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IJM
32,5/6

Organizational learning
Perception of external environment and
innovation performance

512

Yu-Lin Wang
Department of Business Administration, National Cheng Kung University,
Taiwan, and

Andrea D. Ellinger
Department of Human Resource Development and Technology,
The University of Texas at Tyler, Tyler, Texas, USA
Abstract
Purpose The purpose of this study was to examine the antecedent, perception of the external
environment, and its relationship to organizational learning, as well as explore the relationships
between organizational learning and innovation performance at two levels, including individual and
organizational-level innovation performance.
Design/methodology/approach Questionnaire data were collected from 268 senior R&D project
team members who reported their perception about the external environment and organizational
learning along with 83 R&D managers who evaluated their employees innovative behaviors.
Findings The results indicated that the antecedent of organizational learning, perception of
external environment, was significant to organizational learning, and organizational learning was
significant to both individual and organization-level innovation performance and contributed more to
the individual-level than organizational innovation performance.
Originality/value The value of the study lies in its contributions to the scholarly literature on
organizational learning and innovation because examining the antecedent perception of the external
environment and the relationships between organizational learning and innovation performance as
well as the relationship between individual and organizational-level innovation performance have not
received considerable empirical attention.
Keywords Organizational learning, Workplace training, Innovation, Organizational performance,
Individual development, Information dissemination, Competitive advantage,
Human resource management
Paper type Research paper

International Journal of Manpower


Vol. 32 No. 5/6, 2011
pp. 512-536
q Emerald Group Publishing Limited
0143-7720
DOI 10.1108/01437721111158189

Introduction
Globalization of economy, the diverse workforce environment, and use of information
technology have made organizations become more aware of competitive environment
and pursue competitive advantage that lies in learning and knowledge. Learning has
been acknowledged as a key process that contributes to successful innovation, which
determines and supports an organizations success (Kang et al., 2007; Voronov, 2008).
Organizational learning is defined as the process of acquiring, distributing,
integrating, and creating information and knowledge among organizational
members (Dixon, 1992; Huber, 1991). The processes of organizational learning
involve key components that support knowledge productivity processes, which include
searching for information, assimilating, developing and creating new knowledge on
products, processes, and services. The essence of organizational learning in generating

organizational knowledge not only sustains competitive advantage but also leads to
new markets and niches creation (Hult et al., 2003). In other words, an organizations
knowledge is an asset that can be managed to contribute to the firms innovation
performance (Pham and Swierczek, 2006). In addition, the literature has also connected
organizational learning to the principle means of achieving strategic renewal in an
organization (Crossan and Berdrow, 2003). Therefore, organizational learning has been
equated with innovative efficiency in the innovation literature (Crossan and Berdrow,
2003; McKee, 1992; Lopez et al., 2005).
Strategic human resource management (HRM) practice is concerned with
optimizing learning, development, and performance improvement at the individual,
group, team, and organization levels that enables an organization to keep pace with the
changing environment. Saru (2007) has acknowledged that organizational-level
learning and development can be facilitated under a clear linkage between corporate
strategy and HRM practices. It is because organizations require competent people to
learn and interpret new information and technology changes from the external
environment in order to create new knowledge faster than other competitors
(Birdthistle and Fleming, 2005; Casey, 2005). In other words, organizational learning
must be coherent with an organizations design, strategy, structure, and strategic HRM
practices and context. In the past, the HRM function has tended to be preoccupied with
individual performance and training-dominated activities. In more recent years,
strategic HRM practices have focused on learning and knowledge creation to enhance
individuals competencies and collaboration within organizations (Lopez et al., 2006).
Lopez et al.s (2006) empirical study has demonstrated that HRM practice has a positive
influence on the organizational learning processes. Also Cano and Canos (2006)
empirical study has demonstrated that it is HRM practices that impact an
organizations learning and innovation performance. As a result, HRM professionals
often serve as facilitators in cultivating an organizations structure and culture to
encourage learning at every level within an organization.
Problem statement
Although the concept of organizational learning has been examined since the 1950s
and the base of literature has expanded conceptually, theoretically, and somewhat
empirically during the past decades (Dodgson, 1993; Easterby-Smith, 1997; Lipshitz
et al., 2002), few studies have investigated the relationship between organizational
learning, its antecedent, and specific performance outcome variables empirically. Most
researchers have focused on the theoretical side of explaining organizational learning
(Saru, 2007). Easterby-Smith and Araujo (1999) have pointed out that learning is a
complex process with many potential levels to investigate empirically. The
relationship between organizational learning and innovation performance has been
mentioned and assumed conceptually in organizational learning and innovation
literature, but little empirical evidence has supported this perspective and the nature of
this phenomenon has not been fully explicated empirically (Bontis et al., 2002; Lopez
et al., 2005). Moreover, there has also been limited research focused on how
organizational learning processes affect performance (Bapuji and Crossan, 2004;
Easterby-Smith and Araujo, 1999).
In addition, the innovation literature has overly focused on organizational-level
innovation performance (Simsek, 2002; Zahra, 1996). Most prior organizational

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learning and innovation research has predominantly adopted the firm as the unit of
innovation performance analysis and has overly focused on organizational-level
mo and Kolvereid, 2005). In fact, organization learning and
innovation performance (A
innovation is based on individual-level efforts that contribute to organizational-level
learning and performance (Dixon, 1992; Huber, 1991). Further, the organizational
learning literature has conceptually and theoretically acknowledged that
individual-level learning should be embedded and transferred into
organizational-level learning, but the fundamental question of the connection
between individual learning and organizational learning still lacks empirical
investigation in this field (Antonacopoulou, 2006; Ron et al., 2006; Saru, 2007).
As a result, the overall purpose of this study was to examine the antecedents of and
the relationships between organizational learning and innovation performance at two
levels, including individual-level and organizational-level innovation performance.
Also, the relationship between individual-level innovation performance and
organizational-level innovation performance was explored.
Literature review and research hypotheses
Organizational learning
The construct of organizational learning has been articulated for more than 40 years,
and the field of organizational learning has grown rapidly in the 1990s (Casey, 2005;
Dodgson, 1993; Easterby-Smith et al., 1998). The concept of organizational learning has
not only attracted the attention of scholars from disparate disciplines but also
consultants and managers in the business world (Chiva and Alegre, 2005). It is because
the concept of learning provides insights to firms that face uncertain and changing
circumstances (Dodgson, 1993). However, with the emerging importance of
organizational learning, there seems to be little agreement on the definitions,
processes, and models in this field (Lundberg, 1995). A consequence of this is that
diverse disciplinary perspectives are presented in the literature on organizational
learning (Easterby-Smith, 1997). Therefore, Dodgson (1993) has emphasized that it is
important to use a multi-disciplinary approach to fully understand the complexity and
variety of organizational learning literature.
Easterby-Smith (1997) has identified various disciplines that contribute to
organizational learning. One noticeable debate in the literature is whether scholars
should try to move toward a single integrated framework or acknowledge that diverse
disciplinary perspectives exist (Easterby-Smith and Araujo, 1999). Since a number of
scholars have recognized that there is more than a single framework or model in
understanding organizational learning process, researchers have tended to map many
facets of organizational learning and developed integrative conceptual frameworks.
Lipshitz et al. (2002) have stressed that organizational learning should be explicated
more than the cognitive perspective, which has been a dominant focus in the literature.
It is because organizational learning produces and changes the learning in culture,
structures, policy, and norms aspects. Therefore, Lipshitz et al. (2002) have integrated
five facets: structural, cultural, psychological, policy, and contextual, to build their
organizational learning conceptual framework.
In addition, Gnyawali and Stewart (2003) have also argued that the cognitive
perspective has been widely recognized in organizational learning models, but little
research has examined organizational learning by using a contingency approach.

Hence, Gnyawali and Stewart (2003) have adopted the contingency approach in
proposing an integrative model of organizational learning, which emphasizes how
environmental conditions affect organizational learning processes and result in
different types of learning. This conceptual model contains antecedents of
organizational learning, modes of learning, and interaction of the modes and
resulting types of learning. The antecedents of organizational learning are ones
perception of environmental conditions, which include perception of uncertainty and
equivocality. This antecedent of organizational learning, perception of the external
environment, is similar to Lipshitz et al.s (2002) contextual facet, which focuses on
exogenous factors, such as environmental uncertainty. Gnyawali and Stewart (2003)
have suggested that the characteristics of external environment, uncertainty and
equivocality, interact with the way an organization learns. In other words, how
organizational members perceive the external environment influences organizational
learning.
Organizational learning and its antecedents. From the resource-based perspective,
an organization learns to develop organizational structures and systems to transform
itself to become more adaptive and responsive to changes and jolts in the external
environment (Dodgson, 1993; Meyers, 1982). Meyers (1982) has argued that such
environmental jolts are a good opportunity for an organization to learn to deal with
crisis. In other words, an organization improves performance and readjusts itself to
the dynamic environment through the learning process. Also Gnyawali and Stewarts
(2003) contingency perspective delineates how ones mental model towards
environmental change and the organizations information processing are key
concepts which have been elaborated in the early organizational learning literature,
such as Argyris (1977) and Daft and Weick (1984). These early organizational
learning contributions have viewed an organization as an interpretation system of its
environment. In other words, organizations, as open systems, rely on the
interpretation formulated by organization and individuals, especially the top
managers. The organizational interpretation is analogous to an individuals learning.
An organizations overall interpretation functions as the information processing
system with three stages: scanning, interpretation, and learning. Researchers have
suggested that how individuals interpret the external environment influences
organizational learning (Daft and Huber, 1987; Daft and Weick, 1984; Gnyawali and
Stewart, 2003; Garca-Morales et al., 2006). Moreover, when an organization perceives
and recognizes the disconnection between external environment and its internal
design component, it is critical that organization members have the capability to
question underlying assumptions and create learning strategies for higher-level
organizational learning (Dodgson, 1993). In other words, organizational learning is
generated by the organization members reaction and perception about the external
environment. However, such conceptual propositions in how members within an
organization perceive the external environment and its influence on organizational
learning have not been investigated empirically. Therefore, when the external
environment is perceived as an uncertain and complex system, organizational
learning is generated:
H1-1. R&D employees perception of the external environment (as uncertain and
complex) will be positively associated with organizational learning.

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Innovation performance
Innovation is often characterized as a kind of capital for the organization and has
been broadly defined as an idea, a product, or process, system or device that is
perceived to be new to an individual, a group of people or firms, an industrial sector or
a society as a whole (Rogers, 1995, p. 276). Innovation has also been viewed as a
method to sustain competitive advantage since the beginning of the industrial
revolution (Heffner, 2006). March (1991) has indicated that product innovation have
two modes, explorative and exploitive, which mean innovation may be achieved by
exploiting existing products or exploring new ones. Although different definitions of
exploration and exploitation exist, the connotation of these two terms is focused on
learning, and new knowledge acquisition and recognition (Gupta et al., 2006; Ireland
and Webb, 2007). Kanter (1984) has stressed that innovation is not only merely defined
as technological innovation but also organizational learning and change processes in
supporting and stimulating innovations. Recently, one major stream of innovation
studies focus on human aspect that lead to innovation (Prajogo and Ahmed, 2006).
Based on the resource-based view, an organizations innovation performance is rooted
in the human capital embedded in it that cannot be replicated and transferred (Ireland
and Webb, 2007). In other words, an organization with the most advanced technology
but one that is lacking talented employees still cannot perform and conduct innovative
projects. The concept of organizational learning stresses that organizations are
systems that support learning and performance improvement at multiple levels of an
organization. Therefore, the term innovation performance is connected with
organizational learning practices.
In the organizational learning literature, current empirical research has tried to use
organizational learning as a moderator variable to explain organizational performance
(Bapuji and Crossan, 2004). Empirical studies have tended to adopt an organizations
financial and marketing performance, either subjective measure or objective measure,
as the organizational learning performance outcome variable. Recently, some empirical
studies have started to demonstrate that an organization learning capability has a
positive effect on the organizational innovation performance (Garca-Morales et al.,
2007; Lopez et al., 2005) Yet, despite some of the limited empirical evidence, there is a
compelling need to continue building the base of empirical research on organizational
learning and performance outcomes that extend beyond marketing and financial
performance to include other performance outcomes such as innovation performance,
at both the individual and organizational-levels. This is because innovation
performance is considered to be a critical competitive advantage and has been
recognized as an important current trend in the strategic HRM field. Therefore, the
researchers hypothesized that:
H1-2a. Organizational learning will be positively associated with individual-level
innovation performance.
H1-2b. Organizational learning will be positively
organizational-level innovation performance.

associated

with

Individual and organizational-level innovation performance. The organizational


learning literature is primarily underpinned by the concept that individual-level
efforts may contribute to organizational-level performance (Dixon, 1992; Huber, 1991;
Ron et al., 2006). Also, researchers have applied individual learning theories, such as

cognitive psychology theory or behavior theory as the fundamental basis to build the
organizational learning constructs. Without the individuals focus and intention
towards the new opportunity and innovative information, an organization would have
difficulty to achieve and initiate entrepreneurial activities. Although the sum of the
individuals innovative behavior might not equal organization-level innovation
performance, organizational-level innovation performance is based on its members
innovative behaviors. That is, organizational innovation occurs under the conditions
that organizational members innovation is able to be transferred to the
organizational-level (Glynn, 1996). In addition, an innovative organization may
facilitate its employees innovation performance. Hence, the researchers hypothesized
that:
H3a.

Individual-level innovation performance will be positively associated with


organizational-level innovation performance.

H3b.

Organizational-level innovation performance will be positively associated


with individual-level innovation performance.

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Conceptual framework
Based on the reviews of organizational learning and innovation performance
literatures, the researchers have proposed Figure 1 to represent the conceptual
framework from which the above research hypotheses have been developed. Grounded
upon and informed by Huber (1991), Dixon (1992), and Gnyawali and Stewarts (2003)
organizational conceptual frameworks, the researchers have developed the framework
to included organizational learning, its antecedent, perception of external environment,
and individual and organizational-level innovation performance as the outcome
variables. The organizational learning process contains four sub-processes:
information acquisition, information distribution, information interpretation, and
organization memory.
Research sample
The research sites for this study included organizations in an industry that pursues
and puts an emphasis on innovation performance. In addition, Yang et al.s (2007)
empirical study has demonstrated that in Taiwan, only high technology firms
emphasize supporting and applying the organizational learning practice through their
organizations to improve their organization performance and effectiveness.
Consequently, high technology firms located within one science park in Taiwan
became the target sample selection sites for this study.

Figure 1.
Conceptual framework

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Each organizations R&D manager and three to five senior R&D project team members,
randomly selected by the R&D manager, in each high technology firm listed in the
Directory of 2006 Association of Industries in the specific Science Park Directory of
Taiwan were invited to participate in this study. The criterion for each organizations
R&D manager to identify three to five senior R&D project team members in each high
technology firm was to randomly select individuals who have been working for more
than three years in the R&D project teams of each firm. These potential participants may
be product developers, designers, engineers, or marketing personnel. Individuals in
these positions tend to pay more attention to knowledge and information towards
innovation performance. The main study resulted in 83 (30.29 percent response rate)
high technology firms with 83 R&D managers evaluating their respective senior R&D
project team members innovative behaviors and 268 (64.58 percent response rate) valid
returned questionnaires from senior R&D project team members. The descriptive
information on the participants organizational demographics and the participants
individual demographics are presented in Table I and Table II, respectively.
Non-participants bias
To address the non-participants bias issue, the T test comparisons of the participant
firms and non-participants firms on number of employees t 1:23; p 0:21 and
annual revenue t 1:18; p 0:24 did not reveal significant differences between the
two groups. The researcher concluded that participant firms did not differ significantly
from the non-participants firms.

Table I.
Characteristics of
organizations

Frequency (n)

Number of employees
51 100
101 200
201 250
251 300
301 400
401 500
More than 501

9
15
18
28
2
6
5

10.8
18.1
21.7
33.7
2.4
7.2
6.0

Annual revenue
Less than 1 billion NTD
1 4 billion NTD
4 7 billion NTD
7 10 billion NTD
More than 10 billion NTD

13
17
14
19
20

15.7
20.5
16.9
22.9
24.1

Main product of the organization


Computer and peripherals
Integrated circuits
Opto-electronics
Precision machinery
Telecommunications
Others

15
11
14
15
13
15

18.1
13.3
16.9
18.1
15.7
18.1

Note: N 83

Frequency (n)

Percentage (%)

Gender
Female
Male

25
243

9.3
90.7

Length of employment
3 5 years
6 8 years
9 11 years
12 215 years

77
146
37
8

28.7
54.5
13.8
3.9

Work experience in industry


3 5 years
6 8 years
12 15 years
16 20 years
Level of education
Associate degree
Bachelors degree
Masters degree
PhD

65
136
54
13

24.7
50.7
20.1
4.9

4
85
172
7

1.5
31.7
64.2
2.6

Hours dedicated to work related learning


0 hours per month
1 10 hours per month
11 20 hours per month
21 35 hours per month
More than 36 hours per month

10
162
74
15
7

3.7
60.4
27.6
5.6
2.6

Note: N 268

Instrumentation
The researcher developed two sets of survey instruments from measures drawn from
the existing literature: one instrument was designed for senior R&D project team
members and the other was designed for R&D managers in each participating firm
respectively. The instrument for the senior R&D project team members included two
sections: section 1 contained questions using Garca-Morales et al.s (2006) perception
of external environment measure, Lopez et al.s (2006) organizational learning measure,
and Simseks (2002) organizational-level innovation measure. Responses were
five-point Likert-type scales. Section 2 contained demographic items. The instrument
for R&D managers included six items derived from Scott and Bruces (1994)
individual-level innovation performance measure. The R&D managers were asked to
rate every senior R&D project team members innovative behavior on a five-point
Likert-type scale.
Perception of external environment
The items measuring perception of external environment were adopted from
Garca-Morales et al.s (2006) environment instrument (Cronbachs alpha was 0.864).
All four items measure the degree of dynamism, complexity, diversity, and

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Table II.
Characteristics of
participants

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heterogeneity of external environment were summed to derive the measure of


perception of external environment.
Organizational learning
The items measuring organizational learning were adopted from Lopez et al.s (2006)
measure of organizational learning, which was based on Huber (1991) and Dixons
(1992) organizational learning conceptual frameworks. A total of 25 items with four
dimensions, information acquisition (seven items), information distribution (five
items), information interpretation (five items), and organizational memory (eight
items), were summed to derive the measure of organizational learning. The Cronbachs
alphas on Lopez et al.s (2006) information acquisition, information distribution,
information interpretation, and organizational memory measure were 0.796, 0.772,
0.822, and 0.844, respectively. Respondents were asked to use a five-point rating scale
to rate extent of agreement at items describing the learning practices and activities in
their organizations.
Individual-level innovation performance
The items measuring individual-level innovation performance were adopted from Scott
and Bruces (1994) six-item innovative behavior measure (Cronbachs alpha was 0.89),
which asks supervisors to rate their subordinates innovative behaviors in workplace.
In addition, Scott and Bruces (1994) measure was designed for employees who work in
technology related areas, such as R&D personnel. All six items were summed to derive
the measure of each senior R&D project team members individual-level innovation
performance.
Organizational-level innovation performance
In collecting sensitive performance data, prior literature has tended to adopt an indirect
approach (Lopez et al., 2005). That is, scholars have tended to ask participants to report
how well their firm innovatively performed in terms of the extent of new product,
process, and service development rather than ask participants directly to report
financial statement data. Although objective data has been argued to provide greater
validity in theory, Homburg et al.s (1999) empirical study has demonstrated that both
objective and subjective data are all valid in measuring an organizations performance.
In this study, the researchers primarily adopted the subjective self-report approach and
use subjective secondary sources as supplementary data. Simseks (2002) five-item
innovation performance was adopted (Cronbachs alpha was 0.87).
A unique method in revising the self-report approach was used to resolve the
common method bias issue. Instead of adopting the participants own score on the
organizational-level innovation performance, the researcher used the mean score from
the rest of the participants in the same firm. Therefore, the participants own rating on
the organizational-level innovation performance was excluded in the measure.
In addition, the researcher also compared the participants evaluation of the
organizational-level innovation performance with the organizations actual financial
performance in the market, such as return on investment (ROI), which was accessed
from the 2006 Association of Industrial Directory to ensure credibility. However, the
Directory is not an official directory, and some firms choose not to release their

financial reports and statements. Therefore, this method was used as a supplementary
tool to increase the validity of the measure.

Organizational
learning

Control variables
On the basis of a review of the literature, the researchers identified the following
variables that should be controlled in the data analyses. These variables include an
organizations annual revenue and number of employees, individuals off office time
spent on work-related learning and lengths of employment in the high technology
industry (Zahra, 1996).

521

Results
Psychometric properties of the instrument
An exploratory factor analysis with varimax rotation method was conducted on all
items of the survey. The results of the factor analyses indicated that the groupings of
factors were exactly the same as the instrument factor analyses reported in the past
research, and no items were deleted in this stage. Next, the researchers conducted
confirmatory factor analysis to evaluate the factor structure, and Cronbachs alpha was
used to rate the reliability of the instrument. The overall fit of the 7-construct
confirmatory factor model to the data suggested a good fit of the measurement scales
(x 2 996.896, df 710, p , 0.01; Comparative Fit Index (CFI) 0.956, the
Tucker-Lewis Index (TLI) 0.952; the Incremental Fit Index (IFI) 0.957, the root
mean square error of approximation RMSEA 0:039: In addition, each of the
standardized factor loadings was significant ( p , 0.001) and quite high (Table III). As
indicated in Table III, the Cronbach alpha internal consistency reliability estimates
were all above Nunally and Bernsteins (1994) recommended level of 0.70.
Further, to confirm the dimensionality of the organizational learning, second order
confirmatory factor was conducted, following Lopez et al. (2006). The second order
model was estimated to test whether information acquisition, information distribution,
information interpretation, and organizational memory are affected by the higher-order
construct, organizational learning. In other words, the second-order confirmatory
factor analysis of the organizational learning was based upon the hierarchical structure
that the dimensions obtained from the first-order analysis (information acquisition,
information distribution, information interpretation, organizational memory) are
viewed as factors that presumed to be caused by organizational learning. In Table IV,
standardized loadings of second order factors were all high and significant at p ,
0.001, and the CFI exceeded the recommended norm of 0.90. Therefore, the results as a
whole confirm the dimensionality of the organizational learning measure.
Test of the model
A series of multiple regressions with hierarchical method were used to examine the
research hypotheses. That is, relevant control variables were entered into the
regression first, followed by the respective independent variables, organizational
learning, entrepreneurial opportunity recognition, to estimate the additional
contribution of the organizational learning variable to the dependent variables,
individual-level and organizational-level innovation performance. Table V presented
an overview of the means and standardized deviation of all the variables.

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Item
Perception of external environment
1. There are few changes in the
industry that could affect the
organization
2. The changes in the industry
have been easily predictable
3. The industrys evaluation
depended on multiple factors
4. The factors that affect the
industrys evolution differ
greatly from each other
Information acquisition (IA)
1. Makes co-operation agreement
with other companies,
universities, technical colleges,
etc
2. Is in touch with professionals
and expert technicians
3. Encourages employees to join
formal or informal nets made up
by people outside the
organization
4. Asks employees to attend fairs
and exhibitions regularly
5. Has a consolidated and
resourceful R&D policy
6. New ideas and approaches on
work performance are
experimented continuously
7. Has the organizational systems
and procedures that support
innovation

Table III.
Construct measurement
summary: confirmatory
factor analysis and
reliability

Information distribution (ID)


1. Informs all members about the
aim of the company
2. Holds meetings periodically to
inform all the employees about
the latest innovations in the
company
3. Has formal mechanisms to
guarantee the sharing of the best
practices among the different
fields of the activity
4. There are within the
organization individuals who
take part in several teams or
divisions and who also act as
links between them

Standardized
loading

Average variance
extracted

Cronbachs
alpha

Composite
reliability

0.731

0.870

0.870

0.701

0.919

0.919

0.720

0.869

0.869

0.900
0.882
0.680
0.671

0.607
0.658

0.665
0.663
0.706
0.720
0.708

0.679

0.680

0.792

0.764
(continued)

Item
5. Has individuals responsible for
collecting, assembling, and
distributing internally
employees suggestions
Information interpretation (IT)
1. All the members of the
organization share the same aim
to which they feel committed
2. Employees share knowledge
and experience by talking to
each other
3. Teamwork is a very common
practice
4. The organization develops
internal rotation programs so as
to facilitate the shifts of the
employees from one department
or function to another
5. The organization offers other
opportunities to learn (visits to
other parts of the organization,
internal training programs, etc.)
so as to make individuals aware
of other people or departments
duties
Organizational memory (OM)
1. Has databases to stock its
experiences and knowledge so
as to be able to use them later on
2. Has directories or emails field
according to the field they
belong to, so as to find an expert
on a concrete issue at any time
3. Has up-to-date databases of its
clients
4. Has access to the organizations
data basis and documents
through some kind of network
(Lotus Notes, Intranet, etc.)
5. Keeps databases up-to-date
6. Allows all the employees have
access to the organizations
databases
7. Employees consult the
databases
8. The codification and knowledge
administration system make
work easier for the employees

Standardized
loading

Average variance
extracted

Cronbachs
alpha

Composite
reliability

0.714

0.854

0.854

0.707

0.846

0.846

0.769

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523

0.780
0.660
0.708

0.722

0.692

0.816

0.843
0.789

0.824
0.656
0.702
0.707
0.800
(continued)

Table III.

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Item
Individual-level innovation
performance
1. Searches out new technologies,
processes, techniques, and/or
product ideas
2. Generate creative ideas
3. Promotes and champions ideas
to others
4. Investigates and secures funds
needed to implement new ideas
5. Develops adequate plans and
schedules for the
implementation of new ideas
6. Is innovative in work
performance
Organizational-level innovation
performance
1. Has spent heavily (well above
the industry average) on product
development
2. Has introduced a large number
of new products to the market
3. Has pioneered the development
of breakthrough innovations in
its industry
4. Has spent on new product
development initiatives
5. Has acquired significantly more
patents than its major
competitors

Table III.

Standardized
loading

Average variance
extracted

Cronbachs
alpha

Composite
reliability

0.709

0.918

0.918

0.713

0.899

0.899

0.786
0.805
0.790
0.790
0.828
0.843

0.750
0.812
0.840
0.805
0.799

Note: All estimates were significant at p , 0.0, N 268; CFI 0.956; TLI 0.952; IFI 0.957;
RMSEA 0.039; and x2 996.896 with 710 degrees of freedom ( p , 0.01)

Organizational learning and its antecedent. To examine the contribution of senior R&D
project team members perception of the external environment to organizational
learning, organizational learning was entered into the regression model. In Table VI,
R&D project team members perception of the external environment (beta 0.40)
variable was significant to the organizational learning. Hence, H1-1 was supported.
Organizational learning and innovation performance. To examine the contribution
of organizational learning to individual-level innovation performance, organizational
learning was entered into the regression model after the four control variables, annual
revenue, number of employees, out of office time spent on work-related learning, and
work experience in high technology industry. There was a 24 percent increment in the
total variance explained when organizational learning variable was added to the
regression model (Model 2 of Table VII). The total variance explained, including the 8
percent by the four control variables, was 32 percent F 5=262 24:62; p , 0.001).

Item

Standardized loading

First order model


Information acquisition (IA)
IA1
IA2
IA3
IA4
IA5
IA6
IA7
Information distribution (ID)
ID1
ID2
ID3
ID4
ID5
Information interpretation (IT)
IT1
IT2
IT3
IT4
IT5
Organizational memory (OM)
OM1
OM2
OM3
OM4
OM5
OM6
OM7
OM8

0.816
0.843
0.790
0.825
0.656
0.701
0.705
0.801

Second order model


Information acquisition (IA) Organizational learning
Information distribution (ID) Organizational learning
Information interpretation (IT) Organizational learning
Organizational memory (OM) Organizational learning

0.723
0.874
0.918
0.795

0.601
0.660
0.660
0.658
0.713
0.719
0.713

Organizational
learning

525

0.681
0.676
0.788
0.767
0.773
0.782
0.659
0.706
0.722
0.691

Note: First order model: All estimates significant at p , 0.01; N 268; CFI 0.954; TLI 0.948;
IFI 0.955; RMSEA 0.05; and x2 438.292 with 263 degrees of freedom ( p , 0.01)
Second order model: All estimates significant at p , 0.01; N 268; CFI 0.954; TLI 0.948;
IFI 0.954; RMSEA 0.05; and x2 441.559 with 265 degrees of freedom ( p , 0.01)

Annual revenue beta 0:15; employee work experiences in industry (beta 0.14),
and organizational learning beta 0:50 variables were significant to the
individual-level innovation performance. Therefore, H1-2a: organizational learning
activities will be positively associated with individual-level innovation performance,
was supported.
Next, to examine the contribution of organizational learning to organizational-level
innovation performance, organizational learning was entered into the regression model
after four control variables, annual revenue, number of employees, out of office time

Table IV.
First order and second
order confirmatory factor
analysis of the
organizational learning
measurement

Note: *p , 0.05, * *p ,0.01; N 268

3.08
3.44
2.06
2.43
3.37
3.39
2.91
3.38

1. Annual revenue
2. Number of employees
3. Out of office time spent in work-related learning
4. Work experience in industry
5. Perception of external environment
6. Organizational learning
7. Individual-level innovation performance
8. Organizational-level innovation performance

Table V.
Means, standard
deviations, and
correlations for all
variables
Mean
1.42
1.55
0.77
0.80
0.60
1.54
1.68
1.79

SD

0.07
0.06
2 0.08
0.13 *
0.13 *
0.19 * *
0.23 * *

0.04
0.09
0.11
0.10
0.06
0.16 * *

0.10
0.04
0.07
20.01
0.17 * *

0.10
0.11
0.16 * *
0.15 *

0.40 * *
0.43 * *
0.41 * *

0.53 * *
0.48 * *

526

Variable

0.46 * *

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spent on work-related learning, and employee work experience in high technology


industry. Table VII Model 2 indicated that the total variance explained, including the
12 percent by the four control variables, was 29 percent (F 5=262 21:80; p , 0.001).
That is, organizational learning added another 17 percent of variance explained. In
Table VII Model 2, annual revenue beta 0:18; employee off office time spent in
learning beta 0:11; employee work experiences in industry beta 0:12; and
organizational learning beta 0:42 were significant to organizational-level
innovation performance. Therefore, H1-2b: organizational learning activities will be
positively associated with organizational-level innovation performance, was also
supported. Apparently, organizational learning plays a critical role to both
individual-level and organizational-level innovation performance.
Organizational learning subprocesses and innovation performance. In organizational
learning subprocesses and innovation performance correlation table (Table VIII), the
organizational learning and its subprocesses, information acquisition r 0:46;
information distribution r 0:47; information interpretation r 0:38; and
organizational memory r 0:45 were all positively correlated to individual-level
innovation performance. Also, among the four subprocesses, it was information
distribution activities that correlated most to an individuals innovative behaviors. In
addition, these four organizational learning subprocesses, information acquisition r
0:41; information distribution r 0:43; information interpretation r 0:31; and
organizational memory r 0:41 were also all positively correlated to

Predictors

Organizational learning
b
0.40 *
0.18
49.82 *

Perception of external environment


R2
F
Note: *p , 0.001; N 268

Predictors

Annual revenue
Number of employees
Off office time spent in learning
Work experience in industry
Organizational learning
R2
Adjusted R2
DR2
F
F Change

Individual level/
organizational level
Model l
b
0.23 * * *
0.03
2 0.04
0.20 * * *

0.24 * * *
0.12 *
0.13 *
0.17 * *

0.08
0.06

0.12
0.11

5.59 * * *

9.30 * * *

Note: *p , 0.05; * *p , 0.01; * * *p , 0.001; N 268

Organizational
learning

527

Table VI.
Senior R&D project team
members perception of
external environment as
predictor of
organizational learning

Individual level/
organizational level
Model 2
b
0.15 * *
2 0.01
2 0.07
0.14 * *
0.50 * * *
0.32
0.31
0.24
24.62 * * *
92.93 * * *

0.18 * *
0.09
0.11 *
0.12 *
0.42 * * *
0.29
0.28
0.17
21.80 * * *
63.02 * * *

Table VII.
Organizational learning
as predictor of
individual-level and
organizational-level
innovation performance

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528

organizational-level innovation performance. Like the result in individual-level


innovation performance, it was information distribution activities that played the most
critical role in affecting an organizations innovation performance.
To further examine the impact of these four subprocesses on individual-level
innovation performance and organizational-level innovation performance, a structural
equation modeling was conducted with AMOS 5.0 version. The indicators
demonstrated that the model-fit indexes have an acceptable overall disposition
(x 2 880.785, df 573, p, 0.01; CFI 0.948; TLI 0.942; IFI 0.948;
RMSEA 0.045). The analytical results (Table IX) showed that individual-level
innovation performance is positively influenced by information acquisition
(beta 0.402, t 5.56, p, 0.01), information distribution beta 0:412; t 6:09;
p, 0.001), information interpretation beta 0:385; t 4:08; p, 0.05), and
organizational memory beta 0:391; t 4:46; p , 0.05). Additionally, these four
subprocesses, information acquisition beta 0:398; t 4:68; p, 0.05), information
distribution beta 0:406; t 5:74; p, 0.01), information interpretation beta
Variables

Table VIII.
Organizational learning
subprocesses and
innovation performance
correlation

Table IX.
Structural equation
modeling on
organizational learning
subprocesses and
innovation performance

1. Information acquisition
2. Information distribution
3. Information interpretation
4. Organizational memory
5. Individual-level innovation performance
6. Organizational-level innovation performance

0.54 *
0.54 *
0.48 *
0.46 *
0.41 *

0.67 *
0.63 *
0.47 *
0.43 *

0.67 *
0.38 *
0.31 *

0.45 *
0.41 *

0.46 *

Note: * p , 0.01; N 268

Information acquisition ! individual-level


innovation performance
Information distribution ! individual-level
innovation performance
Information interpretation ! individual-level
innovation performance
Organizational memory ! individual-level
innovation performance
Information acquisition ! organizational-level
innovation performance
Information distribution ! organizational -level
innovation performance
Information interpretation ! organizational -level
innovation performance
Organizational memory ! organizational -level
innovation performance

Standardized estimate

t-value

0.402 * *

5.56 * *

0.412 * * *

6.09 * * *

0.385 *

4.08 *

0.391 *

4.46 *

0.398 *

4.68 *

0.406 * *

5.74 * *

0.379 *

3.67 *

0.390 *

3.90 *

Note: *p ,0 .05; * *p , 0.01; * * *p , 0 .001; N 268: All estimates were significant at p , 0.01.
The model fit index x2 880.785 with 573 degrees of freedom (\hskip 1.5ptp , 0.01). CFI 0.948;
TLI 0.942; IFI 0.948; RMSEA 0.045

0:379; t 3:67; p , 0.05), and organizational memory beta 0:390; t 3:90; p ,


0.05) were also positively associated with organizational-level innovation performance.
As a result, information distribution had the most critical role in both individual and
organizational-level innovation performance.
Individual-level innovation performance and organizational-level innovation
performance. Innovation performance, individual-level innovation performance was
entered into the regression model after annul revenue, number of employees, out of
office time spent in work-related learning, and work experience in industry. There was
a 16 percent increment in the total variance explained when the individual-level
innovation performance variable was added to the regression model (Model 2 of
Table X). The total variance explained, including the 12 percent by four control
variables, was 28 percent F 3=264 20:43; p , 0.001). Work experience in industry was
not significant to the organizational-level innovation performance in regression Model
2 of Table X. Only annual revenue beta 0:15; number of employees beta 0:15;
out of office time spent in work-related learning beta 0:11; and individual-level
innovation performance beta 0:41 were significant to organizational-level
innovation performance. Hence, H3a: individual-level innovation performance will
be positively associated with organizational-level innovation performance, was
supported.
On the other hand, to examine the contribution organizational-level innovation
performance to individual-level innovation performance, organizational-level
innovation was entered into the regression model after the annual revenue and work
experience in industry. Because number of employees and out of office time spent on
work-related learning r 0:04; r 20:01 did not correlate with individual-level
innovation performance, they were excluded from the Model 1 of Table XI in the
regression analysis. Inclusion of two control variables, Table XI pointed out that the
total variance explained, including the 8 percent by the two control variables, was 23
percent F3=264 26:65; p , 0.001). Annual revenue beta 0:12; work experience
in industry beta 0:12; and organizational-level innovation performance beta
0:42 variables were significant to individual-level innovation performance. As a result,

Predictors

Annual revenue
Number of employees
Off office time spent in learning
Work experience in industry
Individual-level innovation performance
R2
Adjusted R2
DR2
F
F change
Note: *p , 0.05; * *p , 0.01; * * *p , 0.001; N 268

Organizational
learning

529

Organizational level
Model 1
b

Model 2
b

0.24 * * *
0.13 *
0.12 *
0.17 * *

0.15 * *
0.15 * *
0.11 *
0.09
0.41 * * *
0.28
0.27
0.16
20.43 * * *
57.02 * * *

0.12
0.11
9.30 * * *

Table X.
Individual-level
innovation performance
as a predictor of
organizational-level
innovation performance

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530

H3b: organizational-level innovation performance will be positively associated with


individual-level innovation performance was supported.
Discussion
Antecedent of organizational learning
The results indicated that the senior R&D project team members perception of
external environment was positively correlated with organizational learning. The
findings empirically supported early organizational learning conceptual studies, which
argued that an organization as an interpretation system of its environment and
individuals mental model in scanning and interpreting the external environment and
information have been very important for organizations to learn to prepare for external
environmental jolts (Daft and Huber, 1987, Daft and Weick, 1984; Gnyawali and
Stewart, 2003; Meyers, 1982). Recently, Garca-Morales et al.s (2006) empirical study
has demonstrated that managers perceptions of the environment are positively related
to organizational learning. Unlike their study, the researcher used senior R&D project
team members as participants in this study. In the high technology industry, senior
R&D project team members were deemed to be the new information and knowledge
gatekeepers of their organizations, and are first-line employees engaging in learning
and innovation activities rather than the managers.
Subprocesses of organizational learning
One unique aspect of this study was that the researcher further investigated the
relative importance of the four organizational learning subprocesses toward
innovation performance. The findings indicated that information distribution was
the most important predictor to both individual and organizational-level innovation
performance. Although information distribution follows after information acquisition
in the organizational learning process, the practices and activities that information
distribution contain do help organization members to contribute and transfer their
individual-level learning and knowledge acquisition to the organizational level. That
is, based upon this study, information distribution can be viewed as the most critical
function in the organizational learning process.

Predictors

Table XI.
Organizational level
innovation performance
as a predictor of
individual level
innovation performance

Annual revenue
Work experience in industry
Organizational-level innovation performance
R2
Adjusted R2
DR2
F
F Change
Note: *p , 0.05; * *p , 0.001; N 268

Individual level
Model 1
b

Model 2
b

0.23 * *
0.20 * *

0.12 *
0.12 *
0.42 * *
0.23
0.22
0.15
26.65 * *
53.89 * *

0.08
0.07
10.87 * *

Organizational learning and innovation performance


The current study showed a clear division between individual and firm-level
innovation performance and their relative importance to the organizational learning.
The findings indicated that organizational learning contributed more to individual
level than organizational-level innovation performance. The results may challenge the
general thought that organizational learning should contribute more to
organizational-level innovation performance than individual-level innovation
performance. However, organizational learning relies on its members
individual-level learning performance (Easterby-Smith and Araujo, 1999). Also, how
an individual perceives his or her organizations learning systems and practices may
affect the individuals attitudes towards learning (Gnyawali and Stewart, 2003). That
is, an organization members learning behaviors and performance are shaped and
influenced by the organizations learning mechanisms they perceived. Therefore,
organizational learning has a much more direct impact on an individuals performance
than on organizational-level performance.
Individual and organizational-level innovation performance
Under control variables related to the firm-level innovation performance (Table IX), the
individual-level innovation performance was significant to firm-level innovation
performance. The findings confirmed that organization learning is primarily
underpinned by the concept that individual-level efforts may contribute to
organizational-level performance (Dixon, 1992; Huber, 1991; Ron et al., 2006). This
study further extended the limitation of existing literature in which individual-level
learning and innovation measures are usually neglected and restricted to
organizational-level performance (Antonacopoulou, 2006). Also the empirical
findings supported Glynns (1996) and Antonacopoulous (2006) conceptual
framework that organizational innovation occurs under the condition that an
organization members innovation performance is able to transferred to be the
organization.
Moreover, the findings in Table X indicated that firm-level innovation performance
had significant impact on individual-level innovation performance. It contributed to
the understanding of innovation performance literature from another perspective,
which not only emphasized how individuals contribute to the whole organization but
also how an innovative organization facilitates and encourages its members to pursue
innovation. In addition, this empirical study supported Antonacopoulous (2006)
conceptual argument that the organizations learning and innovation environment
influences its members learning and innovation performance.
Implications for practice
As HRM professionals roles have shifted from traditional operational functions to an
organizational consultancy role, HRM professionals have become more proactive as
strategic advisors of the organization (Ulrich, 1997). A range of environmental
pressures contributed to the emergence of HRM strategic activities and practice.
Learning at the individual, group, and organizational-levels has become a critical
imperative in organizations, and HRM professionals are being challenged to become
strategic business partners that can impact learning and development to improve
innovation performance and enhance organizational functioning in a competitive

Organizational
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532

global business environment. Although scholars have articulated the applications and
practice of organizational learning from the management perspective and literature
(Bapuji and Crossan, 2004), the findings from this study have specific applications and
utility for HRM professionals and managers.
The findings of this study indicated that organizational learning processes enhance
both individual-level and organizational-level innovation performance. Among the
organizational learning subprocesses, the finding suggested that it is information
distribution that contributes most to both individual-level and organizational-level
innovation performance. In other words, information distribution is the most important
subprocess within organizational learning. From an organization development
perspective, improving upon systems and structures may strengthen information
distribution thus augmenting organizational learning. Therefore, HRM professionals
and managers may be positioned to better assist the organization with information
distribution by creating the environment with technology system and informal culture
that fosters employees to share, exchange, and disseminate information and
knowledge within the organization. It is also important that the organization
structure or system does not limit the information distribution activities. In addition,
from the employee development practice perspective, job rotations can broaden the
employees information distribution scope, especially in the high technology industry.
For example, research and development division employees often need to communicate
with manufacturing division employees and rotating employees may enhance this
subprocess.
Moreover, the results also empirically reflect the importance of information
acquisition to individual-level innovation performance is the next most important
subprocess next to information distribution. This suggests that information
acquisition strategies should be strengthened as one critical subprocess within the
organizational learning infrastructure. HRM professionals should help their
organizations and employees to identify and assess diverse or information
acquisition channels and opportunities either internal or external the organization.
In addition, grafting new employees and merging with other firms are
organizational-level information acquisition strategies. For example, managers may
consider initiating collaborative relationships with other firms and recruiting talented
employees from other firms, which are concepts of the construct of information
acquisition. Further, an organizations managers and HRM professionals may consider
strategic organization development interventions at the organizational-level, such as
mergers, acquisitions, networks, or alliances.
Findings also suggest that senior R&D employees perception of external
environment was positively correlated to organizational learning. If R&D employees
are taught to be more sensitive in scanning and searching the external general
environment and industrial environment, they may become more proactive in fostering
learning. Hence, HRM professionals may be positioned to encourage R&D employees,
especially those junior R&D employees, to perceive and interpret the jolts and changes
on the external environment.
Limitations and recommendations for future research
There were some limitations which need to be acknowledged in this study. First,
although the researcher assumed that each R&D manager did randomly select the

senior R&D project team members in the organization, the potential differences
between employees might exist. Moreover, the survey data were mostly based on
self-reports, which may become a research bias. To resolve the challenges associated
with common method bias, the researcher assumed that having R&D managers rate
their employees individual-level innovation performance would address this issue.
Also, the researcher assumed that excluding the participants own rating on the
firm-level innovation, and along with using partial secondary sources of financial data
on firm-level innovation performance as a supplementary tool would address the
common method bias and enhance the validity of firm-level innovation performance
measure. Furthermore, one limitation is that the instrumentation on individual-level
innovation performance may underestimate tacit knowledge creation.
Given the research limitations addressed and the findings reported aforementioned,
the following recommendations are made for future research. First, this study
investigated individual-level and organizational-level innovation performance. Future
research may involve team or group-level participants and investigate their innovation
performance since there is an increasing interest in understanding organizational
learning processes at the group-level, especially virtual teams (Vince et al., 2002).
Hence, understanding how team or group-level innovation performance impacts upon
individual and organizational-level innovation performance may provide HRM
professionals with significant practice knowledge on developing team or group-level
interventions to facilitate their learning and performance.
In addition, Lipshitz et al. (2002) have integrated five facets: structural, cultural,
psychological, policy, and contextual, to build their organizational learning conceptual
framework. As a result, future research may include other facets or variables related to
organizational learning, such as organizational culture or leadership to have a
comprehensive understanding of how these variables interactively or independently
impact on learning and innovation and analyze their relative importance towards
innovation performance and other outcome variables. While the organizational
learning instrument used in this study appeared to be robust in this Asian context,
future research may be focused on developing an indigenous organizational learning
instrument that captures organizational learning practices and other indigenous facets
that may be unique to Taiwan. Finally, a longitudinal research design may provide
more detailed data in further understanding the change of an individuals innovative
behaviors and an organizations innovation performance over more substantial periods
of time.
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About the authors
Yu-Lin Wang is Assistant Professor in the Department of Business Administration at National
Cheng Kung University, Taiwan. Her research interests focus on organizational learning and
entrepreneurship in small and medium enterprises. Yu-Lin Wang is the corresponding author
and can be contacted at: ywang@mail.ncku.edu.tw
Andrea D. Ellinger is Human Resource Development Professor in the Department of Human
Resource Development and Technology at The University of Texas at Tyler, USA. Her research
interests focus on managerial coaching, informal workplace learning, organizational learning,
and the learning organization concept.

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