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Distributed
Investigate the role of distributed leadership and
leadership and strategic flexibility strategic
flexibility
in fostering business
model innovation 93
Suqin Liao
University of Science and Technology of China, Hefei, China
Zhiying Liu
School of Management, University of Science and Technology of China Hefei,
CN Hefei, CN, Hefei, China
Lihua Fu
University of Science and Technology of China, Hefei, China, and
Peichi Ye
Northeast Normal University, Changchun, China

Abstract
Purpose – The purpose of this paper is to examine whether the new distributed leadership patterns is an
important driver for innovating business model. By synthesizing insights from the dynamic capabilities
perspective, it also explores how and when distributed leadership enhances the business model innovation
(BMI) by involving strategic flexibility as a mediator and environmental dynamism as important
contingency.
Design/methodology/approach – A survey via questionnaire was conducted with 262 CEOs and 262
senior managers from Chinese high-tech companies that provided the research data. Structural equation
modeling and linear regression analyses were used to test the time-lagged data, and then the main research
questions were responded to.
Findings – The analysis reveals that distributed leadership has a significant direct influence on BMI, and
that distributed leadership also indirectly affects BMI by enhancing strategic flexibility. Environmental
dynamism strengthens the positive effect of distributed leadership on BMI under strategic flexibility.
Originality/value – This paper advances and enriches the emerging stream of BMI research. It presents
an innovative conceptual analysis of the antecedents of BMI, and it shows a possible solution for BMI that
complements extant research that considers which and how the leadership style of the organizations affects
the business model change.
Keywords Business model innovation, Distributed leadership, Dynamic capabilities,
Strategic flexibility
Paper type Research paper

Introduction
With rapidly evolving technology in an uncertain environment, the increased richness of Chinese Management Studies
data set challenges high-tech firms seeking competitive advantages. Digital technology Vol. 13 No. 1, 2019
pp. 93-112
facilitates direct interaction with customers that have heterogeneous demands and © Emerald Publishing Limited
1750-614X
accelerates data sharing throughout the process of value creation (Rabetino et al., 2016). In DOI 10.1108/CMS-02-2018-0420
CMS response to these challenges, firms are urged to identify key resources and redesign their
13,1 profit formula (Foss and Saebi, 2017a). Supporting this idea, researchers have emphasized
that business model innovation (BMI), which is a strategy of engaging in recreating
customer value and value delivery methods, is related to competitive advantage
(Chesbrough, 2010). However, reconfiguring a business model is difficult for most firms
given the frequently unforeseen external changes and complicated processes (Foss and
94 Saebi, 2017a).
Although prior researchers (Guo et al., 2015; Chesbrough, 2010) have shed light on the
ways for BMI by proposing the experiment process (Sosna et al., 2010), Christensen et al.
(2016) and Chesbrough, (2010) proposed that the limitation of a leader’s capabilities and
existing conflicts of an enterprise’s asset deployment will hinders this process. For example,
the prominent startup called Better Place, which aims to revolutionize electric cars by
equipping them with switchable batteries, went bankrupt after a BMI failure. The reason for
this is that the top leaders ignored the real demands of consumers. Thus, a successful
leadership for organizational changes must be considered; additional demands on
the leadership practice exist (Foss and Stieglitz, 2014). However, most studies adopt a heroic
leadership approach that investigates how BMI is affected by the leadership of one
“superhero.” This “superhero” is the top manager or the CEO (Teece, 2010). However, top
leaders lack expertise, and function leaders lack leadership to address these activities
effectively over the entire organizations. Therefore, it seems reasonable to stress that the
process of BMI poses various and interdependent leadership requirements.
Emergent research has identified another perspective to the role of leadership and
proposed that leadership practice may also flow laterally within organizational units
through distributing leadership responsibilities among low-level leaders and members.
Distributed leadership is popularly described as “post-heroic” (Badaracco, 2001; Cannatelli
et al., 2016), which indicates that the leadership function in an organization is not just
attributes or behaviors of individual “top leaders” but rather those of other leaders and
members in the organization who have relevant heterogeneous knowledge and
responsibility (Spillane et al., 2007). This study contends that the latter perspective on
leadership, although largely overlooked so far, has a significant potential to better overcome
the limitations of top managers in achieving BMI because no one person in the organization
gap has the authority and the capability to overcome all the barriers and conflicts then to
innovate the business model (Chesbrough, 2010). Moreover, managers must be capable of
adopting a sequence of interrelated actions to innovate business models effectively.
Another consideration is that the implementation stage of the process for BMI also
encounters the conflict in which existing structures and resources cannot satisfy the
demands of the new business model (Chesbrough, 2010). That is to say, most often,
leadership practices can be analyzed and are vulnerable to imitation by competitors, thereby
indicating that these practices are insufficient at times in supporting a durable competitive
advantage (Teece, 2014). Thus, something more that refers to dynamic capabilities (DC) is
required (Leih et al., 2014). Strategic flexibility refers to reallocating and reconfiguring the
abilities of firms to handle environmental changes that involve organizational resources,
processes and strategies (Sanchez, 1995). This ability can help organizations in adapting to a
new business model, resolving the tension between existing assets and new transaction
structure, and then stimulating BMI. In addition, as anecdotal evidence suggests, the
behavior of leaders and new business models are frequently affected by industry
environment changes (Gerasymenko et al., 2015). Strategy researchers are divided into those
who consider the effect of the environment on BMI (Steers et al., 2012) and those who
examine the behavior of leaders and organizational members (Kempster et al., 2014). To
address these questions, the dynamic environment is considered as having a moderating Distributed
role to address the meaningful question regarding external contexts, in which a distributed leadership and
leadership effectively affects BMI.
This study contributes to academic research and managerial understanding in three
strategic
ways. First, distributed leadership can overcome the dilemma of management for BMI. This flexibility
phenomenon enriches the research on the prerequisites of BMI. Moreover, the distributed
leadership affects BMI by promoting organization engaged in strategic flexibility. From this
viewpoint, further research on leadership and BMI is conducted. This can also respond to 95
prior scholars’ question of how an organization can innovate its business model (Casadesus-
Masanell and Zhu, 2013), of which style of leadership is more effective for BMI (Chesbrough,
2010). Second, this study not only extends the research of distributed leadership from a
pedagogy to strategic leadership but also considers environmental dynamism and examines
the relationship between distributed leadership and BMI. This helps in understanding the
effectiveness of distributed leadership in an external environmental context.

Theoretical background and hypothesis development

Leadership barriers and internal conflicts of BMI
A business model refers to the articulation of the logic by which a business creates and
delivers value to the customers (Amit and Zott, 2001). A growing body of studies espouses
the importance of innovating a business model (Casadesus-Masanell and Zhu, 2013; Foss
and Saebi, 2017a). However, achieving BMI requires leaders to develop an experimentation
to manage a massive corporate-wide process that fundamentally affects all employees and
all process activities (Foss and Stieglitz, 2014). The experimentation process of BMI involves
various conflicts (Santos et al., 2009) such as, resource inertia (Foss and Saebi, 2017a),
opportunity identification (Guo et al., 2015), path-dependency (Chesbrough, 2007), lack of the
enabler of leadership style (Khanagha et al., 2014) and lack of discussion on overcoming
these barriers (Doz and Kosonen, 2010).
When a new business model is conceptualized, managers may face an uncertain market
and have formed their mental models of the environment on limited or imperfect cognitive
representations. Thus, managers will be hampered by their own “bounded rationality”
(Casadesus-Masanell and Zhu, 2013). In addition, BMI requires changes in internal
organizational structure and control, and even in culture (Foss and Stieglitz, 2014).
Therefore, firms require different leadership interventions, and the managers are needed to
be capable of differentiating and integrating the strategic agenda for each part of BMI.
However, differentiation and interaction are typically hindered by the limited knowledge of
top management teams on strategic options and the tendency of top managers to coalesce
around a single worldview (Heavey and Simsek, 2014). Furthermore, when the firms adopt a
new business model, a new transaction logic may often conflict with existing industry
structures and the underlying configuration of assets, thereby threatening the on-going
value of the company, which means managers are likely to resist experiments (Chesbrough,
2010; Souto, 2015). Thus, these barriers and conflicts of BMI requires firms to address these
leadership issues to recognize the opportunity, integrate the resource and coordinate the
assets and further eliminate these conflicts, which can ensure an effective governance of the
BMI process (Foss and Saebi, 2017b).

The role of distributed leadership and strategic flexibility

Given the hurdle of BMI, we propose that distributed leadership and strategic flexibility
demonstrate considerable potential for facilitating BMI. Distributed leadership has been the
focus of substantial attention from academics and practitioners in recent years
CMS (Bolden, 2011). At a general level, distributed leadership has been conceptualized on the
13,1 basis of different perspectives, such as dynamic interaction (Spillane et al., 2007), quantity
(Kempster et al., 2010) and contextual learning (Gordon, 2002). Although distributed
leadership has been initially analyzed within educational systems (Heck and Hallinger,
2010), emergent research has proposed that the enterprise context is a promising setting for
distributed leadership (Cope et al., 2011). Based on previous studies (Gronn, 2002; Hulpia
96 et al., 2009), we have to acknowledge that distributed leadership is about more than formally
distributing leadership functions, and leadership can also be distributed among the
organizational members in an informal manner which is governed by the individual
interactions. Therefore, the cooperation of the leadership and the interaction of members as
a whole are emphasized. In the enterprise context, distributed leadership is considered as a
collective operation process emerging through the interactions of multiple actors, it is spread
over a number of individuals and the organizational tasks are accomplished through the
interaction of multiple leaders and employees (Kondakci et al., 2016). The collaborative
structure implies that organizational leaders and employees receive support from other
leaders, thereby generating a mutual reinforcement, and thus, a more effective management
team managing the company, which was considered as leadership support (Hulpia et al.,
2009). On the other hand, the more complex management structure, the more conflicts
between the leaders and organizational members (Hristov and Zehrer, 2017). Thus, the
leaders and employees should have been characterized by group cohesion with clear
agreements about the role divisions and an orientation towards the same goals, which refer
to leadership cooperation (Hulpia et al., 2009). In this sense, we can state that distributed
leadership depends jointly on the leadership support and leadership cooperation.
In contrast to shared leadership, for example, a modern leadership approach is
internalized through voluntary cooperation and interaction based on the competencies of all
stakeholders and a sense of responsibility (Carson et al., 2007). The “followers” of the
distributed leadership are not designated as holders of formal leadership roles such as other
units’ support staff – can also be informal leaders and may contribute to leadership
(Fitzsimons et al., 2011). For example, according to Fitzsimons et al. (2011), distributed
leadership goes beyond acknowledging that multiple individuals who are involved in the
leadership practice (termed “leader plus” or shared leadership), by also exploring the
interactions between individuals and investigating the situation in which leadership is
enacted (distributed leadership). As distributed leadership practice embedded in
organizational process, it represents the important organizational ordinary capabilities that
comprise rare, valuable and non-substitutable resource (Gronn, 2002). Therefore, distributed
leadership reflects an important strategic resource to overcome the cognitive barrier and
then to innovate the business model.
Drawing on the DC theory, BMI is as seen as changing as a result of exogenous changes
interact with internal resources and capabilities (Amit and Zott, 2001). Therefore, not only
non-substitutable resource but also DC are needed to help firms achieve competitive
advantage in response to external rapid change and conquer the internal barrier and
organizational inertia. (Tallott et al., 2016). Strategic flexibility is a multidimensional
concept, which is composed of resource flexibility and coordination flexibility (Zhou and
Wu, 2010; Nadkarni and Narayanan, 2007). Resource flexibility refers to the inherent
flexibility in resource allocations in pursuing alternative courses of actions, and
coordination flexibility emphasizes on flexibility in coordinating the use of firm resources
(Sanchez, 1995). Wei et al., (2014) pointed out that firms may dynamically manage resources
to adapt to a dynamic environment by building resource flexibility and coordination
flexibility. Thus strategic flexibility can be regarded as a dynamic managerial capability Distributed
required by BMI (Monteiro et al., 2017; Eisenhardt and Martin, 2000). leadership and
Taken together, we maintain that distributed leadership holds a significant potential to
help leaders overcome leadership barriers within the process of BMI. We also posit that
strategic
distributed leadership can also facilitate BMI by improving the organizational strategic flexibility
flexibility, arguing that BMI depends on leaders’ practice processes that enable them to
reconfigure the resources and assert flexibility to adopt a new business model.
97
Linking distributed leadership with BMI
Distributed leadership can affect BMI given the following reasons. First, by facilitating a
spontaneous collaboration, distributed leadership enhances the interdependence and
complementarily of organizational leaders and members (Kempster et al., 2014).
Organizational leaders are more likely to contribute ideas and make their unique
information accessible to the other members (Spillane et al., 2007). In this way, distributed
leadership practice promotes greater usage of members’ distinct expertise (Cannatelli et al.,
2016). This practice enhances the leader’s capability to address the differentiation and
integration challenges for BMI. In addition, organizational leaders and members who are
engaged in distributed leadership will exchange information, take actions and continuously
adapt to feedback about the actions of other people (Kondakci et al., 2016; Beycioglu and
Harris, 2011). Leadership practice becomes stretched across various contexts through
interaction among different participants (Hristov and Zehrer, 2017), thereby providing a
wider practice base that enables organizations to capture comprehensive information
feedback timely in the process of BMI experimentation, and then craft a various
comprehensive strategies for pursuing BMI (Sheppard et al., 2010).
Second, through supporting each other, distributed leadership leads to the process of
information and knowledge sharing, and it may extend the knowledge boundary of
organizational members (Hristov and Zehrer, 2017). In other words, if organizational
members possess diverse knowledge and their knowledge is shared, enriching the expertise
of each member (Kondakci et al., 2016). An interdependence among organizational leaders
and members will be stronger, which can reduce the likelihood of decision errors. This is
because when two or more people share roles, they tend to cross check each other’s
performance (Fitzgerald et al., 2013). Thus, the “bounded rationality” of managers will be
reduced. Furthermore, by increasing belief in self-determination, distributed leadership may
improve the leaders’ and members’ successful experience of work (Gronn, 2002; Harris et al.,
2008). Such leadership might allow leaders and members to better forecast and respond to
the demands of the organizational environment. In so doing, the leaders are less likely to fall
back on conventional thought and approach, but rather generate divergent insights (Zajac
et al., 2014). The shadow of managerial decisions made in the past will be eliminated, and
thus, benefit BMI (Dasilva and Trkman, 2014).
Finally, distributed leadership can serve to resolve the conflict between an existing value
and an unforeseen risk. A new business model may often conflict with the more traditional
configurations of firm assets (Amit and Zott, 2001; Chesbrough, 2010). Through shifting the
frame of reference from self-interest to the priorities of the entire organization, distributed
leadership encourages cooperation in the course of conflicts (Gronn, 2002; Cope et al., 2011)
and then facilitates BMI. An engagement in on-going negotiation and role sharing is a
requirement of organizational members from distributed leadership, which supports the
development of shared perceptions and aspirations for organizational success (Hoch, 2013).
Shared emotions can make leaders and staff members realize that both the success and
failure of organizational activities result from the collaborative effort (Beycioglu and Harris,
CMS 2011). That is, members engaged in distributed leadership practice will have higher
13,1 commitments to the entire organizational success (Hulpia et al., 2009), thereby resulting in
the increased likelihood of innovating the business model for the good of the organization.

H1. Distributed leadership is positively associated with the firm’s pursuit of BMI.

98
Mediating role of strategic flexibility
By positively forcing to resource flexibility and coordinate flexibility, distributed leadership
has a positive influence on strategic flexibility. Kondakci et al. (2016) found that distributed
leadership promotes collaborative learning, may help in the collective filtering of
information about new resource opportunities and distributes the resource information to
those who can make sense of it. This phenomenon can facilitate resource allocation. In
addition, through encouraging the members who have complementary expertise to interact
with one another, organizations can combine members’ expertise in new ways to develop
and allocate new resource (Tjosvold, 2015). Distributed leadership can also facilitate
coordinate flexibility. By promoting efficiency of information collection and sharing
(Sheppard et al., 2010), distributed leadership strengthens the coordination among different
functional departments and business units, and then it enhances the ability of the enterprise
to balance with exploratory behavior (Yinan et al., 2014), so as to facilitate the flexibility in
coordination. Prior studies (Wang et al., 2015) also suggested that the shared vision
developed by distributed leadership can facilitate a loosely coupled organizational structure
and holds it together as a set of shared goals, which will be the only effective means of
establishing coordination and control.
Previous literature has also suggested that strategic flexibility positively affects BMI.
Andreeva and Ritala (2016) suggested perceiving the requirement for change and then
accomplishing it require strong DC. Resource flexibility focuses on flexibility in resource
allocations and product designs, in which the firm is allowed to use new technologies and
experiment with different product variations (Zhou and Wu, 2010). Thus, resource flexibility
can enable the experiment process for BMI. Nadkarni and Narayanan, (2007) argued that the
experimentation is a crucial mean of enabling organizations to handle the conflicting assets,
that is, if no conflicting assets existed, adding a new business model would pose few
managerial challenges (Kim et al., 2015). Coordinate flexibility can alleviate the
organizational routine inertia, which helps the firm break down its institutionalized business
model processes and explore new alternatives (Wei et al., 2014). Therefore, as a dynamic
management capability, strategic flexibility enables a firm to identify and orchestrate the
necessary resources for designing and innovating the business model (Teece, 2010).
Based on resource – DC – competitive framework, and in view of the conflicts resist in
structural and resource, we posit that the influence of distributed leadership on BMI is also
indirect. As proposed above, distributed leadership facilitates strategic flexibility, and strategic
flexibility facilities BMI. That is, strategic flexibility is a conduit by which distributed leadership
realizes its contributions to BMI. Consequently, we propose the following.

H2. Strategic flexibility will mediate the positive relationship between distributed
leadership and BMI.

Facilitating role of environmental dynamism

Thus far, we contended that distributed leadership stimulates BMI by encouraging the
organizations to engage in strategic flexibility. However, extant research has indicated
turbulence environment as an important contingency for the effectiveness of leadership Distributed
practice (Carmeli et al., 2011; Schilke, 2014) because it requires designing and cultivating leadership and
more adaptive organizational systems with a high level of agility and flexibility (Yitzhack
et al., 2015). Hambrick and Mason (1984), for example, contend that environment dynamism
strategic
is an important moderator of the linkage between top management team heterogeneity and flexibility
performance. Then, we provide arguments for how higher levels of environmental
dynamism amplify the hypothesized relationships between distributed leadership and
strategic flexibility. 99
Environmental dynamism is characterized by unpredictable and rapid change, which
increases uncertainty for individuals and firms that operate within them (Hambrick and
Mason, 1984). This mechanism may improve the effectiveness of distributed leadership in
facilitating the strategic flexibility in BMI process. To alleviate the uncertainty, firms may
create a higher level of interdependence among subunits in the organization and in turn,
between the leaders of these various units representing the unit members (Carmeli et al.,
2001; Mehra et al., 2006), which can enhance the influence of distributed leadership. In fact,
Hristov and Zehrer, (2017) showed that distributed leadership will be increasingly effective
during the crisis because traumatic situations activate the emotional centers of the brain,
that is, the areas which are influenced by the vision that cooperates and interacts behaviors
inspire in individuals and teams. Thus, a dynamic environment provides leaders and
organizational members the opportunity to engage in resource allocation and timely
coordination regarding BMI processes rather than centralize such decision.
In addition, as it increased complexity and ambiguity, a dynamic environment was
coupled with the requirement to respond rapidly to complex market conditions and was led
to new emerging patterns of inter-dependency and coordination which constitute a shift in
the division of staff within organizations (Gronn, 2002). This may enhance the
organizational member’s ability to allocate the different resource in other parts and ways to
coordinate the resource. Moreover, distributed leadership encourages a strong sense of
collective identity, facilitates positive interpersonal relationships and helps create an
effective climate in organizations (Fitzgerald et al., 2013). A firm with distributed leadership
pattern tends to encourage individuals to view the changing environment as a source of
opportunity (Cannatelli et al., 2016). In this sense, turbulence environment endows
distributed leadership to generate a feeling that organizational flexibility is necessary to
deal with external changes. Within a stable environment, a team of heterogeneous manager
may view the collective practice as unnecessary and one that prefers directive leadership.
Eisenhardt and Martin (2000) also argued that DC exert a relatively weak influence on the
competitive advantage of firms when the environment is stable. Consequently, distributed

Figure 1.
Research framework
of this study
CMS leadership more easily facilitates strategic flexibility, which in turn affects firm change in a
13,1 highly dynamic environment

H3. Environmental dynamism moderates the positive indirect effect of distributed

leadership and BMI in such a way that the indirect effects through strategic
flexibility strengthen (weaken) as the degree of environmental dynamism
increases (decreases).
100
Methods
Sampling and data collection
To test the theoretical model, we randomly selected a sample of firms using data from a
leading market research/databank company in China. The following prerequisites were
involved in the sample: first, the availability of complete contact details was necessary; and
second, the sample firm excludes micro-business (company with <20 workers) to avoid a
heterogeneity problem. Our sample covers a broad range of high-tech industries
(telecommunication, pharmaceutical and biopharmaceutical, manufacturing, new material
and chemicals and IT) at Yangtze River Delta and Pearl River Delta, China. The high-tech
industries in the two districts are faced with a strenuous competition and need to urgently
develop BMI. We conduct stratified random sampling, taking the seven industries and
geography into consideration. Request emails were sent to 700 senior executives requesting
their help in contacting their firms’ CEOs. The email gave a detailed description of the
study’s aim. In total, 497 responses were received, and 394 senior managers agreed to help
this research. Following the procedure of prior research efforts (Fitzgerald et al., 2013), the
senior executives were asked to interface with their CEOs, who share the strategic decision-
making process with the senior managers because CEOs wield enormous influence on the
business model events of their enterprises. The CEOs were asked to identify BMI and
strategic flexibility in their enterprise. The senior managers were chosen as the object for
they can perceive the top leaders’ action as well as the action of lower-level staff, which may
demonstrate the leadership distributed clearly (Heck and Hallinger, 2010). The CEOs and
senior executives were asked to complete a structured questionnaire.
This survey was conducted from June 2014 to March 2015 with a Web-based
questionnaire. A preliminary survey containing 45 samples was conducted to test the
reliability and validity of the scale. After this pre-test, 394 questionnaires to measure
distributed leadership and environmental dynamism were sent to the senior managers, and
347 surveys were returned. Half a year later, questionnaires to measure strategic flexibility
and BMI were distributed to the 347 CEOs of the first-period enterprises. The reason for
conducting a longitudinal survey is the lag periods between leadership patterns
implemented to change the organizational structure, group activity realized and change in
the business model. To confirm this time span, an additive question was attached in the pre-
test questionnaire: “How much time would be needed between leaders’ implementation of
the strategy?” The mean value returned was 6.2710 months (SD = 3.003). Two months later,
for second surveys, 296 questionnaires were returned altogether, of which 262
questionnaires were valid. The valid response rate was 37.4 per cent.
In total, 347 senior managers and 296 CEOs are involved in our survey; 66 per cent of the
sample members have worked in their firm for more than five years, and 17.2 per cent have
three to five years of experience within the firm; 35 per cent are of age above 45 years, 41 per
cent are of age between 30 and 40 years and 24 per cent are of age under 30 years; 72.2
per cent are men and 27.8 per cent are women. Of the 262 responding firms, almost half (44.7
per cent) are larger-scale enterprises, comprising at least 500 employees and, in many cases,
more than 1,000 employees. The sample contains organizations of a mean age of 11.02 (SD = Distributed
5.562) years; the members we observed all are come from local organization. leadership and
strategic
Measurement and construct validation flexibility
In the Appendix, we provide the measurement items and their validity assessments. The
construct of this study was measured using multi-item scales that were adapted from
existing research efforts. A pre-test was conducted, in which 20 senior executives were 101
requested to review the questionnaires. These managers indicated whether the items were
ambiguous and/or could not clearly reflect the constructs. This questionnaire was modified
in accordance with those suggestions and feedback received. All variables were measured
on a five-point Likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree). Factor
scores were estimated using the Anderson–Rubin method. The reliability testing reveals the
appropriateness of composite indexes (Cronbach’s alpha exceed the acceptable threshold
of 0.6)
We measure the dependent construct of distributed leadership using the scales which were
developed on the basis of the widely used scale of Hulpia et al. (2009). This scale is composed
of leadership cooperation and leadership support. The firms that engage in distributed
leadership practice distribute the leadership functions not only among formal leaders but
also between leaders and employees. Therefore, the items to measure the leadership
cooperation and leadership support focus on formal and informal distributions. To get
insights supporting the applicability of distributed leadership at the organizational level,
interviews were conducted with 20 senior executives from 10 firms, and interviewees
assessed the relevance of the items. The interviews yielded the CVI (content validity index)
which was used to assess the appropriate level of the items to represent the construct it
intends to measure (Sirén et al., 2012). Interviewees evaluated each item of the distributed
leadership on a scale from 1 to 4 (1 = not relevant, 2 = somewhat relevant, 3 = quite relevant,
4 = highly relevant). The CVI was calculated as the percentage of respondents who
evaluated the items as “quite relevant” or “highly relevant.” The results show that the CVI
attached to each item of distributed leadership are all above the recommended value of 0.8,
which indicates that the scale adequately reflects the connotation of distributed leadership.
A preliminary survey was also conducted to test the reliability and validity; the result shows
that Cronbach’s alpha and the loading of the items all exceeded 0.7. Therefore, we are
confident that the scale is reliable. The average variance extracted (AVE) for the preliminary
survey was 0.52, suggesting acceptable validity. After the second surveys, the Cronbach’s
alphas were evaluated for each dimension (0.791 and 0.772), and the Cronbach’s alpha for
this scale is 0.815. The loadings of the items ranged from 0.632 to 0.710, exceeding the
recommended value of 0.6 (Sirén et al., 2012). Overall, these results show that our measures
possess adequate reliability.
Strategic flexibility was measured using a six-item scale of Zhou and Wu (2010). The
measure captures the two dimensions of strategic flexibility (i.e. resource flexibility,
coordination flexibility). The first three items capture the extent of resource flexibility, and
the last three items were used to measure coordination flexibility. Cronbach’s alphas were
evaluated for each dimension (0.661 and 0.679). The Cronbach’s alpha for this scale is 0.815,
and the loadings of the items ranged from 0.678 to 0.81.
BMI is based on a eight-item scale adapted from Zott and Amit (2007), which was widely
used by prior research (Guo et al., 2015). The main loadings ranged from 0.623 to 0.748, and
the Cronbach’s alpha value for this scale is 0.856.
CMS For assessing Environmental dynamism, a four-item scale of Volberda and Van Bruggen
13,1 (1997) was used to measure environmental dynamism (Cronbach’s alpha = 0.784). The
loadings are all greater than 0.6.
For Control variables, in this study, firm size and firm age should be considered because
they are contextual variables that might potentially influence the result. Firm size is
measured as the number of employees. To examine whether different firm sizes pose various
102 influences on the BMI, and three dummy variables were coded according to prior research
(Huergo and Jaumandreu, 2004), which is in the light of the method proposed by Cohen and
Cohen (2003) (1 pertaining to this size; 0 otherwise). S1 is under 100, S2 is 101-500, S3 is 501-
1,000, with over 1,000 as the base differences in the level of BMI. Four dummy variables for
industry difference were coded (1 pertaining to this industry; 0 otherwise): IC1,
telecommunication; IC2, pharmaceutical and biopharmaceutical; IC3, manufacturing; IC4,
new material and chemicals; IT is the baseline.
To access the convergent validity, this study examines whether AVE was over the
minimum value of 0.50. The result shows that all the lowest AVE value is 0.502, suggesting
satisfactory convergent validity. We then assess the discriminant validity of the substantive
constructs in two ways. First, we conducted a four-factor measurement model (alternative
model strategy) in Table I. The result indicates that the four-factor measure model provides
a significantly better fit than other models. Second, using Anderson and Gerbing’s (1988)
paired construct test, three pairs of latent constructs (distributed leadership, strategic
flexibility and BMI) were formed, and each pair was tested. Two models were created for
each pair: a constrained model and an unconstrained model. In the constrained model, the
covariance is constrained to 1, but the covariance in the unconstrained model is freely
estimated. The result shows that the unconstrained model is significantly superior to the
constrained model (p < 0.001). Overall these results provide evidence of discriminant
validity. To comprehensively examine the degree of fitting, the research assessed the overall
measurement model containing all the items. The result generally yielded a relative good fit
( x 2/df = 1.771, CFI = 0.902, TLI = 0.893, SRMR = 0.049, RMSEA = 0.054). In sum, the
validity of these measurements is acceptable.
In Table II, we present the means, standard deviations and Pearson correlation of all
variables. The results suggest that to understand the roles of distributed leadership,
strategic flexibility and environmental dynamism in BMI, the examination of their
interaction is necessary.

Analysis and results

Hypothesis testing
Hierarchical regression and bootstrapping were used to test the above hypotheses, as this
analysis is particularly suitable for testing the hypothesized moderator mediation relations
(Preacher et al., 2007). Following the classic causal steps strategy proposed by Baron and
Kenny (1986), we first test whether the independent variable affects the dependent variable
significantly, then test the significant relationship between the independent variable and

Model x 2/df RMSEA CFI TLI SRMR

Four factors 1.771 0.054 0.902 0.913 0.049

Table I. Three factors 2.257 0.065 0.838 0.825 0.057
Discriminant validity Two factors 2.314 0.071 0.830 0.818 0.058
for the constructs One factor 2.456 0.075 0.811 0.795 0.060
 M SD 1 2 3 4 5 6 7 8 9 10 11

1. S1 0.1450 0.35281
/

2. S2 0.3969 0.49020
0.334*
/

3. S3 0.1527 0.36036
0.175**
0.344**
/

4. Firm age 11.02 0.70449 0.003
0.132*
0.047
/

5. IC1 0.5992 0.49099
0.172** 0.186** 0.261
0.233**
/

6. IC2 0.0267 0.16157
0.001
0.086
0.005 0.038
0.203**
/

7. IC3 0.1347 0.34493 0.182**
0.097
0.169** 0.077
0.488**
0.066
/

8. IC4 0.0878 0.28353 0.064
0.059
0.132* 0.155*
0.379**
0.051
0.124
/

9. Distributed leadership 3.7873 0.60975
0.010
0.059 0.081
0.025 0.307**
0.132*
0.099
0.182**
/

10. Strategic flexibility 3.7099 0.64768
0.073
0.025 0.049
0.030 0.257**
0.017
0.078
0.229** 0.542**
/

11. BMI 3.7111 0.59769
0.077 0.002 0.037
0.001 0.232**
0.035
0.134*
0.175** 0.551** 0.580**
/

12. envrionmental dynamism 3.7948 0.70449
0.096 0.056 0.052 0.023 0.238**
0.078
0.092
0.183** 0.483** 0.496** 0.465**

Notes: S1 under100, S2 101-500, S3 500-1000; IC1 Telecommunication; IC2 Pharmaceutical and Biopharmaceutical; IC3 Manufacturing; IC4 New Material and
Chemicals; ***p < 0.001; **p < 0.01; *p < 0.05 (two-sided test)
strategic

control variables
the constructs and
103
flexibility
Distributed

(N = 262)
Correlations among
Table II.
leadership and
CMS mediating variable, and finally, simultaneously put the independent variable and mediating
13,1 variable into the model. If the mediating variable significantly affects the dependent
variable and the influence of the independent variable on the dependent variable is
significantly reduced, the mediating effect is significant. Table III present results of this
process for the mediated hypothesis and moderated hypothesis.
Model 1 includes all the control variables. Model 2 includes the main effects of the
104 moderating variable (environmental dynamism). Model 3 includes the main effect of distributed
leadership and one moderator. Model 3 shows that the distributed leadership is significantly
and positively related to BMI ( b = 0.255; p < 0.001). The result satisfies the first step of the
causal steps, providing support for H1. Model 4 presents the result of the second step that
distributed leadership significantly and positively affects strategic flexibility (b = 0.202; p <
0.001), verifying H2 for mediation. Further, we consider the effects of the mediator on the
dependent variable. Model 5 reports that strategic flexibility positively affects BMI ( b = 0.254
P < 0.001). In Model 6, the study observes that strategic flexibility is positively associated with
BMI (b = 0.301; p < 0.001), and the influence of distributed leadership on BMI is reduced (b =
0.152; p < 0.001). In sum, the three conditions required for mediation were all confirmed. Those
results support H2, which suggests that distributed leadership affects the business model and a
meditating role is played by strategic flexibility.
Next, we test the interaction of environmental dynamism and distributed leadership,
plotting the result in Figure 2. First, the independent and moderating variables were
standardized to create interaction terms (Dawson and Richter, 2006). The moderation
hypothesis was tested in Model 7. Although both the simple effects show a positive trend, the
simple effect of distributed leadership on strategic flexibility is stronger among firms that
reported higher environmental dynamism (b = 0.104; p < 0.01). This finding supports H3.
To get a deeper insight into how the indirect effect differs according to the change of dynamic
environment, a process bootstrapping procedure was conducted to quantify the indirect effect at a
low level (
1 SD), mean and high level (þ1 SD) environmental dynamism (Preacher et al., 2007).
Table IV shows the indirect effect at these values of environmental dynamism and provides 95
per cent confidence level intervals for the effect. There is no zero contained between the two
confidence intervals, which indicates that the direct effect is significant (p < 0.001) at each level of
the moderator. In addition, we also can find that the indirect effect of distributed leadership on
BMI is stronger at a high level (b = 0.43) than at low level (b = 0.33) environmental dynamism.

Method validation
To avoid the common method bias, several techniques were adopted, including randomizing
the order of the different variables, ensuring anonymity to the respondents and surveying the
respondents over a significant period of time to measure the independent and dependent
variable at different times (Podsakoff and MacKenzie, 2003). The independent and dependent
variables were measured using different respondents. Senior executives were asked to measure
the independent variables, whereas CEOs were used to measure the dependent variables after
half a year. This method was designed to capture accurate measurement of BMI. In addition,
Harman’s factor test was conducted to control the common method bias. All variables were put
into exploratory factor analysis, and all factors together account for 60 per cent of the total
variance. This result indicates that there is no common method bias.

Discussion and conclusion

This study aimed at examining the relationship between distributed leadership, strategic
flexibility and BMI on the basis of DC theory. Although scholars have been attempting to
discover the antecedent factors of BMI (Casadesus-Masanell and Zhu, 2013), there is a paucity
 Business model innovation Strategic flexibility Business model innovation Strategy flexibility
Predictor Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7

SI
0.084
0.057
0.065
0.052
0.032
0.045
0.036

S2
0.135
0.130*
0.035 0.013
0.065
0.036 0.006
S3
0.094
0.081
0.048
0.036
0.031
0.030
0.046
Firm age 0.029
0.011
0.013 0.013
0.011
0.012 0.015
IC1 0.247* 0.164* 0.012
0.070 0.117* 0.051
0.062
IC2 0.012 0.037 0.078 0.044 0.030 0.055 0.037
IC3 0.008 0.019 0.005
0.088 0.071 0.046
0.094
IC4
0.152
0.092
0.071
0.063
0.046
0.050
0.059
Main effect
Environment dynamism 0.052*** 0.169*** 0.122* 0.144**
Distributed leadership 0.255*** 0.202*** 0.152*** 0.107***
Mediating effect
Strategic flexibility 0.254*** 0.301***
Moderating effect
Distributed leadership x environment dynamism 0.104**
R2 0.101 0.189 0.391 0.392 0.326 0.375 0.392
Adjusted R2 0.073 0.164 0.375 0.375 0.312 0.362 0.384
F 3.569 *** 11.384*** 69.262*** 36.344*** 46.820*** 52.159*** 34.270***

Notes: S1, under 100; S2, 101-500; S3, 500-1000; IC1 Telecommunication; IC2 Pharmaceutical and Biopharmaceutical; IC3 Manufacturing; IC4 new material and
chemicals; ***p < 0.001; **p < 0.01; *p < 0.05 (two-sided test)

Table III.
strategic

moderating role
indirect, and
105
flexibility
Distributed

Results of direct,
leadership and
CMS of studies analyzing the effectiveness of leadership patterns in BMI. The findings reveal that
13,1 the capacity of leaders to drive BMI is rooted from the extent to which they distribute the
leadership. Distributed leadership can directly affect BMI and indirectly affects BMI through
strategic flexibility. This result also shows that environmental dynamism produced a positive
effect on the indirect effect between distributed leadership and BMI. The theoretical framework
is a concrete reflection of the relationships between resources, capabilities, and competitive
106 advantage, which provides a foundation for understanding how distributed leadership
overcomes the barriers and resolves the tensions so as to facilitate BMI.

Theory implications
For the growing body of theory and research on the drivers of BMI, our findings have several
important implications. First, the findings advance the idea that leadership is an important
factor in facilitating the process of experimentation (Martins, et al., 2015; Chesbrough, 2010).
Our proposal of distributed leadership as a solution for BMI complements extant research that
considered how the leadership style of the CEO affects business model change (Gerasymenko
et al., 2015). Thus, through empirically showing that distributed leadership is associated with
higher levels of BMI, our study supports the notion that there are different implications for
achieving BMI depending on whether the leadership responsibilities and functions for
overcoming barriers reside with the chief executive or with the entire staff (Chesbrough, 2007).
Second, focusing on distributed leadership can help the managers develop a routine for BMI.
By enabling the managers to manage the interdependent systems, the barriers can be
conquered and the conflicts resolved through the use of requisite functions residing in staff
inside the whole organization, distributed leadership provides a practical script for routines for
achieving BMI. This study also provides further contributions that independent of the
mechanism (strategy, structural, etc.) that organizations employ to manage the business model,
organizational leaders who share the leadership role rather than top managers can play a direct
and significant role in facilitating BMI. Third, this study found that firms that engaged in
distributed leadership can enable BMI by promoting strategic flexibility to resolve the conflicts

Figure 2.
Moderating role of
environmental
dynamism

Conditional indirect effects of

distributed leadership
Table IV.
Environment dynamism Effect LLCI95% ULCI95%
Conditional indirect
effects at levels of Strategic flexibility
0.7 (
1SD) 0.33 (0.62) 0.22 0.47
environmental Strategic flexibility 0 (Mean) 0.38 (0.57) 0.27 0.49
dynamism Strategic flexibility
0.7 (þ1SD) 0.43 (0.61) 0.31 0.55
at the BMI implementation stage. Thus, this study opens up the black box of how leadership Distributed
practice affects the ability of firms to coordinate and integrate their resources to achieve BMI, leadership and
by providing insights into the underlying mechanisms.
This paper further contributes to distributed leadership research by extending the
strategic
research area from pedagogy to business management. We provide theoretical insights and flexibility
empirical evidence towards establishing distributed leadership as an organization-level
construct to explore the organizational-level outcomes. We found that distributed leadership
is an enabler of BMI, and it affects BMI by enhancing strategic flexibility, which contributes 107
to growing survey-based (Mehra et al., 2006) and case-based (Kempster, et al., 2014) evidence
that distributed leadership is an important practice in strategic management (Fitzgerald
et al., 2013). This result also answers the call of Harris (2009) to explore distributed
leadership outside the education sector. In addition, empirical evidence shown here indicates
that distributed leadership is more likely to facilitate BMI through strategic flexibility when
the enterprise faces a high environmental dynamism or other uncertainties. This result
highlights that environmental dynamism is a contingency variable that provides an
important exogenous condition for the effectiveness of leadership practices. We suspect that
this finding reflects the availability of specific status cues that enable leaders to develop
more specialized repertoires to react well. Compared to other firms that have the same size
and age, firms diverse in the external environment have different perspectives on leadership
development, which provides a potent basis for pursuing distributed leadership.
The present study also contributes to the literature on DC theory. This study focuses on
the distributed leadership practice, which can offer a renewed theoretical and empirical
central issue. The micro-foundations of DC have assumed a significant importance in
searching factors that facilitate strategic change. Here, we focus on micro-foundations at the
lower-level managers or the staff. DC occasionally reside at lower level in the organization
(Leih et al., 2014), as a practice of distributing the leadership role, responsibilities among the
lower levels members of organizations given emergent states. Thus, distributed leadership
provides an empirical basis for exploring the realization of strategic flexibility (dynamic
managerial capability). This study establishes that environmental dynamism plays a key
role in linking resource, DC and competitive advantages. Therefore, this study also
contributes to answering the question “Under what conditions does the presence of resource
and DC in firms generate competitive advantage?” which is “arguably one of the most
interesting questions in the field of strategic management today” (Schilke, 2014, p. 198).

Managerial implications
These findings also provide several important managerial implications. Given that the
development of distributed leadership practice is conducive to pursuing complex strategies
(BMI), top managers should understand that a favorable means of overcoming barriers in
the process of BMI is by engaging in distributed leadership. In terms of leadership
cooperation, managers need to create conditions that cultivate strategic thinking and
expertise among other leaders and employees. Because mutual trust and open
communication are vital to develop distributed leadership, managers can also encourage the
individuals within organizations to spend adequate time to communicate (Cope et al., 2011).
In terms of leadership support, managers can encourage members to view themselves and
their fellow members as leaders and to engage and share with each other, which can be done
by creating interactive forums, such as, off-site retreats, strategy workshops and training.
Another implication is that the organizations must highlight strategic flexibility because
it plays a mediating role between distributed leadership and BMI. Thus, the managers
should ensure that their organizations have clear cognition and complementary analysis of
CMS external environment and internal context, take the initiative to exert influence, weaken the
13,1 hierarchical system to acquire and integrate the information timely. Organizations may
further support these conditions by seeking to foster a creatively organizational culture in
which the members are encouraged to use a proactive strategy to resolve the challenge of
competition. Managers should particularly focus on organizations that may have a high
degree of dynamism in the environment, in order to provide additional guidance.
108
Limitation and future study
Although this study makes important contributions, there are several limitations that need to
be considered and addressed in future research. First, our analysis of BMI is limited to the
internal organizational process, and the moderate role of environmental dynamism is limited to
the indirect effect. Further research should examine the BMI in terms of external influence,
consider more than just the environment dynamism and extend the moderate role to the direct
effect between distributed leadership and BMI. Second, our study extends the research of
distributed leadership to firm development, but the measures of distributed leadership have not
been used in enterprises. We modified the measures based on the research of Hulpia et al.
(2009), and those items rely on the judgment of managers, which may result in the answers not
coinciding with reality. Objective measures such as the financial performance of new products
or the changes of a new market share may yield more realistic results. Third, our study used
the DC theory to frame our hypotheses, and so we do not have direct measures.

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CMS Appendix
13,1
Items (strongly disagree/0; strongly agree/5)

Distributed leadership
Leadership cooperation
1. The leaders collectively determine the planning of major operations
112 2. The leaders supports the goals we like to attain with our enterprise
3. The leaders and employee work in the same strain on the organizational core objectives
4. The leaders and employee in our organization have clear goals
5. The leaders and employee in our organizations know which tasks they have to perform
Leadership support: To what amount is the leaders involved in the following statements? (never /0; always/5)
1.. . .call each other to make critical decisions with employee
2. . .. encourage each other to cooperate
3.. . .explains his / her reason for criticism to employee
4.. . .provide organizational support for employee interaction
5.. . .encourage us to pursue our own goals for professional learning
Business model innovation
1. Our business model offers new combinations of products, services and information
2. Our business model attracts a lot of new customers
3. Our business model attracts a lot of new suppliers and partners
4. Our business model bonds participants together in novel ways
5. Our business model links participants to transactions in novel ways
6. We frequently introduce new ideas and innovations into our business model
7. We frequently introduce new operational processes, routines, and norms into our business model
8. Overall, our business model is novel
Strategy flexibility
1. The flexible allocation of marketing resources (including advertising, promotion and distribution
resources) to market a diverse line of products
2. The flexible allocation of production resources to manufacture a broad range of product variations
3. The flexibility of product design (such as modular product design) to support a broad range of potential
product applications
4. Redefining product strategies in terms of which products the firm intends to offer and which market
segment it will target
5. Reconfiguring chains of resources the firm can use in developing, manufacturing, and delivering its
intended products to targeted markets
6. Redeploying organizational resources effectively to support the firm’s intended product strategies
Environment dynamism
1. Environmental changes in our local market are intense
2. Our clients regularly ask for new products and services
3. In our local market, changes are taking place continuously
Table AI. 4. In our market, the volumes of products and services to be delivered change fast and often

Corresponding author
Zhiying Liu can be contacted at: liuzhiyustc@163.com

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