The purpose of this paper is to address the conflicting views on the role of bottom‐up learning; this research combines the information‐processing and organizational inertia views to explore how bottom‐up learning affects both exploratory and exploitative innovations and if the effects are contingent on organizational formalization.
Data for this study are obtained through an interview survey instrument from 213 firms. The questionnaire is adopted from several previous studies on organizational learning, structure and innovation with minor translation adjust. A pilot test was conducted and necessary modifications were made to the questionnaire. Tests show that the sampling validity is not biased by non‐response bias and the measure reliability and validity are acceptable. Furthermore, Harman one‐factor and CFA tests show that the results should not be biased by common method bias. The multicollinearity is also tested and controlled during regression analysis.
The findings show that bottom‐up learning has accelerated positive effect on exploitative innovation while having an inverted U‐shaped effect on explorative innovation. Furthermore, the organizational formalization strengthens the positive effect of bottom‐up learning on exploitative innovation and the U‐shaped effect on exploratory innovation.
The paper contributes to organizational inertia and information‐processing theories by providing a complete picture on how firms built exploitative and exploratory innovations through bottom‐up learning aligned with appropriate organizational structure.
