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Vital organisational capabilities for Vital

organisational
strategic agility: an empirical study capabilities
Josephine Ie Lyn Chan and Rajendran Muthuveloo
Graduate School of Business, Universiti Sains Malaysia, George Town, Malaysia
223
Abstract
Received 22 December 2019
Purpose – The purpose of this study is to examine the organisational capabilities needed for strategic agility Revised 17 July 2020
among private higher education institutions (HEIs) in Malaysia that are operating in a turbulent business Accepted 25 September 2020
environment. In addition, the study also intends to determine the area of prioritisation for these institutions.
Design/methodology/approach – A two-month data collection was carried out on 375 private HEIs via a
Web-based survey, which garnered a response rate of 41.33%. The data were subsequently analysed with the
partial least squares structural equation modelling to establish the validity and reliability of the research model
and to test the postulated hypotheses. The assessment of importance and performance matrix analysis (IPMA)
was also carried out to highlight the areas of significance for improvement.
Findings – The study discovered that all three constructs of organisational capabilities, i.e. environmental
scanning, marketing and organisational learning, attributed significantly to strategic agility. This in turn
enabled strategic agility to significantly influence the organisational performance of private HEIs in Malaysia.
Finally, IPMA revealed that private HEIs need to prioritise organisational learning to strengthen their strategic
agility, thus optimise organisational performance.
Originality/value – Aside from business and management research of strategic agility in other industries, the
current study manages to establish that strategic agility also plays an important role in the private higher
education sector. Furthermore, the use of IPMA provides fresh insight into the importance and performance of
the organisational capabilities examined against strategic agility.
Keywords Organisational capabilities, Strategic agility, Organisational performance, IPMA, Private higher
education
Paper type Research paper

1. Introduction
In Malaysia, the higher education sector is crucial towards the economic growth and global
competitiveness of the nation. This is evident from the sector’s strong contribution to the
gross domestic product in 2017, with a gross output of RM17.6bn, and its value added
percentage share at RM10.8bn (Department of Statistics, 2019). Based on the higher education
statistics, private higher education institutions (HEIs) have an important role to play. As of
October 2019, there are 405 private HEIs in Malaysia, which is an estimated 70% of the
overall higher education population (UPU, 2020). However, the current business environment
has shifted into one filled with uncertainties. Private HEIs, together with other businesses, are
still reeling from the “new normal” caused by the recent Covid-19 pandemic crisis, eclipsing
other disruptions of high customer and industry demands, financial constraints, national
policy changes and emerging technologies (Ahmad and Ng, 2015; Binden et al., 2014).
Consequently, for private HEIs to overcome such challenges, they need to have a new
organisational paradigm shift of adopting strategic agility as a crucial protective mechanism
against the dynamic and disruptive changes happening in the current business landscape
(Chan and Muthuveloo, 2019; Mukerjee, 2014; Pucciarelli and Kaplan, 2016). Past studies have
claimed that strategic agility enables organisations to have heightened sense and response to
the external business environmental changes (Al-Dhaafri et al., 2013; Muthuveloo and Teoh,
2013; Pucciarelli and Kaplan, 2016). Subsequently, timely and fluid deployment of resources
could be taken to strategically manage these complex and uncertain changes. With strategic Asia-Pacific Journal of Business
Administration
agility, organisations will always have the advantage over their competitors, as they have the Vol. 12 No. 3/4, 2020
pp. 223-236
© Emerald Publishing Limited
1757-4323
The authors would like to thank all the participating private HEIs for their support in this study. DOI 10.1108/APJBA-12-2019-0261
APJBA ability to detect threats and take advantage of opportunities faster (Chan and Muthuveloo,
12,3/4 2018; Pucciarelli and Kaplan, 2016). Moreover, organisations with higher levels of strategic
agility are known to achieve higher levels of organisational performance (Muthuveloo and
Teoh, 2013; Verma et al., 2017). Despite strategic agility being such a critical factor, its effect
on the higher education remains relatively unexplored (Mukerjee, 2014).
More importantly, how can organisations such as private HEIs create and embed strategic
agility within their organisations? Fourne et al. (2014) argued that, for organisations to achieve
224 strategic agility, they need to have the right combination of organisational capabilities that are
dynamic. Only then will organisations have the ability to make strategic commitments as they
stay agile and flexible (Doz and Kosonen, 2010). In particular, success for private HEIs to
survive the demanding business environment depends largely on their effort to build
appropriate organisational capabilities so as to acquire strategic agility to perform well and
sustain future business. Nejatian et al. (2019) raised a concern that, although there is knowledge
on strategic agility, little is known on the antecedents of strategic agility. They also pointed
towards a lack of research on how organisations are able to identify areas to prioritise to
improve their agility. Therefore, this study intends to fill these research gaps by examining
appropriate organisational capabilities for private HEIs to increase their strategic agility.
Through the extended analysis of importance and performance matrix analysis (IPMA), fresh
insight gained will put private HEIs in a better position to prioritise the right resources to
develop the right organisational capabilities for strategic agility. Consequently, the strategically
agile private HEIs will be able to take quick and decisive strategic decisions to overcome
challenges of turbulent business landscape, hence optimise organisational performance and
sustain business growth in the long run. The following sections of the paper describe the
theoretical foundation and research hypotheses, followed by research methodology, analysis
and results, conclusion and implications and, finally, limitations and future research.

2. Theoretical foundation and research hypotheses

2.1 Dynamic capabilities theory
Due to the current turbulent business landscape, the dynamic capabilities theory is used to
frame the study. This theory extends the resource-based view theory, which states that the
reason for imbalance of organisational performance among organisations is due to their
competitive advantage attributed by resources that are unique, of value, cannot be imitated or
reproduced and non-substitutable (Bobe and Kober, 2015; Barney, 1991). The dynamic
capabilities theory focuses on the ability of organisations in responding to the rapidly
changing business environment. In other words, unless these organisations are able to sense,
seize and shape both internal and external opportunities and threats, organisations will never
be able to make the right strategic decisions to reconfigure and redeploy their resources
(Eisenhardt and Martin, 2000; Inan and Bititci, 2015; Teece, 2007; Teece et al., 1997).
In general, past studies have examined different dimensions of organisational capabilities
against organisational performance such as human capital development and management
(Ali et al., 2017; Aragon et al., 2014), high-performance work systems or practices (Lu et al.,
2015; Saridakis et al., 2017), learning organisational culture (Hussein et al., 2014), knowledge
management (Ang et al., 2015; Navarro et al., 2016), goal alignment (Ayers, 2015) and
perceived changing business environment (Zhu et al., 2013) . Majority of these studies focused
on human-related functions of various industries (Inan and Bititci, 2015). While these
organisational capabilities have been proven influential on organisational performance, they
might not be appropriate for the higher education sector. Nonetheless, according to Teece
(2018), there are similarities between universities and private firms operating in
unpredictable changing environment. He suggests that universities can benefit from
adapting and applying strategic management approaches such as the dynamic capabilities
framework. Similarly, Heaton et al. (2019) recommend universities to have strong dynamic
capabilities so as to prioritise countless competing demands on their resources and Vital
orchestrate the development and deployment of resources strategically. organisational
Consequently, the higher education sector needs to consider the three fundamentals of the
dynamic capabilities theory; first, the ability to sense the environment for opportunities and
capabilities
threats through scanning and interpreting both the external and internal environment;
second, the ability to seize opportunities with fresh approaches and confront threats that
arise; and third, the ability to shape promising avenues for growth or transform towards
greater flexibility and creativity (Teece, 2018). This means, private HEIs need to have the 225
right combination of organisational capabilities that are based on the fundamentals of the
dynamic capabilities theory. For instance, with environmental scanning capability, private
HEIs will be able to sense environment shifts/trends and respond to the external market
needs. Next, to enhance their market responsiveness, private HEIs have to take advantage of
market opportunities in a timely manner (Teece et al., 2016). Marketing capability enables
private HEIs respond to customer demands so as to provide timely products to their
customers through product differentiation and also update their branding or reputation
(Teece, 2018). Simultaneously, private HEIs have to go through an organisational
transformation towards embracing changes (Teece, 2018), which can be achieved through
the organisational learning capability. When the whole organisation focuses on acquisition,
dissemination and interpretation of knowledge, the organisation is able to have more agility
and innovativeness. Teece (2018) reiterates that for the dynamic capabilities framework to
work, private HEIs must be strategic and forward-thinking. Moreover, Schilke et al. (2018)
highlighted the need for further research to explore causal mechanisms that can affect the
performance of organisational capabilities that are dynamic, which in turn affect performance
of organisations. Having briefly described the three key organisational capabilities –
environmental scanning, marketing and organisational learning – and strategic agility as a
causal mechanism for this study, the next section elaborates further on their relationships.

2.2 Research hypotheses

2.2.1 Relationship between organisational capabilities and strategic agility. Strategic agility
enables organisations to efficiently renew their resources in response to the current dynamic
and disruptive business environment and have the flexibility and capability to handle
unforeseen market changes (Teece, 2018). Nejatian et al. (2019) aptly described strategic
agility as a set of systematic and continuous actions that organisations take when operating
in a disruptive and turbulent business environment. Therefore, to acquire strategic agility,
private HEIs need to further develop and strengthen specific organisational capabilities that
have dynamic elements in them such as environmental scanning, marketing and
organisational learning.
First, environmental scanning is a pertinent capability for private HEIs to reduce the
challenges faced from disruptions and uncertainties in the dynamic business environment.
This is substantiated by previous studies, which highlighted that organisations conducting
environmental scanning have better anticipation and understanding of the possible future
events or trends that might positively or negatively affect their business (Fabbe-Costes et al.,
2014; Takahashi et al., 2017; Toit, 2016; Trinh, 2015). Information and knowledge gathered
from the external environment enable organisations to seize potential business opportunities
(Onyango et al., 2015; Takahashi et al., 2017; Toit, 2016). More importantly, the output from
the environmental scanning provides crucial inputs for organisations to strategically craft
future management plans and actions that will set them apart from their competitors
(Takahashi et al., 2017; Trinh, 2015). However, unlike manufacturing and supply chain
industries, not many private HEIs have environmental scanning capability
(Fabbe-Costes et al., 2014). Nevertheless, environmental scanning capability plays an
essential role for private HEIs as they operate in a competitive and dynamic business
APJBA landscape. Greater awareness of the external business changes enables quicker and more
12,3/4 effective responses from private HEIs, thus securing their competitiveness (Chan and
Muthuveloo, 2019; Trinh, 2015). As such, the following assumption will be tested:
H1. Environmental scanning capability has a significant influence on strategic agility.
Second, marketing capability is critical for private HEIs to sustain their business (Kamboj
and Rahman, 2015). Evidences from past studies indicated that organisations with marketing
226 capability have market acuity, quick responses to the changing customer demands and
ability to exploit the occurrences of disruptive changes (Krush et al., 2016; Wilden and
Gudergan, 2015). Accordingly, organisations become more strategically agile. At present, the
massification and internationalisation of higher education have increased new customer
demands and intensified competition (Takahashi et al., 2017). Inevitably, this has led to
commercialisation of higher education. Marketing capability provides private HEIs the
ability to have strong market presence to secure their customer base and attract potential new
ones (Takahashi et al., 2017). For instance, this capability enables private HEIs to use market
intelligence to sense out their competitors and market trends. As a result, accurate and
effective marketing mix strategies could be directed on the right domestic and international
market segmentation (Krush et al., 2016; Takahashi et al., 2017; Wilden and Gudergan, 2015).
Moreover, based on the market intelligence inputs, private HEIs will be able to seize new
market opportunities that provide value to both existing and potential customers, hence
create differentiation from other competitors (Takahashi et al., 2017; Trinh, 2015). This
eventually leads to a strong presence in higher education market, as private HEIs acquire
better awareness and respond quicker to the external market changes and trends. As such,
the following assumption will be tested:
H2. Marketing capability has a significant influence on strategic agility.
Third, organisational learning capability is vital for the success of organisations (Aragon et al.,
2014). Past studies have demonstrated that organisational learning contributes towards the
ability of organisations to innovate and continually transform, thus maintain their
competitiveness (Jain and Moreno, 2015; Pham and Tran, 2016). As education hubs for
knowledge creation and application, private HEIs need organisational learning capability to
actively acquire, distribute and interpret information and knowledge from the current dynamic
business environment so as to remain relevant, competitive and agile to handle the disruptive
changes (Aragon et al., 2014; Tippins and Sohi, 2003). For instance, as a learning organisation,
private HEIs will be able to sense out market trends and what their competitors are doing
through networking activities such as conferences, seminars and workshops. Here, information
and new knowledge gathered could be disseminated and shared among all employees within
the organisation (Aragon et al., 2014; Pham and Tran, 2016; Tippins and Sohi, 2003). This
strategy actually encourages a shared understanding of the various interpretations of
information. Subsequently, this will foster alignment of work among employees, which can lead
to overall positive performance outcomes (Pham and Tran, 2016). Briefly, organisational
learning capability enables private HEIs efficiently renew and reconfigure their resources and
develop capabilities needed in response to the uncertainties and disruptions in the business
environment (Doz and Kosonen, 2010). Consequently, this attributes positively towards the
strategic agility of private HEIs. As such, the following assumption will be tested:
H3. Organisational learning capability has a significant influence on strategic agility.
2.2.2 Relationship between strategic agility and organisational performance. Organisations are
currently challenged by the dynamic changes caused by competition, technologies and
inconsistent demands (Abuzaid, 2015; Mukerjee, 2014). Specifically, organisations that are
unprepared face difficulties in maintaining their organisational performance, as they suffer
disruptions to their business operations or experience financial losses. Past studies have Vital
demonstrated the pivotal role of strategic agility on the performance of organisations (Junni organisational
et al., 2015; Oyedijo, 2012; Verma et al., 2017). However, these studies are generally in the
manufacturing or information technology (IT) context. The impact of strategic agility at the
capabilities
organisation level has yet to capture the attention of higher education researchers (Mukerjee,
2014). Despite this, as the higher education business landscape is rapidly transforming into a
more dynamic and competitive one, in-depth insights into strategic agility and dynamic
capabilities are very much needed. 227
Similar with organisations in other industries, private HEIs are currently operating in a
business landscape that is turbulent. Domination of private HEIs at 73% of the overall higher
education population has created intense competition among private HEIs. To succeed,
private HEIs need strategic agility, as it can significantly influence their business operations
and competitiveness.
Strategic agility is more valued when uncertainties and disruptions reign in the business
environment. This is because strategic agility provides positive dynamism for the
organisations. For instance, anticipating instead of reacting to changes means
organisations have the upper-hand to prepare themselves against any potential disruptive
changes that might affect their operations. Likewise, potential opportunities can also be
anticipated. In other words, depending on the movements of the business environment,
immediate strategic decisions can be taken, and internal resources can be immediately
reassigned and capabilities developed to either prevent potential threats or capitalise
potential business opportunities (Brueller et al., 2014; Junni et al., 2015). Therefore, strategic
agility can be considered a crucial agility for private HEIs to manage the rapid changes that
are disrupting their organisational performance and future business sustainability
(Mukerjee, 2014). As such, the following assumption will be tested:
H4. Strategic agility has a significant influence on organisational performance.
2.2.3 Indirect relationship of strategic agility on organisational capabilities and organisational
performance. Organisational capabilities have been proven to positively influence
organisational performance, as they attribute towards effective development and
deployment of resources needed to gain competitive advantage (Onyango et al., 2015).
However, based on the current turbulent business environment, strategic agility is very much
needed, as internal and external changes could be anticipated, and quick strategic decisions
could be made and implemented (Brueller et al., 2014; Junni et al., 2015; Muthuveloo and Teoh,
2013). From extant research, organisational capabilities of environmental scanning
(Takahashi et al., 2017; Trinh, 2015), marketing (Krush et al., 2016; Takahashi et al., 2017;
Wilden and Gudergan, 2015) and organisational learning (Jain and Moreno, 2015; Pham and
Tran, 2016) have significant influence on strategic agility, and in turn, strategic agility has
significant influence on organisational performance (Junni et al., 2015; Oyedijo, 2012; Verma
et al., 2017). On this basis, strategic agility is positioned as a mechanism that intervenes
between the relationship of organisational capabilities and organisational performance. As
such, the following assumptions will be tested:
H5. Strategic agility has a mediating effect on environmental scanning capability and
organisational performance.
H6. Strategic agility has a mediating effect on marketing capability and organisational
performance.
H7. Strategic agility has a mediating effect on organisational learning capability and
organisational performance.
Figure 1 captures all the proposed relationships examined in the study.
APJBA
12,3/4
Environmental

Organisational capabilities
scanning
H1
H5, H6, H7
H2 Strategic H4 Organisational
Marketing
228 agility performance

Figure 1. H3
Proposed Organisational
research model learning

3. Research methodology
This quantitative study used a Web-based survey targeted at the private higher education
population registered with the Ministry of Higher Education as of April 2018. The
respondents were purposively sampled from 375 private HEIs in Malaysia. Only one
respondent per private HEI from the top management level was invited to participate. These
respondents were considered to have in-depth knowledge and experience to provide
responses that are relevant and accurate regarding their organisation. The sample size for
statistical data analysis recommended is in the range of 30–500 (Sekaran and Bougie, 2013),
or 100 or more (Hair et al., 2017). As such, a minimum sample size of 100 was deemed sufficient
for the study. At the end of the data collection period, 155 responses were received, denoting a
41.33% response rate.
The demographic profile of the respondents is that the majority of them (65.1%) are the
top personnel of president/CEO and vice-chancellor. Of them, 46.4% have more than ten years
of working experience in their organisations. The demographic profile of the organisation
indicates that colleges formed the largest group of respondents, whereby 50.3% are small-
sized organisations, and majority (70.3%) are well established for more than ten years
(Table 1).

Demographic profile
Respondent % Their organisation %

Designation Type
President/CEO 54.8 University 14.8
Vice-chancellor 10.3 University college 10.3
Deputy vice-chancellor 5.2 Foreign branch campus 3.2
Director 9.7 College 71.6
Dean 3.9
Head 9.0 Size (student enrolment)
Manager 7.1 600 or less 50.3
601–1,999 26.5
2,000 or more 23.2
Experience in the organisation Years of establishment
1–5 years 29.7 1–5 years 9.0
6–10 years 23.9 6–10 years 20.6
11–15 years 14.2 11–15 years 9.7
Table 1. 16–20 years 14.8 16–20 years 12.9
Demographic profile More than 20 years 17.4 More than 20 years 47.7
The study contained five constructs, and measurement items for each of the constructs were Vital
adapted from past studies. First, measurement items for organisational performance (ten organisational
items) were adapted from Chen et al. (2009) and Cruke and Decramer (2016) such as achieves
financial stability with reserves, increases graduation rate, improves internal processes and
capabilities
strengthens employee training and development. Second, measurement items for
environmental scanning (four items) were adapted from Trinh (2015) and Takahashi et al.
(2017) covering items such as monitors broad trends in the external business landscape and
notifies important external changes. Third, measurement items for marketing (four items) 229
were adapted from Takahashi et al. (2017) such as invests heavily to create a strong market
presence. Next, measurement items for organisational learning (four items) were adapted
from Pham and Tran (2016) such as maintains strong networking to acquire information.
Finally, measurement items for strategic agility (ten items) were adapted from Trinh (2015)
and Krush et al. (2016) such as continuously anticipates the needs of customers, makes decisions
without approval from HQ and implements changes needed quickly. In all cases, a six-point
Likert scale (1 5 strongly disagree until 6 5 strongly agree) was used respondents from
taking a neutral stand (Sekaran and Bougie, 2013).

4. Analysis and results

Common method bias, which is seen as a possible threat to the validity of the research due to
acquiring data from a single source, was assessed with Harman’s single-factor test
(Podsakoff et al., 2003). The result of the unrotated principle axis factoring method on all
measurement items revealed that seven factors extracted with eigenvalues greater than 1.0
accounted for 63.54% of the total variance. The largest variance was explained by a single
factor at 40.36%, which is below the recommended value of 50%. This indicates that common
method bias is not present in the study.
The research model was assessed with partial least squares structural equation modelling
(PLS-SEM) software called SmartPLS version 3.0 (Ringle et al., 2015). PLS-SEM was used in
the study because of its usefulness in prediction and enhancement of existing theory.
Additionally, it is able to cater for small sample sizes. The study followed the two-step PLS-
SEM procedure recommended by Hair et al. (2017).
First, the measurement model was tested for validity and reliability. The results (Table 2)
indicated that the measurement items had convergent validity because all factor loadings
(except OP1, OP2 and SA6) were more than the recommended 0.6 value, and all average
variance extracted (AVE) values exceeded the 0.5 criteria (Hair et al., 2017). In addition,
discriminant validity was established between the constructs (Table 2) as the heterotrait-
monotrait (HTMT) values were all less than the threshold value of 0.90 (Gold et al., 2001).

Reliability and convergent validity Discriminant validity – HTMT

Loading
Construct Item range AVE CR 1 2 3 4 5

1. Environmental ES1- 0.825–0.905 0.757 0.926 ***

scanning ES4
2. Marketing M1-M4 0.734–0.768 0.555 0.833 0.812 ***
3. Organisational OL1- 0.704–0.875 0.661 0.906 0.813 0.892 ***
learning OL5
4. Strategic agility SA1- 0.699–0.824 0.639 0.941 0.721 0.777 0.816 ***
SA10
5. Organisational OP2- 0.643–0.830 0.559 0.910 0.468 0.571 0.622 0.575 *** Table 2.
performance OP9 Measurement model
Note(s): OP1, OP10 and SA6 were deleted because of low loadings results
APJBA Internal consistency reliability was also established (Table 2), as the composite reliability of
12,3/4 all constructs was more than the required 0.708 value (Hair et al., 2017).
Second, collinearity issue was tested among the constructs prior to assessing the
structural model. The results revealed no collinearity issue, as the tolerance value and
variation inflation factor (VIF) for all constructs met the criteria of more than 0.2 and less than
5.0, respectively. Next, the structural model was tested for the hypothesised relationships.
A bootstrapping resampling of 1,000 samples was used to assess the significance of path
230 coefficients, loadings and weights. The indirect effect of strategic agility was tested using
Preacher and Hayes’ (2008) approach whereby the path coefficients have to be significant,
and the bootstrapped confidence intervals have no zero in between the lower and upper limits.
Based on the assessment carried out, all hypothesised relationships were supported (Table 3).
As such, it is evident that environmental scanning, marketing and organisational learning are
significant predictors of strategic agility, explaining 60.8% of its variance, while strategic
agility is a significant predictor of organisational performance at 27.9%. Therefore, based on
the recommended criteria of Cohen et al. (2003), it can be concluded that the structural model
has high predictive power to explain the main constructs of strategic agility and
organisational performance, as the R2 values for both constructs are more than 0.25.
Lastly, IPMA was also carried out based on Hair et al.’s (2017) procedure. IPMA is an
extension of the PLS-SEM analysis and is able to provide additional information on the actual
performance of each construct. At the same time, the importance–performance map (Abalo
et al., 2007) provides further interpretation of the IPMA. This is pertinent for the study, as new
insights could be gained for further managerial actions (Table 4 and Figure 2). Among the

Standard
Relationship beta (β) t-value Decision

H1: Environmental scanning capability has a 0.209 2.762** Supported

significant influence on strategic agility
H2: Marketing capability has a significant influence 0.158 2.224* Supported
on strategic agility
H3: Organisational learning capability has a 0.493 5.653** Supported
significant influence on strategic agility
H4: Strategic agility has a significant influence on 0.532 7.993** Supported
organisational performance
H5: Strategic agility has a mediating effect on 0.111 2.606** [CI: 0.031, 0.201] Supported
environmental scanning capability and
organisational performance
H6: Strategic agility has a mediating effect on 0.084 2.134* [CI: 0.002, 0.158] Supported
marketing capability and organisational
performance
H7: Strategic agility has a mediating effect on 0.262 4.331** [CI: 0.146, 0.380] Supported
Table 3. organisational learning capability and
Structural model organisational performance
results Note(s): **p < 0.01, *p < 0.05

Construct Importance (total effect) Performance (index value)

Table 4. Organisational learning 0.467 70.163

IPMA of strategic Environmental scanning 0.196 71.486
agility results Marketing 0.143 63.990
 100 Vital
Concentrate here
90 organisational
80 Environmental scanning
capabilities
Low priority Organisational learning
70 * *
*
60 Marketing
Performance

50 231
40
30
20
10 Possible overkill Keep up the good work
0 Figure 2.
0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 Importance–
performance map
Importance

three constructs examined against strategic agility, environmental scanning construct has
the highest performance, but it is not the most important predictor of strategic agility. By
contrast, organisational learning turned out to be the most important construct based on its
total effects on strategic agility. As for marketing, it has the lowest importance and
performance in the prediction of strategic agility, thus considered as low priority.

5. Conclusion and implications

Strategic agility is a necessity for private HEIs to perform well against the uncertainties, and
disruptions are found in the current business landscape. Despite the importance of strategic
agility on organisational performance, there are limited empirical studies of strategic agility
within the higher education context (Mukerjee, 2014). Further review on the extant literature
indicated scant attention on organisational capabilities of environmental scanning,
marketing and organisational learning as the right combination of capabilities for
strategic agility and its mediating effect on organisational capabilities and organisational
performance of private HEIs. To address these research gaps, the current study draws on the
dynamic capability theory to empirically analyse the capabilities and outcome of strategic
agility.
In light of the results obtained from the study, all of which corroborated past studies, it can
be concluded that strategic agility plays a crucial role in the organisational performance of
private HEIs in Malaysia. The proposed combination of organisational capabilities
(environmental scanning, marketing and organisational learning) was proven as strong
predictors of strategic agility. Furthermore, the results also revealed that through strategic
agility, the three organisational capabilities are able to have significant influence on
organisational performance.
First, from a theoretical standpoint, the empirical result of this study has managed to
reinforce the fundamentals of the dynamic capabilities theory. In particular, sensing
opportunities and threats, seizing opportunities and shaping or transforming resources could
be attained through the three new dimensions of organisational capabilities – environmental
scanning, marketing and organisational learning – which were examined in this study. The
result also further extends Schilke et al.’s (2018) content analysis review of dynamic
capabilities in which organisational factors of resources and capabilities are considered as
antecedents of dynamic capabilities. However, more than this, the research framework used
APJBA in this study has demonstrated its applicability in examining both the direct and indirect
12,3/4 effects of strategic agility as a causal mechanism for organisations to perform well in current
dynamic and disruptive business environment. There is a common thread among the three
main organisational capabilities of environmental scanning, marketing and organisational
learning. Specifically, all have elements that can attribute to strategic agility. Thus,
organisations leveraging these three main organisational capabilities should acquire
strategic agility. Focusing on strategic agility should then enable higher organisational
232 performance. Accordingly, the positive outcome of the study has extended the body of
knowledge of dynamic capabilities in the context of higher education and provided new
insight for the top management of private HEIs.
Second, from a practical standpoint, the results of the hypothesis testing, together
with IPMA, an additional analysis that focuses on the importance and performance of
each individual organisational capability, revealed several implications that need the
attention of the top management of private HEIs in Malaysia. Ultimately, organisational
learning is by far the most important capability among the three organisational
capabilities examined in the study. It is, therefore, essential that private HEIs should
focus their attention on their organisational learning capability, e.g. have strong higher
education networking by attending conferences, seminars and workshops. Through
these networking events, private HEIs would be able to keep abreast with current or
potential changes and trends that might disrupt the academic business landscape.
Specifically, private HEIs would be in position to acquire new information, sense or
anticipate potential threats or opportunities. Consequently, private HEIs should prioritise
the practice knowledge sharing within their organisations for their people to have new
ideas and come out with new approaches that can have positive impacts on their strategic
agility and overall organisational performance. Next, environmental scanning is revealed
as the second important capability, and that the private HEIs are already performing well
in this capability. Nonetheless, as the higher education sector is intensely competitive,
private HEIs should continue to have continuous awareness on the market changes as
inputs for their corporate strategies. Besides that, new potential business opportunities
could be sensed out when private HEIs keep close tabs on the market pulse. Lastly,
although marketing capability is revealed as low priority in the IPMA quadrant, there is
room for improvement, as this capability has the lowest performance compared to
organisational learning and environmental scanning. Private HEIs could consider
product differentiation so as to stand out against their competitors. This would
eventually enable private HEIs to have a stronger presence in the higher education
market as they are able to meet the changing demands of their existing or potential
market segment.
Therefore, these insightful findings based on the additional IPMA have not only managed
to extend the body of knowledge in strategic agility, but have also provided significant
contribution for private higher education. Top management of private HEIs would now have
a better understanding on what to prioritise in their development and deployment of
resources to build capabilities needed for strategic agility. This means that private HEIs
would be able to save cost, time and energy in their quest to optimise their organisational
performance, and in the long run, their business sustainability (Chan and Muthuveloo, 2019).
Finally, this would also enable the nation to achieve its aspiration of being the regional
education hub.

6. Limitations and future research

There are several limitations in the study, which could also point towards future research.
First, although the study covered only the population of the private higher education sector in
Malaysia, the findings should only be interpreted in the context of study. Future studies could Vital
expand this study to include the public higher education. Second, the proposed research organisational
model could be further enhanced with other factors that were not included in the study. For
instance, different leadership roles and organisational types could be added as moderators
capabilities
that could affect the relationships between organisational capabilities, strategic agility and
organisational performance. Third, the method of data control to ensure that the respondents
are from top management created over dependence on a single source data. From the test
results, although common method bias was not present in the study, future research could 233
focus on a multiple informant survey to prevent different strategic perceptions of their
organisation.

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About the authors

Josephine Ie Lyn Chan has recently completed her DBA at Graduate School of Business, Universiti Sains
Malaysia, Malaysia. Her research interests include strategic management, organizational performance
and TESL (creative teaching and active learning). She received her MEd in TESOL from Universiti Sains
Malaysia, and BEd in TESL (with Health and Physical Education) from Universiti Malaya, Malaysia.
She also holds qualifications in Quality, Environmental, Occupational Health and Safety Management
Systems and is an experienced ISO and OHSAS Consultant and Auditor. She has previously worked in
Indonesia and China. Josephine Ie Lyn Chan is the corresponding author and can be contacted at:
josephinechan.work@gmail.com
Ir. Dr. Rajendran Muthuveloo is a Senior Lecturer at the Graduate School of Business, Universiti
Sains Malaysia, Malaysia. His research interests include corporate strategy, strategic agility, futuristic
business, global scenario planning and human capital management. He received his PhD (Management)
from Universiti Putra Malaysia, MBA from University of Strathclyde (UK), and Bachelor of Chemical
Engineering (Hons) from Universiti Malaya, Malaysia. Ir. Dr. Rajendran is also a Professional Engineer
(Chemical) registered with Board of Engineers Malaysia. Ir. Dr. Rajendran has published numerous
articles in international journals and has authored three books in Corporate Strategy and Human Capital
Management.

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