Controlling Organizational Learning Processes During Strategy Change in Small‐ and Medium‐Sized Enterprises

ABSTRACT In this era characterized by volatility, uncertainty, complexity, and ambiguity, the business environment of small and medium‐sized enterprises (SMEs) is undergoing rapid changes, presenting increasingly complex survival challenges. Under such circumstances, efficient SME managers implement strategy changes to respond quickly and effectively to the changing environment. However, even managers with excellent leadership skills find it difficult to ensure all employees follow their strategies with agility. Accordingly, this study explores the following research question: How do managers' actions affect employees' learning processes during strategic changes in SMEs? Based on 7 years of longitudinal action research in a Japanese IT SME, this study examines how employees' learning processes evolved during three cycles of strategy change. Data were collected through semi‐structured interviews with 16 participants (managers and employees), field observations, and document analysis and analyzed thematically to identify patterns of organizational learning. To address potential researcher bias stemming from the dual role of the author as both manager and investigator, an external consultant was engaged to review the coding of interview data and validate emerging themes. The study proposes the novel concept of a dual‐loop learning state, in which new single‐loop learning, derived from double‐loop learning initiated by management, coexists with old single‐loop learning rooted in traditional theory‐in‐use. This framework extends Argyris' theory of organizational learning by demonstrating its applicability in SMEs, where multiple governing values may coexist between managers and employees. By highlighting the mechanisms through which managerial actions influence employee learning, the findings contribute both theoretical insights and practical guidance for improving management efficiency in SMEs.