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Is there a global model of learning organizations? An empirical, cross-nation study
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ABSTRACT
This paper develops and tests a learning organization model derived from HRM and dynamic
capability literatures in order to ascertain the model’s applicability across divergent global contexts.
We define a learning organization as one capable of achieving on-going strategic renewal, arguing
based on dynamic capability theory that the model has three necessary antecedents: HRM focus,
developmental orientation and customer-facing remit. Drawing on a sample comprising nearly six
thousand organizations across fifteen countries, we show that learning organizations exhibit higher
performance than their less learning-inclined counterparts. We also demonstrate that innovation fully
mediates the relationship between our conceptualisation of the learning organization and
organizational performance in eleven of the fifteen countries we examined. It is the first time to our
knowledge that these questions have been tested in a major, cross global study and our work
contributes to both HRM and dynamic capability literatures, especially where the focus is the
applicability of best practice parameters across national boundaries.
Keywords: Innovation, learning organization, HRM, dynamic capabilities
Is there a global model of learning organizations? An empirical, cross-nation study
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INTRODUCTION
Although there is growing understanding of the characteristics of learning organizations in Western
contexts, it is less clear whether this model is applicable elsewhere in the globe, given diverse
institutional and cultural contexts. Furthermore, existing measures of learning organizations have
focused on internal variables, although insights from dynamic capability literatures (e.g. Teece, 2007)
suggest that alignment with external stakeholders, particularly customers, is important for businesses
that aspire towards being learning organizations. In this paper, we make two contributions. Firstly,
we define a learning organization following Pedler et al. (1999) as one that draws on the insights of
internal and external stakeholders in order to build the capability required to achieve strategic
renewal. Our model adds to extant literature by capturing the extent to which learning organizations
engage with key stakeholders- their customers -as well as internal parties.
Our second contribution is to ascertain the model’s applicability across divergent national
contexts. In a major international survey, we assess our model’s impact on organizational innovation
and performance across fifteen countries, drawing on survey data from nearly six thousand
organizations. Conceptualising the learning organization in a more complete way, and testing the
model in a major international study, we not only contribute to theory surrounding learning
organizations but also provide concrete evidence as to the impact that the model might have on
performance outcomes at the level of the organization. There have been wide calls for more
supporting evidence (Friedman et al., 2005; Goh et al., 2012; Spicer & Sadler-Smith, 2006).
Defining the learning organization
In recent years, the learning organization has become a widely-researched topic for
organizational scholars (Ellinger et al., 2002; Garvin et al., 2008; Weldy, 2009). Amongst the reasons
for this interest are the demands of a turbulent and dynamic external environment, together with a
perceived need for innovation (Laursen and Foss, 2003; Martínez-Sánchez et al., 2010). Literature is
often focused on Western ideas around self-development and improvement, with learning
organizations being presented as visionary ideals; where learning behaviour improves as a result of
proactive and empowering intervention by senior management (Sicilia & Lytras, 2005). Senge
(1990,p.3), for example, defined learning organizations as places ‘…where people continually expand
Is there a global model of learning organizations? An empirical, cross-nation study
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their capacity to create the results they truly desire, where new and expansive patterns of thinking are
nurtured, where collective aspiration is set free’. To achieve this, organizations should adopt flat,
decentralized organizational structures that facilitate open communication and dialogue (Garvin,
1993). Team working facilitates individual growth and empowerment, and therefore presents the
ideal structural arrangement for organizations concerned to promote an environment conducive to
learning (Leonard-Barton, 1998). Other HR systems should be developed in line with this aspiration;
for example, individuals should have opportunities to participate in organizational decision-making
and reward systems should be designed to recognize the achievement of learning goals (Armstrong &
Foley, 2003; Wong & Ahmed, 2003).
Where these ideas are tested in practice, learning is often measured by reference to a single
scale capturing attributes such as the extent of strategic integration and the extent to which employees
are encouraged to pursue learning-related priorities (Chiva & Alegre, 2009; Ellinger et al.,2002;
Garvin et al., 2008). Although these factors have a role, we propose following Pedler et al. (1999)
that learning organizations are ones that engage effectively with external stakeholders, especially
customers, while simultaneously building internal capabilities (Teece, 2007). Defined in this way, the
learning organization embraces not only whether there is commitment to learning and questioning
behaviours (expressed in policy statements, for example). It also captures whether there is the
opportunity for learning and questioning activities to be appropriately directed, taking account of
customer needs. Following this logic, we suggest that learning organizations emerge following close
attention to three factors: customer-facing remit, developmental orientation and HRM focus. As such,
the model represents an intangible (and unobservable) strategic ‘second order’ resource (Hult et al.,
2002).
International comparative perspectives and the learning organization
Although there are few if any published studies (of which we are aware) that have looked at
whether the learning organization model is applicable across national boundaries, the way in which
HRM practices might or might not influence performance given differing cultural and institutional
contexts has been the subject of protracted academic inquiry (e.g. Budhwar & Debra, 2009; Budhwar
Is there a global model of learning organizations? An empirical, cross-nation study
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& Debra, 2002). It is outside the scope of this paper to rehearse arguments comprehensively covered
elsewhere except to say that there are valid reasons why Western- oriented models may not achieve
expected outcomes in other areas of the world. (see Sheenhan & Sparrow, 2012 for an overview).
The institutional and cultural environment is made up of rules and nationally-devised ways of
working that form the backdrop for work activity, often outside of conscious intent (Budhwar &
Debrah, 2009). Cultural factors also play a role ( Aycan ,2005). In short, one might expect that the
inspirational ideals associated with the learning organization have stronger bearing on perceptions and
outcomes in some national contexts rather than others.
A related literature on knowledge creation and innovation suggests that talent management
and developmental practices are significantly and positively related to performance, in areas of the
world as disparate as India, Spain, Taiwan and UK (Alegre & Chiva, 2009; Hung et al., 2011; Kong et
al, 2012; Raduan et al., 2009 ). Also taking a global perspective, Horwitz (2011) has identified that
opportunities for growth and talent development, as well as consistent and fair HR practices are
important means of drawing talented people into organizations across cultures, rather than just in
Western paradigms. These insights echo those of Deloitte Touche Tohmatsu in conjunction with the
Economist Intelligence Unit (EIU, 2009) who in a global study of 531 HR and non-HR executives
found that there was growing interest in leadership development and learning and development
focused on high potential employees. Research on transitional economies suggests that such
employees are looking for challenging work, career development opportunities and cultures that build
trust and collaboration (Horwitz, 2006). - Taken together, these various studies are suggestive of
‘cross-vergence’ at least for professionals and knowledge workers (Horwitz, 2011). Based on this
evidence, we suggest that, applied with sensitivity, the learning organization model outlined here
should promote desirable outcomes even given substantial differences in national contexts.
THEORETICAL FRAMEWORK
In developing our conceptual framework, the following sections are organized as follows. We first
hypothesize that developmental orientation, HRM focus and customer-facing remit are captured in the
second order construct labelled ‘learning organization’. Then we hypothesize about the effects of our
learning organization model on innovation and financial performance.
Is there a global model of learning organizations? An empirical, cross-nation study
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The antecedents of the learning organization
Defining exactly what best practice components characterise the learning organization, such that
innovation is produced in a sustained way, is problematic. Although broad parameters can probably
be established, isolating causal attributes from superfluous detail may not always be possible. The
challenge is heightened when focusing on learning organizations, since learning arises both from
informal, day-to-day experience as well as formal, planned interventions and occurs at the level of the
individual, the workgroup and/ or the organization (Bontis et al., 2002). Furthermore, learning
generally involves both tacit and explicit knowledge (Shipton and Zhou, 2008).
Given the complexity of the various interactions involved, it seems unfeasible as well as
potentially misleading to do more than offer a broad framework regarding desirable policies and
practices for learning organizations. We have called upon three variables labelled ‘first-order factors’
(Hult et al, 2002) – developmental orientation, HRM focus and customer-facing remit, each of which,
we suggest, is necessary but individually insufficient to constitute the model.
The variables measuring developmental orientation and HRM focus represent internal components
of learning organizations. Argyris and Schön (1978) have argued that learning organizations engage
in ‘double loop’ learning, questioning underlying assumptions. Arising from this, learning
organizations make the learning of their members a key strategic goal and actively encourage staff to
continually challenge existing ways of working (Pedler et al., 1999). Employee training and learning
are seen as an investment rather than a cost, so that resources are made available to support learning
activity (Appelbaum and Gallaher, 2000). The underlying values of the company would tend to
include learning as the key to on-going improvement. (Senge, 1990).
We are interested in HRM not so much in terms of its role in directing, motivating and rewarding
employees, but more with regard to factors that prompt the questioning of existing practice and draw
on employee insights. Staff appraisals are important, for example, insofar as they enable the
identification of employee learning needs and planning of appropriate interventions to meet specified
needs (West et al., 2006). Regular staff meetings provide the opportunity to draw on staff insights
about work (London & Smither, 1999). Attitude surveys, conducted at given points in time, offer a
glimpse into changing feelings at work to inform decision-making (James, 2002). Through asking
Is there a global model of learning organizations? An empirical, cross-nation study
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individuals about their experiences of work, managers are better informed about where potential
learning blockages may exist (and in a position to deal with them) (Mumford, 2000). Overall, the
acknowledgement and recognition that staff experience following these various strategic perspectives
– encompassed within the variable measuring developmental orientation as well as HRM focus-
seems likely to increase flexibility and openness to change, employee attributes which research has
shown to be linked with innovation (Martinez-Sanchez et al., 2010).
These two considerations alone are insufficient, however. Taking into account the customer is a
necessary additional component for a learning organization. A customer-facing remit provides a focus
for interaction with the external context to ensure that learning is valuable relative to the
organization’s strategic goals (Cohen and Levinthal, 1990) and offers data to inform the
organization’s strategic learning and development plans (giving a rationale for customer service
training, for example). Where strategic imperatives place the customer at the heart of business
planning, new insights can be brought into the organization to ensure alignment (Pedler et al., 1999),
which, in turn, predicts the extent to which organizations can operationalize external knowledge for
the purposes of achieving innovation (Lichtenthaler and Lichtenthaler, 2009). Organizational
members can span boundaries through liaising with customers, and organizations can reinforce the
value doing so represents (Theoharakis and Hooley, 2008).
These three learning organization components may influence dynamics in unexpected ways.
Surveying staff attitudes may shed new light on how the company conducts an analysis of external
stakeholders, in particular, customers. A higher level of informal learning and knowledge-sharing may
occur where there is a perception by senior managers that the company’s ability to learn is key to
competitive advantage. Competitive strategies based on understanding customer needs may engender
a more externally-oriented attitude on the part of employees across the organization, as well as a
willingness to network. Furthermore, it seems probable that where there is a questioning orientation
together with strong customer links, there will be scope to assess the viability of existing work
practices and at the same time review whether customer needs are being adequately addressed. Thus,
although (we suggest) the three components are likely to remain important, interactions will vary
across contexts, depending on how they are interpreted and enacted within a particular setting.
Is there a global model of learning organizations? An empirical, cross-nation study
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In sum, following the above logic, our first hypothesis is as follows:-
Hypothesis 1: The learning organization conceptualised as a second order construct arises from three
inseparable components: developmental orientation, HRM focus and customer-facing remit.
The learning organization, innovation and performance
We define innovation as a concrete change that has both novelty and value, relative to current
practice (West and Farr, 1990). It is as a multi-dimensional construct that may arise in products,
services and administrative as well as management systems (Crossan and Apayin, 2010). Given the
right context, there is scope for a multitude of innovations to occur across all levels and areas of the
organization (Patan and McCalman, 2000). While innovation may be concentrated in a particular area
(for example, R & D) it could also be widely dispersed across the organization (Damapour, 1991).
The learning organization is conducive to innovation in several ways. It presents a context where
there are open channels, both with the customer and within the organization, where there are
systematic efforts by managers to capture information from both sources. Such channels facilitate the
flow of ideas from the outside in, so that customer insights inform and enrich internal dialogue,
thereby improving the quantity and quality of ideas and their subsequent implementation, while at the
same time drawing on the insights of employees. The flow of ideas in learning organizations may also
occur the other way round, from the inside out, as, for example, when companies create a need of
which customers had not previously been aware (such as Apple’s IPad) - a connection linked with
close understanding of the external market. Secondly, the learning organization actively encourages
questioning behaviours, which ensures that existing ways of working are regularly scrutinized to
ascertain their continued viability. This helps an organization to avoid competency traps (Leonard-
Barton, 1998), which signal that change is unnecessary and success assured given existing ways of
working, thereby discouraging innovation. Furthermore, a questioning approach (effectively
communicated) may ensure that managerial practices such as performance management and employee
attitude surveys are responsive to this particular orientation. So, for example, employees will be
rewarded for exhibiting questioning behaviours, and employee attitude surveys will be carried out by
managers who are open to the insights gained as a means of improving practices, rather than feeling
threatened and disempowered by the insights revealed. This makes it more likely that new
Is there a global model of learning organizations? An empirical, cross-nation study
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possibilities can be contemplated and where appropriate adopted. In addition, learning organizations
present opportunities for building employee flexibility in a way which is aligned with customer needs
(by emphasizing the importance and value of learning new skills), and a flexible workforce is more
likely to produce innovative outcomes than one where skills are entrenched (Martinez-Sanchez et al.,
2010). Finally, HRM systems in learning organizations provide a forum for discussing staff
developmental needs and gaining insight into staff feelings about work in a way that is tempered by a
deep and broad understanding of customer needs and requirements. Insights gained in this way are
likely to feed into the understanding that senior managers have about the viability and potential
applicability of proposed innovations, while at the same time reinforcing to staff that innovation is a
valued and necessary part of day to day work.
Our theorizing suggests that innovation is a potential mediator between our measure of the
learning organization and organizational performance. Innovation allows adaptation to changing
environments, thereby enabling better performance relative to less well-adapted firms (Helfat and
Peteraf, 2008). Innovative organizations are likely to be more flexible and able to envisage alternative
strategic options (Botazzi et al., 2001). This allows them to sustain ‘evolutionary fitness’ (Helfat &
Peteraf, 2008). Innovation may also prompt cost reduction through eliciting new and better ways of
working (Sinclair et al., 2000).
Because here we have conceptualized innovation as a capability arising from employees across the
entire organization, rather than concentrated in pockets of specialist expertise, with the learning
organization supporting and sustaining the capability, we envisage that there will be correspondingly
more innovation where the learning organization exists to a greater extent, and that higher financial
performance outcomes will flow from this. We also predict that there will be a positive relationship
between these variables and sustained competitive advantage, given that this outcome focuses on
success that is reinforced over time. Our second and final hypothesis is therefore as follows:-
Hypothesis 2: Innovation mediates the relationship between the learning organization and
organizational performance (indicated by sustained competitive advantage and financial
performance)
METHOD
Is there a global model of learning organizations? An empirical, cross-nation study
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The data on which the hypotheses of this study are tested are drawn from the ‘Marketing
in the 21st century’ dataset (MC21), a large multi-country data collection effort organized by
Aston University in the United Kingdom. This dataset spans 16 countries: Australia, Austria,
Brazil, Mainland China, Finland, Germany, Greece, Hong Kong1 (SAR), Hungary, Ireland,
the Netherlands, New Zealand, Poland, Slovenia, the United Kingdom, and the United States
(see Table I). Two countries, Poland and the Netherlands, had to be dropped from this
analysis because of the high proportion (>10%) of missing data. Further analyses were
therefore conducted on organizations from 14 countries. These countries vary to a large
extent in terms of their economic development. For example the lowest GDP per capita
(mainland China) was $6270 while the highest (USA) was $41529.
In each country, an academic expert managed and co-ordinated the data-collection
activities. Because the research design was set up initially to explore the relationship between
marketing practices and organizational performance, each country expert targeted the chief
marketing officer (in some organizations termed marketing or sales director) of these
organizations, who each of whom was asked to participate in the study. In the event that the
marketing specialist was unable to complete the survey, the chief executive officer was asked
to respond. Confidentiality was assured to each informant. A follow up survey was sent after
two weeks if no response had been obtained after the first wave. The net response of the total
data collection effort, excluding Poland and the Netherlands, is 5909 organizations. Details
are reported in Table I. No evidence of non-response bias is found through comparing firms
that responded in the first and second wave (Armstrong and Overton, 1977). The MC21
sampling frame varied from country to country but was always based on an established
business directory (including Dun and Bradstreet, proBusiness, Ireland Kompass, and TOY-
research). From these sampling frames, organizations having fewer than 20 employees and
non-commercial organizations were eliminated. The remaining organizations were further
Is there a global model of learning organizations? An empirical, cross-nation study
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stratified into small (20-99 employees), medium (100-499 employees), and large (500 or
more employees). From the remaining organizations a random sample was drawn and
approached. Part of the study design was to draw on organizations from a heterogeneous
range of organizations spanning consumer products and services and business products and
services. The sampled companies were spread across a range of business areas including
banking, telecommunications, information technology (IT), consulting, commercial,
aerospace, pharmaceutical production/research and development, railway engineering,
automotive production, energy, oil, minerals and shipping.
We employed an etic approach, comparing constructs implicit in the questionnaire scales
(see appendix 1) across multiple countries, and testing construct equivalence through a series
of interviews designed to compare the meaning of these constructs. Subsequently the
constructs were translated from the UK original into the native language/spelling (not for
Ireland) and subsequently translated back into UK English to test for equivalence (see
Harkness et al., 2003). The main UK questionnaire was extensively pilot tested to refine
measurement, check understanding and confirm the applicability of measurement scales and
items. We also tested for the cross-cultural equivalence of our measures. Configural and
metric invariance of the measures used were supported (Steenkamp and Baumgartner, 1998).
For each scale separately, configural invariance of the one-factor model was supported. The
Incremental Fit Index (IFI; Bollen, 1990), the Comparative Fit Index (CFI; Bentler, 1990),
and the Root Mean Square Error of Approximation (RMSEA) indicated acceptable model fit.
The χ2 is significant, which is expected given the large sample size (Steenkamp and Trijp,
1991).We also tested for equality of factor loadings, which was also supported by the data.
Finally, we also inspected the range of the Cronbach’s alpha’s found. It appeared that in each
country the alpha met the commonly accepted standards.
Measures
Is there a global model of learning organizations? An empirical, cross-nation study
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Developmental orientation. Our measure of developmental orientation is adapted from
Sinkula et al., (1997). This measure taps into the consensus amongst managers that a
company’s ability to learn is the key for competitive advantage, and of underlying values
recognizing learning as key to improving actions and performance outcomes. This measure
also takes into account the extent of commitment to invest in training and learning and
whether there is awareness that perceptions of the marketplace must be continually
questioned. The measure comprises four items and response options ranged from (1)
‘strongly disagree’ to (5) ‘strongly agree.’ The scale’s alpha reliability in the pooled sample
is .79.
HRM focus. We used a 4-item scale derived from West et al. (2006) to measure HRM focus.
We were interested in the existence of HRM systems, and whether or not such systems were
designed to take account of employee needs. We also wished to capture participation and
contribution of staff views, to ascertain whether or not managers were interested in the
feelings of staff about work. Sample items are ‘We have regular staff appraisals in which we
discuss employees’ needs’ and ‘We survey staff at least once each year to assess their
attitudes to their work’. Response options ranged from (1) ‘strongly disagree’ to (5) ‘strongly
agree.’ The scale’s alpha reliability in the pooled sample is .76.
Customer –facing remit. Customer-facing remit is the central aspect of market orientation and
we used five items adapted from Narver and Slater (1990) to measure this factor. Through
developing a customer- facing remit, organizations are able to gain understanding of an
organizations’ target customers to allow offering products and services that are of superior
value continuously (Narver and Slater, 1990). Sample items are ‘Our commitment to serving
customer needs is closely monitored’ and ‘Customer satisfaction is systematically and
frequently assessed.’ Response options ranged from (1) ‘strongly disagree’ to (7) ‘strongly
agree.’ The scale’s alpha reliability in the pooled sample is .81.
Is there a global model of learning organizations? An empirical, cross-nation study
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Innovation: We used a 4-item scale adapted from West and Farr (1990) to measure
innovation. According to their definition, innovation encompasses changes in methods,
processes, products and procedures which are new to the unit of adoption and designed to
benefit the organization. We asked respondents to assess these elements in respect of key
competitors. Sample items are ‘We are more innovative than our competitors in deciding
what methods to pursue in achieving our targets and objectives’ and ‘We are more innovative
than our competitors in initiating new procedures or systems’. Response options ranged from
(1) ‘strongly disagree’ to (5) ‘strongly agree’. The scale’s alpha reliability in the pooled
sample is .89. We adopt a broad measure of innovation that is distinct from ‘adoptive’
innovativeness measures that focus on, for example, the adoption of new products (Hauser et
al., 2006). Furthermore, the definition is not restricted to technological change but includes
new ideas or processes in administration, operations, or management. This focus on
innovation serves our context well as it is applicable to every organization. Note that our
definition does not require absolute novelty of the innovation, but it has to be new compared
to current practice.
Sustained competitive advantage. This scale focuses on the degree to which the organization
has created advantages that are difficult to copy by competitors. Based on the resource-based
view of the organization (Barney et al., 2001) difficult-to-imitate advantages help
organizations achieve higher profits but are also a direct advantage in themselves. We used a
4-item scale developed by Theoharakis and Hooley (2008) to measure sustained competitive
advantage. An example item is: ‘Our competitive advantage is difficult for competitors to
copy because it uses only resources we have access to.’ Response options ranged from (1)
‘strongly disagree’ to (5) ‘strongly agree.’ Sample items are ‘Our competitive advantage is
difficult for competitors to copy because it uses resources only we have access to’ and
Is there a global model of learning organizations? An empirical, cross-nation study
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‘Competitors could copy our competitive advantage but it would be uneconomic for them to
do so’. The scale’s alpha reliability in the pooled sample is .72.
Financial performance. We used a scale developed by Theoharakis and Hooley (2008) to
measure financial performance. Following the question, ‘How well did your company
perform compared with your main competitors in the last financial year on the following
criteria’, respondents were asked to compare the profit (margins) achieved relative to
competitors. Response options ranged from (1) ‘strongly disagree’ to (5) ‘strongly agree.’
Sample items are ‘Relative competitors profit margins achieved’ and ‘Relative competitors
return on investment’. The scale’s alpha reliability in the pooled sample is .72.
Given the global nature of our study and divergent approaches to capturing and reporting
financial data, we believe that having two measures of organizational performance increases
the likely accuracy of our performance data and provides another check for the general
direction of our results. We would anticipate, for example, that the responses to questions on
financial performance and sustained competitive advantage would be broadly in the same
direction, and this check on the data could be useful in asserting the viability of our results.
In a related point, the question of using subjective rather than objective measures of
performance deserves scrutiny given that the managers in our sample were asked for their
views about performance on two counts, firstly regarding opinions about the sustained
competitive advantage of the company, and secondly about its financial performance, in both
cases in relation to competitors. There have been mixed views amongst researchers about the
relative viability of subjective versus objective measures of organizational performance,
although recent research has suggested that concerns in this direction may have been over-
emphasised. Wall et al. (2004), for example, in three comprehensive tests have shown that
there is no statistical difference between objective and subjective measures of performance;
indeed, that the two approaches converge to a figure approaching 95% accuracy. They
Is there a global model of learning organizations? An empirical, cross-nation study
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suggest, however, that subjective measures are accurate to the extent that the person
completing the questionnaire has a detailed knowledge about the financial position of the
company. Senior managers, they argue, are required to be fully cognizant of financial
developments and for this reason their ratings are likely to concur closely with (ostensibly
more accurate) objective performance data.
Given that respondents in our study were selected on the basis of their knowledge and
seniority in the company, we suggest that their opinion about the company’s financial well-
being or otherwise is more likely than otherwise to be accurate. Furthermore, following
recommendations by Wall et al. (2004) to include more than one measure of performance, we
developed two separate measures, one related to perceptions of the longer-term performance
of the organization and the other taking into account shorter-term financial advantage. Both
shed light on how key managers envisage the performance of their organizations, we believe
in a way which is helpful for understanding relationships with management practices.
Data analysis
Anderson and Gerbing’s (1988) two step-approach was followed to test our hypotheses.
Confirmatory factor analysis (CFA) was conducted to test the measurement model by
comparing the hypothesized 6-factor model (developmental orientation, customer- facing
remit, HRM focus, innovation, sustained competitive advantage and financial performance)
to a series of nested models: (1) a 5-factor model (combining competitive advantage and
financial performance; (2) a 3-factor model (combining developmental orientation, customer-
facing remit, HRM focus and innovation); and (3) a 1-factor model.
Then we tested the structural model following procedures recommended by James et al.
(2006). The learning organization was modelled as a second-order construct or ‘latent
variable’ (Hult et al, 2002) with 3 first-order factors (developmental orientation, customer-
Is there a global model of learning organizations? An empirical, cross-nation study
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facing remit and HRM focus). We compared the hypothesized fully mediated model to a
partially mediated model A (with a direct path from LO to financial performance), a partially
mediated model B (with a direct path from LO to competitiveness), a partially mediated
model C (with paths from LO to financial performance and competitiveness), and a non-
mediated model (Kelloway, 1998). We repeated these procedures with the sample from each
of the 14 countries and the pooled sample. We used the IFI, the CFI, and RMSEA) to
examine model fit. In addition, we used χ2difference test to compare the relative fit of the
nested models. Values of .90 or greater are indicative of good fit for IFI and CFI (Medsker et
al., 1994) while RMSEA values of .08 or lower are indicative of good fit for the model
(Browne and Cudeck, 1993).
RESULTS
Table II presents the results of the descriptive statistics and zero-order correlations of the
study variables across 14 countries.
[Insert Table II about here]
Table III shows the results of comparison of structural equation models. For the sake of
clarity, we only report the model that fits the data best for each country and the pooled
sample2. The upper part of Table III displays the results of the path estimation relating to
hypothesis 1. Developmental orientation was a significant first-order component of the
learning organization with loading values ranging from .70 to .97 (p<.001). Customer- facing
remit was also a significant first-order component of the LO with loading values ranging
from .44 to .76 (p<.001). Similarly, HRM focus was a third significant first-order component
of the LO with loadings ranging from .55 to .85 (p<.001). Thus, Hypothesis 1 was supported.
The fully mediated model received support with the samples from 11 countries (i.e. UK,
Ireland, Austria, Finland, New Zealand, Australia, Hungary, Hong Kong, China, Slovenia,
Is there a global model of learning organizations? An empirical, cross-nation study
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and Greece). With each of the samples from the 11 countries, the fully mediated model
showed a better fit than the nested models (i.e. partial mediated models and the non-mediated
models), thus hypothesis 2 received support among these 11 countries. However, for the
samples from Germany and the US, the partially mediated model A (with a direct path from
the learning organization to financial performance) showed a better fit than other models. For
the sample from Brazil, the partially mediated model B (with a direct path from the learning
organization to sustained competitive success) showed a better fit than other models. Finally,
for the pooled sample (including all 14 countries), the partially mediated model C (with direct
paths from the learning organization to both outcome variables) showed the best fit (χ2
=2466.98, df =267, IFI = .96, CFI= .96, RMSEA= .037). Thus, Hypothesis 2 only received
partial support with Germany, US and Brazil not fitting the criteria for full mediation. This
was also the case for the pooled sample. Figure 2 shows the path diagram with standardized
results across the pooled sample.
To understand if the antecedents of the learning organization vary across countries and
industries we conducted simple one-way ANOVA’s for mean differences. We also conducted
Levene’s (1960) test of the equivalence of variance. We conducted these tests across the
different countries and industries present in the sample; consumer goods and services and
business goods and services plus an “other’ category consisting of organizations selling to
different industries.
The results suggest the means and variances of developmental orientation, employee focus
and the customer facing remit, vary across countries and industries (P<.01). Only the
variance of the customer facing-remit across industries (P>.10) suggests no difference in
variation albeit that the means are significantly different. In another test for heterogeneity, we
carried out ANOVA tests for differences in the median and the 10% trimmed mean (the 5%
Is there a global model of learning organizations? An empirical, cross-nation study
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and 5% highest observations are taken out). These additional robustness checks indicate
similar findings.
Taken together, these differences suggest a degree of heterogeneity in the learning
organization antecedents. We find that the learning organization impacts on performance in
all cases (albeit sometimes fully mediated, sometimes partially mediated). While the
constituent elements of the learning organization differ across countries and industries, the
outcomes of being a learning organization are always positive. The levels and variances of
the outcomes (innovation, financial performance and sustained competitive advantage) also
differ across countries and industries, but to a markedly lesser extent.
[Insert Table III & Figure 2 here]
Post-hoc tests: The results of the CFAs showed that the hypothesized 6-factor model fit
the data better than the nested models across 14 countries and the pooled sample. For
instance, with the pooled sample, the hypothesized 6-factor model (χ2 = 2383.84, df = 260,
CFI = .96, IFI = .96, RMSEA = .037) showed a better fit than the 5-factor model (Δ χ2 =
3728.63; Δdf = 5 ; p < .001), the 3-factor model (Δ χ2 = 15094.65; Δdf = 12; p < .001), and
the 1-factor model (Δ χ2 = 26162.06; Δdf = 15; p < .001)3. These findings suggest
discriminant validity of our measures.
The potential occurrence of CMV needs to be carefully considered given our research
design. Although researchers are by no means in agreement about the phenomena, with some
arguing that CMV is an ‘urban legend’ the effects of which are often over-corrected (Spector,
2006), others again have suggested that in order to mitigate the dangers CMV presents,
researchers should select an appropriate test (Richardson et al., 2009). More recently,
scholars have suggested that confirmatory factor analysis may be a one of the more robust
Is there a global model of learning organizations? An empirical, cross-nation study
18
tests for CMV (Podsakoff, et al., 2003). We adopted this more rigorous test, and the results of
the CFA indicate to us that the findings are not driven by common method bias.
DISCUSSION
In this study, we identify two main contributions. Firstly, we have developed and tested a
model to represent the learning organization based on a sample of 5909 organizations drawn
from fourteen countries across the globe. Although the majority of extant work has defined
learning in terms of an extra dimension capturing questioning and reflecting behaviours, our
conceptualization extends this framework by presenting the learning organization as a second
order construct, arising from three inseparable elements, including the extent of integration
with the customer. As such, our study represents a new way of conceptualizing the learning
organization, which is suggestive of how innovation may be encouraged across a wide range
of different companies and countries with distinctive cultures and at various stages of
economic development.
This way of portraying learning organizations draws upon organizational learning and
dynamic capability theory and makes connections across these literatures. For the former, it
has been suggested that organizations learn to the extent that there is a significant ‘jolt’ or
widely-felt acknowledgement signalling that change is required (Thomas et al., 2001), a
mindset which, we believe, may be initiated through building strong links with the buyers of
the products or services on which the organization depends. Linked with this point, we have
attempted to shed light on an area in the dynamic capability literature (how to produce the
capabilities linked with innovation) that has hitherto received little research attention (Helfat
and Peteraf, 2008). The dynamic capabilities needed to achieve innovation arise from
learning, which is in turn precipitated by close attention to each of the three components
outlined here. We return to these points in the following section.
Is there a global model of learning organizations? An empirical, cross-nation study
19
A second contribution of our work is to demonstrate the applicability of our model across
global boundaries. Although there are grounds for questioning whether or not a universalistic
model such as that described here might deliver hoped-for benefits, our work suggests that,
by and large, the model holds up, at least for the majority of countries in our study. This
might be because of the way that we have conceptualised the learning organization, as a
latent variable arising whether sufficient attention is given to the three components detailed
above. As suggested in our post-hoc analyses, becoming a learning organization is complex
and situation-specific. Although broad parameters (like those described here) seem to be
necessary, the way in which the various orientations play out in a given scenario cannot
necessarily be anticipated in advance, especially against a backdrop of change. For example,
competitive strategies based on understanding customer needs may produce a more
externally-oriented attitude on the part of employees across the organization, as well as a
willingness to network outside. More informal learning and knowledge-sharing may occur
where there senior managers believe that the company’s ability to learn is the key to
competitive advantage. Our results point to a broad template encompassing various practices
that seem likely to channel learning in the desired direction; exactly how the various
dynamics that are elicited play out in a given context will vary depending on the dynamics of
a particular situation, for example, especially creative individuals, consistent leadership, prior
experience at innovating and so on. This way of conceptualising learning organizations
broadens its potential applicability to countries outside the West where the notion was
originally devised. It adds credence to the idea that the model may be best captured through
a second-order conceptualization, rather than through a single construct or multiple constructs
separately. We suggest the communality between three core constructs; developmental
orientation, HRM focus and customer-facing remit best represents learning organization.
Is there a global model of learning organizations? An empirical, cross-nation study
20
It is worth mentioning that for organizations from two countries- US and Germany- a
partially mediated model, with a direct path from the learning organization to financial
performance added, suggests a better fit than the fully mediated model. Similarly, in the case
of Brazil, we detected a pattern in our data leading directly from the learning organization to
sustained competitive success. The pooled sample too demonstrated the viability of a
partially mediated model, with paths straight from the learning organization to both outcome
variables (financial performance and sustained competitive success). By way of explanation,
we suggest that although overall our data (at country level) reveal a fully mediated model,
that the learning organization also directly influences performance outcomes makes logical
sense. For example, staff in learning organizations are probably better at anticipating
performance challenges and more adept at avoiding any damaging effect on financial
outcomes (because of the better sources of information to which they have access and the
relatively high skills of the workforce). The workforce flexibility such organizations have
would mean that the organization is quicker and more efficient than less learning-oriented
counterparts at performing existing activities, with corresponding financial benefits.
Regarding differences across the countries, we find consistent strong effects of learning
organization on innovation and performance. Three countries stand out against this general
trend: Germany, US and Brazil, where the learning organization seems to also directly
influence performance outcomes (partially mediated by innovation). Why this may be so for
these three countries in particular is an interesting point. Although there have been cross-
cultural studies exploring the effect of national characteristics on outcomes like
entrepreneurialism and innovation, mostly the focus has been on individualism versus
collectivism (Bhaga et al., 2003). Germany, US and Brazil tend to score highly for
individualism (like other countries in our sample); however, perhaps more tellingly, all three
countries stand out in the way that they aspire to becoming more ‘performance oriented’
Is there a global model of learning organizations? An empirical, cross-nation study
21
(Javidan et al., 2005) (where performance orientation is defined as the extent to which a
collective encourages and rewards group members for performance improvements). Although
detailed discussion of cultural dimensions and their relationship with innovation/
performance is outside the scope of this paper (see Bhaga et al., (2003) for a review), we
suggest that this desire for performance orientation may lead organizations with these cultural
characteristics to be perhaps less interested in achieving innovation (in relative terms) and
instead committed to working in a way which impacts directly on the ‘bottom line’, i.e. the
on-going financial viability of the organization. In this sense, we concur with Shane (1993)
that cultural influences may have a role in understanding national rates of innovation.
Performance orientation is, we suggest, an area deserving of future research in addressing
questions of this kind.
In practical terms, our work offers guidance for practitioners, especially in global, multi-
national companies, into the vexed question of how learning organizations may be developed
and where attention should ideally be directed. Currently, literature either focuses on abstract
(from a practitioner perspective) ideas such as culture and structure (Garvin et al., 2008) or
alternatively conflates a complex, multi-level phenomena into a simple scale measuring the
extent of questioning activities and/ or reflecting behaviour (e.g. Baker and Sinkula, 1999).
Here, we provide relatively straightforward guidance which is likely to yield performance
benefits in a number of respects, most notably in terms of the on-going financial health of the
organization. The components identified in this study: developmental orientation, customer-
facing remit and HRM focus, we suggest, in combination, instigate the learning needed for
organizations to achieve the capability needed to innovate over time, in order to retain a
competitive position. At the same time, because of the complex dynamics involved, the
precise mechanisms will vary across organizations, linked with the unique characteristics of a
particular setting. Our overriding message is that the learning organization model is always
Is there a global model of learning organizations? An empirical, cross-nation study
22
important, regardless of the setting, while its antecedents are malleable in line with situation-
specific variables. Not only is the message to practitioners unambiguous about where
attention should be directed; it also allows scope for interpretation depending upon the
dynamics within a particular context. Linked with this point, our model seems to have
applicability across the globe, even where there is variation in cultural characteristics
(Hofstede, 2001). Global leaders may therefore find the practical suggestions outlined here
have a bearing on the strategic priorities they endorse over and above country-specific
attributes.
Our study has a number of strengths, especially regarding the breadth of analysis it offers,
given the number of countries represented in the analysis and the sample of organizations
included. Furthermore, through taking a multi-disciplinary approach we have been able to
bring together variables such as the three in our study that are rarely considered in
combination, thereby yielding new theoretical insights, linked with organizational learning
and dynamic capability literatures. This is the first time to our knowledge that the learning
organization has been conceptualized as a second-order construct, although the methodology
has been employed to produce interesting and informative insights elsewhere (e.g. Hult et al.,
2002).
For future research, it would be valuable to further explore specific examples of effective
practice, given the intangible, interdisciplinary and complex nature of learning organizations.
It may be that qualitative, case study research would shed further light, given the broad
direction that our study has suggested. On the other hand, instruments could be designed to
offer insight into the antecedents of learning organizations. For example, are there particular
practices, applied internally, such as project work, interdisciplinary teams, mentoring
arrangements that might supplement the three components captured here? Are there other
measures for capturing external integration such as the extent of benchmarking practices or
Is there a global model of learning organizations? An empirical, cross-nation study
23
training offered outside the organization? Given that we have to some extent sacrificed depth
for breadth, it would also be interesting and useful to explore whether the global applicability
we have found here for our measures holds given more detailed scrutiny, focusing in detail on
two or more culturally distinctive nations.
Overall though, given the scope and breadth of our work, we are able to offer a new way
of conceptualizing the learning organization. In line with dynamic capability research, our
framework sets down broad parameters, while allowing sufficient scope for interpretation and
enactment within a particular context. These parameters we believe to be important to focus
priorities and to guide the direction of strategic attention, especially where organizations have
to deal with turbulent and challenging wider demands.
NOTES
1 Hong Kong is not a country but we have included this geographical region on account
of its unique historical and cultural legacy relative to mainland China.
2 The results of the comparison of structural equation model for specific countries are
available from the authors.
3 The CFA results for specific countries are available from the authors.
Is there a global model of learning organizations? An empirical, cross-nation study
24
Is there a global model of learning organizations? An empirical, cross-nation study
25
Table I
Descriptive Statistics on Samples
N
Language
Net response
rate
United Kingdom
487
English
10%
Ireland
657
English
47%
Austria
249
German
16%
Finland
327
English
24%
New Zealand
472
English
45%
Australia
250
English
20%
Hungary
572
Hungarian
21%
Hong Kong
552
Chinese
27%
China
400
Chinese
25%
Slovenia
759
Slovene
60%
Greece
326
Greek
43%
Germany
400
German
16%
United States
165
English
11%
Brazil
293
Portuguese
10%
Total
5909
Is there a global model of learning organizations? An empirical, cross-nation study
26
Table II
Descriptive statistics of study variables across 14 countries
Mean
Sd
1
2
3
4
5
6
1
Developmental orientation
3.95
.70
.79
2
Customer- facing remit
4.98
1.03
.40
.81
3
HRM focus
3.72
.79
.53
.34
.76
4
Innovation
3.51
.82
.47
.30
.36
.89
5
Sustained competitive advantage
3.00
.78
.18
.14
.16
.31
.72
6
Financial performance
3.36
.84
.17
.15
.16
.28
.19
.89
n= 5909
Reliability coefficients for the scales are included along the diagonal.
Note: We tested significance of the correlations via the application tool at
http://faculty.vassar.edu/lowry/rsig.html. The results showed that for a sample size of 5909, r
values equal to .03 and greater are significant.
Is there a global model of learning organizations? An empirical, cross-nation study
27
Table III: Summary of the results of structural equation modelling across countries
UK
Ireland
Austria
Finland
NZ
AU
Hungary
HK
China
Slovenia
Greece
DE
US
Brazil
Pooled
sample
Path analysis for the whole model
DO ← LO
.97***
.89***
.76***
.77***
.83***
.80***
.70***
.84***
.85***
.78***
.72***
.76***
.77***
.81***
.83***
CR ← LO
.62***
.64***
.67***
.73***
.63***
.76***
.60***
.44***
.55***
.67***
.70***
.70***
.76***
.70***
.58***
HRMF ← LO
.76***
.72***
.73***
.55***
.78***
.72***
.76***
.85***
.74***
.84***
.83***
.63***
.77***
.85***
.74***
INNO ← LO
.52***
.51***
.63***
.59***
.41***
.62***
.73***
.58***
.54***
.58***
.64***
.62***
.55***
.45***
.56***
Sustainable advantage ←
INNO
.27***
.33***
.47***
.47***
.35***
.37***
.44***
.29***
.21**
.33***
.43***
.42***
.37**
.26***
.34***
Financial performance ←
INNO
.23***
.33***
.32***
.19**
.25***
.29***
.49***
.16**
.25***
.35***
.41***
--
--
.30***
.26***
Sustainable advantage ←
LO
--
--
--
--
--
--
--
--
--
--
--
--
--
.17*
.08***
Financial performance ←
LO
--
--
--
--
--
--
--
--
--
--
--
.42***
.41**
--
.10***
Model fit indices
χ2
551.01
584.20
404.79
584.07
524.82
390.41
715.65
470.33
433.21
655.74
434.54
380.40
328.36
474.86
2466.98
Df
269
269
269
269
269
269
269
269
269
269
269
269
269
268
267
χ2/Df
2.05
2.17
1.51
2.17
1.95
1.45
2.66
1.75
1.61
2.44
1.62
1.41
1.22
1.77
9.24
IFI
.95
.95
.94
.91
.93
.96
.91
.96
.94
.95
.94
.97
.96
.94
.96
CFI
.95
.95
.94
.91
.93
.95
.91
.96
.94
.95
.94
.97
.96
.94
.96
RMSEA
.05
.04
.06
.06
.05
.04
.05
.04
.04
.04
.04
.03
.04
.05
.04
a: standardised regression weight; * p < .05; ** p < .01; *** p < .001. DO = developmental orientation; LO = learning organization; CR =
customer- facing remit; HRMF = HRM focus; INNO = innovation; IFI, Incremental fit index; CFI, comparative fit index; RMSEA, root
mean square error of approximation
Is there a global model of learning organizations? An empirical, cross-nation study
28
Figure 1
Learning organization and its impact on organizational outcomes
Developmental
Orientation
HRM focus
Customer-facing
remit
Learning
Organization
Innovation
Financial
performance
Sustained
competitive
advantage
1st order
factors
Mediator
Outcome
variables
2nd order
latent factor
Is there a global model of learning organizations? An empirical, cross-nation study
29
Figure 2
Path diagram with standardized results with the pooled sample
Note: *** p < .001
Developmental
orientation
Customer-
facing remit
Employee
focus
Learning
organization
Innovation
Sustained
competitive
advantage
Financial
performance
.83***
.08***
.58***
.74***
.10***
.90***
.52***
.56***
.75***
.67***
.81***
.69***
.87***
.65***
.74***
.76***
.67***
.70***
.71***
.67***
.50***
.86***
.82***
.57***
.60***
.82***
.71***
.88***
.86***
.56***
.34***
.26***
1st order latent
factors
2nd order latent
factor
Mediator
Outcome
variables
.65***
Is there a global model of learning organizations? An empirical, cross-nation study
30
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Is there a global model of learning organizations? An empirical, cross-nation study
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Appendix 1: Questionnaire items
Developmental orientation
Scaling: 1-5; strongly disagree – strongly agree
Managers agree that our company’s ability to learning is the key to competitive
advantage (.65)
Employee training and learning is seen as an investment rather than an expense (.82)
The underlying values of our company include learning as a key to improvement (.86)
Our staff realise that our perceptions of the marketplace must be continually questioned.
(.50)
HRM focus
Scaling: 1-5; strongly disagree – strongly agree
We have regular staff appraisals in which we discuss employee needs (.76)
We have regular staff meetings with employees (.74)
As a manager, I try to find out the true feelings of my staff about their jobs (.57)
We survey staff at least once each year to assess their attitudes to their work (.60)
Customer-facing remit
Scaling: 1-7; not at all - to an extreme extent
Our commitment to serving customer needs is closely monitored (.67)
Our objectives and strategies are driven by the creation of customer satisfaction (.71)
Competitive strategies are based on understanding customer needs (.70)
Business strategies are driven by increasing value for customers (.67)
Customer satisfaction is systematically and frequently assessed (.65)
Innovation
Scaling: 1-5; strongly disagree – strongly agree
We are more innovative than our competitors in deciding what methods to use (.82)
We are more innovative than our competitors in initiating new procedures or systems
(.86)
We are more innovative than our competitors in developing new ways of achieving our
goals (.88)
We are more innovative than our competitors in initiating changes in the job content (.71)
Sustainable competitive advantage
Is there a global model of learning organizations? An empirical, cross-nation study
37
Scaling: 1-5; strongly disagree – strongly agree
Our competitive advantage is difficult for competitors to copy because it uses only
resources we have access to (.67)
It took time to build our competitive advantage and competitors would find it time-
consuming to follow a similar route (.75)
Competitors find it difficult to see how we created our competitive advantage in the first
place (.56)
Competitors could copy our competitive advantage but it would be uneconomic for them
to do so (.52)
Financial performance
Scaling: relative to competitors, is your company (1-5; much worse - much better)
Relative to competitors, overall profit levels achieved (.69)
Relative to competitors, profit margins achieved (.88)
Relative to competitors, return on investment (.90)
Relative to competitors, shareholder satisfaction with financial performance (.81)
The question of exactly how learning impacts on performance outcomes at the level of
the organization remains the subject of wide debate and has fuelled research into so-
called ‘dynamic capabilities’, defined as ‘the ability to integrate, build and reconfigure
internal and external competences to address rapidly changing environments’ (Teece et
al. 1997, p. 516). Evidence suggests that there are commonalities across dynamic
capabilities given particular strategic priorities (Eisenhardt and Martin, 2000). This in
turn implies that practices designed to trigger learning (such that innovation may arise)
may have common elements.
Commonalities across dynamic capabilities. It has been suggested that there are more or
less effective ways of dealing with identified organizational and technical challenges
(Eisenhardt and Martin 2000). For example, for companies seeking to achieve innovation,
there are particular dynamic capabilities- for example, effectively drawing on employee
Is there a global model of learning organizations? An empirical, cross-nation study
38
insights – that may be likely to create the necessary conditions for innovation to occur
(Anand et al., 2007). That commonalities exist across processes is not to imply that each
company attempting to achieve new product development or innovation will do so in an
identical way (Eisenhardt and Martin, 2000). Indeed, although according to Dougherty
(1992) external linkage is important for new product development, it can be achieved in
subtly different ways, depending on the unique constellation of factors that together
constitute an organization’s resource base. How precisely each capability evolves in a
particular context will vary in line with differences across organizations (Eisenhardt and
Martin, 2000).
