impact of organizational learning on organizational ...

INTERNATIONAL JOURNAL Of ACADEMIC RESEARCH

Vol. 3. No. 5. September, 2011, II Part

IMPACT OF ORGANIZATIONAL LEARNING ON ORGANIZATIONAL PERFORMANCE: STUDY OF HIGHER EDUCATION INSTITUTES 1

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Shoaib Akhtar *, Ahmed Arif , Erum Rubi , Shaheryar Naveed 1

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Department of Public Administration, Fatima Jinnah Women University, Rawalpindi, Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology, Islamabad (PAKISTAN) *Corresponding author: [email protected]

ABSTRACT The education sector is the most important sector of any country as it is involved in the building of the future human capital. Education has achieved the status of an industry in Pakistan. The present study is conducted to investigate the impact of organizational learning on organizational performance of higher education institutes of Pakistan. Non-probability purposive sampling strategy was adopted, and a sample of size 150 was chosen amongst the employees. The response rate obtained was 66 percent. The data were collected by using DLOQ. Regression analysis was performed to estimate the impact of explanatory variable ‘organizational learning’ on the response variable ‘organizational performance’ with “Culture” as a moderator. The results revealed a significant positive impact of the organizational learning on organizational performance. Inquiry and dialogue, and systems connection were the two dimensions which were found to be highly significant; however, five of them (continuous learning, team work, embedded systems, empowerment and leadership) were insignificant in relation to the organizational performance. Key words: Organizational learning, Organizational performance, DLOQ, Culture 1. INTRODUCTION The ever increasing competition in the market has compelled the organizations to devise the strategies for enhancement of their performance to gain a competitive advantage in the market (1-4). Organizations are promoting the learning environment for this purpose. Organizational learning is a transformational process through which different stakeholders contribute their learning experiences both individually and collectively to attain organizational goals (5). This helps the organization to adapt to the changing environment (6). The organization’s ability to learn, acquire knowledge and innovate has emerged as an important factor influencing organizational performance and survival (5, 7). Learning plays a vital role in almost all the fields but its importance increases by many folds in the education sector. Universities are important places built implicitly as well as explicitly on the notion of learning at all levels incorporating knowledge, addition to existing knowledge, growth and improvement, and creativity (8). 2. LITERATURE REVIEW Organizational learning has gained significant importance during the last couple of decades (9). Learning is defined as a way to understand others as well as one-self (10). It provides an opportunity to the individuals to discover and understand themselves. Learning process actually starts from feedback and response from others (11) leading to the organizational improvement and performance (12). Organizational learning is holistic in nature taking into account the individual’s dynamic use of knowledge to direct behaviours in ways that would help the organization to adapt to the changing scenarios (7). On the other hand it refers to the specific strategies, policies and rules which are supportive for promoting learning (13) and affecting decisions and actions (14). Organizational learning is a multi dimensional construct and researchers have proposed various dimensions to measure learning processes (15-17). But majority of the researchers has focused on the seven dimensions proposed by Watkins and Marsick (16) namely: continuous learning (CL), dialogue and inquiry (D&I), team learning (TL), embedded system (ES), system connections (SC), empowerment (Emp.), and leadership (Ldp). A strong relationship exists between organizational learning and organizational performance because the performance of organization increases with the rate of organizational change which leads towards improvement of organizational performance (1, 3, 14, 18). Culture is defined as organizational values, beliefs, practices, rituals and customs (13). Culture is a key to unlocking the possibility of ongoing learning process (16). The learning organization’s culture usually learns and works to integrate processes in all organizational activities and functions. In this way, the culture of a learning organization is continuously developing a never-ending variety in a harmonious learning environment. As a result, the purpose is trade of helpful knowledge leading to improvement in performance. Organizational culture not only influences performance of the employees but also helps in tackling crisis, shocks, and other threats. It depends upon the culture of the organization that how effectively it encourages knowledge sharing with attractive reward system for the individuals working in the organization (19) The present study takes seven dimensions of organizational learning proposed by Watkins and Marsick’s (16) and investigates their impact on non-financial dimensions of organizational performance. The hypotheses developed for the study and the research model is given below:

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Fig. 1. Research Model H1: Organizational learning has a positive impact on organizational performance. H2: Continuous Learning has a positive impact on organizational performance. H3: Inquiry and Dialogue has a positive impact on organizational performance. H4: Team Learning has a positive impact on organizational performance. H5: Embedded systems have positive impact on organizational performance. H6: Empowerment has a positive impact on organizational performance. H7: Systems connection has a positive impact on organizational performance. H8: Leadership has a positive impact on organizational performance. H9: Organizational learning has a positive impact on organizational performance when moderated by culture. 3. METHODOLOGY A co-relational field study was used to examine the relative impact of organizational learning dimensions on organizational performance. Pearson Correlation and multiple regression analysis techniques were adopted for the study. Survey technique was used using questionnaire adopted from Watkins and Marsick (16). Data was collected from the employees of the higher education institutes belonging to both public and private sectors. Non-probability purposive sampling was used as the target population belonged to higher education institutes. A total of 150 respondents were selected on the basis of convenience sampling. The response rate achieved was 66.66%. The sample consisted of faculty and administrative staff. Majority of the respondents (43%) belonged to the age group (25-30) and only 11% belonged to age category of 45 and above. About 49% of respondents were males and 51 percent were females. Out of total respondents 39 percent had masters level of education, 35 percent were MS/M.Phil, whereas, 10 percent had Ph.D degree. Pilot study was conducted to test the reliability of adopted instrument on a sample of 30 respondents. The Cronbach alpha values obtained ranged between 0.65 – 0.95, showing strong consistency between items which is satisfactory value for survey research (20). It reveals that scale used in this study is reliable in Pakistani context. 4. RESULTS AND DISCUSSIONS Regression technique employing Baron and Kenny (21) method for testing moderating effect has been used in the study. Before the model testing, descriptive statistics and correlation matrix analysis was carried out. Table 1 is showing the descriptive statistics, including the values of mean, standard deviation, skewness and kurtosis. The mean values are showing the agreement in most of the cases, except empowerment which is revealing the neutrality of the respondents and leadership showing a disagreement. The skewness and kutrosis values have been obtained to check the normality of the data which is one of the primary assumptions of regression (22). Both the values are within acceptable ranges, thus proving the authenticating the normality of data. Table 1. Descriptive statistics Continuous Leaning Dialogue and Inquiry Team Learning Embedded Systems Empowerment System Connections Leadership Culture Organizational Performance

Mean 4.1014 4.3480 4.3383 4.3550 3.0717 4.2800 2.3978 3.5577 4.3777

Std. Deviation .73078 .86812 1.14260 2.05257 .92455 1.20322 1.03429 .82728 1.02021

Skewness -.279 -.087 2.111 1.242 .029 1.386 -.199 .086 .692

Kurtosis 0.243 0.077 5.705 3.005 .578 2.676 .704 .605 1.850

Table 2 is the correlation matrix, showing the correlation among the different dimensions of our independent variable i.e. organization learning, culture (moderating variable) and dependent variable (organization performance). The correlation matrix reveals that most of the correlations are significant at 0.01 and 0.05 level. The correlation matrix also proves that there is no multi-collinearity among the independent variable which otherwise

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could have deteriorated our results. The correlation coefficients results of organizational learning dimensions are consistent with the studies of Yang, Watkins and Marsick (23). Table 2. Correlation matrix CL D&I TL ES Emp. SC Ldp Cul. OP

CL

D&I

TL

ES

Emp.

SC

Ldp

Cul.

1 0.644(**) 0.547(**) 0.454(**) 0.524(**) 0.453(**) 0.544(**) 0.551(**) 0.410(**)

1 0.571(**) 0.422(**) 0.603(**) 0.571(**) 0.658(**) 0.623(**) 0.540(**)

1 0.370(**) 0.553(**) 0.454(**) 0.552(**) 0.503(**) 0.294(**)

1 0.400(**) 0.361(**) 0.454(**) 0.581(**) 0.228(*)

1 0.615(**) 0.780(**) 0.669(**) 0.431(**)

1 0.627(**) 0.505(**) 0.514(**)

1 0.695(**) 0.384(**)

1 0.615(**)

OP

1

** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed). H2: Continuous Learning has a positive impact on organizational performance. (Rejected) H3: Inquiry and Dialogue has a positive impact on organizational performance. (Accepted) H4: Team Learning has a positive impact on organizational performance. (Rejected) H5: Embedded systems have positive impact on organizational performance. (Rejected) H6: Empowerment has positive influence on organizational performance. (Rejected) H7: Systems connection has a positive impact on organizational performance. (Accepted) H8: Leadership has a positive impact on organizational performance. (Rejected) After obtaining descriptive statistics and correlation matrix, regression analysis has been carried out to test the model for the evaluation of relationship between organizational learning and performance. Baron and Kenny (21) method has been employed to test the moderating impact of organizational culture. Table 3 shows the results of regression analysis. Firstly, multiple regressions were run, taking all the dimensions of organizational learning as independent variables. The value of R is 0.614, proving the fitness of model up to 61.4% level. The total variation caused by 2 dimensions of organization learning in organization performance is 37.7%, as R = 0.377. The value of DurbinWatson is within acceptable range. The beta values reveal that all the relationships are insignificant except Inquiry and Dialogue and System Connections. These two dimensions of organizational learning are significantly affecting the organization performance with beta values of 0.455 and 0.272. The t-statistics for these two dimensions is 3.022 (p < 0.01) and 2.850 (p < 0.01), i.e. significant. Two of our hypotheses are accepted while other leads to rejection on the basis of our results. Table 3. Regression analysis 2

R

R

0.614

0.377

Adjusted R 0.330

2

F stats Durbin-Watson Multiple Regression 1.484 7.950

Sig.

0.243

0.235

Baron and Kenny Step 1 1.455 31.463

0.378

0.372


0.278

0.271


Constant O.L. * Cul.

0.943 0.147 0.455 -0.094 -0.022 0.171 0.272 -0.170

2.378 0.908 3.022 -0.958 -0.463 1.109 2.850 -1.167

0.019 0.366 0.003 0.341 0.644 0.270 0.005 0.246

1.477 .581

4.215 5.609

0.000 0.000

.680 .758

1.896 7.718

0.061 0.000

2.252 0.092

11.109 6.148

0.000 0.000

0.000

Constant Cul. 0.528

Sig.

0.000

 OL 0.615

t-statistics

0.000

 CL D&I TL ES Emp. SC Ldp 0.493

Beta

0.000

Dependent Variable: Organizational Performance Continuous learning is an individual effort and has greater impact on individual performance but its impact on organizational performance is minimal (24). Inquiry and Dialogue has a positive impact on organizational performance and has been accepted. This is an important tool for promoting collective thinking and communication




leading towards organizational performance. According to Jyothibabu, Farooq, Pradhan (24) team learning or group level learning has a mediating effect on organizational performance and does not have direct influence on performance. Leadership plays an important role in enhancing the communication and the establishment of processes for shared learning. It empowers employees to tackle issues at their level within organizational context. The results of the present study highlight that the employees of higher education institutes are not empowered enough to take decisions on their own but rather rely on leadership for decision making. The main reason for rejection of our hypothesis stems from the fact that majority of the respondents did not have requisite experience and education level to be empowered enough to take decisions. Also majority of the respondents were young (43%). System connection has a significant impact on the organizational performance, as shown by the results above. These results highlight the fact that the employees are well versed with both internal and external environment that surrounds them and have the ability to link the two environments. This is reflected by the educational levels of the respondents of the study. Our main hypothesis (H1) is accepted here on the basis of results shown in Baron and Kenny Step 1. The 2 value of R is 0.243 and beta value 0.581 with t-statistics 5.609 and p < 0.05. This result is consistent with the studies of Jamie and Callahan (25). H1: Organizational learning has positive impact on organizational performance (Accepted) The culture has been taken as the moderating variable in this study. This variable was tested in step 2 and step 3. The results shown in Table III prove that the culture is performing as moderator in the relationship between 1 organizational learning and organization performance . H9: Organizational learning has a positive impact on organizational performance when moderated by culture (Accepted). The finding demonstrates that in higher education institutes, organizational learning is playing a significant role in improving their performance. Since most of the HEI’s in Pakistan are compelled to increase their financial resources therefore, organizational learning becomes essential to produce high returns on investment, and it is only possible when their performance will become up to the mark. Secondly, with the withdrawal of funding from the government, public sector institutes are under huge pressures to make adjustments and show performance to attract funding. 5. CONCLUSION In today’s ever competitive environment, due to globalization and many other factors organizations belonging to any sector have to effectively respond towards these changes. 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According to Baron and Kenny (1987), significance of beta value in step 3 supports the moderation hypothesis.

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