Abstract
Knowledge is increasingly regarded as a primary strategic resource for firms and the processes involved in the knowledge domain becomes central to organizational success. This paper examines mediating effect of combinative capabilities in strategy-learning relationship. Using March's definition of explorative learning, this study attempts to identify the importance of combinative capabilities that are defined as system, socialization, and coordination capabilities to support explorative learning effort by firms. Responses from 208 manufacturing firms in Malaysia were analyzed using Structural Equation Modeling. Combinative capabilities were found to partially mediate the relationship between prospector strategic orientation and explorative learning. The findings also supported the hypothesis of negative relationship between system capabilities and explorative learning and positive relationship between coordination capabilities and explorative learning. However, the negative relationship postulated between socialization capabilities and explorative learning was not supported. The findings of this paper suggested that the choice of learning as incumbent to the strategy pursued by firms and alignment between learning and internal organizational mechanisms of firms is important to ensure proper implementation and significant results of the learning process.