The Impact of Organizational Learning and Human Resource Management on Organizational Performance

The Case of Austrian Business Enterprises


Doctoral Thesis / Dissertation, 2019

221 Pages, Grade: 1,0


Excerpt

Table of Contents

Annotations

List of Abbreviations

List of Tables

List of Figures

Introduction

1 Conceptual framework of interdependecies between organizational learning, human resource management and organizational performance
1.1 Main approaches to the relationship between organizational learning, human resource management and organizational performance
1.2 Definition of main theoretical concepts
1.3 Open questions in existing literature as starting points for further research

2 Research methodology for testing the interdependencies between human resource management, organizational learning, and organizational performance
2.1 Research hypotheses about the connection between organizational learning, human resource management and organizational performance
2.2 Dimensions of the research model and measurement of organizational learning, human resource management, and organizational performance
2.3 Target population and sampling approach to research on the linkage between organizational learning, human resource management, and organizational performance
2.4 Approach to reliability and validity in the conducted research
2.5 Theoretical scheme of the presupposed connex between organizational learning, human resource management, and organizational performance
2.6 Measurement model of the connex between organizational learning, human resource management, and organizational performance
2.7 Research roadmap: the development of the research scheme and evidence based adaptation
2.8 Approach to research evaluation

3 Quantitative and qualitative analysis of the relationship between organizational learning and human resource management on organizational performance
3.1 Impact of organizational learning and human resource management on organizational performance: partial factor analysis
3.2 Modified evidence-based research model
3.3 Factor scores' Pearson correlation and linear regression
3.4 Testing interdependencies as basis for confirmation or disconfirmation of the hypotheses: regression analysis
3.5 Testing interdependencies via Structural Equation Modeling
3.6 The findings of the research

4 Best-practice-example of practical implementation of research in Austrian companies

Conclusions and suggestions

List of sources

Appendices
Appendix 1: Organization of Questionnaire
Appendix 2: Detailes Information on Findings from Literature Review
Appendix 3: Detailed Results of Analysis
Appendix 4: Practical Implementation and approbation

Annotations

The purpose of this dissertation is to develop a model of the linkages between human resource management, organizational learning and organizational performance to test the assumptions and to analyze the correlations in order to substantiate or falsify the original model and to draw respective conclusions for relevant stakeholders in business enterprises as well as to give suggestions for further research in the field.

Content: Chapter one is concerned with an extensive literature review including a meta­analysis of previous research, considerations of the theoretical background and main approaches to the impact of organizational learning and human resource management on organizational performance, main approaches to the measurement of organizational performance, the derivation of the definitions of the central theoretical concepts, namely organizational learning, human resource management, organizational performance, and business enterprise, tailor-made for the use in the current study, and open questions in existing literature as starting point for the research.

In chapter two the research hypotheses are developed and the research model is conceptualized, operationalized, and visualized via the resulting theoretical scheme. Also, the development of the research methodology, design, and the selection of research methods is being undertaken, and the data gathering process via pre-study and electronic servey is described.

In chapter three the research results are presented. The data analysis takes place starting with a factor analysis and based on it the research scheme is being adapted into an evidence-based research model which is analyzed via different descriptive statistical methodes, i.e. hierarchical and multiple regression analysis, and Structural Equation Modeling.

Chapter four discusses the practical implementation of research suggestions in Austrian business enterprises by ways of the best-practice-example of an international business enterprise in the sector of industry.

The final part highlightes, first the conclusions of the research against the original research questions and in the light of previous research, second suggestions are given for practical implementation in business enterprises, and third suggestions are given for further research on the topic. Main conclusions include that: organizational performance cannot be seen as a holistic concept incorporating the end results of all the organization's work processes and activities directed at lasting competitive advantage but has to be divided into two separated concepts. On the one hand a dimension with variables concerning financial or economic figures and on the other hand a dimension incorporating variables regarding perceptions of non-financial figures of general competitiveness and human resource performance; the main hypothesis that organizational learning positively influences organizational performance in terms of economic/financial variables can be substantiated. The he main hypothesis that organizational learning positively influences organizational performance in terms economic and non-financial variables regarding general competitiveness and human resource performance also can be substantiated.

Human resource managers can use the findings as reference for future strategic orientation of organizations as well as derive specific implementation measures from it. A more effective use of resources as a result is then more likely. Furthermore, the research supports effective information policy and resource allocation of public bodies. A higher level of information is the base for a positive development in the field.

Keywords: Human Resource Development, Human Resource Management, Learning Organization, Organization Development, Organizational Learning, Organizational Performance, Strategic Human Resource Management.

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of Tables

Table 1: Main Approaches to Organizational Theory and Organizational Behaviour

Table 2: Summary of meta-analysis of previous research on the connection between organizational learning / human resource management on organizational performance

Table 3: Historic development of the definition of organizational learning in context with the current research

Table 4: Historic development of the definition of human resource management in context with the current research

Table 5: Historic development of the definition of organizational performance in context with the current research

Table 6: Classification of HRM dimensions

Table 7: Dimensions and test items of HRM

Table 8: Classification of organizational learning dimensions

Table 9: Dimensions and test items of organizational learning

Table 10: Classification of organizational performance dimensions

Table 11: Distribution of Active Members of the Austrian Federal Economic Chamber by business sector in 2015

Table 12: Total number of business enterprises 2015 by regional sample

Table 13: Overview of electronic survey samples in the different target regions

Table 14: Total number of responses by regional sample

Table 15: Percentage of business enterprises included in samples 2017 by sector

Table 16: Measurement items of dimension organizational learning

Table 17: Measurement items of human resource management

Table 18: Measurement items of organizational performance

Table 19: Research roadmap

Table 20: Partial factor analysis eigenvalues of economic performance and competitive capacity

Table 21: Factor scores Pearson correlation HRM and economic performance

Table 22: Factor scores pearson correlation HRM and competitive capacity

Table 23: Linear regression independent competitive capacity on dependent HRM model summary

Table 24: Factor scores Pearson correlation organizational learning and economic performance 103 Table 25: Linear regression independent organizational learning on dependent economic performance model summary

Table 26: Factor scores Pearson correlation organizational learning and competitive capacity

Table 27: Linear regression independent organizational learning on dependent competitive capacity model summary

Table 28: Factor scores Pearson correlation economic performance and competitive capacity

Table 29: Linear regression independent competitive capacity on dependent economic performance model summary

Table 30: Hierarchical multiple regression organizational learning on economic performance model summary

Table 31: Multiple regression economic performance by organizational learning component matrix'

Table 32: Hierarchical multiple regression organizational learning on competitive capacity model summary

Table 33: Multiple regression ‘competitive capacity by organizational learning component matrix

Table 34: Multiple regression economic performance by HRM component matrix

Table 35: Hierarchical multiple regression HRM on competitive capacity model summary

Table 36: Multiple regression competitive capacity by HRM component matrix

Table 37: Sample grouped by organizational size

Table 38: Sample grouped by business sector

Table 39: Hypotheses test overview

Table 40: Content items of the Apprentice Academy

Table 41: Subgoals of apprenticeship in best-practice example

List of Figures

Figure 1: Levels of learning

Figure 2: The delination of Organizational Learning and Human Resource Management

Figure 3: Theoretical Scheme of the research

Figure 4: Modified independent evidence-based research model

Figure 5: SEM Base Model, organizational performance as dependent construct

Figure 6: SEM Alternativew Base Model, organizational performance as independent construct

Figure 7: Structural Equation Modeling by size of business enterprise (over 500)

Figure 8:Structural Equation Modeling by Organisational size (101 thru 500)

Figure 9: Structural Equation Modeling by organizational size (up to 100)

Figure 10: Structural Equation Modeling by business sector ‘Industry’

Figure 11: Structural Equation Modeling by business sector ‘Crafts and Trades/Commerce’

Figure 12: Structural Equation Modeling by business sector ‘Other’

Figure 13: Six-legged approach to integrated organizational development

Introduction

Topicality

Before the background of a fast changing and competitive economic environment organizational learning and human resource management are increasingly perceived as key elements in supporting lasting competitive advantage in business organizations. The requirement of corporations from a theoretical as well as practical point of view accordingly is the acquisition of knowledge about the complex interdependencies between organizational learning, humanresource management on the one hand and organizational performance on the other hand, as well as the development of action alternatives for practical implementation. The research project evidences the complex connections between the aforementioned theoretical constructs and allows for drawing qualified conclusions for practical implementation.

Contemporary economies are increasingly based on knowledge and information. Accordingly, the ability of companies to develop, produce and sell products regardless of their branch of business stems from professional knowledge and know-how. This seems to be all the more true as the technological revolution is accelerating a global transformation of the competitive environment. HRM is to a growing extent asked to contribute to value-added in business enterprises which gives human resource management increasingly strategic significance (cf. Ulrich 2016). In other words, the possibility to generate profits and hence the very source of existence of every business unit is directly linked to its collective relevant knowledge and know-how. Building up, renewing and fostering of this vital resource therefore should be a major concern of any business entity, as argumentum e contrario the converse argument, namely resisting the need for continuous transformation and development is likely to result in a businesses’ downfall. Not surprisingly therefore, recent research shows that a number of organizations have implemented organizational learning strategies and introduced various human resource management initiatives with the goal of improving organizational performance because cutting-edge science suggests a positive connection between organizational learning and human resource management on the one hand and organizational performance on the other. This research seeks to contribute to the topic by deepening and widening the understanding of the anticipated connections between human resource management, organizational learning and organizational performance with special emphasis on business enterprises in Austria and in that sense seeks to contribute to the overall meritocracy. The author a priori argues that human resource management and organizational learning are connected to and enhance organizational performance. This notion stems first from findings in previous research which name these two theoretical constructs as major predictors and second from the authors' own practical experience in the field of organizational development.

Object and Subject

- The object of the study is organizational performance as endogen theoretical construct, where organizational performance itself is conceptualized as an approach incorporating the end results of all the organization's work processes and activities directed at lasting competitive advantage.
- The subject of the dissertation is first organizational learning and second human resource management and the relationships of these theoretical construkts with organizational performance.

Purpose

The purpose of the dissertation is testing the hypothesized interdependencies between organizational learning, human resource management and organizational performance and compilation of an evidence-based research model thereof.

Tasks

The tasks necessary to reach the purpose of this dissertation are as follows:

1. To review existing literature in the field of organizational learning respectively organizational development and human resource management and to compile a resulting meta-analysis of previous scientific publications on the topic as well as to establish the theoretical background in the field, and to identify gaps in the literature concerning the topic as well as limitations to existing research and hence to open possibilities for further own research.
2. To establish own definitions of the main theoretical concepts relevant to the study, namely organizational learning, human resource management, and organizational performance as well as to establish the presupposed linkage between organizational learning and human resource management on one hand and organizational performance on the other with reference to previous findings.
3. To conduct a pre-study as part of method triangulation for optimal operationalization of theoretical constructs.
4. To conceptualize the theoretical scheme of the research including dimensions suggested by various previous researchers as well as extensions and adaptations made by the author and to operationalize the main theoretical constructs of organizational learning, human resource management, and organizational performance by establishing the relevant measurement items.
5. To develop and operationalize the research design with regards to sampling as well as measurement and operationalize the measurement model with regards to sampling, and to develop the research procedure leaning on proven scientific proceedings tailored for the use amongst Austrian business enterprises.
6. To evaluate construct and data quality, measuring reliability, and validity based on accepted scientific proceedings.
7. To develop the questionnaire for data gathering capturing all items formulated in the operationalization of the theoretical constructs of organizational learning, human resource management and organizational performance. To conduct the survey.
8. To evidence-based modify the original theoretical research according to the outcomes of factor respective partial factor analysis.
9. To conduct data analysis on the partial level of single variables as well as on the level of the overall model using various analytical methods, e.g. dimension reduction techniques, correlation and regression analysis, and structural equation modeling.
10. To compute research evaluation via a post-study.
11. To draw qualified conclusions from the conducted evaluation of the findings with the aim of advancing the scientific state of the art in the relevant fields of organizational learning and human resource management and to give recommendations resulting from the reached conclusions of the study for practical use in management.

Hypothesis - Research Question

- The main hypothesis (H1) of this dissertation is that organizational learning positively influences organizational performance.
- The first subhypothesis (H2) is that the influence is mutual, namely that organizational performance positively influences organizational learning.
- The second subhypothesis (H3), that human resource management positively influences organizational performance.

Methodology of the study

Existing scientific work on the subject was scrutinized and evaluated resulting in a meta­analysis of existing approaches. In addition, the author gained personal expertise by direct professional experience in the relevant field of organizational learning/human resource management during a period of over eight years where practical input refined the theoretical knowledge. The hypotheses formulated against this background were visualized in a theoretical scheme based on pre-existing research. The operationalization was realized via an electronic questionnaire using a four-point Likert scale - ordinal scaling - using 35 questions - including control questions - and sent to 2.363 recipients in 1.796 organizations in Austria. The resulting data was analyzed using a standard statistical software for social sciences. A factor analysis used for dimension reduction unearthed despite the original perception two separate dimensions of organizational performance. The following parametric tests on the respective factor scores - scaled data - delivered satisfying results with regards to the linkage of the above described theoretical constructs. Based on the results the research scheme was adapted to an evidence-based model and further analyzed by using Pearsons correlation, linear and multiple regressions, and Structural Equation Modeling. The findings of the statistical methods are cross-checked for plausibility via a post-study computed with a summative evaluation method to assesses the effectiveness of the previously introduced statistical findings.

Data gathering in the post-study is carried out as a series of semi-structured or guided interviews amongst experts in the field with academic background and practical experience Structure of dissertation Chapter one is concerned with an extensive literature review and consideration of the theoretical background. The chapter starts with a derivation of the definitions of the central theoretical concepts, namely organizational learning, human resource management, and organizational performance, on which the later work is based with regards to existing research in the field and tailor-made for the use in the current study. Chapter one also gives an overview of the relevant literature concerning the topic in the light of previous research including a meta-analysis of earlier works over approximately two decades. Main authors of reference for the theoretical part include Schuler and Jackson (1987), Gupta (1993), Huselid (1995) Delaney (1996), Pérez Lopez et al. (2005), Lin and Kuo (2007), Gomez-Mejia (2010), Kuo (2011), and Gurbuz and Mert (2011).

The following chapter two is about model and hypotheses development. In the chapter the research model is conceptualized and visualized via the resulting theoretical scheme. Based on earlier research then the measurement designs of the latent exogen (organizational learning and human resource management) as well as endogen (organizational performance) variables are operationalized and respective measurement items are selected. With regards to the theoretical scheme and the initial research question the main and sub-hypotheses are derived. Also, this chapter is concerned with the development of the research methodology and research design, and the selection of the adequate research methods. After the theoretical derivation, first special attention is being given to the goodness of the data and hence operationalization of ensuring reliability and validity of the construct as well as data. Also, possible threats to construct reliability and validity are highlighted. Second, an empirical examination of the research model takes place followed by the detailed development of the measurement model for each of the theoretical constructs (organizational learning, human resource management and organizational performance). Third, the data collection architecture and measurement scale are developed.

In chapter three the research results are presented. First of all, the construct and data quality is highlighted via missing values and reliability analysis for each of the partial models or theoretical concepts and the overall model. Subsequently, the research procedure is developed with regards to accepted previous scientific works. In the following the data analysis takes place starting with a factor analysis. Derived from it factor scores are generated and based on the findings the research scheme is being adapted into an evidence-based research model. Based on which correlation, linear and multiple regression analyses are computed and the respective findings presented and further analyses are done using Structural Equation Modeling. The findings of the statistical methods are cross-checked for plausibility via a post­study computed with a summative evaluation method to assesses the effectiveness of the previously introduced statistical findings.

Within the research roadmap the key turning point is the evidence-based imperative to modify the original research scheme grounded on the findings form the partial factor analysis which clearely indicates the necessity to use two separate theoretical constructs in order to describe organizational performance, namely economic performance and competitive capacity. This necessity in describing organizational performance with two separate theoretical constructs also brought about the need to split the oriniganl hypotheses including organizational performance into two hypotheses each.

In chapter four the practical implementation of research suggestions in Austrian business enterprises is discussed by ways of the best-practice-example of an international business enterprise in the sector of industry. The background of the comprehensive development approach is highlighted as well as the concrete practical implementation.

In the final part conclusions and suggestions, first the conclusions are highlighted against the original research questions and in the light of previous research, and second suggestions are given for practical implementation in business enterprises, as well as for further research on the topic.

Limitations of the study

1. The target group due to the aim of the research was limited to business enterprises in Austria. As the sampling was not extended to other countries the findings exclusively hold explanatory power for business enterprises in Austria and may not be generalized.
2. The chosen method of data collection was a questionnaire based on self-evaluation which implies a certain possibility of bias in the given answers by the respondents, as their answers reflect subjective ratings.
3. The variables determining the theoretical constructs used in the theoretical scheme were items derived from arlier scientific works and completed by items chosen by the author so that the findings cannot be generalized for different definitions of the theoretical constructs (human resource management, organizational learning and organizational performance) respectively different operationalization using different measurement items.
4. The sampling architecture could be seen as a certain pre-selection, as only professionals in the field of organizational learning/human resource management have been the target group for the questionnaire.
5. The study can only provide a snapshot of the situation as the data collection covered a timeframe of several months but does not include a long-term study.

Used sources

Various scientific sources were considered in the course of the completion of this dissertation which resulted in the use of around four hundred references. For human resource management, organizational learning and organizational performance the main authors of reference include Schuler and Jackson (1987), Gupta (1993), Huselid (1995) and Delaney (1996), Pérez Lopez et al. (2005), Lin and Kuo (2007), Gomez-Mejia (2010), Kuo (2011), and Gurbuz and Mert (2011). Furthermore, various experts, e.g. from the Austrian Federal Economic Chamber and the University of Applied Sciences Wiener Neustadt. In addition, business experts in the relevant field of research were interviewed and delivered valuable input in written and oral form.

Theses to defend

1. Evidence from the research suggest that organizational performance cannot be seen as a holistic concept incorporating the end results of all the organization’s work processes and activities directed at lasting competitive advantage but has to be divided into two separated concepts. As a computed factor analysis yields on the one hand a dimension with variables concerning financial or economic figures and on the other hand a dimension incorporating variables regarding perceptions of non-financial figures of general competitiveness and human resource performance. The assumption of organizational performance has to be modified according to the evidence-based research findings.
2. Grounded on the evidence-based results the main hypothesis is split in two parts. The first part of the main hypothesis that organizational learning positively influences organizational performance in terms of economic/financial variables can be substantiated by the findings. Statistical analyses suggest that organizational learning can be seen as an important predictor for items of economic organizational performance. The predictive power evidenced is the highest for the item pack of the factor improvement attitude, namely active involvement in development, active suggestions on improvements, and attitude towards change. Evidencing therefore that active involvement of staff in the organization explains variation in e.g. turnover and profit margins. Also, the items of the factor knowledge acquisition, especially research and development as well as innovation show high impact. Furthermore, results point out that items of the factor knowledge distribution, namely knowledge sharing and information on strategies and aims positively impact on economic/financial performance. The second part of the main hypothesis that organizational learning positively influences organizational performance in terms of non­financial variables regarding general competitiveness and human resource performance also can be substantiated. Statistical analyses suggest that organizational learning can be seen as predominant predictor for these variables of organizational performance as a large amount of predictive power in terms of variability explained can be attributed. Furthermore, the analysis reveals that especially the item pack of the factor improvement attitude, namely active involvement in development, active suggestions on improvements, and attitude towards change have a significant impact. Furthermore, the item pack of the factor knowledge acquisition, namely concerning research and development as well as innovation have a meaningful positive impact.
3. The sub-hypothesis economic/financial organizational performance positively influences organizational learning cannot be substantiated. Outcomes of the structural equation modeling show no substantial impact. For the sub-hypothesis that items of general competitiveness and human resource performance positively influence organizational learning it can be shown that the two concepts are explaining a substancial amount of variance of each other reciprocally. The sub-hypothesis accordingly can be substantiated.
4. Human resource management does not directly impact on financial/economic organizational performance in the majority of subgroups being analyzed, but positively influences competitive capacity, i.e. items of general competitiveness and human resource performance.

Novelty for management science

1. A new six-legged high-impact approach to integrated organizational development streamlining the most influencial items that evidence-based positively impact on organizational economic performance and competitive capacity has been developed.
2. A unique theoretical scheme is developed in this work in order to visualize the complex linkage between the latent constructs of human resource management, organizational learning, and organizational performance using in each case a uniqe set of measurement items.
3. Applying different statistical methods the original theoretical scheme is modified to a unique evidence-based research model of the connex between organizational learning, human resource management, economic performance, and competitive capacity taking into account the connections between the latent constructs as well as the influence of comprising test items.
4. It can be shown via partial factor analysis that the theoretically holistic construct of organizational performance has evidence-based two spheres, namely one with economic performance and comptetitive capacity.
5. Taking into account the evidence-based outcomes of the research the author can show that contrary to the prevailing scientific opinion economic performance does not significantly positively influence organizational learning, whereas competitive capacity is evidenced to have significant impact on organizational learning.
6. The current scientific work is the first one to examine the situation of business enterprises in Austria in the field and therefore adds valuable information about the linkage between human resource management, organizational learning and organizational performance for business enterprises in Austria.
7. Based on earlier scientific definitions the work develops new and autonomous definitions of organizational learning, human resource management, and organizational performance with a holistic approach of the theoretical constructs.

Approbation of results of research

During the course of this specific research, the author has presented in various conferences, including scientific and international conferences, to discuss the current standing of the research and to improve the research model, methods, and to include other views for a well- rounded approach to the topic. Several papers have been published and continuous practical input from business partners in the field has been taken into account.

International conferences in which the research process and findings were reported:

1. “Linking Organizational Learning and Performance”, at the “Scientific Days” at the University of Applied Sciences Kufstein Tirol (Austria), November 2013.
2. “Organizational Learning - the boost to Organizational Performance - State of Research 12/2014”, at the “Business and Social Science Research Conference” in Paris (France), December 2014.
3. “Organizational Learning - the boost to Organizational Performance - State of Research 04/2015”, at “The WEI Business and Economics Academic Conference” in Vienna (Austria), April 2015.
4. “Organizational Learning - the boost to Organizational Performance - State of Research 06/2015”, at the “International Business and Education Conference” at the Clute Institute in London (UK), June 2015.
5. “Organizational Learning and Emotional Intelligence”, at the “International Conference on Emotional Intelligence in Organizations: Development and Application of EI" in Salzburg (Austria), November 2016.
6. “Organizational Learning influencing Organizational Performance: A comprehensive inquiry”, at the “International Academic Conference on Business&Economics, Management, and Finance”, in Vienna (Austria), April 2019.

Scientific publications relating to the topic:

1. Schreder, C., 2014. Organizational Learning - the boost to Organizational Performance: An Organization Development assessment amongst Austrian business entities. The Macrotheme Review, A multidisciplinary journal of global macro trends 3(9), p. 160-181.
2. Schreder, C., 2015. Organizational Learning - the boost to Organizational Performance. Journal of WEI Business and Economics (JWEIBE), No. 4, Vol. 4, p. 11-36.
3. Schreder, Christoph. 2018. “Wertschöpfungsbeitrag von Emotionaler Intelligenz in Organisationen: Praktische Umsetzung im Bereich Talentmanagement in einem internationalen Industrieunternehmen in Salzburg”. Emotionale Intelligenz in Organisationen - Der Schlüssel zum Wissenstransfer von angewandter Forschung in die praktische Umsetzung, Springer-Gabler publishers ISBN 978-3-658-19126-9, p. 393-410.
4. Schreder, Christoph. 2019. “Organizational Learning influencing Organizational Performance: A comprehensive inquiry”, Journal of WEI Business and Economics (JWEIBE), ISSN2166-7918.

Gratitude

The author owes a great debt of gratitude to so many people that have been involved in this project; he hopes it satisfies their expectations. The author acknowledges his scientific supervisors, Ass. Prof. Dr. Inga Vilka, Prof. (FH) Dr. Herbert Gölzner, and Prof. Dr. Oec. Baiba Savrina, who have been from the very beginning supporting and encouraging. Further gratitude to the Scientific Head of Doctorate Program, Prof. Dr. Neuert. The author wants to express special recognition to all the people from companies and organizations that have cooperated in a way he did not expect. Their prompt answers, their motivation during the meetings, and their interest have encouraged the author and pushed him to go ahead and do his best. The author also wants to pay gratitude to his wife Nicole, family, friends, readers and students from Austria and Latvia who have been listening with patience and understanding about this research for many years since the start of this wonderous academic endeavor.

This work is dedicated in gratitude to my family, my wife Nicole and our two wonderful children Laura and Leonhard. Salzburg, Wednesday, November 27, 2019

1 Conceptual framework of interdependecies between organizational learning, human resource management and organizational performance

1.1 Main approaches to the relationship between organizational learning, human resource management and organizational performance

Many authors before have been concerned with the question that for example Goh, Elliott and Quon (2012) pose: “Does developing a learning organization lead to improved organizational performance and effectiveness?” This very question and the endeavor to answer it is what the concept of organizational learning respectively the learning organization has made so appealing (cf. P. Senge 1990) and for that matter not only interesting but also important as field of study.

Despite the clear importance of learning-based distinctive competencies for the success of organizations (cf. Urbano and Yordanova 2007; Prieto and Revilla 2006; P. M. Senge 1990; Palacios-Marques, Ribeiro-Sori ano and Gil-Pechuan 2011), still and quite surprisingly, as stated by Palacios-Marques, Ribeiro-Soriano and Gil-Pechuan (2011), there has been little research on the process of developing this key intangible asset (cf. Ranft and Lord 2002; Zollo and Winter 2002; Palacios-Marques, Ribeiro-Soriano and Gil-Pechuan 2011).

Also, the impact of HRM on organizational performance is an important field of research (cf. Jones, Gareth R., and Patrick M. Wright 1992; Kleiner 1990) and referring to Gurbuz and Mert (2011) the conceptual link between HRM and organizational performance has been well established in literature (see Mark A. Huselid 1995; M. A. Huselid, Jackson and Schuler 1997; Wright, Patrick M. and Timothy M. Gardner 2003) .

For the author the driving interest of the research is therefore the general idea that organizational learning and HRM positively influence the development of the respective company in terms of organizational performance in Austrian business enterprises based on a unique set of items and theoretical scheme tailored for this study.

Main approaches to the impact of organizational learning and human resource management on organizational performance

The field of organizational learning, as Goh, Elliott and Quon (2012) point out, has amassed a vast amount of research and literature over the last four decades, and the proliferation of research shows no sign of abating (Bapuji 2004; Goh, Elliott and Quon 2012). Consequently organizational learning as a concept has been and still is evolving a lot. As such an agile discipline has many branches, notions, and points of view there is little common agreement on the meaning of what and how an organization is learning (cf. Goh, Elliott and Quon 2012). For all of that one thing is broadly accepted, which is that there are two different bodies of literature evolving around and concerning the same field of interest, namely organizational learning and the learning organization (cf. Fiol and Lyles 1985a; Tsang, Eric WK 1997; Yeo 2005; Goh, Elliott and Quon 2012). Therefore in this chapter it shall be tried to frame and arrange the notion of organizational learning with regard to this work.

Framing organizational learning into the concept of learning it has been pointed out that learning as a concept has a long history and developed mainly in the field of psychology (cf. Wang, C. L., and P. K. Ahmed. 2001). According to Argyris (1975 p. 148 in Rivera Claudio Andrés 2010a p. 23) “most of the people define learning too narrowly as mere problem solving, so they focus on identifying and correcting errors in the external environment. Solving problems is important. But if learning is to persist, managers and employees must also look inward.” One possible approach would be the view that “learning is regarded as a process and is studied from the perspective of learning style, a concept derived from the theory of cognitive style, and deals with the way in which people organize and process information for the purpose of making changes in knowledge and skills.” (Salvato, Carlo, Per Davidsson and Anders Persson eds. 1999; Rivera Claudio Andrés 2010a). However, it was and still is perceived from various perspectives and there is rarely agreement as to what learning actually is nor how it takes place (cf. Fiol and Lyles 1985a). What organizational learning is therefore, has been defined under a variety of different points of view. A detailed account of the ‘Notions of Organizational Learning by scientific discipline’, page 189 is given in the appendix.

Learning and therefore also organizational learning is a social construct. As put forward by different researchers (e.g. Johnson and Hasher 1987), OL depends on features of individual memories. In fact it is argued by Dixon, N. and C. Flood (1993) that basically three incremental levels of learning can be distinguished: individual learning, group learning, and organizational learning - Figure 1 page 25 shows the concept:

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Levels of learning

On the level of individual learning Schein (1993) depicts communication, respectively dialogue as the nucleus of the learning process stating that dialogue is a necessary first step in learning. As such, dialogue becomes a necessary condition for effective group action and therefore organizational learning, as in dialogue the whole group is the object of learning (Schein 1993). Furthermore, the learning process would be intrinsically social and collective and on a group level would occur not only through the imitation and emulation of individuals, but also by collaboration and interaction in understanding complex problems. The knowledge generated in this way would be translated into new models of activity, routines and logic in the organization (Teece and Pisano 1994). Consequently, it was pointed out that organizational learning should happen where the individual interacts with others through the process of education and as a result of experience (Kolb, David A. 1984 in Dasgupta 2012). However, it has also been underlined that we learn from experience only when the experience is followed by immediate feedback (P. Senge 1990b). Furthermore, Pérez Lopez et al. (2005) elaborate that learning theorists (Lave 1988; Lave and Wenger 1990) would have been rejecting learning transfer models, which isolate knowledge from practice, and would have developed a view of learning as a social construction, putting knowledge back into the contexts in which it has meaning (J. S. Brown and Duguid 1991). In that sense organizational learning is the collection of individual learning within the organization (cf. Dasgupta 2012) and can on the other hand not take place if the entire workforce in an organization is restricted from learning (Romme and Dillen 1997 in Dasgupta 2012). However, summing up individual learning does not make an organization learn. In fact, Anand, Manz, and Glick (1998) discuss systemic/organizational memory as distinct to group or individual memory and also Argyris and Schön (1978: 19) describe the role of organizational memory in such a way that “in order for organizational learning to occur, learning agents' discoveries, inventions, and evaluations must be embedded in organizational memory”. Along similar lines, Levitt and March (1988: 319) define organizational memory as “how organizations encode, store, and retrieve the lessons of history despite the turnover of personnel and the passage of time.”

In order to understand and set into perspective the branch of organizational learning it is important to first understand the root, which is organizational theory. The discipline has been organized by different authors (cf. Davis and Scott 2007) and even if the views differ somewhat on certain details, the overall picture is rather coherent. Based on the introduction given by Eberl (2012) the following section will try to unveil the most important evolutionary steps. Table 1 below gives a summary.

Table 1: Main Approaches to Organizational Theory and Organizational Behaviour

Abbildung in dieser Leseprobe nicht enthalten

Data source: author's own construction

Classical Organization Theory developed in the early 20th century as consolidation of scientific management (Taylor), bureaucratic theory (Weber ), and administrative approach formalized by Fayol as normative approaches with the basic focus on the purpose of the organization and its structure, e.g. planning, technical requirements, and principles of management.

In an attempt to overcome the shortcomings of classical organization theory, the most noteworthy being that it created over conformity and rigidity, thus hindering creativity, individual growth, and motivation, Human Relations Approach was introduced. As a reaction to the tough, authoritarian structure of classical theory it emphasized on genuine concern for human needs. A milestone in the development marked the so-called “Hawthorne Experiments”. The findings of the Hawthorne Experiment lastingly changed the notion of how to accurately evaluate the effects of management models and theories. Not last Simon, H. A. (1945) introduced the “limited rationality” model to explain the Hawthorne experiments, stressing the point that employees could respond unpredictably to managerial alterations.

In the wake of this discovery a new branch of views, namely the Neo-Human Relations Approach, evolved concerning the personal adjustment of the individual within the work organization (motivation). The central contribution, according to Eberl (2012), is the opening up of organizational theory for the effects of interpersonal interactions. As main representative Maslow (1943; 1954) elaborated on personality and motivation describing the hierarchy of needs, which arranges human needs in an hierarchical order from basic needs up to higher needs and by doing so gives implicitly advice on the underlying cause-effect- relationship of motivation. Based on this work Herzberg, Mausner, and Snyderman (1959) further developed and distinguished the topic in the two-factor theory stating that there are certain factors regarding work environment that can cause satisfaction, i.e. the so-called ‘Motivators’, while a separate set of factors can only cause dissatisfaction, i.e. the so-called ‘Hygiene factors’.

Barnard in 1939 suggested one of the first modern organizational theories when proposing organizations as a system of consciously coordinated activities, emphasizing the role of leadership for organizational performance by creating an environment of coherence of values and purpose. Systems Theory was originally proposed by the Hungarian biologist Ludwig von Bertalanffy in 1928, although it has not been applied to organizations until much later (Kast, F. E. and Rosenzweig, J. E. 1972; Scott 1981). The basic idea of the theory is that all the partitions of an organization are interlinked, and thus altering one variable impacts the whole system.

In contrast to earlier theories, where conflicts were to be avoided at any cost, Contingency Theory (cf. Lawrence: R., and Lorsch, J. W. 1969) views conflicts as inevitable but manageable consequences of the processes set to work in organizations. With his suggestion that form follows function Chandler (1962) summarized his findings that an organization naturally evolves to meet the needs of its strategy. Implicitly he postulates that organizations act in a rational, sequential, and linear manner to adapt to changes in the environment, where its effectiveness is a function of management's ability to adapt to environmental changes.

In the ongoing development of the discipline, the yet latest views are summarized under the term (Post-) Modern Approach which is putting forward alternative interpretations of rationality and addresses the role of power (cf. Eberl 2012). One of them is the concept of Learning Organizations , developed to enable organizations to remain competitive in the business environment (cf. O'Keeffe 2002). This approach is at the same time one of the most influential amongst this branch and was put forward by Senge (1990b) and his colleagues, where the term labels a company that facilitates the learning of its members and continuously transforms itself and according to Senge (1990a) has five main features: systems thinking, personal mastery, mental models, shared vision and team learning. In accordance with the views of ‘learning organization' organizations in the context of this work are seen as open systems interacting on multiple layers with their environment and undergoing continuous change. Consequently, the measurement of organizational learning is based on a broad approach taking into account a variety of variables.

Organizational learning as sub-discipline of organizational theory has many roots in different schools of thought partially dating back more than a century. More specific Dasgupta (2012) points out the idea that organizational learning it's processes and development can be traced back to many perspectives of management. One such root attributed to organizational learning is the so-called “action learning” process as proposed by Revans (1982). This concept uses small groups, the collection of statistical data and a group's positive emotional energies (cf. Garratt 1999). Other significant works contributing to the discussion on organizational learning are for example the double-loop learning notion as put forward by Argyris and Schön (1978), as well as the “Fifth Discipline” (P. Senge 1990) and the learning company model. Organizational learning therefore has been studied under a variety of aspects. The table ‘Aspects of organizational learning', page 190 tries to give a brief overview (cf. Dasgupta 2012: 2). According to Dasgupta (2012) there are three main reasons why the study of organizational learning has gained much momentum. Firstly, large­sized companies are in ever more need for flexible strategies, structures and systems which can respond quickly to internal as well as external stimuli. Secondly, the increasingly significant influence of technological change and the caused effects on concerned companies. And last not least, thirdly, organizational learning has a powerful analytical value, as it is an dynamic and integrative concept that is able to unify various levels of analysis on: individual, group, corporate, and community aspects of organizations (M. Dodgson 1993 in Dasgupta 2012).

Providing a placement of the learning organization and the learning environment provided by the learning organization, following the notion of P. Senge (1990b), learning means enhancing ones capacity to take action. “So learning organizations are organizations that are continually enhancing their capacity to create ” It has been underlined (cf. e.g. P. M. Senge 1990c) that learning organizations evolve as a result of the learning and behavior of its employees. Therefore the most decisive factor distinguishing learning organizations, as suggested by Matalay (2000), is the relationship between individual and collective learning. A learning organization, suggest Pedler, Boydell, and Burgoyne (1989), can be described as “an organization which facilitates the learning of all its members and continually transforms itself” and has certain characteristics, which are: cultivation of a climate of encouragement where individuals learn and develop their full potential, extending the learning culture to involve customers, suppliers, and other important stakeholders, positioning human resource strategy at the center of corporate strategy, and constantly undergoing of a process of organizational transformation. In the context of this work learning organizations are decisive concerning the learning environment.

However, learning would depend not only on investment efforts, but also on the previously accumulated knowledge or experience respectively the absorptive capacity (Pérez Lopez et al. 2005). Where the ability to absorb new knowledge, following the argument by Balogun and Jenkins (2003) will be higher when there is already prior knowledge of a particular specialist area, making it easier to absorb new knowledge about this specialism. In the context of this work organizational learning is looked at with a focus on the in scientific theory frequently partly overlapping concept of HRM and in that respect learning organizations as underlying framework providing for organizational learning and HRM alike.

The placement of Human Resource Management and its impact on organizational performance is important, as HRM is assumed to impact on organizational performance directly as well as indirectly via contributing to organizational learning, as suggested by recent research (Kuo 2011). The importance of HRM for organizational performance can hardly be overestimated in an ever more competitive economic environment, as a large part of the relevant knowledge and know-how is brought in and set to work by the very employees of the regarding company. Human resource management to enhance the knowledge and hence productivity of these ’knowledge workers’ (Gates 1999; Kuo 2011) as a consequence becomes an important factor. Accordingly, in times of changes - whether from a demographic, economic or technological side - organizations have to treat HRM as a valuable asset and make an effort to use this asset in a more efficient way (cf, Tichy, N., Fombrun, C., Deyanna, M. 1982; Pfeffer 1994; Delery and Doty 1996; Khatri et al. 2006; C.-Y. Lin and Kuo 2007). Consequently, states Kuo (2011a), human resource is considered the most important asset that any company must treasure. As the postulated consequence of organizational learning sustained by ways of HRM is organizational performance, a learning organization should focus on valuing, managing, and enhancing the individual development of its employees (Scarbrough, Swan, and Preston: 1999). Regarding the two interrelationships the relevant points of influence regarding the linkage between HRM and organizational learning as well as organizational performance are, as suggested by Kuo (2011a), as follows:

Human resource management and organizational learning: Amongst others Pérez Lopez (2005) and Kuo (2011a) point out the critical role of HRM in facilitating organizational learning when evidencing that selective hiring, strategic training and employee participation in decision-making positively affects organizational learning. Furthermore, it is widely accepted that adult learning is the basis of HRM, as it supports continuous quality and performance improvement, knowledge management, organizational learning, change management, learning organization (McLean 2006; Bhatnagar 2007; Kuo 2011).

Human resource management and organizational performance: HRM positively affects an organizations’ social climate, cooperation, and shared codes and language (Collins and Smith 2006; Kuo 2011) and therefore has a major impact on a firm's productivity and facilitate the success of an organization (Jiménez-Jimenez, Valle, and Hernandez-Espallardo 2008; Kuo 2011). Also, it has been shown (P. M. Wright 2002; Kuo 2011) that the combined use of HRM activities has a greater effect on organizational performance than the sum of the individual effects of each activity.

After the deductions and delineations above it is now important to discuss the outcomes of organizational learning. Organizational learning means changes of specific items in an organization over time, which for example include changes in values and assumptions (Argyris and Schön 1978), skills (Fiol and Lyles 1985a), systems and structures (Levitt and March 1988), core competencies (Prahalad and Hamel 1990), organizational innovativeness and competitiveness (Nason 1994), corporate success and employee satisfaction (Bontis, Crossan and Hulland 2002). Literature on organizational learning suggests that learning orientation and organizational memory are connected to two key outcomes: organizational performance and innovativeness (Hanvanich 2006) and emphasizes synergetic effects of the human resource practices on organizational performance (Mark A. Huselid 1995; MacDuffie 1995; Patrick M. Wright et al. 2005; Gurbuz and Mert 2011). For example previous works suggest that strategic human resource management as a theoretical concept partially overlapping with organizational learning is positively related to financial and operational performance of an organization (Delaney and Huselid 1996; Becker and Huselid 1998; Khatri 2000; Gurbuz and Mert 2011). Also, the data provided by Pérez Lopez et al. (2005) support the view that OL contributes positively both to innovation and competitiveness and to economic/financial results. Furthermore, their results show a positive relationship between innovation and competitiveness and economic/financial results.

Organizational learning is, as Dasgupta (2012) explains, an ever-evolving concept and includes all aspects that foster the respective organization to build up and sustain competitive advantage. The collective learning of individuals in organizations leads to organizational learning which in turn constitutes the development of (new) core competencies and hence distinctive advantages for the company (Prahalad and Hamel 1990). Accordingly it has been argued that organizational learning is a key to competitive advantage (cf. Garratt 1999, Porter 1985), as it has been found to be a key element for improving organizational performance (Brockman and Morgan 2003; Palacios-Marques, Ribeiro-Soriano and Gil-Pechuan 2011).

Also HRM was suggested by many to be a source of sustained competitive advantage (Begin 1991; Cappelli and Harbir Singh 1992; Jackson, Schuler and Rivero 1989; Porter 1985; Schuler 1992; Wright 1992). And as innovation, change and organizational renewal become more critical bases of competitive advantage, dynamic capabilities are also in future likely to be seen as important proprietary resources that sustain a given position (cf. Hedlund 2007). And as there is an increasing emphasis on survival of the fittest in international competitiveness, in order to stay alive, organizations have to win the international organizational learning race (cf. Hampden-Turner, 1992 cited in Bontis 1998). Moreover, Pérez Lopez et al. (2005) state that: In examining the sustainability of competitive advantage, (Williams 1992) found that all industries undergo substantial change, whether driven by customers, competitors or technology suppliers. This change creates continuous pressure for businesses to improve their products and services to maintain or increase their value to customers, because no customer benefit is safe from being matched or exceeded by competitors. Thus, it is no surprise that comments such as "the ability to learn faster than competitors may be the only sustainable competitive advantage" (De Geus 1988) : have been frequently paraphrased by executives and scholars (Stata 1989; Nonaka 2008) . In that sense organizational learning is considered to be one of the fundamental sources of competitive advantage within the context of strategic management (cf. Pérez Lopez et al. 2005). Researchers even argue that in volatile environments the capacity to learn faster than competitors would may be the only sustainable competitive advantage (De Geus 1988; Stata 1989) cf. (Pérez Lopez et al. 2005). In agreement with these considerations, organizational learning, through better knowledge and understanding, facilitates behavior change that leads to improved organizational performance (Simon 1969; P. Senge 1990; Garvin 1993; Lei, Slocum and Pitts 2000; Pérez Lopez et al. 2005). Firms that are able to learn about customers, competitors and regulators stand a better chance of sensing and acting upon events and trends in the marketplace (cf. Pérez Lopez et al. 2005).

It can be understood that many and more variables influence organizational performance. However, in the context of this work it seems to be important to understand the main dependencies between the key concepts discussed (organizational learning, HRM and organizational performance), which seem to be complex and reciprocal and of course involve a multitude of influencing factors outside the considerate model. The notion by the author is that many factors outside the considered theoretical concepts (organizational learning and HRM) are influencing organizational performance directly or indirectly via their interference with the independent variables of organizational learning and HRM. However, the dissertation focusses on the dependencies between the independent variables of organizational learning and HRM on the one hand and the dependent variable of organizational performance on the other.

Kuo (2011a) develops the argument that HRM is connected to organizational learning which in turn is influencing organizational performance et vice versa. In addition the direction of the mutual influence seems to be two-tailed, as put forward by Swanson and Holton (2001) the notion is namely “that understanding factors that contribute to organizational learning and the transfer of knowledge to the workplace environment are essential to human resources management”. As suggested before, e.g. in the research of Kuo (2011a) who evidenced an indirect influence of HRM on organizational performance via organizational learning, for all intents and purposes of this research the notion of HRM, organizational learning and organizational performance will be a systemic one where these three concepts reciprocal influence each other like interlocked gear-wheels. In this sense the alteration or movement of one gear-wheel will trigger alterations in all the other connected gear-wheels.

Furthermore it seems to be important to understand the organization of organizational learning; or at least the buildup of the partitions relevant within the scope of this work. Leaning on Gölzner (2013b; 2015) the author understands that the theoretical concepts of organizational learning and HRM have partial overlap areas, as shown in the figures below. Furthermore it is understood that both theoretical concepts on their own have partial overlaps with different related theoretical constructs (see Figure 2 on page 34).

The theoretical constructs themselves can be split up in several sub-partitions revealing their make-up by a number of relevant items. The deduced make-up of relevant items for this dissertation is evidenced in the operationalization of the theoretical scheme further below. Nonwithstanding, the theoretical overlap in the context of this work there is a clear disambiguation of organizational learning and human resource management both in the theoretical as well as the practical measurement approach.

First, on the one hand from a theoretical point of view, organizational learning denominates the continous process or attitude of change in organizational collective knowledge acquisition, distribution, and interpretation aimed at enhanced problem-solving competence and capacity for implementation contributing to competitiveness of the organization as a whole. Even though organizational learning takes place via individual and group learning its concept reaches beond and is directed at the corporate level and also involves procedures and processes (cf. Al-Laham 2016). Human resource management on the other hand is also directed at the enhancement of organizational competitiveness and based on the sum of measures taken in personel management in different fields, e.g. leading, controlling, motivating ect. of employees.

Second, the two theoretical concepts are disambiguated also in the measurement model by a clear delineation of the factors and measurement items. Organizational learning encompasses four measurement factors (i.e. knowledge acquisition, distribution, and interpretation and improvement attitude) where the test items include questions on the individual (e.g. improvement of individual competencies), group (e.g. about attitudes towards teamwork and knowledge-sharing), and organizational level (e.g. about internal systems and procedures). Human resource management encompasses five dimensions (i.e. staffing, appraisal, rewards and compensation, human resource development, and employee participation) with measurment items on an organizational (e.g. corporate reward policies, human resource development strategy) level. It is important to note that the measurement models of the two concepts of organizational learning and human resource management do not overlap and that there are no common test items; each test item being unique.

Meta-analysis on the impact of organizational learning and human resource management on organizational performance

During the extensive literature review the author via a meta-analysis found strong evidence among a growing diversity of research in the field over the last two decades up to the most resent research that organizational learning and HRM are indeed positively contributing to organizational performance directly or indirectly via mediating effects and found that 74.6% or a total of 53 publications support that view. Further details on the specific findings of the included works can be found in the appendix in the table Meta-analysis on research on the relationship between organizational learning and HRM, and organizational performance, page 190.

Furthermore, it seems that on the whole the postulated connection between organizational learning and/or HRM and organizational performance is very much dependent on the specific circumstances and settings of the research conducted and therefore the findings of a considerable body of research, namely 19.7% or a total of 14 publications, only partly agree. The authors evidence that organizational learning can act as a mediator by which organizational performance is influenced in a positive way (cf. Lee and Choi 2003; Hung et al. 2010; Chou 2016; Tseng and Lee 2014; Kim et al. 2017). The same mediating effect was evidenced for HRM (Kasemsap, K. 2015; Schreder 2017). The findings of other authors support a positive relationship between organizational learning and certain partial aspects of organizational performance, with stronger results for non-financial than financial performance (Goh, Elliott, and Quon 2012; Kaplan and et. al. 2014; Valmohammadi and Ahmadi 2015; Schreder 2017). Also, Wall (2005) states on the often assumed effect of HRM practices on organizational performance that methodological limitations make such a conclusion premature and further research also on the possible direction of influence is needed. A notion shared also by Weldy (2009). Furthermore, some works evidence connections between organizational performance and theoretical constructs of intangible assets that are not directly compareable to the independent concepts of organizational learning and HRM used in this work (Galbreath and Galvin 2006; Saunila 2012).

Nonetheless, there are also research examples - 5.6% or a total of 4 publications from 71 included in the meta-analysis - that fail to evidence such a dependency. Table 2 below summarizes the findings of the meta-analysis. For organizational learning some results seem to contradict the notion that learning capability leads to higher organizational performance in terms of financial results but a significant and positive relationship to job satisfaction (Goh 2001; Goh, Elliott, and Quon 2012). Elsewhere, research finds that transfer of learning from the individual to the organization achieving organizational development is not evident (Rowland and Hall 2014). Regarding HRM, Guest et al. (2003) in a study confirm the association between HRM and performance but fail to evidence that HRM causes higher performance. Also, it was pointet out that employee competency presented no correlation with performance whereas employee satisfaction showed association with all aspects of performance perspective (Fernandes, Mills, and Fleury 2005).

With the meta-analysis above the author tries to show the development of the issue in a chronologically order. The schedule does not constitute a concluding register, but rather a compendium of works considered important and/or of interest by the author in the sense of them contributing to the state of the art understanding of the topic. Accordingly, further research is needed to clarify the postulated connection under the specific circumstances relevant for this work.

Table 2: Summary of meta-analysis of previous research on the connection between organizational learning / human resource management on organizational performance

Abbildung in dieser Leseprobe nicht enthalten

Data source: author’s own construction

Concerning the evaluated period during the last twenty years it is interesting to note that firstly, roughly from 2006 up to 2013 there seem to have been published exclusively works that fully agree with the above posed notion. Only in the most recent literature approximately from 2014 scientific publication are increasingly published again that differentiate the view and suggest that organizational learning/HRM only partly support organizational learing either directly of via mediating effects or even disagree with the notion.

In the mind of the author the discussion above clearly indicates the need for further research on the relationship between organizational learning, HRM and organizational performance despite many previous works in the field. This is true for at least two reasons. First, previous studies have been concentrated as a general rule on specific ramifications such as a single business sector etc., so that a comprehensive study incorporating all business sectors is needed for robust results. And second, the number of publications on the general topic remains high over a considerable number of years which indicates further need for clarification concerning the interdependencies between organizational learning, HRM and organizational performance. This notion is sustained by the fact that within the scientific body there is disagreement on the nature of the linkage and the need for further research therefore is given.

Main approaches to the measurement of organizational performance

Pérez Lopez et al. (2005) elaborate that previous studies which underline the positive effects that organizational learning and HRM have on organizational performance differ on what they understand by performance. Previous literature generally considers financial results as organizational performance (cf. Lei, Slocum and Pitts 2000; Tippins and Sohi 2003; Pérez Lopez et al. 2005). Although these outcomes are important, it could well be the case that more outcomes mediate the relationship with financial results. Therefore, it is important to establish what is understood by the term organizational performance in the context of this work. In order to arrive at a valid as well as viable answer it is helpful to look at what has been done in that field before.

Different authors in previous studies have applied a variety of measurements respectively models to evaluate organizational performance (see for example Pérez Lopez et al. 2005; Wong and Wong 2007; Prajogo et al. 2007; Prajogo 2007; Moneva, Rivera-Lirio and Munoz- Torres 2007). Organizational performance is measured through the use of performance measurement which is a metric used to quantify the efficiency or effectiveness of an activity. According to Matthews (2011) in almost every organization, performance measures are used to assess and measure organizational effectiveness. Hence, good performance measures fulfill certain criteria which are: balanced—include both financial and nonfinancial measures; aligned to the organization’s strategies; flexible—can be changed as needed; timely and accurate; simple to understand; focused on improvement. Orr (1973) organized a set of performance measures in his Input-Process-Output-Outcomes model, Input measures are comparably easy to quantify and gather. These measures are usually counts or numeric values. Process measures or productivity measures are focused on the activities that transform resources. Process measures are reflected in an analysis that will quantify the cost or time to perform a specific task or activity and are ultimately about efficiency. Process measures are typically measured either as cost per activity or as time per activity. Output measures are used to indicate the degree to which services are being utilized. More often than not, output measures are simply counts to indicate volume of activity.

However, as Matthews (2011) points out, key performance indicators will differ by type of organization and accordingly several organizational performance measurement tools have been developed. The different measurement approaches of organizational performance are delineated in the following section.

First, some organizations assemble a large number of performance measures and present this information in the form of a dashboard whereas Key Performance Indicators (KPIs) help an organization define and evaluate how successful it is, typically in terms of making progress toward its long-term organizational goals. Critical Success Factor (CSF) is the term for an element that is necessary for an organization to achieve its vision. Successful factors are those activities and capabilities that define the continuing success of an organization (cf. Daniel 1961; Rockart 1986).

Second, another set of possible measurements focuses on process improvement is Total Quality Management (TQM) which has brought greater focus to the importance of nonfinancial approaches and a management approach for implementing improvement activities. In particular, TQM focuses on using statistical process control methods to control and improve processes in organizations. Six Sigma proponents believe that if the number of defects in a process is measured these defects can be systematically eliminated.

Third, the integration of both financial and nonfinancial approaches has guided the development of quality award models for managers to assess their business excellence. These approaches are subsumed under the term Self-Assessment Award Models. The best-known models emerged in the late 1980s and early 1990s and were developed for the Malcolm Baldrige National Quality Awards (MBNQA) and the European Foundation for Quality Management (EFQM) Award. The criteria of the MBNQA include leadership; strategic planning; workforce focus; measurement, analysis, knowledge management; process management; business results and customer focus. These categories can also be defined by two key performance constructs of results and drivers. The EFQM primary provides a common language for communicating and sharing best practices among firms. The EFQM Excellence Model is based on nine criteria which reflect what is considered to be leading­edge management practices. These criteria are closely aligned to the performance constructs of drivers and results. The five criteria that are controllable by managers are called “enablers” (or drivers), and the four criteria named “results” are what an organization can achieve (cf. Matthews 2011).

Forth, another set of approaches is subsumed as the Strategic Measurement Analysis and Reporting Technique (SMART). First, SMART system, also known as the Performance Pyramid, was created as a management control system to define and sustain. Secondly the Performance Prism which is designed to assist managers in the process of selecting the best performance measures for their organization (Neely Adams and Kennerley 2002).

Fifth, as Matthews (2011) elaborates, holistic frameworks as integrated and balanced approach to measurement focused on providing both financial and nonfinancial performance, became popular in the early 1990s. These approaches are using a framework that encourage a manager to gain a better understanding about what leads to organizational success and assess performance appropriately. Moore (1995) has suggested that a strategic triangle is an effective way to focus the attention of managers on three complex issues that must be considered before (or while) committing themselves and their organizations to a particular course of action: (1) What is the important “public value” the organization is seeking to produce? (2) What “sources of legitimacy and support” can be relied upon to authorize the organization to take action and provide the resources necessary to sustain the effort to create that value? (3) What “operational capabilities” (including new investments and innovations) will the organization need to deliver the desired results? Social Return on Investment (SROI) is an outcomes-based tool that helps organizations understand and quantify three perspectives—the social effects, environmental impacts, and economic value they are creating. The Big Picture is a 2 x 2 matrix. The left two quadrants are “enablers” and focus on the fact that an organization needs the right direction and appropriate processes to achieve results. The right two quadrants focus on “results” and are the things that have a positive impact and ensure stakeholder satisfaction. The Balanced Scorecard (BSC), developed by Robert Kaplan and David Norton, is a comprehensive framework in which the mission and strategic directions of an organization can be interpreted via an array of performance measures (Kaplanand Norton 1996a; 1996b). It was intended that the framework would give managers an all-inclusive view of the business yet allow them to focus on critical areas for improvement for strategic development purposes. As a result, it has been used mainly by businesses as a means of performance measurement and as a performance driver.

In the mind of the author and in line with the state of the art understanding of organizational performance, namely the holistic frameworks, it is most appropriate for this study to develop a broad view of a company's state respectively development in order to measure organizational performance. Accordingly, different dimensions of organizational performance, i.e. economic and non-economic dimensions are introduced as elaborated further below.

In general, leading researchers focus on three different approaches to explain the linkage between HRM and/or organizational learning and organizational performance (Gurbuz and Mert 2011): universalistic or best-practices; fit or contingency and the resource-based view (RBV).

The first to evolve was the universalistic or best-practice approach which supports the view that some HRM and/or organizational learning activities are more suitable than others to sustain organizational performance and hence organizations should identify and adopt these activities (Kochan and Osterman 1994; Pfeffer 1994; Pfeffer 1998; Gurbuz and Mert 2011). The best-practice approach is very persuasive and also very appealing to practitioners to ensure they are focusing their energies and resources on the activities most likely to yield positive results. However, the approach has attracted a considerable amount of criticism on several counts. It has been pointed out that there is generally little agreement which practices are the most important (Becker and Gerhart, 1996). First, although some practices are named by a number of authors, including human resource development, contingent pay and reward, performance management, recruitment and selection, job security, and employee voice (Boselie et al, 2005), there is considerable variety in the items that have been suggested (Boselie et al, 2001; Martin-Alcazar et al, 2005). For example, whilst Pfeffer‘s work attaches importance to job security, this is not included in other proposals (Marchington and Grugulis, 2000). Furthermore, those practices that are generally advocated tend to be at a very generic level. Also, the universalist approach has been criticized for being atheoretical; no underlying theory has been proposed to explain why some practices, more than others, might influence performance or how the process works (Guest, 1997;Martin-Alcazar et al, 2005). Furthermore, the best-practice approach has been criticized regarding broader societal considerations. Boxall and Purcell (2008) note that the best-practice perspective does not consider for whom the practices may be considered ,best‘. Criticisms on the best-practices approach state that other organizations eventually will imitate the successful activities, making it no long-lasting source of value creation and competitive advantage (Gurbuz and Mert 2011). Also, the best-practices process might restrict organizational creativity and the ability to develop new appropriate practices (M. Porter 1996).

As a consequence to the above mentioned shortcomings the best fit or contingency approach was established (Delery and Doty 1996) which is based on the synergistic impact of particular HRM/organizational learning practices on organizational performance (MacDuffie 1995; Becker and Gerhart 1996). In opposition to the universalist approaches, contingency or best-fit, approaches are based on the notion that the way in which people are managed in organizations will vary according to many circumstances. Whereas the universalist perspective suggests that there is one best way of managing people, the contingency approach takes account of factors such as organizational size, location, sector, strategy and the nature of work (cf. Truss, 2012). Gurbuz and Mert (2011) point out that “the contingency approach recognizes that particular HRMpractices may enhance organizational performance when HRM practices are consistent with each other and with the firm's strategic goals”. The consistency among HRM practices represents a horizontal fit while the alignment between these practices and firm's larger strategic objectives represents a vertical fit (Baird and Meshoulam 1988; Wright 1992). Effectiveness of human resource practices is contingent on how well it is vertically and horizontally integrated, e.g. what discrete human resource policies would be most appropriate if an organization were to encourage new product innovation (Colbert 2004). Considerable research evidence supports the contingency approach by pointing out the relationship between internally consistent human resource practices and organizational effectiveness (Huselid 1995; Delery and Doty 1996; Youndt et al.1996; Becker and Huselid 1998; Bowen and Ostroff 2004). Nonetheless, also the contingency approach has been criticized for several reasons. First, the role of human agency needs to be taken into consideration, e.g. interpretation that takes place in the development of human resource strategies (cf. Truss 2012). Also, organizations are complex and comprise different employee groups. In some cases, these may require different HR approaches and strategies. The best-fit model does not account for these (Boxall 1991; Truss and Gratton 1994). Contingencies do not of themselves determine the approach that should be taken. It is also not clear which contextual aspects may be most important and relevant in terms of creating a ‘fit’ (Boxall and Purcell 2008)

The resource-based view (RBV) is the most recent approach and focuses on the role of organizational learning and HRM on the development of organizational competencies - as Gurbuz and Mert (2011) state - where rare, valuable, inimitable and non-substitutable resources can provide sustainable competitive advantage (Barney 1991). Consequently, practices or polices that meet these criteria can provide sustainable competitive advantage and enhance organizational performance (Lado and Wilson 1994; Patrick M. Wright, McMahan and McWilliams 1994). These kinds of activities, as Gurbuz and Mert (2011) explain, „can ensure the inimitability of the firm's human resources. However, to provide sustainable competitive advantages, these sources must be valuable and support competencies that add value to the organization (P. M. Wright 2001; Collins and Clark 2003) . In other words, HR practices can create value when the individual practices are aligned to develop critical resources or competencies for a firm (P. M. Wright 2001).“ In this sense the RBV is a dynamic approach used in recent works (Enz 2008; Eisenhardt, Kathleen M. and Jeffrey A. Martin 2000; Teece, D. J. 1998; Teece, D. J., Pisano G. and Shuen A. 1997; Palacios- Marques, Ribeiro-Soriano and Gil-Pechuan 2011), which focus on explaining how distinctive competencies are created, developed, and accumulated (Palacios-Marques, Ribeiro-Soriano and Gil-Pechuan 2011).

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Details

Title
The Impact of Organizational Learning and Human Resource Management on Organizational Performance
Subtitle
The Case of Austrian Business Enterprises
College
Salzburg Management Business School  (Faculty of Business and Management and Economics)
Grade
1,0
Author
Year
2019
Pages
221
Catalog Number
V961354
ISBN (eBook)
9783346313188
ISBN (Book)
9783346313195
Language
English
Tags
Human Resource Development, Human Resource Management, Learning Organization, Organization Development, Organizational Learning, Organizational Performance, Strategic Human Resource Management
Quote paper
Dr. Christoph Schreder (Author), 2019, The Impact of Organizational Learning and Human Resource Management on Organizational Performance, Munich, GRIN Verlag, https://www.grin.com/document/961354

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