different streams of thought, emphasizing the organizational context attribute of stretch was useful. For example, Jagath (the assistant IE manager) and Ruchika (the Product Development manager) mentioned that the drive to be incomparable made them want to create a world-class manufacturing plant in India and to bring down the cost per standard minute to a particular level. This helped them to resolve differences that arose when they tried to discuss the implications of the assimilated ideas.
In more informal settings, we observed the practice of Ravin (the head of operations) making regular visits to the factory floor and interacting with individuals and influencing the transformative learning process. This practice is common to both Mr Udena (board director) and Ranga (CEO of BAW), and was noted in our informal chats and conversations with individuals.
In all such interactions (the formal monthly non-operational cross-functional meetings and informal factory floor visits), emphasizing the organizational context attribute of support was important. This support comes from top management when facilitating conversations and integrating different streams of thought, and this behaviour cascades down the hierarchy. Duminda, the assistant operations planning manager, compared BAW with his previous employer and said:
One thing good is that nobody restricts the discussion of new ideas. New ideas are supported by management and others. There are some organizations when new ideas come, others restrict. This is not here and it is the best thing we have.
Research has established the need for social connections for knowledge transformation (e.g. Jansen et al., 2005). Greater social connections, which are a reflection of the organizational context attribute of support (Gibson and Birkinshaw, 2004), enable dialogue to take place by facilitating knowledge transfer and exchange. Greater social connectedness reduces conflict, builds trust, and enables a greater sharing of information and exchange of ideas. However, greater connectedness can create mental prisons (Jansen et al., 2005) by reducing diverging views from emanating. It is the transformational leadership style of top management, especially their intellectual stimulation, which leads people to challenge commonly held beliefs and assumptions that prevents this from happening.
While the top management leadership style was transformational in this learning process, the leadership style of middle managers changed from transformational to transactional. Middle management had to balance operational pressures, such as meeting the operational targets and KPIs, with the implementation of the newly acquired and assimilated knowledge. Middle management had to ensure that the new collective understanding on how to implement the new idea did not affect its operational goals and objectives. This focus on agreed upon goals and objectives as a driver for direct report behaviour is typical behaviour for a transactional leader (Bass et al., 2003; Howell and Hall-Merenda, 1999). For example, Ruchika, the product development manager, said:
At times certain potential innovation projects affect the KPIs which primarily targets issues like on-time delivery, error rates and these types of things. So we have to manage the KPIs with these projects. Sometime these projects can affect these KPIs and we have to manage these.
For this reason, middle managers appear to exercise a more transactional leadership style in this phase of the learning process, where idea transformation is balanced with the need to meet operational KPIs.
Although this transactional behaviour of middle management appears to counteract the more transformational behaviour of top management, the two opposing styles are mutually reinforcing and therefore complementary. Naga, the production supervisor, said:
When we are involved in innovation, our bosses’ boss [i.e. top management] encourages us to think outside the box and take risks but sometimes my direct boss [middle management] seems to be more concerned about meeting deadlines and targets…sometimes this is confusing [italics added].
Can such opposing actions synergistically enhance the transformative learning process? The need to meet operational KPIs can be classified as a closed action strategy where the emphasis is on control (Gebert et al., 2010). The need to facilitate different streams of thoughts through transformational behaviour by the top management can be classified as an open action strategy where the emphasis is on autonomy (Gebert et al., 2010). Gebert et al. (2010) suggest that an open action strategy fosters knowledge generation while a closed action strategy fosters knowledge integration with existing knowledge bases, and these two strategies can mutually reinforce each other to yield synergies. In the case of BAW, the success of some of their key innovation projects (e.g. decentralized cutting operation; a production-planning and monitoring system based on counting cartons instead of individual pieces of garments; and the design and development of a complex machine attachment) indicates that these two action strategies complement rather than oppose each other (note: we thank an anonymous reviewer for this insight).
This transactional leadership of middle management was seen to be effective when managers emphasize the organizational context attribute of discipline. The organization has a strong commitment to meet key deliverables such as on-time deliveries and quality targets. This commitment to meet key deliverables is commonly held across all functions and is a reflection of the context attribute of discipline. Heminda, the HR and administration manager, said:
If there is an urgent shipment today, not only packing and production but finance people will also come and pack. That is the culture we have here. Honestly, the finance people will work till 6.00pm. After 6.00pm even the finance manager will come and pack if the shipment is critical.
The CFT (i.e. top management team) instils this attribute of discipline through regular weekly meetings. On Mondays they meet to discuss the sales targets, financials, and the factory open capacities. On Tuesdays they meet with operational people to discuss the on-time-delivery status of every customer order. Nuwan, the assistant manager of sourcing and logistics said:
Our CEO is very structured and detailed…like Udena…this makes us want to go to details. We have to prepare to the nth detail on every order for the OTD (on-time delivery) meeting and have detailed explanation of what happened and what needs to be done.
Middle management therefore ensures that key operational parameters are given sufficient focus during the transformation of the acquired and assimilated knowledge. This happens with the transactional style exercised by middle management with the individuals who acquired and initiated the idea. Middle management discusses the feasibility of ideas and interacts with the acquirers in structuring their proposals for the top management team. This gives the middle management the opportunity to ensure that operational objectives are not unduly compromised and to set attainable goals and objectives for the project. A permeable layer exists between the middle and top management, and middle management creates opportunities for the acquirers to formally interact with the top management and justify their acquired and assimilated ideas. It is in this careful orchestrating of idea transformation by the middle management that their transaction styles are displayed. For example, Ruchika, the product development manager, said:
I give opportunity to my staff to interact with the CFT and justify their ideas. This is beneficial to the lower level staff. However, I must ensure that I balance the new ideas with operational challenges.
These differing leadership styles of middle and top management complement each other and ensure the efficiency of conversion from an exploratory to a transformative learning process. This efficiency of conversion ensures that the organization is ambidextrous (Holmqvist, 2004; Tushman and O’Reilly, 1996), and this has been found to positively influence firm performance (Gibson and Birkinshaw, 2004; He and Wong, 2004).
To summarize the findings, we suggest that the transformational leadership styles of top management, complemented by the transactional style of middle management, influence subordinate behaviours that enhance the transformative learning process of absorptive capacity. This influence is enhanced by emphasizing certain attributes of the organizational context. The organizational context attributes of stretch and support, when emphasized, enhances the impact of a top management transformational leadership style on the transformative learning process. The organizational context attribute of discipline, when emphasized, enhances the impact of a middle management transactional leadership style on the transformative learning process. We offer the following proposition for testing by future studies:
Proposition 2: The transformative learning process is facilitated when top management exercises transformational leadership style complemented with a transactional style by middle management.
Exploitative learning process
The transformative learning process is the stage where newly acquired external knowledge is combined with existing knowledge, and a new shared understanding evolves at the organizational level regarding how to apply the recombined knowledge. After the transformative learning process, the exploitative learning process occurs where the actual implementation of the recombined knowledge takes place so as to ensure its reuse (Lane et al., 2006; Sun and Anderson, 2010). In order to create an effective exploitative learning process, top management’s leadership style changed from being transformational in the earlier exploratory and transformative learning processes to being transactional in the exploitative learning process stage. Top management’s focus at this stage of the learning process was to ensure successful implementation and its continuing use in the organization. They focused on the key deliverables such as deadlines, budgets, and paybacks.
The transaction style of top management operates effectively when managers emphasize the organizational context attribute of discipline. We found top management more formally involved with certain innovation projects. These projects were riskier due to their novelty and had greater organization-wide implications. A disciplined process was instituted where every other Tuesday from 2–4pm the progress of such projects was discussed. The payback and benefits derived from these projects was closely monitored. Group director Mr Udena, who regularly attends these meetings, said:
The benefit of the innovation is for the operations team. So if you save say US$100,000 that goes to the operations team because you cannot implement without the operations team. For the project team we say they have a memorandum account. …it’s like a bank account. When you bring the idea to the operations team, you bank the idea. …we have a bank book and in the book we make an entry saying this is the amount we would save through this new idea for a certain period of time. Once the actual saving occurs, we make an entry into this book and then analyse to see if the real benefits obtained matches with our expectations.
The top management also has the practice of regularly visiting the factory floor and following things up with the initiator or the team involved in the implementation. Madura, the senior IE executive, said:
Time to time Ravin comes to the floor and inquires about things. On a daily basis he visits the development workshop and inquires about progress and the difficulties faced and he spends about 5–10 minutes in a very friendly discussion. From this he knows what is happening and it is like a regular monitoring and feedback but in a more friendly and relaxed way. This sort of keeps us on our toes because he does this very regularly.
While top management’s leadership style changed from being transformational in the transformative learning process stage to transactional in the exploitative learning process stage, the middle management’s leadership style remained transactional from the previous learning process. Middle management continued to balance the demand of operational pressures with pressures of implementation. The key operational parameter of on-time-delivery was sacrosanct and was not compromised, even in the face of innovation implementation pressures. For this reason, we observed that every customer order in the organization and every innovation project had a time and action calendar that was agreed to by management. This was a common practice in the organization and middle management focused their management effort through the use of these time and action calendars.
The transactional style of middle management appeared to be more effective when its actions emphasized the organizational context attribute of support. Middle management supported the exploitative learning process by seeking to dismantle barriers by interacting with top management. For example, Madura said:
I needed some finance to purchase some components and a resource person to help me in the implementation. My boss (from middle management) spoke to Ravin and got these for me.
Further, there was support from colleagues across functions and disciplines that understood the implications of the change and were willing to absorb them for the benefit of the wider goals and objectives. Duminda, the assistant operations and planning manager, said:
For example, when we implemented the concept of monitoring a carton of 72 pieces instead of single pieces, after visiting the cigarette factory, the packing people had problems. However, they did not restrict or create issues when we implemented it. They thought out of their packing section and they thought of the wider benefit for the factory.
This support therefore minimized resistance for implementation and helped individuals in the organization balance the implementation and operational pressures.
An understanding of the implications of the change and the focus on common goals and objectives contributed to the attribute of support from colleagues. This has developed because of the matrix structure of the organization. The back-end manufacturing is broken into teams where 12 operating modules form one matrix team. All the functions or disciplines are decentralized into matrix teams and all individuals in the team work together towards common operational goals such as on-time delivery and quality parameters, irrespective of the function or discipline they belong to. Such a matrix structure exposes individuals to other functions and hence gives them a systemic knowledge of the operations in the organization.
Therefore, in summary, a combined leadership style of top and middle management that is more goal-orientated and which seeks to ensure the fulfilment of agreed upon objectives is more suited for the exploitative learning process of absorptive capacity. This was enhanced when certain attributes of the organizational context were emphasized. The organizational context attribute of discipline, when emphasized, enhances the impact of top management’s transactional leadership on the exploitative learning process. The organizational context attribute of support, when emphasized, enhances the impact of middle management’s transactional leadership on the exploitative learning process. Therefore, based on these observations the following proposition is suggested for testing by future studies:
Proposition 3: The exploitative learning process is facilitated when both top and middle management use transactional leadership styles.
Discussion and conclusion
This study concerns the influence of the combined leadership styles of top and middle management on the exploratory, transformative, and exploitative learning processes of absorptive capacity. Our case study suggests that both top management and middle management should adopt a transformational leadership style during the exploratory learning process. During the transformative learning process, top management should continue to exercise transformational style while middle management should switch to a more transactional style. During the exploitative learning process, both top and middle management should exercise a transactional leadership style. Furthermore, our case study suggests that such leadership style changes of top and middle management are more effective when specific attributes of the organizational context are emphasized by their actions. We suggest that by these repeated emphases of certain organizational context attributes during certain stages of absorptive capacity development, the organization develops ‘context attribute memory’. This means that over time the appropriate context attribute will be evoked automatically from collective memory (Anderson and Sun, 2010) by those involved in the absorptive capacity learning processes.
We developed a theoretical framework based on the insights gained from our case study, and this framework is shown in Figure 2. While the first three quadrants of the theoretical framework evolved from the case study, no empirical evidence was found for the fourth quadrant of the theoretical framework. We did not encounter situations where a transactional top management leadership style was combined with a transformational middle management leadership style. This perhaps could be because our study focused on the exploratory, transformative, and exploitative learning processes. Nonetheless, we briefly discuss this combination and theorize about the learning that it may be suited for. We note that this discussion does not draw on evidence from the case study.
Influence of combined leadership styles of top and middle management on absorptive capacity learning processes
When top management’s style is transactional and focused primarily on agreed upon goals and objectives, it tends to emphasize useful existing routines and therefore learning tends to be incremental or single-loop (Crossan et al., 1999; Jansen et al., 2009; Vera and Crossan, 2004). Such a transactional style of top management is well suited when operating in an environment of stability but becomes ineffective when operating in an environment of change (Jansen et al., 2009; Vera and Crossan, 2004) as the team tends to focus only inwards at improving the existing routines of the organization (Berson et al., 2006).If top management continues to exhibit this transactional style, defensive routines could be established to protect the dominant routines and practices of the organization (Vera and Crossan, 2004), leading to an anti-corrective organization (Argyris, 2004). Over time, core rigidities are likely to set in and preferences will be for information sources that reinforce existing views of markets (Leonard-Barton, 1992), inhibiting product innovation and change (Slater and Mohr, 2006).
Due to the power of the top management, the prevailing dominant practices of the organization would continue, causing frustration and de-motivating middle management who may want to institute learning and change. Even if middle management is transformational, and through intellectual stimulation raises challenges to the assumptions of the organization, at most the type of learning that will be permitted by top management is incremental (Argyris, 2004). This leads us to theorize the following proposition for the fourth quadrant, and offer it for testing by future studies:
Proposition 4: If the top management leadership style is primarily transactional, and middle management’s leadership style is transformational, learning will be incremental and preference will be given to internally generated knowledge.
Limitations of the study and implications for future research
Our study has certain limitations. First, given that this research involved a single case study, additional testing and investigation of our theoretical framework and propositions is needed. Our case organization is unique. The leadership of this organization is rather exceptional, as is attested by the organization’s extraordinary growth in an environment of intense competition and change. Although this uniqueness lends support for a single case study (Yin, 1994), there is a need for future research to conduct multiple case studies to test the generalizability of our findings and framework. Another approach would be a survey study across a wide range of industries, with the learning processes as the dependent variables and leadership styles as independent variables. With such a study, one could test whether a given combination of leadership styles is more significantly related to the learning processes of absorptive capacity.
Second, our theoretical framework proposes a linear shift of leadership styles that change as one move from exploratory to transformative to exploitative learning processes. Such a framework is not problematic when there is a single learning project in an organization. However, in most organizations, individuals are likely to be involved with multiple projects at various stages of the learning processes. Such individuals would be exposed to leaders who are expected to shift from one behaviour type to another as they constantly juggle to align their behaviours to the changing context (Bass et al., 2003; Carmeli and Halevi, 2009). How would such leader behaviours be perceived by individuals and how could this impact the learning processes of absorptive capacity? Although these scenarios add complexity, they are areas that warrant future study.
Third, our case study was not longitudinal. Future research may want to collect longitudinal data that closely follows learning projects. Such longitudinal data could better ascertain if certain combinations of leadership styles of top and middle management, given certain attributes of the organizational context, are necessary conditions for the success of certain phases of the absorptive capacity learning processes. Although our study did not collect such longitudinal data, it did reveal a relationship between certain combinations of leadership styles of top and middle management to the success of the exploratory, transformative, and exploitative learning processes. This is a significant contribution to existing knowledge and provides exciting avenues for future research.
Practical implications
In addition to its theoretical contributions, our study has several implications for practising managers. First, it shows the critical role that middle management leadership styles play in organizational learning. Most leadership development has focused on top management, and little attention has been devoted to developing middle management leaders. Moreover, little consideration has been given to the need for leaders to display ambidexterity in their leadership styles. The management development literature tends to emphasize that a transformational style is more useful than a transactional one. Given that evidence exist that both transformational and transactional leadership styles are related to performance (e.g. Bass et al., 2003; Bono and Judge, 2004; Judge and Piccolo, 2004), we suggest that more attention is needed to identify when each leadership style is more suited for particular outcomes.
Second, our study highlights the variation of shared leadership styles needed at various stages of the learning processes. Such an understanding gives richer practical insights into the role of managers and their behavioural complexities, and how they can impact absorptive capacity, and this has implications for an organization’s ambidexterity. While a recent study (Jansen et al., 2008) has examined the influence of the CEO’s transformational leadership style on senior team attributes (i.e. senior team shared vision, senior team social integration, and senior team contingency reward), and how such attributes influence the organization’s ambidexterity, we have found no studies that have examined the combined leadership styles of top and middle management and their effect on organizational ambidexterity.
Third, our study suggests that the leadership styles of top and middle management are more effective when the appropriate organizational context is emphasized. For exploratory learning, top management’s transformational style is broadly exercised by emphasizing the organizational context attribute of stretch, while middle management’s transformational style is more narrowly focused on certain individuals by emphasizing the organizational context attributes of trust and support. For a transformative learning process, top management’s transformational leadership style is effectively exercised by emphasizing the organizational context attributes of support and stretch, while middle management changed its style to be more transactional and this style is exercised more effectively by emphasizing the organizational context attribute of discipline. For an exploitative learning process, top management changed its leadership style to be more transactional and this operated more effectively by emphasizing the organizational context attribute of discipline, while middle management exercised a transactional style by emphasizing the organizational context attribute of support. This suggests that while attributes of organizational context generally operate across the organization (Ghoshal and Bartlett, 1994), they should be emphasized differently for different stages of the learning processes. This insight gives practising managers more intelligent ways of intervening with their behaviour and with mechanisms to emphasize the appropriate organizational context.
Footnotes
Appendix
Individuals interviewed and their background
| Individuals interviewed | Designation | Position in the hierarchy | Education | Work experience |
|---|---|---|---|---|
| Naga | Snr supervisor Production | Staff | High school | >2 yrs |
| Anuhya | Asst. industrial engineer | Staff | Diploma | >2 yrs |
| Madhura | Snr executive Industrial Engineering | Staff | Diploma | >7 yrs |
| Dinuka | Human Resources executive | Staff | Business degree | >2 yrs |
| Pushpika | Merchandiser, BIA | Staff | High school | >7 yrs |
| Dharshana | Snr executive Planning | Staff | Engineering degree | >5 yrs |
| Dumindu | Asst manager Operations Planning | Middle mngt | Engineering degree | >5yrs |
| Nuwan | Asst manager Sourcing and Logistics | Middle mngt | Engineering degree | >5yrs |
| Jagath | Asst manager Industrial Engineering | Middle mngt | Certificate | >20 yrs |
| Azard | Manager Industrial Engineering | Middle mngt | Diploma | >19yrs |
| Heminda | Training/HR/Admin manager | Middle mngt | Engineering degree | >5yrs |
| Ruchika | Manager Product Development | Middle mngt | Certificate | >15yrs |
| Chandana | Manager Industrial Engineering | Middle mngt | Graduate diploma | >7yrs |
| Lasitha | Asst manager Merchandising | Middle mngt | Business degree | >3yrs |
| Kelum | Asst manager Human Resources | Middle mngt | ?? | >10yrs |
| Channa | Manager Industrial Engineering | Middle mngt | ?? | >11yrs |
| Ranga | CEO, BAW | Top mngt | MBA | >15yrs |
| Udena | Board director, BAW | Top mngt | MBA | >20yrs |
| Udaya | COO, BAW | Top mngt | Business degree | >10yrs |
| Emerick | CEO, BIA | Top mngt | PhD | >10yrs |
| Parakrama | Head of Operations, BIA | Top mngt | Degree | >10yrs |
| Ravin | Head of Operations, BAW | Top mngt | Engineering degree | >10yrs |
Acknowledgements
We would like to thank Prof. Jim McElroy and Prof. Jim Barker who provided us with valuable comments during the early stages of the manuscript. We would also like to acknowledge the editor Craig Prichard and the three anonymous reviewers whose valuable comments made the article better. Any errors remain our own.