2.5 Relationships between Learning Organizations and Competitive
industry (Porter, 1980). Porter proposed two ways to create and maintain a competitive advantage in the long run: cost leadership and product differentiation (Djonlagic et al., 2013). The research of Sudharatna & Li (2004) demonstrated that being a learning organization has a strong influence on competitive advantage. They studied six characteristics of the learning organization which bring about readiness for change: (i) cultural values (Dokukina, 2003; Naveed, 2009; Senge, 1990); (ii) leadership commitment and empowerment (Davis & Daley, 2008; Farrukh &
Waheed, 2015; Herrera, 2007; Watkins & Marsick, 1997; Yang et al., 2004); (iii) communication (Davis & Daley, 2008; Herrera, 2007; Senge, 1990; Watkins &
Marsick, 1997; Yang et al., 2004); (iv) knowledge transfer (Davis & Daley, 2008;
Herrera, 2007; Naveed, 2009; Senge, 1990; Watkins & Marsick, 1997; Yang et al., 2004); (v) employee characteristics (Dokukina, 2003; Naveed, 2009; Senge, 1990);
and (vi) performance upgrading. The learning organization characteristics which have high correlation with competitive advantage were found to be leadership commitment and empowerment, employee characteristics, and communication. Cultural values, knowledge transfer, and performance upgrading were found to have a medium level relationship.
Additional characteristics of learning organizations which have been found to affect competitive advantage are: (i) opportunities for continuous learning (Davis &
Daley, 2008; Herrera, 2007; Watkins & Marsick, 1997; Yang et al., 2004); (ii) encouraging collaboration and team learning (Davis & Daley, 2008; Djonlagic et al., 2013; Dokukina, 2003; Herrera, 2007; Naveed, 2009; Senge, 1990; Watkins &
Marsick, 1997; Yang et al., 2004); (iii) connecting the organization to its environment (Davis & Daley, 2008; Djonlagic et al., 2013; Herrera, 2007; Watkins & Marsick, 1997; Yang et al., 2004); (iv) providing strategic leadership for learning (Davis &
Daley, 2008; Herrera, 2007; Naveed, 2009; Watkins & Marsick, 1997; Yang et al., 2004); (v) systems thinking (Djonlagic et al., 2013; Dokukina, 2003; Naveed, 2009;
Senge, 1990); (vi) sharing vision (Dokukina, 2003; Naveed, 2009; Senge, 1990;
Watkins & Marsick, 1997); and (vii) acceptance of risk, positive attitudes towards changes, and investment in employee development (Djonlagic et al., 2013).
In addition to bringing about readiness for change, learning organizations improve competitive advantage by creating: (i) cost-based advantages such that costs
of production and prices of products are lower than competitors (Ismail et al., 2010, 2012; Li et al., 2006; Naveed, 2009; Neely, 2005; Nham Phong & Yoshi, 2010;
Phongpetra & Johri, 2011; Porter, 1990; Wang & Lo, 2003); (ii) product-based advantages such as differences in product, packaging, and design (Ismail et al., 2010, 2012; Li et al., 2006; Morgan et al., 2004); (iii) service-based advantages such as width of production line, flexibility, reliability, speed of service, and value to customers (Eisenhardt & Brown, 1998; Fahy, 2000; Ismail et al., 2010, 2012; Li et al., 2006; Morgan et al., 2004; Naveed, 2009; Sanchez, 1993, 1995; Stalk, 1990); (iv) quality advantages (Li et al., 2006; Nham Phong & Yoshi, 2010); and (v) innovation advantages (Naveed, 2009; Nham Phong & Yoshi, 2010). Research by Naveed (2009) showed that certain learning organization elements significantly affect competitive advantage in terms of cost, innovation, and value to customer. These are system thinking, mental model, shared vision, leadership, knowledge or information flow, personal mastery, and team learning. The most important was found to be shared vision, followed by system thinking and team learning. A study by Oyeniyi (2011) found that there is a positive relationship between organizational learning and sustainable competitive advantage.
The results of some of these studies on the relationship between the learning organization and competitive advantage are summarized in Table 2.7.
From the results of the studies, the relationship between learning organization and competitive advantage can be summarized in the following assumption:
Hypothesis 2: Learning organization has a positive direct effect on competitive advantage. (LO Æ CA)
55 Table 2.7 Summary of the Studies regarding the Relationship between Learning Organization and Competitive Advantage
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Djonlagic et al. (2013)
Key
characteristics of learning organization:
- Leadership - Organizational culture
- Organizational design
- Competitive advantage
- Conceptual paper - The learning organization represents an important concept of creating competitive advantages.
- Individual and
organizational learning are identified as significant sources of organizational competitiveness.
Naveed (2009)
Learning organization:
- Systems thinking - Mental models/culture
- Competitive advantage:
- Cost - Innovation - Financial performance
170 petroleum companies in Pakistan
Regression, Multiple regression
- All components of learning organization contribute significantly towards achieving the competitive advantage.
56 Table 2.7 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Naveed (2009) (Continued)
- Shared vision/mission - Leadership - Knowledge/
information flow
- Personal mastery - Team learning
- Value of customer
- The most significant was shared vision, systems thinking, and team learning (44.2%, 17.1%, 13.4%
respectively).
- Learning organization, if implemented intently, can be a sustainable source to develop and prepare organizations to cope with uncertainty environment proactively.
57 Table 2.7 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Sudharatna
& Li (2004)
Learning organization characteristics:
- Cultural values - Leadership commitment and empowerment - Communication - Knowledge transfer - Employee characteristics - Performance upgrading
- Organizational readiness-to- change
2 mobile service providers in Thailand
Factor analysis Company A:
- High correlation: leadership commitment and
empowerment, employee characteristics.
- Moderate correlation: cultural value, communication,
knowledge transfer, performance upgrading.
Company B:
- High correlation: leadership commitment and
empowerment, communication.
- Moderate correlation: cultural values, knowledge transfer, employee characteristics, performance upgrading.
58 Table 2.7 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Costa &
Cabral (n.d.)
- Learning (knowledge exploration) - Knowledge (absorptive capacity and internal knowledge)
- Innovation - Organization age
- Competitive dynamic
Competitive advantage
- Conceptual model - Innovation is a function of differentiated knowledge sources and learning processes.
- The sort of effect depends of the dimensions, subject to the moderate effect of organization age.
- Innovation affects firm competitive advantages in differentiated ways and this relationship is also
moderated by the
competitive environment.
2.6 Relationships between Competitive Advantage and Organizational