A from-the-top view of strategic flexibility: a study of CEO social class, TMT regulatory focus, and environment uncertainty

Strategic flexibility is the key to navigating turbulent and complex times, yet its managerial antecedents lack adequate examinations. With interest in testing an explanation from the ‘strategic fit’ paradigm, where the top management is the key, we develop a new theory integrating CEO, TMT, and environmental attributes. We propose that the CEO’s social class is an important contextual factor that influences the effects of TMT posture in terms of two types of regulatory focus on firm strategic flexibility, which is further contingent upon different environmental conditions. The empirical findings from two studies support the prominent role of CEO social class in the relationships between TMT promotion/prevention focus and firm strategic flexibility. Moreover, the moderation effects of CEO social class are stronger when the firm faces higher market or regulatory uncertainty, a typical situation faced by firms in the Asia Pacific. Our study highlights that the interaction of the CEO’s social status and the TMT’s regulatory focus is important to understand if and how firms are executing strategic flexibility in turbulent times.