The influence of organizational learning on performance in Indonesian

Loading...

Southern Cross University

[email protected] Theses

2012

The influence of organizational learning on performance in Indonesian SMEs Ferdinandus Sampe Southern Cross University

Publication details Sampe, F 2012, 'The influence of organizational learning on performance in Indonesian SMEs', PhD thesis, Southern Cross University, Lismore, NSW. Copyright F Sampe 2012

[email protected] is an electronic repository administered by Southern Cross University Library. Its goal is to capture and preserve the intellectual output of Southern Cross University authors and researchers, and to increase visibility and impact through open access to researchers around the world. For further information please contact [email protected]

THE INFLUENCE OF ORGANIZATIONAL LEARNING ON PERFORMANCE IN INDONESIAN SMEs

By FERDINANDUS SAMPE

THESIS SUBMITTED IN FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF DOCTOR OF PHILOSOPHY

SCU BUSINESS SCHOOL DECEMBER 2012

P a g e | ii

Abstract This study has investigated the existing level of organizational learning practices in a SMEs context in a developing country, Indonesia. Constructs measuring organizational learning and its antecedents were investigated. A review of the literature revealed that there are three main antecedents of organizational learning namely organizational culture, transformational leadership and empowerment. Along with organizational learning outcomes and organizational performance, there are five constructs in a proposed conceptual model. To address the interactions amongst the constructs in the structural model, eight hypotheses positing associations between the five constructs were examined. The research method for primary data collection was a survey of owner/managers and employees of SMEs in service and trade sectors. A questionnaire was designed to measure their opinions of organizational learning practices as well as their opinions of organizational

antecedents

and

organizational

learning

outcomes.

After

the

questionnaire had been pretested, it was distributed online to 1000 owner/managers and employees of SMEs in Indonesia and yielded 501 usable returned questionnaires - a 50 per cent response rate. Analysis of the data was carried out using the SPSS statistical package software release 19 and the Amos Structural Equations Modelling package release 20 to develop parsimonious valid and reliable constructs to measure organizational learning and its antecedents – organizational culture, transformational leadership, and empowerment as well as organizational learning outcomes, organizational performance.

P a g e | iii

The study has revealed that in an Indonesian setting, organizational culture, transformational leadership and empowerment are valid antecedents of organizational learning with both of the constructs having significant relationships with organizational learning. All of the direct associations between the constructs were found to be significant and positive in value except for the direct path from transformational leadership to organizational learning which was not significant. However, transformational leadership is shown to influence organisational learning through both empowerment and organizational culture with the major effect being by way of organizational culture. In relation to the antecedents of organizational learning, the study found that organizational culture was the main determinant of the organizational learning process. In addition, this thesis found that trust amongst employees and a culture of trust within an organization are two crucial aspects for the existence of an organizational learning process. The thesis concludes with a discussion of the implications of these findings. Recommendations

for

owners/managers

researchers, and academia are provided.

and

SME

authorities,

organizational

P a g e | iv

DECLARATION OF ORIGINALITY

I certify that the work presented in this thesis is, to the best of my knowledge and belief, original, except as acknowledged in the text, and that the material has not been submitted, either in whole or in part, for a degree at this or any other university. I acknowledge that I have read and understood the University's rules, requirements, procedures and policy relating to my higher degree research award and to my thesis. I certify that I have complied with the rules, requirements, procedures and policy of the University (as they may be from time to time).

Ferdinandus Sampe, Lismore, 10/12/2012

P a g e |v

RELATED PUBLICATIONS Sampe, F. 2009 “Cultural relationship and HRM practices in Indonesian SMEs”, The 14th Asia Pacific Management Conference – Proceedings of The 14th Asia Pacific Management Conference (APMC), ISSN 2086-0188, p. 61-76

Sampe, F. (2012) “The influence of organizational learning on Indonesian SMEs Performance” Indonesia International Conference on Innovation, Entrepreneurship, and Small Business Proceeding book 02, ISBN 978-979-19081-6-0, p. 189-203

P a g e | vi

ACKNOWLEDGEMENT

First of all I would like to extend my appreciation and my debt of gratitude for the outstanding assistance of my supervisors Emeritus Professor Donald R. Scott and Dr Peter Vitartas. Their overwhelming support, generous assistance, guidance, and substantial patience made this Ph.D thesis possible. I am deeply thankful to the Directorate General of Higher Education of the Education Ministry of the Republic of Indonesia for providing me with financial support through the Overseas Scholarship scheme. I also wish to extend my appreciation to the International Office of SCU and Division of Research for additional financial assistance which allowed me to participate in conferences and for a semester tuition fee waiver. My appreciation is also given to the Head of the SCU Business School and all employees for their hospitality and remarkable ongoing support ever since my first time at the school. Thank you so much to my family, my mother, my brothers and my sister for your support and encouragement throughout my education. A very special thank you to my dearest wife Kartini Rofina Kalimas and my beloved sons Marianus Hante and Christian Natalis Sampe and my daughter, Jacoline Festi Sampe who have always provided me with cherished love, psychological encouragement, and marvellous motivation to pursue this achievement.

P a g e | vii

GLOSSARY OF ABBREVIATIONS

AMOS

: Analysis of Moment Structure

CFA

: Confirmatory Factor Analysis

EP

: Empowerment

GDP

: Gross Domestic Product

ME

: Medium Enterprises

OC

: Organizational Culture

OL

: Organizational Learning

OP

: Organizational Performance

SE

: Small Enterprise

SEM

: Structural Equation Model

SME

: Small and Medium-sized Enterprise

SPSS

: Statistical Package for the Social Sciences

TL

: Transformational Leadership

UKM

: Usaha Kecil Menengah

P a g e | viii

TABLE OF CONTENTS page ABSTRACT ………………………………………………………..................

ii

DECLARATION OF ORIGINALITY ……………………………….............

iv

RELATED PUBLICATIONS …………………………………………….......

v

ACKNOWLEDGMENTS ……………………………………………..............

vi

GLOSSARY OF ABBREVIATIONS ……………………………....................

vii

TABLE OF CONTENTS ……………………………………….......................

viii

LIST OF FIGURES …………………………………………………................

xv

LIST OF TABLES ………………………………………………….................

xvii

LIST OF APPENDICES ……………………………………………...............

xx

CHAPTER 1

INTRODUCTION

1.1. Foreword ………………………………………………………................

1

1.2. Background to the research …………………………………....................

2

1.3. Gaps in the literature ………………………………………......................

8

1.4. Research problem …………………………..............................................

10

1.5. Research questions.....................................................................................

11

1.6. Objectives of the research …………………………………......................

12

1.7. Justification for the research ………………………………........................

12

1.7.1. The shortage of comprehensive Research on Organizational Learning

12

1.7.2. Focus on SMEs.................................................................................. ....

13

1.7.3. Limited previous research into SME organizational learning ..............

14

1.7.4. Potential application of research findings.......................................... ....

14

1.8. Theoretical framework ........................................................................... ....

15

1.9. Overview of methodology ……………………………………...................

16

1.10.

Definitions ……………………………………………………...........

18

1.10.1. Organizational learning..........................................................................

18

1.10.2. Organizational culture............................................................................

19

1.10.3. Transformational leadership...................................................................

19

1.10.4. Empowerment………………………………………………………….

20

P a g e | ix

1.10.5. Organizational performance...................................................................

20

1.10.6. SMEs (small and medium enterprises).............................................. .....

20

1.11.

Limitations and key assumptions ………………………………..........

21

1.12.

Outline of thesis ………………………………………………............

22

1.13.

Conclusion ……………………………………………………....... .....

23

CHAPTER 2

CONCEPTS AND DEFINITIONS

2.1. Introduction ………………………………………………………........ ......

24

2.2. Organizational learning …………………………………………...............

25

2.2.1. Perspectives of organizational learning ………………………................

25

2.2.2. Organizational learning and learning organizations………......................

29

2.2.3. Organizational learning and knowledge management ……......................

31

2.2.4. Definition of organizational learning ………………………….......... .....

33

2.2.5. Conclusion of the discussion of the organizational learning concept as used in this research……………………………………………..........

37

2.3. Antecedents of organizational learning ………………………...................

37

2.3.1. Organizational culture …………………………………………….….....

38

2.3.2. Transformational leadership……………………………………….…....

42

2.3.3. Empowerment……………………………………… ………………. .....

44

2.4. Organizational performance…..………………………………………......

47

2.5. Small and Medium Enterprises (SMEs)……………………………….....

51

2.5.1. Classification criteria for an SME……………………………………....

51

2.5.2. Indonesian SME classifications…………………………………….......

52

2.6. Conclusion……………………………………………………………....

53

CHAPTER 3 CONTEXT AND RESEARCH ISSUES 3.1. Introduction………………………………………………………………..

54

3.2. Importance of Small and Medium Enterprises…………………………....

55

3.2.1. The Importance of SMEs in a global context……………………….. ....

55

3.2.2. Importance of SMEs in an Indonesian context………………………....

57

3.3. Research context in an Indonesian organizational setting.....….......... ....

60

3.3.1. Organizational culture………………………………………………. ....

60

3.3.2. Transformational leadership………………………………………..….

65

3.3.3. Employee empowerment in Indonesia…………………………….…...

66

P a g e |x

3.4. Organizational learning in an SME context……………………………...

67

3.5. Research issues…………………………………………………………....

69

3.6. Conclusion………………………………………………………………...

71

CHAPTER 4 MODEL AND HYPOTHESES DEVEPLOPMENT 4.1. Introduction ……………………………………………………………....

72

4.2. Conceptual framework of organizational learning models..................... ....

73

4.3. Model development for this research ...................................…………......

78

4.3.1. Organizational learning and organizational performance................... ....

81

4.3.2. Organizational learning and organizational culture.....……………… ....

84

4.3.3. Organizational learning and transformational leadership…...................

87

4.3.4. Organizational learning and empowerment..........…………………......

89

4.3.5. Organizational culture and transformational leadership .........................

91

4.3.6.Transformational leadership and empowerment..........……………….....

92

4.3.7. Organizational culture and empowerment…………………...................

94

4.3.8. Comprehensive conceptual model.…………………………………......

95

4.4. Proposition and hypotheses .......................................................................

98

4.4.1. Organizational learning and organizational performance........................

98

4.4.2. Organizational culture and organizational learning.................................

99

4.4.3. Organizational culture and empowerment............................................ ...

100

4.4.4. Transformational leadership and organizational learning........................

102

4.4.5. Transformational leadership and organizational culture..........................

103

4.4.6. Transformational leadership and empowerment......................................

104

4.4.7. Transformational leadership and organizational performance................

105

4.4.8. Empowerment and organizational learning.............................................

106

4.5. Construct development............................................................... ...............

107

4.5.1. Organizational learning...........................................................................

107

4.5.2. Organizational culture.............................................................................

115

4.5.3. Transformational leadership....................................................................

120

4.5.4. Empowerment.........................................................................................

124

4.5.5. Organizational performance....................................................................

129

4.5.6.Respondent characteristics......................................................................

134

4.5.6.1. Gender.................................................................................................

134

4.5.6.2. Number of employees..........................................................................

135

P a g e | xi

4.5.6.3. Education .............................................................................................

135

4.5.6.4. Tenure....................................................................................................

135

4.5.6.5. Age of the firm......................................................................................

136

4.5.6.6. Sector ...................................................................................................

136

4.6. Conclusion.............................................................................................. ....

136

CHAPTER 5 RESEARCH METHODOLOGY 5.1. Introduction ………………………………………………………............

137

5.2. Research problem and hypotheses........……………………………….......

138

5.3. Research paradigm.......................................................................................

139

5.3.1. The four research paradigm in organizational science..…………….......

139

5.3.2. Justification of the paradigm used in this thesis.......................................

141

5.3.3. Scientific research elements.....................................................................

141

5.3.4. Positivistic research method.....................................................................

142

5.3.5. Justification for quantitative research design....................................... .....

144

5.4. Research design............................................................................................

144

5.4.1. Justification for the research design..........................................................

146

5.4.2. Primary survey methods………………………........................................

149

5.4.3. Justification for web-based survey………………………........................

153

5.5. Sampling design ………………………………………..............................

154

5.5.1. Target population………………………………………..........................

155

5.5.2. Select sampling frame ………………………………………….............

156

5.5.3. Determine if a probability or non-probability sampling method will be chosen.................................................................................................. .....

156

5.5.4. Plan procedure for selecting sampling units........................................ .....

157

5.5.5. Determine sample size ………………………………………….............

157

5.5.6. Conduct fieldwork…………………………………................................

158

5.6. Operation definitions ..........................................................……………...

158

5.6.1. Development of parsimonious constructs ...............................................

162

5.7. Questionnaire design……………………………………….......................

163

5.7.1. Questionnaire development …………………………………….............

163

5.7.1.1. Specify the information needed.............................................................

164

5.7.1.2.Specify the type of interviewing method ……………………....................

165

5.7.1.3.Determining the content of individual questions/statement............... .....

166

P a g e | xii

5.7.1.4. Design the questions to overcome the respondent’s inability................

167

5.7.1.5. Decide on the question structure...........................................................

167

5.7.1.6. Determine the question/statement wording...........................................

169

5.7.1.7. Arrange the questions/statements in proper order................................

169

5.7.1.8. Reproduce the questionnaire................................................................

170

5.7.1.9. Eliminate bugs by pretesting.................................................................

170

5.7.2. Reliability ……………………………………………………................

171

5.7.3. Validity…………………………………………….................................

172

5.7.3.1. Content validity.....................................................................................

172

5.7.3.2. Criterion validity …………………………………………..................

173

5.7.3.3. Construct validity ………………………………………….................

173

5.7.4. Ethical considerations………………………………………...................

173

5.8. Administration of the survey............................................................. …….

175

5.9. Data analysis…………………………………....................................... .....

176

5.9.1. Managing non-response error and non-response bias.......................... .....

176

5.9.2. Method of analysis ……………………………………….......................

177

5.9.3. Structural equation modelling (SEM) .......................................................

177

5.9.4. Justification for the method of data analysis ………….............................

178

5.10. Conclusion …………………………………………………….................

189

CHAPTER 6 ANALYSIS OF DATA 6.1. Introduction ………………………………………………….....................

190

6.2. Assessment of survey response …………………………..........................

191

6.2.1. Assessing survey response adequacy ......................................................

191

6.2.2. Respondent characteristics ……………………………………..............

191

6.2.2.1. Gender ..................................................................................................

192

6.2.2.2. Number of employees ...................................................................... .....

192

6.2.2.3. Education .............................................................................................

193

6.2.2.4. Tenure ...................................................................................................

194

6.2.2.5. Age ................................................................................................... ......

195

6.2.2.6. Business sector ......................................................................................

196

6.3. Data screening …………………………………………….........................

197

6.3.1. Normal distribution ……………………………………..........................

198

6.3.2. Homoscedasticity ………………………………………..........................

198

P a g e | xiii

6.4. Descriptive finding ......................................................................................

198

6.4.1. Organizational learning............................................................................

198

6.4.2. Organizational culture ………………………………….........................

201

6.4.3. Transformational leadership.....................................................................

204

6.4.4. Empowerment …………………………………………….....................

206

6.4.5. Organizational performance ……………………………........................

208

6.4.6. Conclusions from the descriptive statistics..............................................

209

6.5. Assessing the constructs ………………………………….........................

210

6.5.1. Organizational learning...................................................................... .....

211

6.5.2. Organizational culture …………………………………….....................

215

6.5.3. Transformational leadership.....................................................................

218

6.5.4. Empowerment …………………………………………….....................

222

6.5.5. Organizational performance ………………………………....................

226

6.6. Assessment of discriminant validity....................................................... .....

229

6.6.1. Organizational learning – organizational performance ……...................

230

6.6.2. Organizational learning – organizational culture …………....................

231

6.6.3. Organizational learning – transformational leadership …………..........

233

6.6.4. Organizational learning – empowerment ……………………............ ....

234

6.6.5. Organizational culture – transformational leadership …………............

236

6.6.6. Organizational culture – empowerment ……………………............. ....

237

6.6.7. Transformational Leadership - organizational performance............... ....

239

6.6.8. Transformational Leadership - empowerment …………………............

240

6.7. Discriminant validity assessment ...............................................................

242

6.8. Construct reliability............................................................................... ....

243

6.9. Analysis of data: Specifying and testing the model ...................................

245

6.9.1. Specifying the structural model................................................................

245

6.9.2. Testing the model ………………………………………………………

247

6.10. Testing the mean differences on respondent characteristics ....................

254

6.11. Testing of the hypotheses.........................................................................

256

6.12. Conclusion................................................................................................

262

P a g e | xiv

CHAPTER 7

SUMMARY AND CONCLUSIONS

7.1. Introduction................................................................…………………......

264

7.2. Summary................................................................................................. .....

265

7.3. Conclusions ..................................................................................................

267

7.3.1. Conclusion in regard to the research questions ........................................

267

7.3.2. Conclusion in regard to the research hypotheses ......................................

268

7.3.2.1. Organizational learning – organizational performance .......................

270

7.3.2.2. Organizational culture – organizational learning ................................

272

7.3.2.3. Organizational culture – empowerment ...............................................

273

7.3.2.4. Transformational leadership – organizational learning ......................

274

7.3.2.5. Transformational leadership – organizational culture .........................

275

7.3.2.6. Transformational leadership – empowerment ......................................

277

7.3.2.7. Transformational leadership – organizational performance ...............

277

7.3.2.8. Empowerment – organizational learning .............................................

279

7.3.2.9. Empowerment – organizational performance .......................................

280

7.3.3. Conclusions in regard to the research problems .....................................

282

7.3.4. Conclusion on mean difference of respondent characteristics ................

283

7.3.5. Mediation effects .....................................................................................

283

7.4. Research implications and contributions ....................................................

284

7.4.1. Research implication for theory ..............................................................

284

7.4.2. Research implications for practitioners ...................................................

287

7.4.3. Research implications for policy decision making ...................................

289

7.5. Limitations ………………………………………………… ......................

290

7.6. Opportunities for future research …………………………………………

291

7.7. Conclusion ……………………………………………………..................

292

REFERENCES ………………………………………………………………...

293

APPENDICES .....................................................................................................

350

P a g e | xv

LIST OF FIGURES Page Figure 1.1. Outline of chapter ..........................................................................

1

Figure 1.2. Theoretical framework of organizational learning .........................

15

Figure 2.1. Outline of chapter 2 ......................................................................

24

Figure 3.1. Outline of chapter 3 .......................................................................

54

Figure 4.1. Outline of chapter 4 .................................................................... ....

72

Figure 4.2. Single organizational learning and organizational performance model ............................................................................................

74

Figure 4.3. Jyothibabu, Farooq and Pradan (2010) Model ..............................

76

Figure 4.4. Chang and Lee Model ...................................................................

77

Figure 4.5. Proposed OL – OP relationship ....................................................

84

Figure 4.6. Proposed OC-OL-OP relationship .................................................

87

Figure 4.7. Proposed TL – OL –OC and OP relationships ...............................

89

Figure 4.8. Proposed TL - EP –OC – OL - OP relationship ............................

91

Figure 4.9. Proposed TL – OC –EP - OL – OP relationship ...........................

92

Figure 4.10. Proposed TL – OC – EP – OL - OP relationship ..........................

93

Figure 4.11. Proposed TL - OC – EP – OL – OP relationships..................... ....

95

Figure 4.12. Proposed final model ..................................................................

97

Figure 5.1. Outline of chapter 5 .................................................................... ....

137

Figure 5.2. Research problem, objectives, questions and hypotheses ...............

138

Figure 5.3. Steps of research design ..................................................................

145

Figure 5.4. Sampling design process ................................................................

155

Figure 5.5. Questionnaire development guidelines ...........................................

164

Figure 5.6. Details of self-administered questionnaire ............................... .....

165

Figure 5.7. Six-stage process for structural equations modelling ............... .....

180

Figure 5.8. Path diagram of proposed construct relationships ...................... .....

181

Figure 6.1. Outline of chapter 6 ................................................................... .....

191

Figure 6.2. Initial organizational learning construct model ...…………............

211

Figure 6.3. Final construct measuring organizational learning …………..........

214

Figure 6.4. Initial organizational culture construct model ...…………….........

215

Figure 6.5. Final organizational culture construct measure ……………….......

218

Figure 6.6. Initial transformational leadership construct model ………….......

219

P a g e | xvi

Figure 6.7. Final transformational leadership construct measure………... .......

222

Figure 6.8. Initial empowerment construct model ……………………….......

223

Figure 6.9. Final empowerment construct measure ……………………….......

225

Figure 6.10. Initial organizational performance construct ……………............

226

Figure 6.11. Final measure for organizational performance ……………........

228

Figure 6.12. Organizational learning - organizational performance ….............

230

Figure 6.13. Organizational learning – organizational culture ………….........

232

Figure 6.14. Organizational learning – transformational leadership ……..........

233

Figure 6.15. Organizational learning- empowerment …………………….......

235

Figure 6.16.Transformational leadership – organizational culture …….…......

236

Figure 6.17. Organizational culture – empowerment .......…………………......

238

Figure 6.18.Transformational leadership – organizational performance ...........

239

Figure 6.19.Transformational leadership– empowerment ……………….........

241

Figure 6.20. Initial organizational learning structural model ………..……. ....

247

Figure 6.21. Final organizational learning structural model ……………..........

249

Figure 7.1 Structure of chapter 7 ……………………………………….........

264

Figure 7.2. Structural model and path values ....................................................

269

P a g e | xvii

LIST OF TABLE page Table 2.1. Definitions of organizational learning .............................................

34

Table 2.2. Antecedents of organizational learning.............................................

38

Table 2.3.Organizational culture definitions …................................................

41

Table 2.4. Classification of SMEs ....................................................................

51

Table 4.1. Previous research result of influence OL on OP .............................

82

Table 4.2. Previous measure of organizational learning (second order) ..........

109

Table 4.3. Previous measure of organizational learning (first order) ...............

111

Table 4.4. Pool of organizational learning items and their sources .................

114

Table 4.5. Previous measure of organizational culture (second order) ...........

116

Table 4.6. Organizational culture (first order) .................................................

118

Table 4.7. Pool of organizational culture items and their sources ...................

120

Table 4.8. Previous measure of organizational learning (Second order)...........

121

Table 4.9. Previous measure of leadership (First order)………………............

122

Table 4.10. Pool of transformational leadership items and their sources….......

124

Table 4.11. Selected previous measure of empowerment (Second order)…......

125

Table 4.12. Selected previous measure of empowerment (First order)…..........

127

Table 4.13. Pool of empowerment items and their sources………………........

128

Table 4.14. Selected previous measure of organizational performance (second order) .................................................................................

130

Table 4.15. Selected previous measure of organizational performance (First order) ....................................................................................

132

Table 4.16. Pool of organizational performance items and their sources…......

134

Table 5.1. Scientific research paradigms .........................................................

140

Table 5.2. Characteristics of different types of business research ...................

147

Table 5.3. Advantages and disadvantages of typical survey methods ..............

151

Table 5.4. Operation definition ......................................................................

158

Table 5.5. Summary of goodness-of-fit indices used in the research ...............

188

Table 6.1. Respondents’ gender .....................................................................

192

Table 6.2. Number of employees………………………………………..........

193

Table 6.3. Respondents’ education……………………………………...........

194

Table 6.4. Respondents’ employment tenure…………………………….........

195

P a g e | xviii

Table 6.5. Organization age……………………………………………............

195

Table 6.6. Main business sector………………………………………..............

197

Table 6.7. Descriptive statistics for the indicators of organizational learning ...

199

Table 6.8. Descriptive statistics for the indicators of organizational culture .....

202

Table 6.9. Descriptive statistics for the indicators of transformational leadership .......................................................................................

204

Table 6.10. Descriptive statistics for the indicators of empowerment…...........

206

Table 6.11. Descriptive statistics for the indicators of organizational performance ..................................................................................

208

Table 6.12. Organizational learning standardized regression weights .............

212

Table 6.13. Initial Goodness-of-fit indices for organizational learning construct model .............................................................................

213

Table 6.14. Goodness-of-fit indices for final organizational learning construct model ..............................................................................

214

Table 6.15. Initial organizational culture construct standardized regression weights ..........................................................................................

216

Table 6.16. Initial goodness-of-fit indices for organizational culture construct model ...........................................................................

217

Table 6.17. Goodness-of-fit indices for final organizational culture model.. ....

217

Table 6.18. Initial transformational leadership standardized regression weights ...........................................................................................

219

Table 6.19. Goodness-of-fit indices for transformational leadership construct Model .............................................................................................

220

Table 6.20. Goodness-of-fit indices for final transformational leadership construct model…..........................................................................

221

Table 6.21. Initial empowerment standardized regression weights…………...

223

Table 6.22. Goodness-of-fit indices for initial empowerment construct model

224

Table 6.23. Goodness-of-fit indices for final empowerment construct model ...

225

Table 6.24. Initial organizational performance standardized regression weights

227

Table 6.25. Goodness-of-fit indices for organizational performance construct model ..............................................................................................

227

Table 6.26. Goodness-of-fit indices for final organizational performance construct model .............................................................................

228

Table 6.27. Goodness-of-fit indices of OL- OP…………………………….......

231

P a g e | xix

Table 6.28. Goodness-of-fit indices for OL-OC construct model………….....

232

Table 6. 29. Goodness-of-fit indices for OL-TL construct model………….....

234

Table 6.30. Goodness-of-fit indices for OL-EP construct model………….. ....

235

Table 6.31. Goodness-of-fit indices for OC-TL construct model…………......

237

Table 6.32. Goodness-of-fit indices for OC-EP construct model …………......

238

Table 6.33. Goodness-of-fit indices for TL-OP construct model…………......

240

Table 6.34. Goodness-of-fit indices for TL-EP construct model………….......

241

Table 6.35. Discriminant validity…………………………………………......

242

Table 6. 36. Construct reliability………………………………………..........

244

Table 6.37. Goodness-of-fit indices for initial organizational learning construct model ..............................................................................

248

Table 6.38. Goodness-of-fit indices for final organizational learning construct model .............................................................................

251

Table 6.39. Final model standardised residual covariances……………...........

252

Table 6.40. Final organizational learning SEM model parameter estimates ....

253

Table 6.41. Mean differences in organizational learning scores by respondent And organizational characteristics .................................................

254

Table 6.42. Standardized direct, indirect and total effects of constructs ...........

262

Table7.1. Summary of research hypotheses .......................................................

281

P a g e | xx

LIST OF APPENDICES

page Appendix 1 Questionnaire in English and Bahasa Indonesia ...........

346

Appendix 2 Overseas Research for SCU Students application ........

359

Appendix 3 Human Research Ethics Committee (HREC) approval .

366

Appendix 4 P-P Plot .......................................................................

370

P a g e |1

CHAPTER 1 INTRODUCTION 1.1 Foreword This chapter introduces the background to the thesis, the problem formulation and research questions, the research objectives, the significance of the study and a definition of key terms. It concludes with a summary of the research methods to be employed. The outline of chapter 1 is presented in figure 1.1. below: Figure 1.1 Outline of Chapter 1 1.1.

Foreword

1.2. Background to the research 1.3. Gaps in the literature

1.4. Research problem 1.5. Research questions 1.6. Objectives of the research

1.7. Justification for the research 1.8. Theoretical framework

1.9. Overview of methodology 1.10. 1.11.

Definitions

Limitation and key assumption 1.12.

Outline of thesis

1.13.

Conclusion

Source: Developed for this thesis

P a g e |2

1.2 Background to the research This section explains the context of the research gaps which are to be filled by this research from an organizational learning context.

The growing importance of

organizational learning for business organizations, inconsistencies in research results in regard to the relationships between organizational learning and organizational performance, the roles of organizational culture, leadership and empowerment in influencing organizational learning practice as well as the limited research into organizational learning in regard to Small and Medium Enterprises (SMEs), are discussed. Two critical aspects of the new millennium development goals are poverty alleviation and equality of access to an economy (United Nations 2011). Poverty alleviation mainly relates to an effort to decrease the number of people below the absolute poverty line, and hence the set of resources needed by a person to maintain a minimum standard of living. Equality of access to an economy relates to the distribution of income, land, and assets amongst the population of a country (Antal and Sobczak 2004; Cuevas, Mina et al. 2009; The World Bank 2011). In order to meet the new millennium development goal, SMEs (Small and Medium Enterprises) will play a crucial role (Tambunan 2008; Cuevas, Mina et al. 2009; The World Bank 2011). SMEs have proven to be reliable means of alleviating poverty in many countries and for creating the possibility of an equality of access to the economy and resources (Beck, Demirguc-Kunt et al. 2005; Tambunan 2008). Because of this, interest in how SMEs can continuously contribute to poverty alleviation and to equality of access to an economy has increased during the new millennium.

P a g e |3

SMEs, however, face many challenges such as continuous changes in the business environment (Bougrain and Haudeville 2002; Garcia-Morales, Llorens-Montes et al. 2006; Bierly and Daly 2007; Cegarra-Navarro, Jiménez et al. 2007; Akhavan and Jafari 2008), a lack of financial support (Torre, Pería et al. 2010; The World Bank 2011) and inadequate support from governments (Tambunan 2008; Ardic, Mylenko et al. 2011). An optimal continuous contribution to alleviating poverty and to increasing equality of access to economic resources by SMEs, requires them to cope and to adapt to turbulence as business environments experience continuous changes over time (Chaston, Badger et al. 2001; Sadler-Smith, Spicer et al. 2001; Birdthistle 2008; Daud and Yusoff 2010; Popescu, Chivu et al. 2011). In such business environments, SMEs need to have methods that will assist them in finding out how to cope and to adapt to continuous changes and threats to their survival. A need for survival and growth in an era of continuous change can force organizations to find a condition that will enable them to cope with the new situation in the environment. It is proposed that the search for such a condition leads organizations to continuously learn from their internal and external environments (Crossan and Bedrow 2003; Vera and Crossan 2003; Bapuji and Crossan 2004; Skule and Reichborn 2007; Hoe 2008; Jansen, Vera et al. 2009). The need for continuous learning leads to the organizational learning concept, as many researchers have suggested, as a means of achieving success in turbulent times (Avlonitis and Salavou 2007; Bierly and Daly 2007; Akhavan and Jafari 2008; Austin and Harkins 2008). An organizational capability to continuously acquire, disseminate, exploit and store relevant knowledge as a process of organizational learning is crucial for the organization’s better performance.

P a g e |4

Many academics and practitioners have proposed that organizational learning as a process of continuous knowledge acquisition, dissemination and exploitation may improve the competitiveness of an organization (Alvarez Gil 1999; Bontis, Crossan et al. 2002; Stevens and Dimitriadis 2004; Vera and Crossan 2004; Berkhout, Hertin et al. 2006; Chang and Lee 2007; By and Dale 2008; Jansen, Vera et al. 2009; Ayse 2010; Jyothibabu, Pradhan et al. 2011). Thus, Chang & Lee (2007) have stated that companies with a learning capability can gain a competitive advantage. Although organizational learning has been claimed to be important for an organization’s competitiveness and survival, empirical research on organizational learning is still needed (Goh 1998; Bontis, Crossan et al. 2002; Goh 2003; Stevens and Dimitriadis 2004; Goh and Ryan 2008; Elliott, Dawson et al. 2009; Crossan, Maurer et al. 2011). More empirical work is needed to clarify terminology, constructs and dimensions of organizational learning as well as organizational learning antecedents and outcomes (Argote 2011; Argote and Miron-Spektor 2011; Crossan, Maurer et al. 2011). Since organizational learning as a process of knowledge acquisition, dissemination and exploitation needs to occur daily in an organizational context to be effective, the process needs specific organizational conditions that enable the process (Crossan and Bedrow 2003; Berson, Nemanich et al. 2006; Garcia-Morales, Llorens-Montes et al. 2006). Specifically, organizational culture is required to support the occurrence of organizational learning (Cook and Yanow 1993; Yanow 2000). Cook and Yanow (1993) for example have claimed that organizational learning processes are rooted in organizational culture. Organizational culture is an organizational value system that provides rules for sharing information, reaching general agreement, and acting on its

P a g e |5

meaning, which is a prerequisite for organizational learning to take place. A work environment is required that allows for the making of rational decisions and nurtures innovation, while structures that enable employees to work effectively are also required to nurture organizational learning (Schein 2004). So, understanding organizational culture is critical to acquiring an understanding of the organizational learning processes (Yanow 2000; Schein 2004). Thus, an organizational learning process may be viewed as a shared culture of the organization’s members that create a system for organizational improvement. Yanow (2000) has claimed that organizational learning processes should be viewed from the perspective of a shared culture. Similarly, Popper and Lipshitz (2000) have observed that the determination of whether an organization might be considered to be a learning organization may be decided in part by assessing the culture within which the learning mechanisms are embedded. Although Yanow (2000) believed that organizational culture was closely linked to organizational learning, such linkages have remained wholly speculative. Thus, empirical research that explores how organizational culture relates to organizational learning processes is required (Popper and Lipshitz 2000; Lipshitz, Popper et al. 2002; Lipshitz 2006). Another aspect that may influence the existence of organizational learning is transformational leadership (Bass 1990; Boehnke, Bontis et al. 2003; Stefanus 2007; García-Morales, Jiménez-Barrionuevo et al. 2011). Continuous processes of knowledge acquisition, dissemination and exploitation need the support of transformational leadership (Vera and Crossan 2004; Berson, Nemanich et al. 2006; Aragón-Correa, García-Morales et al. 2007; Jansen, Vera et al. 2009). Garcıá-Morales, Lloréns-Montes,

P a g e |6

and Verdú-Jover (2008) even claimed that transformational leadership is the most important factor in creating organisational learning. Transformational leadership is claimed to be a pivotal factor in the quest to become a learning organization because leaders challenge the status quo assumptions regarding the environment and guide followers in creating shared interpretations that become the basis for effective action (Williams 2001; Vera and Crossan 2004; Aramburu, Sáenz et al. 2006; Jansen, Vera et al. 2009). Strong leadership is needed to enable innovation, reduce hierarchies, distribute power, and to integrate new knowledge from employees and customers into their core business processes (Austin and Harkins 2008). Thus, Naot, Lipshitz and Popper (2004) have asserted that organizational learning occurs if leaders in an organization make real changes, challenge status quo assumptions regarding the environment and guide employees in creating shared interpretations. Leaders are therefore responsible for making organizational learning a high priority, creating the psychological and cultural conditions to enhance collective learning, and shaping contextual factors to enable the transfer of learning from the individual to the organizational level (Popper and Lipshitz 2000; Amitay, Popper et al. 2005; Sarros, Cooper et al. 2011). Although transformational leadership is claimed to be an important enabler of organizational learning, limited research has been done to investigate the relationship (Bass 1990; Coad and Berry 1998; Aragón-Correa, García-Morales et al. 2007; GarcıáMorales 2008; García-Morales, Jiménez-Barrionuevo et al. 2011). According to several writers such as Jerez-Gomez, Cespedes-Lorente and Valle-Cabrera (2005) or Santora and Sarros (2008) how transformational leadership can transform an organization to effectively acquire, share and utilize knowledge and how it can contribute to the development of organizational learning, is still not clear. So, further empirical research

P a g e |7

into the influence of transformational leadership in promoting organizational learning is needed. A continuous effort to create a process of organizational learning needs enthusiastic, capable and motivated employees who work effectively and are able to absorb new knowledge and to apply it in a daily working context (Baek-Kyoo and Ji Hyun 2010; Allahyari, shahbazi et al. 2011; Grinsven and Visser 2011). Enthusiastic, highly motivated employees and employees who are willing to learn are necessary conditions for organizational learning to occur (Snell and Chak 1998; Peterson and Zimmerman 2004; Baek-Kyoo and Ji Hyun 2010; Allahyari, shahbazi et al. 2011; Grinsven and Visser 2011). All organizational members need to have the capability to learn and to implement theories in regard to operations within the firm (Hult, Ferrell et al. 2002; Price, Bryman et al. 2004). In other words, the empowerment of employees to enable them to use their initiatives and to try new actions can be expected to be a prerequisite for organizational learning to take place. Although employee empowerment enables the existence of organizational learning, there has been limited research that has investigated the relationship (Allahyari, shahbazi et al. 2011; Grinsven and Visser 2011). Previous researchers have included empowerment activities as one of the dimensions of the organizational learning process (Yang, Watkins et al. 2004; Bhatnagar 2006; Limpibunterng and Johri 2009), but it would seem reasonable to expect that empowerment could be a separate dimension that influences organizational learning. This possibility needs to be investigated.

P a g e |8

1.3 Gaps in the literature This thesis research was targeted at the investigation of four aspects of organizational learning in order to address gaps in knowledge. Firstly, although research into organizational learning has proliferated, there is no consensus as to what organizational learning is (Marsick and Watkins 2003; Yang, Watkins et al. 2003; Yang, Watkins et al. 2004; Bates and Khasawneh 2005; Lipshitz, Friedman et al. 2007; Argyris 2009; Argote 2011) and what dimensions are included in it (Hernandez and Watkins 2003; Yang, Watkins et al. 2003; Yang, Watkins et al. 2004; Jyothibabu, Farooq et al. 2010; Argote 2011). Bontis, Crossan, and Hulland (2002) have stated that the diverse nature of the organizational learning literature creates confusion and Friedman, Lipshitz, & Popper (2005) have stated that many researchers are still in doubt as to whether organizational learning is beneficial for an organization. Thus, as suggested by Spector and Davidsen (2006 p. 65), organizational learning ‘deserves scientific investigation’. This research has therefore investigated the nature of organizational learning and the dimensions that comprise it, in order to contribute to a better understanding of the concepts and dimensions of organizational learning. Secondly, some researchers have included organizational culture, leadership and empowerment as integral components of organizational learning (Bhatnagar 2006; Jyothibabu, Farooq et al. 2010). On the other hand, other researchers have claimed that organizational culture, leadership and empowerment are enabling aspects of organizational learning and have separated them from the organizational learning process (Popper and Lipshitz 2000; Lloréns Montes, Ruiz Moreno et al. 2005; GarciaMorales, Llorens-Montes et al. 2006; Garcıá-Morales 2008; García-Morales, JiménezBarrionuevo et al. 2011). So, there is a need to understand the relationships between the

P a g e |9

three organizational learning enablers – organizational culture, leadership and empowerment and their influence on organizational learning and organizational performance. Thirdly, empirical research into organizational learning has mainly been conducted in large enterprises and little research has been carried out in relation to SMEs even though, management and organizational conditions differ between SMEs and large enterprises. Many researchers investigating large enterprises have found positive influences of organizational learning on organizational performance (Fang and Wang 2006; Real, Leal et al. 2006; Akgün, Keskin et al. 2007; Aragón-Correa, GarcíaMorales et al. 2007; Panayides 2007; Garcıá-Morales 2008; Chang and Ku 2009). However, research findings on SMEs, are still inconclusive. While some empirical results do show a positive influence (van Gils and Zwart 2004; Alegre and Chiva 2008; Goh and Ryan 2008; Panagiotakopoulos 2011), other researchers have found no relationship (Chaston, Badger et al. 1999; Birdthistle 2008). Sigh, Reynolds, Muhammad, (2001) suggested that learning activity is inversely related to the growth of an SME. So, understanding organizational learning practices in an SME context is an area that calls out for further study. Finally, research into organizational learning has been mainly conducted in developed countries such as the United States (Zagorsek, Marko et al. 2004), Spain (AragónCorrea, García-Morales et al. 2007; García-Morales 2011), Australia (Gasston and Halloran 1999), and Japan (Jung and Takeuchi 2010) but such research in relation to developing countries is still scant, especially in regard to Indonesian SMEs where the culture is very different to that of developed economies such as those where previous research has been conducted. The author has not been able to find any comprehensive

P a g e | 10

organizational learning research that has been conducted in regard to Indonesian SMEs and an examination of the situation pertaining to such a culture is necessary in order to provide a more comprehensive picture of organisational learning and of the organisational elements that influence it. Thus in summary, there are research gaps that need to be filled in relation to discovering the patterns of relationships between organizational culture, leadership, empowerment and organizational learning; organizational learning in SMEs and organizational learning in a developing country with an Asian cultural background such as Indonesia. 1.4 Research Problem The previous section has identified four research gaps which are investigated in this research. learning

Much research into the individual relationships between organizational and

organizational

organizational

culture,

learning

empowerment

and

organizational and

learning

and

organizational

leadership,

learning

and

organizational performance has been carried out (Amitay, Popper et al. 2005; Bates and Khasawneh 2005; Bhatnagar 2006; Aragón-Correa, García-Morales et al. 2007; Chang and Lee 2007; Allegre and Chiva 2008; García-Morales, Jiménez-Barrionuevo et al. 2011). However, no research into organizational learning that simultaneously takes into account

the

inter-relationships

between

organizational

culture,

leadership,

empowerment and their influence on organizational performance, has been identified. Organizational learning is unique in that organizational learning processes are rooted in culture (Cook and Yanow 1993; Jakupec and Garrick 2000; Godkin and Allcorn 2009; Henderson, Creedy et al. 2010). Since most studies have been carried out in western countries such as in Europe (Chaston, Badger et al. 1999; Chaston, Badger et al. 2001;

P a g e | 11

Sadler-Smith, Spicer et al. 2001; Garcia-Morales, Llorens-Montes et al. 2006; AragónCorrea, García-Morales et al. 2007; Garcıá-Morales 2008) further research that explores these relationships in a non-western developing world cultural setting, such as Indonesia, is required. So, the overall research problem has been formulated as: How does organizational learning and its antecedents influence the performance of small and medium size Indonesian enterprises (SMEs). 1.5 Research questions Based on the research problem, two component research questions were raised: 1. Can the testing of a comprehensive model of the relationships between SME organizational performance and organizational learning and its antecedents – organizational culture, transformational leadership and empowerment produce a valid outcome? 2. What are the relationships between organizational learning and its antecedents and the performance of Indonesian SMEs? These research questions and their associated hypotheses will be discussed further in chapters 4 and 5.

P a g e | 12

1.6 Objectives of the research Based on the problem formulation and the two research questions, the main objectives for this research were: 1. To develop and test a comprehensive model of the relationships between organizational learning, leadership, empowerment, organizational culture and SME performance. 2. To explore the strengths of the relationships between organizational learning, leadership, empowerment, organizational culture and Indonesian SME performance. 1.7 Justification for the research The research is merited for the following reasons: 1.7.1

The Shortage of Comprehensive Research on Organizational Learning

Although, the theoretical literature relating to organizational learning is abundant, there remains a shortage of empirical research on organizational learning that simultaneously explores the relationship between organizational learning, leadership, empowerment, organizational culture and organizational performance (Bontis, Crossan et al. 2002; Alegre and Chiva 2008; Argote 2011; Crossan, Maurer et al. 2011). The organizational learning literature is copious, and multiple and varied definitions of organizational learning have arisen throughout the theoretical literature but there remains a shortage of empirically tested research instruments that can enable the measurement of organizational learning processes. The shortage of empirical research has prompted some researchers to call for a much more aggressive development of valid and reliable

P a g e | 13

measurement instruments to be able to measure the organizational learning construct (Crossan and Guatto, 1996; Crossan, Nicoline et al. 2000; Vera and Crossan, 2003). Further discussion of organizational learning is presented in section 2.2 1.7.2

Focus on SMEs

SMEs are recognized as making a significant contribution to economies either to alleviate poverty or create equality of access to the economic resources (United Nations, 2011). More specifically, SMEs provide employment (Akhavan and Jafari 2008), act as a societal wealth distributor (The World Bank 2011), stimulate innovation (Narula 2004; Uden 2007), and promote an efficient economy (Cuevas, Mina et al. 2009). In an Indonesian context, SMEs have historically been the main players in domestic economic activities (Tambunan 2010), especially as large providers of employment opportunities. When Indonesia faced the 1997/1998 Asian financial crises and the 2008/2009 global crises, SMEs acted as the main engine of growth for the Indonesian economy (Hayashi 2002). This research focuses on SMEs in service and trade sectors and their organizational learning, leadership, empowerment and organizational culture as well as their performance. The focus is justified by the contributions of services and trades to economic growth. Service and trade sectors determine world economic growth (IFC 2011). In an Indonesian context, the service and trade sectors grew on average by 8.9 and 8.7 percent respectively for a five year time period up to 2010 (Statistics Indonesia 2010). In 2010, the service and trade sector contributed 37.1% of Indonesian Gross Domestic Product (GDP) and employed 48.9% of the total labour force. In terms of employment contribution, the trade and service level of 48.9% of employment was the

P a g e | 14

highest, followed by agriculture at 38.3% and industry at 12.8% (Statistics Indonesia 2010). 1.7.3

Limited previous research into SMEs organizational learning

Large firm management is fundamentally different from SME management and the conclusions that have been drawn from many studies of organizational learning in large enterprises cannot be applied to SMEs without empirical confirmation (García-Morales, Lloréns-Montes et al. 2007 p. 548) and more research on SMEs should be performed (García-Morales, Lloréns-Montes et al. 2007 p. 550). The author has identified no comprehensive research output results relating to organizational learning, leadership, empowerment, organizational culture and organizational performance in Indonesian SMEs. 1.7.4

Potential application of research findings

Outcomes from this research into the comprehensive relationships between organizational learning, leadership, empowerment, organizational culture and SME performance will have implications for owners of SMEs, industry associations, training organizations, government, and research and teaching institutions. It is anticipated that the outcomes will enable SMEs owners to create improvements in organizational learning mechanisms and hence to benefit their own enterprises. Governments should be interested in the research outcomes as an input into policy and to influence the scope and direction of government-supported empowerment programs for SME owners. Similarly, industry associations should benefit from the outcomes since those associations can influence SME members and utilize the outcomes to empower programs for members. Finally, this research should lead to further research in the field of organizational learning to assist in creating a survival mechanism for SMEs in

P a g e | 15

various nations of Asia and elsewhere. In addition, the outcome of the research should provide an input into the programs of teaching institutions (refer to section 3.5). 1.8 Theoretical framework This research explores the complexity of organizational learning by examining antecedents of organizational learning namely organizational culture, transformational leadership and empowerment as well as their influences on SME performance. The study explores the interrelationship between organizational learning, SME performance, organizational culture, transformational leadership and empowerment as shown in Figure 1.2. Figure 1.2. Theoretical framework of organizational learning Organizational Culture

Transformational Leadership

Organizational Learning

Empowerment

Source: developed for this research

SMEs Performance

P a g e | 16

1.9

Overview of methodology

Organizational learning is concerned with the interaction of members of an organization in a social entity (Argote 2011). As it is concerned with human interactions, there are four research paradigms that can be chosen: positivism, constructivism, critical theory and realism (Sobh and Perry 2006). Of the four research paradigms, the positivism paradigm was chosen for this study. The reason for the choice was the popularity of the positivism research paradigm in an organizational research context (Anderson 2004; Aguinis, Pierce et al. 2009) and the suitability of this study for such an approach. In their review of organizational research methods, Aguinis, Pierce, Bosco and Muslin (2009) found that positivist paradigms were adopted for nearly all empirical organizational studies. This study therefore chose a positivist paradigm as being the most suitable for an organizational learning study (refer to chapter 5 section 5.3) The main positivism research method used in an organizational context is a survey (Deutskens, de Ruyter et al. 2006; Aguinis, Pierce et al. 2009; Terzioglu, Schmidt et al. 2010; Allahyari, shahbazi et al. 2011). A survey approach refers to a group of methods which allow for the use of quantitative analysis, where data for a large number of organizations are collected through methods such as mail questionnaires, telephone interviews, or from surveys, and these data are analyzed using statistical techniques (Zikmund, Babin et al. 2010; Babbie 2011). By studying a representative sample of organizations, the survey approach seeks to discover relationships that are common across organizations and hence to provide generalisable statements about the object of the study (Babbie 2011). This study examined the patterns of interrelationships between organizational learning and its antecedents and their influence on organizational performance in an SME context.

P a g e | 17

To get a better understanding of the area of study, an exploratory step was conducted prior to a pilot study and a survey. Two SME owner/managers and three SME employees were interviewed to discover their opinions of the existence of organizational learning practices. In addition, at the outset of the research, the researcher discussed this matter with experts in the area of study while conducting a review of the literature. Based on the literature review and the expert comments, a questionnaire was developed in order to be used as a research instrument. A pilot study was used to check the validity and reliability of the questionnaire. The persons targetted in the SMEs that were involved in this pilot study were SME owners and managers who were listed by the Cooperation & SMEs Department South Sulawesi Province, Indonesia. The results of the pilot study were used to determine if the questionnaire had produced the desired type of information and whether there were any modifications to the questionnaire that were required. A web-based survey using Qualtrics, a commercial web-based survey software that is subscribed to by Southern Cross University was used to collect the main survey data. HRD-Power group, a group of SME owners, managers and employees as well as individuals interested in human resource and organizational development were used as respondents. One thousand SME owners, managers and employees from the Indonesian service and trade sector were drawn from the list of HRD-Power Group Membership that constituted the sample frame. The online survey form was equipped with a cookie to identify the remote host and computers’ IP addresses in order to prevent multiple responses from one individual, malicious users, and uninvited respondents (Ranchhod and Zhou 2001).

P a g e | 18

Data gathered from the survey was analysed using both descriptive and inferential statistics. A statistical package namely the Statistical Package for the Social Sciences (SPSS version 20) along with AMOS 20 was used to analyse the data. SPSS was used to examine the validity and reliability of the instrument. It was also used to perform descriptive analyses. AMOS 20 was used to carry out exploratory and confirmatory factor analyses and the analysis of a structural equation model. 1.10

Definitions

1.10.1 Organizational learning Organizational learning is “the process by which an organization continuously adjusts and/or changes itself by utilizing and enriching organizational knowledge resources in an effort to adapt to both external and internal environmental changes to maintain a sustainable competitive advantage” (Chen, 2005, p. 472). Organizational learning can be defined as a dynamic process of creation, acquisition and integration of knowledge aimed at the development of resources and capabilities that contribute to better organizational performance. For the purpose of this research, Hoe and McShane’s (2010) definition that organizational learning is an organization’s enhanced ability to acquire, disseminate and use knowledge in order to adapt to a changing external and internal environment was used (refer to 2.2.4)

P a g e | 19

1.10.2 Organizational culture Organizational culture is the specific characteristic aspect of an enterprise either visible; such as behavioural models, regulations and rites, or invisible; such as values and norms that integrate the daily activities of organizational members and are used to reach their planned goals (Chang & Lee, 2007). This research used the Lateenmaki, Toivonen and Mattila’s (2001) definition that organizational culture is a set of values and basic assumptions that an organization has created and developed through the life of the organization to enable it to adapt to environmental changes to enable the organization to better its performance (refer to 2.3.1). 1.10.3 Transformational Leadership Transformational leadership is a leadership style where a leader aims to transform her/his organization based on environmental changes and challenges by raising her or his followers' aspirations and activating their higher-order values. Transformational leadership is an influence relationship among leaders and collaborators who intend real changes that reflect their mutual purposes (Mirkamali, Thani et al. (2011). For the purpose of this research, García-Morales, Jiménez-Barrionuevo, and GutiérrezGutiérrez’s (2012 p. 1040) definition that “transformational leadership can be defined as the style of leadership that heightens consciousness of collective interest among the organization's members and helps them to achieve their collective” was adopted (refer to 2.3.2). In short, transformational leadership raises the follower aspiration to achieve organizational vision and encourages good communication and spirit of trust to acquire, share, and exploit information and knowledge for the benefit of the organization.

P a g e | 20

1.10.4 Empowerment Empowerment is the process of enabling or authorizing an individual to think, behave, take action, and control work and decision making in autonomous ways (Rankinen, Suominen et al. 2009). It is the state of feeling self-empowered to take control of one's own destiny. For the purpose of this research, the Rankinen, Suominen, Kuok, Lekane, and Doran’s (2009) definition of empowerment as a process whereby the individual feels confident that he or she can successfully execute a certain action during organizational change (refer to 2.3.3) was used. 1.10.5. Organizational performance SME performance/growth is the ability of an enterprise to achieve its predetermined objectives. A SME’s performance and growth depends on exogenous and endogenous factors in relation to the individual enterprise and its management. For the purpose of this research, organizational performance will be defined as an ability of an organization to create employment, improve effectiveness, efficiency and quality of work life resulting in organizational growth and survival (García-Morales, Moreno et al. 2006c). In this research, SME performance was based on the objectives of the manager-owners or employees (refer to 2.4) 1.10.6 SMEs (small and medium enterprises) In this research, a SME was taken to be any business with a number of employees of between 10 and100 people that was seeking opportunities to develop the business. This classification was based on two governmental institutions, the Statistics Indonesia Board and the Ministry of Industry that are commonly used as references by many researchers, non-governmental organizations or governmental policy making. A small

P a g e | 21

business with fewer than 10 employees was categorized as a micro enterprise (refer to 2.5). 1.11

Limitations and key assumptions

The explicit boundaries for this research are given by the research problem described in Section 1.2. A number of limitations and key assumptions are identified as applying to this thesis research. The study was a cross-sectional study, it is possible that the behaviour of SME owner/managers in relation to organizational learning may change as they increase their level of knowledge and face different business environments. The cross-sectional nature of the research covering a series of potentially dynamic concepts (organizational learning, organizational culture, transformational leadership, empowerment and organizational performance) meant that the research only covered behaviour at a specific point in time and not behaviour over time. The data for this thesis research is restricted to examining the mechanisms of organizational learning and organizational performance by assessing organizational culture, transformational leadership and empowerment as enablers of organizational learning in a SME context. Some degree of organizational learning was already taking place in Indonesian SMEs especially in the trade and service sector. Aspects of organizational learning, organizational culture, leadership and empowerment also did exist in both the trade and the service sectors. Because of the focus of the research on organizational culture, transformational leadership and empowerment, organizational resources were not studied.

P a g e | 22

Focusing on Indonesian SMEs that operate in a specific ethnic culture, while valid from a research design perspective, may affect the generalisability of the results. The results obtained from this thesis research were Indonesian based and might not be representative of those to be found in other countries. 1.12

Outline of thesis

This thesis will contain seven chapters. Chapter 1 provides an introduction and a background to the research, outlines the research question, justifies the area of the research, indicates the methodology to be applied and provides relevant definitions and an outline of the limitations and key assumptions. Chapter 2 will review literature covering organizational learning, leadership, empowerment, organizational culture and SME performance. Concepts and definitions for each construct to be used in the research will be presented. Chapter 3 will set out the research context and the issues to be investigated. Chapter 4 will set out the model and hypothesis development. Chapter 4 will also cover the measures to be used to test these hypotheses. In Chapter 5 the reasons for the choice of research design and methodology will be presented and justified. Chapter 5 will also describe the sample to be used and the method of collection of the required data for construct development, validity and reliability assessment, the data collection methods, the sample design and the data analysis. Chapter 6 will use the data that has been collected, to develop a set of parsimonious constructs that will be used to examine the model that was set out in Chapter 4. These constructs will then be used to test the model and its associated hypotheses.

P a g e | 23

Finally, Chapter 7 will discuss the outcomes of the analysis and the hypothesis tests and will examine the implications of the research for theory, policy, and practice plus the possibilities for further research. 1.13

Conclusion

This chapter has provided an outline of the proposed research and has identified the research question. It has also presented a set of definitions of terms.

P a g e | 24

CHAPTER 2 CONCEPTS AND DEFINITIONS

2.1. Introduction The previous chapter outlined the proposed research and the research question. This chapter discusses the concepts and definitions of measures used in the thesis. The outline of the chapter is presented in Figure 2.1.

Figure 2.1 Outline of Chapter 2 2.1. Introduction

2.2. Organizational learning

2.3. Antecedents of organizational learning

2.4. Organizational performance

2.5. Small and Medium Enterprises (SMEs)

2.6. Conclusion

Source: developed for this thesis

P a g e | 25

2.2. Organizational learning This section describes perspectives of organizational learning, differences in organizational learning and the learning organizational concept, organizational learning and knowledge management, and finally presents organizational learning definitions by previous researchers. 2.2.1. Perspectives of organizational learning The origins of attention to organizational learning began with the recognition of experience curves (Hoy 2008). Researchers observed that outputs increased relative to inputs as workers gained experience over time (Argote 2001; Argote and MironSpektor 2011). Similarly, organizational members became more knowledgeable about the industry in which their firm competed and about their company business model (Hoy 2008). This model describes the internal capacity of organizations to learn from experience, to examine and to adopt new ideas and to transform them into policy and action plans in order to obtain a competitive advantage (Lipshitz, Friedman et al. 2007; Mitki, Herstein et al. 2007). Research focused on organizational learning can be grouped into three main themes: how defensive routines prevent learning (for example Argyris and Schön 1978; Adler and Zirger 1998; Akgün, Lynn et al. 2003), how changes in an organization’s routines affect future behaviour (for example Bolman and Deal 2003; Argote and Miron-Spektor 2011) and how characteristics of performance have changed as a function of experience (for example Altman and Iles 1998; Argote and Ingram 2000; Ellinger, Ellinger et al. 2002; Dutton 2003). From the three main themes of organizational learning, emerge six academic perspectives which have made significant contributions to understanding organizational learning: psychology, management science, strategy, production

P a g e | 26

management, sociology, and cultural anthropology (Crossan, Nicolini et al. 2000). Each perspective tries to explain phenomena that are considered the core of organizational learning. The central focus of the psychological perspective is on human development within an organizational context. Individuals in their organizations build up cognitive maps of their work context and modify these maps in the light of experience (Nonaka and Takeuchi 1995; Dixon 1999; Bapuji and Crossan 2004). Dixon (1999) proposed an organizational learning cycle in which information is generated through the direct experience of employees, which is shared and interpreted collectively and this leads to responsible action being taken by those involved. The central issue of psychology and organizational development is how an individual’s experience in an organization contributes to organizational learning. The perspectives, however, face a main problem of how to move the content of learning from individuals to groups and organizations (García-Morales, Lopez-Martín et al. 2006). The management science perspective concerns the gathering and processing of information in, and about, the organization – how potential knowledge and information are acquired, distributed, interpreted and stored (March and Simon 1958; Huber 1991; Deng and Tsacle 2003). Huber (1991) elaborates this through a review of the literature covering four main processes: knowledge acquisition, information distribution, information interpretation, and organizational memory. Knowledge can be acquired through the inherited knowledge of members of the company and by recruiting new staff with external knowledge. This knowledge then needs to be distributed and interpreted widely across the organization and be used to improve organizational performance and then stored for future information as organizational knowledge.

P a g e | 27

The strategic perspective analyses organizational learning in terms of whether it gives an organization an advantage over others. The crucial factor in the organizational learning context, is survival and most organizations can do little to change themselves in the face of environmental changes (Halawi, McCarthy et al. 2006). Organizational performance is measured by continued expansion and diversification of activities (Mayo 1994; Bontis, Crossan et al. 2002). The relationship between learning and strategy is seen as being reciprocal: strategic frameworks influence the perception and interpretation of information from the environment and the learning style and capacity of the organization may in turn determine the strategic options that can be perceived (Fiol and Lyles 1985; Thomas, Sussman et al. 2001). The production management perspective focuses primarily on the relationship between learning and organizational productivity/efficiency. Organizational learning is assessed using productivity criteria. Early research was conducted into the "learning curve": the idea that the production costs of any product reduce in proportion to the cumulative number of units that have been produced (Garvin 1994; Argote 2001; Argote and Miron-Spektor 2011) and that organizational design influences the transfer of learning from individuals to organizations (Argote 2011). The sociology perspective focuses on social systems and organizational structures where learning may be embedded, and which may inhibit or support organizational learning. A social system has a crucial impact on the way that the organization is able to make sense of what is going on both inside and outside the organization (Pettigrew 1979; Lang 2004; Law and Ngai 2008). Information flow and processing in an organization as well as beneficial usage for the whole organization are influenced by structural aspects of the organization (Hedberg and Wolff 2003; Mavin and Cavaleri

P a g e | 28

2004). Hierarchies and power differences are crucial determinants of how information is shared among organizational members (Easterby-Smith, Snell et al. 1998; EasterbySmith and Lyles 2005; Hong, Easterby-Smith et al. 2006). In addition, sociology and organization theory suggest that organizational learning means different things and operates in different ways according to the nature of the organization (Schulz 2001; Akgün, Lynn et al. 2003; Kontoghiorghes, Awbre et al. 2005; Schulz 2008). Shrivastava (1983) demonstrated how different organizational structures and cultures lead to distinct learning processes so that learning is conceived to be a process and outcome of social construction (Brown and Duguid 1991; Popper and Lipshitz 2000; Toiviainen 2007). The cultural perspective sees "culture," either local or national as a significant cause and effect of organizational learning. Hofstede (2001) claimed that culture distinguishes the members of one human group from another. The nature and process of learning may vary in different situations and cultures. Culture is seen to be determined by managers and leaders to influence the organizational learning processes in an organization as well as being a frame of thinking for all organizational members (Nonaka and Toyama 2003; López, Peón et al. 2004). In addition, (Brown and Duguid 2000) argue that learning is an integral part of a specific context in which it takes place. In this context, learning becomes a product of a community rather than of the individuals in it. Values and beliefs are crucial in either facilitating or inhibiting organizational learning. Organizational learning relates to the level of learning, the time frame and to managerial intervention (Drew and Smith 1995; Drejer 2000; Chang and Huang 2002; Burnes, Cooper et al. 2003; Chang and Lee 2007; Birkenkrahe 2008; Au, Carpenter et al. 2009; Ahlgren and Tett 2010; Cho 2010; Lam and Lambermont-Ford 2010; López

P a g e | 29

Sánchez 2010). As knowledge acquisition, distribution, usage, and storage occur through the interactions between the organization’s members (Elkjaer 2004) and social constructions (Klimecki and Lassleben 1998; Stacey 2003) the sociological perspective was accepted as a frame of thinking for this research. Organizational learning in this research is therefore assumed to be influenced by the structural interaction of organizational members in specific social interactions, supported by transformational leadership and empowered employees. Organizational learning attempts to predict how organizations and the employee-employer relationships in the organizations will behave in varying organizational structure, culture and circumstances. It is assumed that as an organization is a direct reflection of societal values, organizational learning only exists if specific organizational cultural conditions enable it, leadership supports it and employees have the courage and capability to work under such conditions. 2.2.2 Organizational learning and learning organizations Organizational researchers have disagreed as to the equivalence of organizational learning and a learning organization. Some believe that the two concepts are two sides of the same coin that can be used interchangeably (Robey, Boudreau et al. 2000; Moilanen 2005; Song, Joo et al. 2009) while others see the two concepts as being different (Örtenblad 2001; Sun 2003; Yeo 2005). Organizational learning and learning organizations are terms that try to explain how an organization acquires, disseminates, and integrates knowledge to gain competitiveness and better performance (Stata 1989; Gnyawali and Steward 2003; Yang, Watkins et al. 2004; Yang, Wang et al. 2007). McGill, Slocum, & Lei (1992) for example defined both organizational learning and a learning organization as the ability of an organization

P a g e | 30

to gain insights and understanding from experience through experimentation, observation, analysis, and a willingness to examine both successes and failures. So, because of the similarity of all of the dimensions in both organizational learning and in a learning organization, some scholars do not distinguish between them and believe that they are interchangeable terms. However, many researchers suggest that organizational learning and a learning organization are slightly different in nature (Tsang 1997; Örtenblad 2001; Yeo 2005). For instance, Tsang (1997) contrasted organizational learning and a learning organization in terms of process versus structure. Organizational learning was said to refer to a process of acquiring, disseminating and using knowledge while a learning organization referred to a structure which existed because of learning, so that a learning organization would be an ideal condition to achieve. In other words, organizational learning refers to learning processes and activities that occur within the organization while a learning organization refers to a particular organizational form (Örtenblad 2001; Sun 2003; Yeo 2005). Similarly, Yeo (2005b) proposed that organizational learning is a concept to describe certain types of activity that took place in an organization while the learning organization referred to a particular type of organization, an organization that was good at learning. While Tsang (1997) distinguish organizational learning in terms of process versus structure, Örtenblad (2001) described differences between organizational learning and a learning organization as concepts based on content, degree of normativity, and the target audience. In the content aspect, organizational learning was said to be an activity while the learning organization was a classification into either a learning organization or a non-learning organization. In the normative aspect, the organizational learning

P a g e | 31

literature was said to be primarily descriptive whereas the learning organization literature was primarily prescriptive. Based on the target audience, organizational learning was academic in nature while the learning organization literature targeted practitioners and consultants. A few extreme opinions in relation to the concept of learning organizations, do exist, namely that there is no such entity as a learning organization (Huber 1991; EasterbySmith, Crossan et al. 2000; Stacey 2003). The main reason put forward is that a learning organization is an ideal type of organization which does not actually exist as a process of knowledge acquisition, distribution, and use of knowledge is an on-going activity during daily organizational activities. Stacey (2003) claims that knowledge creation, dissemination and storage exist in highly complex human interactions and relationships and are under a continuous state of construction so that an ideal type of learning organization cannot be achieved. As this research focused on a continuous interaction between organizational members to acquire, disseminate, use and store knowledge during the operation of the organization, the organizational learning concept was chosen for this study. Adoption of this approach facilitated the research in being able to examine all aspects that related to knowledge acquisition, sharing and usage in SME organizations such as organizational culture, leadership, and empowerment for better performance. 2.2.3 Organizational learning and knowledge management The concept of organizational learning and knowledge management are closely related. (Akbar 2003; Anuradha and Gopalan 2007; Daneshgar and Parirokh 2007; Ajmal, Kekale et al. 2009; Swart and Kinnie 2010; Gunsel, Siachou et al. 2011). While organizational learning is concerned with knowledge acquisition, dissemination, usage

P a g e | 32

and storage, knowledge management is mainly concerned with knowledge flows and with the administration of knowledge stocks in an organization (Bontis, Crossan et al. 2002). Bontis, Crossan, and Hulland (2002) for example, have suggested that organizational learning is a process that encompasses knowledge management and intellectual capital, and incorporates them into a learning process. In this context, the knowledge management processes are used to administer knowledge stocks and flows. Kogut and Zander (2003) have stated that organizational learning theory has contributed to a larger theoretical movement emphasizing the importance of knowledge development and knowledge storage in organizations, which also included the knowledge-based theory of the firm, and the theory of organizational memory, group learning, and shared cognition. An organization’s knowledge determines what actions its members are capable of taking, as well as how they coordinate and integrate their efforts. According to Song, Uhm, and Yoon (2011) organizational knowledge is created, refined, altered, and discarded as organizational members experience reality and attempt to update their individual and shared understandings of it to reflect the lessons they draw from their experience.

Building on this view of organizational knowledge

and knowledge development, Benoit & Mackenzie (1994) asserted that organizational learning is the evolution of organizational knowledge. Organizational learning can be conceived as having three sub-processes: creating, retaining and transferring knowledge (Akbar 2003). When organizations learn from experience, new knowledge is created in the organization (Yang 2007). The knowledge can then be retained so that it exhibits some persistence over time. Knowledge can also be transferred within and between units. Through knowledge transfer, one unit is

P a g e | 33

affected by the experience of another (Argote, Ingram et al. 2000) or learns vicariously from the experience of other units (Easterby-Smith, Lyles et al. 2008). This research uses the organizational learning concept rather than the concept of organizational knowledge, because it is assumed that organizational knowledge is an aspect of organizational learning (Liao and Wu, 2010), especially in regard to sharing knowledge and storing organizational memories. 2.2.4. Definition of organizational learning There is no universal agreement on what is organizational learning (Crossan and Guatto 1996; Adler and Zirger 1998; Aramburu, Sáenz et al. 2006; Spector and Davidsen 2006; Argote 2011). As has been described in section 2.2.1, multiple perspectives of how to derive knowledge from an organizational learning process do not reach any accepted consensus by organizational learning experts as to what is organizational learning (Jiménez-Jiménez and Cegarra-Navarro 2007; Yang 2007). Argyris (1999) also points to the challenges that arise from the selection of the specific organizational features that are emphasized, due to the broad and multidisciplinary nature of the field. For instance, while some theorists have concentrated specifically on the power relationships associated with organizational learning processes, others have chosen to focus more expressly on aspects of systems thinking (Senge 1990; Dimitriades 2005), culture (Cook and Yanow 1993; Hedberg and Wolff 2003), strategy (Crossan, Lane et al. 1995; Bontis, Crossan et al. 2002), socially constructed learning (Easterby-Smith, Snell et al. 1998; Elkjaer 2004), and communities of practice (Brown and Duguid 1991; Wenger 1998; Sarin and McDermott 2003; Kirkman, Mathieu et al. 2011). Different definitions of organizational learning are shown in table 2.1.

P a g e | 34

Table 2.1 Definitions of organizational learning Definition

Researcher(s) Argyris

&

Schon, The process of detection and correction of errors

(1978) Shrivastava (1983)

The process by which the organizational knowledge base is developed and shaped

Fiol & Llyles (1985)

The process of improving actions through better knowledge and understanding

De Geus (1988)

The process whereby management teams change the shared mental models of their company, their markets, and their competitors

Levitt & March (1988)

The encoding of inferences from history into routines that guide behaviour

Senge (1990)

Organizational members have a shared vision and work together to achieve common goals in order to produce results that are important to them.

Huber (1991)

Changing the range of potential behaviour through information processing

March & Olsen (1991)

Adaptive behaviour of organizations over time

Cook & Yanow, (1993) The acquiring, sustaining, or changing of inter-subjective meanings through the artifactual vehicles of their expression and transmission and through the collective actions of the group Dodgson (1993)

A result of individual learning in that individuals are the primary learning entity in firms and it is individuals that create organizational forms that enables learning in ways that facilitate organizational transformation

Nonaka & Takeuchi The capability of a company as a whole organization to (1995) Source: Literature review

create and disseminate knowledge

P a g e | 35

Table 2.1 Definitions of organizational learning (Continued) Lipshitz, Popper, and The process through which organization members develop Oz (1996)

shared values and knowledge based on past experience of themselves and of others

DiBella, Nevis, and The capacity (or processes) within an organization to Gould (1996) Crossan,

maintain or improve performance based on experience

Lane,

White (1999)

and The process of change in thought and action— both individual and shared—embedded in and affected by the institutions of the organization.

Lahteenmaki,

The adaptation to the changes in operational culture,

Toivonen,

Mattila development of new ways of doing things, norms and

(2001)

paradigms

Vera

&

Crossan The process of collective learning activities through shared

(2003) An

thought and actions. &

Reigeluth Learning beyond individual or group-level learning

(2005) Chen (2005b)

A process through which an organization continuously acquires new knowledge and adjusts in order to successfully adapt to external and internal environmental changes and to maintain sustainable existence and development.

Lopez, Peon, Ordas The process of knowledge acquisition, distribution, (2005b)

interpretation and integration to organizational memory

Panayides (2007)

Commitment to learning, intra-organizational knowledge sharing, shared vision and open-mindedness.

Hoe (2010)

&

McShane An organization’s enhanced ability to acquire, disseminate and to use knowledge in order to adapt to a changing external environment

Source: Literature review

P a g e | 36

Based on these definitions, organizational learning has two main dimensions, namely, cognitive and behavioural dimensions. The cognitive dimension mainly relates to how an organization acquires new knowledge while the behavioural dimension relates to how the organization adjusts to change (Lahteenmaki, Toivonen et al. 2001; Chen 2005b; Hoe and McShane 2010). The assumption is that the learning process is dependent on the underlying individual cognition and organizational knowledge structures through which an organization continuously acquires new knowledge and adjusts itself in order to successfully adapt to external and internal environmental changes. The behavioural dimension relates to the internal environment which promotes learning, shared meanings, values, metaphors and symbols to modify organizational structures and patterns of interaction that result in better performance and survival (Huber 1991; Bushardt, Lambert et al. 2007; Dimovski, Škerlavaj et al. 2008; Ho and Kuo 2009). For the purpose of this research, the definition by Hoe and McShane (2010) that organizational learning is an organization’s enhanced ability to acquire, disseminate and use knowledge in order to adapt to a changing external and internal environment will be used. This is because this definition suits a continuous effort to create, acquire and integrate knowledge into daily organizational activities in order to maintain organizational competitiveness and performance. In this context, organizational learning is framed in a sociological perspective that is determined by specific organizational structures and cultures, facilitated by transformational leadership and empowered employees. The ability to continuously enhance organizational abilities to

P a g e | 37

acquire, distribute, use, and store knowledge occur through the interactions between the organization’s members (Elkjaer 2005; Argote 2011) and the social construct. 2.2.5. Conclusion of the discussion of the organizational learning concept as used in this research This section has described the organizational learning perspective and the organizational learning related concepts namely the learning organization, knowledge management and the definitions of organizational learning. Organizational learning is defined as a continuous effort to acquire, disseminate and to use knowledge to adapt and perform in a continuously changing organizational environment. Having discussed the organizational learning concept, the next section will discuss important aspects of organizational learning namely organizational culture, leadership and empowerment which are antecedents of organizational learning. 2.3. Antecedents of organizational learning The sociological perspective that organizational learning occurs as a social system was adopted as the basic framework for this study (refer to section 2.2.1). Based on this perspective, the effective development of organizational learning is determined by organizational structure and culture, leadership and employee empowerment. Organizational learning occurs if organizational culture enables it (Ahmed, Loh et al. 1999; Carr and Chambers 2006; Lucas and Kline 2008; Ahlgren and Tett 2010; Jung and Takeuchi 2010; Suppiah and Sandhu 2010), leadership supports it (Jung, Chow et al. 2003; Lloréns Montes, Ruiz Moreno et al. 2005; Yeo 2006; Amy 2008; Jung and Takeuchi 2010; Allameh and Davoodi 2011) and employees are able to work in a

P a g e | 38

continuous process of acquiring, disseminating and exploiting knowledge (Prugsamatz 2010; Allahyari, shahbazi et al. 2011; Grinsven and Visser 2011). Table 2.2 shows antecedents, theoretical justifications and relevance to organizational learning.

Antecedent

Table 2.2 Antecedents of organizational learning Theoretical justification Relevance

Organizational

Gorelick (2005); Senge

Reflects norms and values that

culture

(1990)

characterize an organization and shape the expectations about what are appropriate behaviours and attitudes.

Transformational Thomas & Allen (2006);

Transformational leadership is needed

leadership

Garcia-Morales. Llorens-

to develop the learning process in the

Montes et al. (2006)

organization.

Lee, Bennett et al.,

Employees are involved in setting,

(2000); Ahlstrom-

owning, and implementing a joint

Soderling (2003)

vision; responsibility and authority are

Empowerment

given so that employees are motivated to learn what they are held accountable to do. Source: developed for this thesis The following subsections will provide a detailed discussion of organizational culture, leadership and empowerment as antecedents of organizational learning. 2.3.1. Organizational culture Organizational learning exists under specific conditions and according to the culture of an organization (Cook and Yanow 1993; Egan, Yang et al. 2004; Bates and Khasawneh 2005; Bushardt, Lambert et al. 2007; Chang and Lee 2007; Graham and Nafukho 2007; Lucas and Kline 2008; Al-Adaileh and Al-Atawdi 2010; Škerlavaj, Song et al. 2010).

P a g e | 39

The direction and quality of information and knowledge flow in an organization depend on the values, customs and the organizational structure (Awal, Klingler et al. 2006; AlAdaileh and Al-Atawdi 2010; Suppiah and Sandhu 2010; Sarros, Cooper et al. 2011). The values, customs and the organizational structure that embrace organizational culture influence the occurrence of organizational learning (Yanow, 2000). Škerlavaj, Štemberger, Škrinjar, and Dimovski (2007) used the term organizational learning culture to cover organizational learning practices of information acquisition, dissemination, information interpretation as well as interpretational activities. Norms, values and interactions amongst organizational members when acquiring, disseminating and exploiting knowledge have been said to be determined by the flow of authority and responsibility embedded in an organizational structure (Lejeune and Vas 2009). This flow of authority and responsibility allows for participation, openness, and psychological safety and is required in order to nurture organizational learning (Mumford, Scott et al. 2002; Jung and Takeuchi 2010). Yanow (2000) claimed that organizational learning processes should be viewed from a shared culture perspective, as shared meanings. This is because, as Jung and Takeuchi (2010) have suggested, an organizational culture provides rules for organizational members sharing information, reaching general agreement, and acting on its meaning. Shared values and conditions that promote an organizational learning process mainly relate to organizational structure, decision making processes and levels of error tolerance. Decision making processes, creation of performance measurement systems, unity of all organizational members to achieve predetermined objectives, innovation values, openness to customer ideas and the creation of a system data base to cope with continuous knowledge development, are crucial aspects of the organizational learning

P a g e | 40

process. This process is comprised of knowledge acquisition, dissemination and exploitation and organizational memory (Wang, Su et al. 2011). Organizational culture can be regarded as a catalyst for organizational members to share their experience and knowledge (Bates and Khasawneh 2005). Thus, an organization’s values, beliefs, norms, symbols, language, rituals and myths determine the willingness or unwillingness of its members to share information and knowledge, visions and intentions and to participate fully in an organization (Chang and Lee 2007). As Senge (2006) has suggested, a shared vision is the primary step that allows people to begin working together even if they distrust each other. Interactions that take place under the influence of an organizational structure, may encourage organizational members to challenge or discourage them from challenging the opinions of others even if they are more senior or are respected for their personal level of responsibility and their respect for others (Al-Gharibeh 2011). Organizational culture thus dominates in a manner that affects employee interactions and organizational functioning and influences all decision making. These values, beliefs and shared assumptions dictate a policy of normal problem solving and the approaches to unique situations where the generation and dissemination of new knowledge, and consequent response scenarios are shared with multiple levels of the organization (Chaston, Badger et al. 2000; Egan, Yang et al. 2004; Halawi, McCarthy et al. 2006). Shared assumptions, decision making processes and structures determine how organizational members acquire, interpret and use organizational knowledge in an organizational environment, so that according to (Popper and Lipshitz 2000; Somerville and Nino 2007), an appropriate organizational culture should lead to organizational learning

P a g e | 41

Definitions of organizational culture in relation to organizational learning are presented in table 2.3. Table 2.3. Organizational culture definitions Definition

Researcher(s) Cook and Yanow (1993)

A set of values, beliefs, and feelings, together with the artefacts of their expression and transmission (such as myths, symbols, metaphors, rituals), that are created, inherited, shared, and transmitted within one group of people and that, in part, distinguish that group from others.

Denison

and

Mishra Shared rules and norms that suggest preferred solutions

(1995)

to common problems and situations encountered by members of an organization

Rowan (2000)

The sum total of the shared language, values, beliefs, activities and traditions which a specific group of people learn and teach to new members of their group

Lahteenmaki, Toivonen et The adaptation to the changes in operation and al. (2001)

development of new ways of doing things, norms and paradigms

Schein (2004)

A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.

Daft (2005)

A set of key values, assumptions, understandings, and norms that is shared by members of an organization and taught to new members as being correct

Source: literature review

P a g e | 42

This research uses the Lahteenmaki, Toivonen, and Matilla (2001) definition that organizational culture is a set of values and basic assumptions that an organization has created and developed through the life of the organization to enable it to adapt to environmental changes and to enable the organization to improve its performance. This section has defined organizational culture from an organizational learning, perspective and has shown the importance of organizational culture. The next section will discuss leadership in an organizational learning context. 2.3.2. Transformational leadership In an organizational learning context, transformational leadership is believed to be the most suitable leadership style (Bass 1990; Coad and Berry 1998; Aragón-Correa, García-Morales et al. 2007; Eissenbeis, van Knippenberg et al. 2008; García-Morales, Lloréns-Montes et al. 2008; García-Morales, Jiménez-Barrionuevo et al. 2011; Mirkamali, Thani et al. 2011). Transformational leadership suggests that such leaders are ready to transform their organization based on environmental changes and challenges by raising their followers' aspirations and activating their higher-order values. It is suggested that followers who have identified with the leader and his or her mission/vision, will feel better about their work, and will perform beyond expectations (Conger and Kanungo 1998; Avolio, Zhu et al. 2004; Walumbwa, Lawler et al. 2007). These are the requirements of an organizational learning process. García-Morales, Jiménez-Barrionuevo, and Gutiérrez- Gutiérrez (2011) believe that the occurrence of organizational learning requires intellectual stimulation, inspirational motivation and self-confidence among organizational members, so that transformational leadership promotes the existence of organizational learning.

P a g e | 43

Transformational leadership is a vital enabler of organizational learning (Nonaka and Toyama 2003; Al-Gharibeh 2011). This leadership style heightens the consciousness of collective interest among an organization's members and helps them to achieve their collective goals (García-Morales, Jiménez-Barrionuevo et al. 2011). In addition, this leadership style enables organizational learning to occur by promoting change and innovation, inspiring a shared vision, enabling employees to act, modelling their actions and creating continuous opportunities to learn (Sarros, Cooper et al. 2011). Organizational learning requires employees to experiment, to take risks and to take up opportunities to learn from mistakes which learning will only occur if the employees are supported by their leaders goals (García-Morales, Jiménez-Barrionuevo et al. 2011). In addition, leaders need to share their values, interests, hopes and dreams to uplift employee motivation and to gain a better future for their own and for their organization’s future (García-Morales, Lloren-Montes et al. 2008; Sarros, Cooper et al. 2011). Sharing of values, interests, hopes and dreams is believed to create an emotional attachment to values, aspirations, and priorities by followers (House, Javidan et al. 2002; Yukl 2009). Thus in transformational leadership, followers develop feelings of identity with the leader and the team that is being led (Kark, Shamir et al. 2002). Transformational leaders inspire employees and can create a perception among employees that they are being taken seriously, listened to and valued as members of the organization. In order to cope with continuous changes in the work environment, the inspiring of employees and the creation of feelings of respect between employees is needed (Bass 2000; Schein 2004; Serfontein 2006). In addition, transformational leadership stimulates employee participation by creating a work environment where employees feel free and have the capability to seek out innovative approaches to

P a g e | 44

performing their jobs (Bass 2000; Bolman and Deal 2003). Freedom to perform a job is important because employees produce more creative work when they perceive that they have greater personal control over how to accomplish given tasks (Zhang and Bartol 2010). “Transformational leadership guides and motivates a common vision of the organization and encourages good communication networks and a spirit of trust, enabling transmission and sharing of knowledge and generation of knowledge slack” (García-Morales, Lloren-Montes et al. 2008 p. 301). This section has provided an explanation of transformational leadership in regard to the organizational learning concept. The next section will discuss empowerment as an aspect that further enables organizational learning. 2.3.3. Empowerment Highly motivated and innovative employees are needed to bring about organizational learning (Schein 1999; Bhatnagar 2007; Stewart, McNulty et al. 2008; Allahyari, shahbazi et al. 2011; Grinsven and Visser 2011; Wallace, Johnson et al. 2011). Efficient and effective knowledge acquisition, distribution, interpretation and organizational memory need creative, capable and highly motivated employees (Wang, Wang et al. 2010) who need to be able to learn and grow continuously (Stewart, McNulty et al. 2008). As learning by employees is the basis for organizational learning as suggested by Crossan, Lane and White (1999) employee passion for learning and the development of their capabilities is crucial for organizational learning. According to Akhavan and Jafari (2008), continuous changes in a daily business context require employees to value learning and innovation in order for them to achieve ideal standards and to believe in their capability to achieve the expected performance levels for individuals and organizations.

P a g e | 45

Empowerment is crucial for organizational learning for two reasons (Spreitzer and Mishra 2002). Firstly, authorizing workers to manage elements of their adjacent job surroundings, is a pivotal parameter to convince employees of managerial support which can possibly lead to a higher level of worker devotion to the companies’ objectives. Secondly, autonomy provides employees with an opportunity to apply their understanding and skills and thereby to improve their work motivation and to improve their productivity. Worker empowerment can be facilitated by providing them with suitable resources, tasks and abilities to design, classify, employ and gauge their work, and to take the necessary action to fully optimize their contributions to their company in the most valuable way (Ahmad and Oranye, 2000). Empowerment affects organizational learning in various ways. In a decentralized, flat, team-based organizational structure, employees have the opportunity to evaluate their work effectiveness and to suggest measures for improvement, thereby replacing old routines with new ones (Baek-Kyoo and Ji Hyun 2010). This flexibility helps the organization to adapt to a rapidly changing external and internal environment, with employees becoming more adaptive to present circumstances and more disposed towards innovative behaviour (Chan and Scott-Ladd 2004; Örtenblad 2004; Grinsven and Visser 2011). Continuous adaptation requires inner enthusiasm, security feeling, and competence from employees (Spreitzer 1995; Ugboro and Obeng 2000; Menon 2001; Maynard, Mathieu et al. 2007). This thesis research will investigate empowerment in the context of organizational learning, and a psychological perspective will be used. This approach will integrate the existing thinking on empowerment as enunciated by Menon (2001) by combining

P a g e | 46

traditional empowering techniques such as increased employee autonomy and promoting knowledge sharing in an organizational learning context. For the purpose of this study, the Rankinen, Suominen, Kuok, Lekane, and Doran’s (2009) definition of empowerment as “A process whereby the individual feels confident he or she can successfully execute a certain action during organizational change” will be used. This is because the definition embraces the role of empowerment in the process of knowledge acquisition, interpretation and sharing as has been identified by Bontis, Crossan and Hulland (2002). Employee confidence relates to an individual’s belief in his or her ability to perform tasks successfully; self-determination reflects autonomy in the initiation and continuation of work behaviours and processes; while impact relates to the degree to which an individual can influence work related organizational outcomes. The capability of employees to cope with continuous change is a fundamental requirement for organizational learning to occur (Rankinen, Suominen et al. 2009). Enhancing employees’ capacities to think on their own, encouraging employees to work with creative new ideas and continuously to improve their skills to cope with a continuous change in their work requirements are a few aspects that relate to the empowerment of organizational learning (van Grinsven & Visser, 2011). It may be concluded that empowerment is an important antecedent to organizational learning. This section has defined empowerment from an organizational learning, perspective and has shown the importance of empowerment in relation to organizational learning. The next section will examine organizational performance.

P a g e | 47

2.4. Organizational performance This section will discuss the perspectives of organizational performance, its definition and its measurement in an organizational learning context. Organizational performance has been identified as being a complex

and

multidimensional concept (Prieto and Revilla 2006) and to be comprised of both quantitative and qualitative components. As has been discussed in the previous section, each stakeholder considers different criteria when evaluating organizational performance (Espinosa and Porter 2011). For investors, organizational performance means high returns on capital, high dividend levels and a high confidence in the abilities of the management team. For customers, organizational performance means reasonable prices, high product and services quality, and rapid delivery. For employees, organizational performance means good compensation packages, support, respect and fair treatment. For suppliers, organizational performance means repeat business, increases in sales and feedback on performance. For regulators, performance means compliance with rules, openness and honesty, while for communities, organizational performance may mean regional employment, responsibility and prosperity for the members of the community. There are two main perspectives of organizational performance, those of the shareholders and those of the stakeholders. The shareholder perspective focuses on optimizing the internal workings of a business for the sole benefit of its shareholders (Neely 2002). In the shareholders’ perspective, organizational performance has mainly been measured by financial performance indicators such as sales growth, profit growth, return on equity and return on assets (Hubbard 2009). On the other hand, a stakeholder

P a g e | 48

perspective tries to embrace all of the stakeholders’ interests namely those of investors, customers, intermediaries, employees, suppliers, regulators, and communities. Based on his review of the literature, Hubbard (2009) concluded that there were three levels of stakeholder approach: the Balanced Scorecard, the Triple Bottom Line and the Towards Sustainability. The balanced scorecard, approach which was first put forward by Kaplan (2004) includes shareholders (financial performance), employees (internal business performance), customers, suppliers, industry and local communities (customer performance) and innovation and learning performance. The Triple Bottom Line approach contains three aspects of organizational performance: economic, social and environment performance. Economic performance consists of sales growth, profit growth, return on equity, return on assets and gearing while social performance consists of organizational performance such as responsiveness, overall customer satisfaction, sponsorship and education. Environmental organizational performance can be measured by aspects such as fewer spillages, less nitrogen discharge, fewer suspended solids discharges and more wastewater reuse. The Toward Sustainability approach proposes a sustainability approach that combines economic, social and environmental performance with the future needs of stakeholders (Ahmed 2002). Thus in relation to organizational sustainability performance, an organization needs to meet the needs of its stakeholders without compromising its ability to meet their needs in the future. Espinosa and Porter (2011) have expanded on this idea by suggesting that sustainability is a concept of meeting the current organizational objectives by considering future generations so as to meet their needs, and that it will need continuous innovation not only to do things better but also to do better things for the benefit of current and future stakeholders.

P a g e | 49

Although organizational performance may be defined according to stakeholders’ interests, according to Cocca and Alberti (2010) there can be at least eight areas of compromise, namely; effectiveness, efficiency, quality, productivity, quality of work life, profitability, innovation and learning. Effectiveness was defined as organizational performance in relation to the capability to accomplish things right the first time while efficiency was defined as organizational performance in relation to the ratio of resources expected to be consumed over resources actually consumed to produce certain products or services. Quality was defined by Jiménez-Jiménez and CegarraNavarro (2007) as referring to organizational performance in meeting or exceeding customer expectations. Productivity has been recently identified as organizational performance in relation to the ratio of output over input and quality of work life and in relation to the affective response of employees’ in the organization (Pavlov and Bournce 2011). Profitability has been defined as organizational performance in relation to revenues and cost while innovation is organizational performance that continuously improves products or processes in order to survive and grow (Rhee, Park et al. 2010). Learning has been defined as the ability of an organization to continuously create, retain and transfer knowledge within an organization (Argote 2011). To summarise, in an organizational learning context, organizational performance may represent innovativeness (Liao and Wu 2010; Rhee, Park et al. 2010); enhanced productivity and quality (Field 2011); employee satisfaction and increased capacity to acquire, transmit and use new knowledge (García-Morales, Lloréns-Montes et al. 2007); product advantage and international expansion (Hsu and Pereira 2008) or an increase in the reputation of a firm (Calantone, Cavusgil et al. 2002; Zhao, Li et al. 2011)

P a g e | 50

For the purpose of this research, organizational performance will be defined as an ability of an organization to create employment, improve effectiveness, efficiency and quality of work life resulting in organizational growth and survival as was outlined by García-Morales, Moreno and Llorén-Montes (2006c). The use of scales for evaluating performance relative to the main competitors is one of the most widely used practices in recent studies (Aragón-Correa, García-Morales et al. 2007; Choi, Poon et al. 2008; García-Morales, Jiménez-Barrionuevo et al. 2011). Many researchers have used managers’ subjective perceptions to measure beneficial outcomes for firms. Others have preferred objective data, such as return on assets. The literature has established that there is a high correlation and concurrent validity between objective and subjective data of performance, which implies that both are valid measures to use when calculating a firm’s performance (Strandholm, Kumar et al. 2004; Aragón-Correa, García-Morales et al. 2007; Alegre and Chiva 2008; García-Morales, Lloréns-Montes et al. 2008; Andrea 2010). As subjective data has been empirically shown to be a valid measure for examining organizational performance and as objective data is not easily obtained because of its potential commercial sensitivity, in this study, subjective data was used to assess organizational performance. The previous section has discussed antecedents of organizational learning and organizational performance. The next section will describe the organizations that were the subject of this thesis research namely small and medium enterprises (SMEs).

P a g e | 51

2.5. Small and medium enterprises (SMEs) 2.5.1. Classification criteria for an SME There is no universal criterion for the classification of a SME and virtually every country or institution has a different set of criteria or criterion. However, the number of employees, value of assets and sales value are most often used as descriptive criteria. The cut-off values for these measures vary from country to country, and the classification criteria for SMEs as used by a number of countries are shown in table 2.5 Table 2.4. Classification of SMEs Country Category Definition France SME 10-499 employees Germany SME <500 employees Italy Small enterprises <200 employees Ireland SME <500 employees Netherland Small enterprise <10 employees Medium enterprises 10-100 employees Sweden SME Autonomous firms with <200 employees United States Very small enterprise <20 employees Small enterprises 20-99 employees Medium enterprises 100-499 employees Japan Manufacturing, mining and <300 employees or capitalisation transportation <30 million Yen Trade and service <50 employees or capitalization <10 million yen Hong Kong Manufacturing <100 employees Non-manufacturing <50 employees Philippines Small enterprise <200 employees, revenue


P a g e | 52

Two international institutions that regularly assist SMEs are the International Finance Corporation (IFC) and The World Bank. The IFC (2011) defines a small and medium enterprise as one with 10 to 300 employees (10 to 50 employees for small enterprises and between 50 and 300 employees for medium enterprises) and a total sales/turnover of between $100,000 and $15 million. The World Bank has a more concise definition of MSMEs based on the number of employees, total assets and annual sales. Micro enterprises are defined as individual/firms with total assets of less than $ 100,000, total sales less than $100,000 and employing fewer than 10 persons. Small enterprises are individuals/firms with total assets or annual sales between US $100,000 up to US $ 3 million and employing 10–50 persons. Medium enterprises are individuals/firms with total assets or annual sales of more than US $3 million up to US $ 15 million and employing more than 50 and up to 300 persons. 2.5.2. Indonesian SME classifications In Indonesia, there are several classifications used for SMEs, depending on which agency has provided the classification. Menegkop & UKM (Menteri Negara Koperasi & Usaha Kecil Menengah/Ministry of Cooperation and SMEs) promulgated the Law on Small Enterprises Number 9 of 1995, which defines a small enterprise (SE) as a business unit with total initial assets of up to Rp 200 million (about US$ 22,000 at current exchange rates), not including land and buildings, or with an annual value of sales of a maximum of Rp 1 billion (about US$ 110,000), and a medium enterprise (ME) as a business unit with an annual value of sales of more than Rp 1 billion but less than Rp 50 billion.

P a g e | 53

Statistics Indonesia/BPS (Badan Pusat Statistik), which has regularly conducted surveys of SMEs, uses the number of workers as the basis for determining the size of an enterprise. In its definition, Micro Enterprises (MIEs), Small Enterprises (SEs), and Medium Enterprises (MEs) are business units with, respectively, 1-9, 10-19, and 20-99 workers, and large enterprises (LEs) are units with 100 or more workers. The Ministry of Industry (MoI) defines enterprises by size in its sector and according to the number of workers as is done in the Badan Pusat Statistik (BPS) definition. For the purpose of this thesis, the number of employees will be used to determine whether an enterprise is a micro, small, medium or large enterprise. Thus the classification used by BPS and the Ministry of Industry will be followed. The choice of this was based on the consideration that both BPS and MoI are two formal governmental institutions that are commonly used by many researchers into SMEs in Indonesia (Cunningham and Rowley 2008; Tambunan 2008). 2.6. Conclusion Chapter 2 has discussed the concepts and definitions of organizational learning and performance as well as the organizational learning antecedents of organizational culture, leadership and empowerment. The next chapter will discuss the context of the thesis research in the form of the importance of organizational learning in SMEs both globally and locally in Indonesia.

P a g e | 54

CHAPTER 3 RESEARCH CONTEXT AND ISSUES

3.1. Introduction The previous chapter has discussed the concept and the definition of organizational learning and its antecedents, followed by organizational performance and SMEs. This chapter will set out the context of the study to identify research issues. The outline of chapter 3 is shown in figure 3.1 Figure 3.1. Outline of Chapter 3 3.1. Introduction

3.2. Importance of Small and Medium Enterprises

3.3. Research context in an organizational learning setting

3.4. Organizational learning in an SME context

3.5. Research issues

3.6. Conclusion

Source: developed for this research

P a g e | 55

3.2. Importance of small and medium enterprises Small and medium enterprises (SMEs) are believed to play a crucial role both globally and nationally. This section will firstly discuss the global importance of SMEs and then the importance of SMEs in an Indonesian context. 3.2.1. The importance of SMEs in a global context SMEs are important to almost all economies in the world no matter whether they be in developing or developed countries (van Gils and Zwart 2004; Biggs and Shah 2006; Garcia-Morales, Moreno et al. 2006; Akhavan and Jafari 2008; Torre, Pería et al. 2010; Ardic, Mylenko et al. 2011; The World Bank 2011; Wieneke and Gries 2011). SMEs stimulate innovation (Narula 2004; Uden 2007), provide employment (Akhavan and Jafari 2008), act as a societal wealth distributor (The World Bank 2011), and promote an efficient economy (Cuevas, Mina et al. 2009). SMEs have proven to be societal institutions that promote innovation (Narula 2004; Ardic, Mylenko et al. 2011; The World Bank 2011). By creating innovative products, new methods of producing things or by providing better service to customers, SMEs act as innovators to meet specific customers’ needs (Uden 2007; Meyer 2011). When realizing a potential market demand for certain products, SMEs may respond faster than large businesses and produce innovative products to meet the demand (Uden 2007). SME products contribute $5 trillion worth of goods and services for 4 billion people around the world (Savlovschi and Robu 2011).

P a g e | 56

Many countries rely on SMEs to eliminate unemployment (Cuevas, Mina et al. 2009; Ardic, Mylenko et al. 2011; The World Bank 2011). SMEs generate more jobs for a more modest input of capital than do large enterprises and governments (Burke and Gaughran 2006; Aslan, Diken et al. 2011). Since SMEs tend to be labour-intensive, they create employment at relatively low levels of investment per job created (Patten, Rosengard et al. 2001; Ardic, Mylenko et al. 2011). The World Bank (2011) data shows that SMEs employ 99.45 % of people around the world. In addition, based on IFC (2011) data, SMEs generate the largest share of economic activity and employment. As another example, of the value of SMEs, it was found that after focusing for years on massive investments and courting multinational companies in Latin American, politicians have now begun to realize that SMEs are the real sources of job opportunities (Torre, Pería et al. 2010). In addition, many countries have relied on SMEs for economic development. For example, in Brazil, while the economy grew by only 0.8% in 1999, SMEs grew by 6.5%. In Colombia, SMEs represent 36% of all the job opportunities and 63% of the jobs in industry (Savlovschi and Robu 2011). Some of the highest performing economies in Asia and even in the world (Taiwan and Hong Kong), have relied strongly on small enterprises (Cuevas, Mina et al. 2009) and about 81% of all of the employees in Japan are concentrated in

SMEs (Savlovschi and Robu 2011). Countries with

growing and flourishing economies are marked with the booming and blooming of SMEs (Savlovschi and Robu 2011) so that SMEs play an important role in the development of a country (IFC 2011).

P a g e | 57

As SMEs generate employment for a large part of the labour force, SMEs act as an agent of wealth distribution amongst members of society. In an economy dominated by SMEs, inequality in distribution of income tends to be low (Hsu, Lawson et al. 2007). SMEs use local resources in their production processes, so the result of their efforts are also enjoyed by other members of the population where the SMEs are located (Entrialgo, Fernández et al. 2000). Thus the development of SMEs facilitates the distribution of economic activity within the economy and thus fosters equitable income distribution. The efficiency of local resource usage is another important economic role for SMEs. SMEs tend to be more effective in the utilisation of local resources using simple and affordable technology (Caloghirou, Protogerou et al. 2004) and have therefore been found to play a fundamental role in utilising and adding value to local resources. To sum up, SMEs have dominated the economic activity in many countries. Job creation and equal distribution of incomes are the most significant contributions of SMEs. SMEs have a crucial role for global economic development as pioneers in innovation, employment creators, wealth

distributors and general economic

development stimulators. 3.2.2. Importance of SMEs in an Indonesian context Indonesia is an archipelago which is located between two continents, Asia and Australia and two oceans, the Pacific and the Indian Ocean (Statistics Indonesia 2010). It is comprised of 17,508 islands and based on the 2010 Indonesian National Census, it is inhabited by 237,556,363 people (Statistics Indonesia 2010) and ranked as the fourth most populous country in the world. With its strategic location and large population,

P a g e | 58

Indonesia plays an important role in global politics and economics. Indonesia is a founding member of the ASEAN group of nations and is a member of the G-20 group of countries. As a large country with a large population, Indonesia represents a large market. Indonesia is the largest economy in Southeast Asia, is ranked as the eighteenth largest economy in the world and the fifteenth largest economy in terms of purchasing power parity (The World Bank 2011). Despite the 2008 and 2008/2009 global economic crises, the Indonesian economy performed quite well in 2010 and through to the middle of 2011 (The World Bank 2011). The country exhibited the third highest gross domestic product (GDP) growth in the Group of Twenty nations (G-20) which was subordinate in growth rate only to China and India, and averaged more than a six per cent quarterly growth during the first half of 2011. Despite the world financial crisis, Indonesia’s economy grew at 4.5 percent in 2009, outstripping the government’s target (Aswicahyono, Brooks et al. 2011). The country’s large domestic market and its relatively low dependency on external trade fuelled the country’s economic growth amidst the global economic recession (Aswicahyono, Brooks et al. 2011). In 2010, Indonesia’s estimated gross domestic product (GDP) was US$ 1.029 trillion and the ratio of debt to GDP was 26 percent (Statistics Indonesia 2010). The industrial sector is the economy's largest and accounted for 46.4% of GDP in 2010, this was followed by trade and services at 37.1% and agriculture at 16.5%. In 2010 the trade and service sector employed 48.9% of the total labour force, followed by agriculture at 38.3% and industry at 12.8% (Statistics Indonesia 2010).

P a g e | 59

Indonesia is predicted to be an influential world economy and is expected to be in the top ten countries with the strongest economies within ten years when Indonesia along with Brazil, Russia, India, China and South Korea will account for more than half of the global economic growth through to 2025 (Woo and Hong 2010). As the world’s number one exporter of thermal coal and palm oil, Indonesia is predicted to enjoy continuing growth (Woo and Hong 2010). In addition, Indonesia is set to reap a future demographic dividend as its working-age population grows to 21 million people by 2020 (The World Bank 2011). Similarly to most countries of the world, in Indonesia, SMEs have historically been the main players in domestic economic activities (Tambunan 2010), especially as large providers of employment opportunities, and hence as generators of primary or secondary sources of income for many households (Cuevas, Mina et al. 2009). When Indonesia faced the 1997/1998 Asian financial crises and the 2008/2009 global crises, SMEs acted as the main engine of growth for the Indonesian economy by providing employment (Hayashi 2002) either for laid-off employees from large enterprises or as opportunities for fresh employment. SMEs had a crucial role in Indonesian economic growth (Ekopuri, Widyadari et al. 2007; Woo and Hong 2010). Of more than 40 million enterprises, 99.99% are classified as SMEs and only 0.01% are classified as large enterprises (Statistics Indonesia 2010). SMEs are also crucial for domestic economic activity by providing employment opportunities, as generators of income for many households, and as an important engine of the development of local economies and communities (Tambunan 2008). Indonesian SMEs provide 90% of the employment for the Indonesian workforce and produce 60% of the Indonesian GDP (Statistics Indonesia 2010). In addition, the SMEs facilitate the

P a g e | 60

emergence of a local economy, promote equity in income distribution, stimulate market and technology innovations, are seedbeds for entrepreneurship, maintain linkages with large enterprises, and provide the country with an ability to deal with contemporary development problems like poverty alleviation, gender equity and employment generation (Tambunan 2010). The above description explains why Indonesia, although it is still classed as a developing country, plays an important role in the world economy and how important SMEs are in supporting the current Indonesian economy as well as in creating the future potential for its growth (Woo and Hong 2010). With its natural resources and large population, Indonesia has the potential to play an influential role in the global economy (Aswicahyono, Brooks et al. 2011). To reach this potential, Indonesia will need to promote the development of SMEs so as to contribute more in terms of GDP and employment growth and to produce innovative products (Tambunan 2010). In conclusion, SMEs in Indonesia play a crucial role in providing employment, sources of family income and acting as wealth distributors. 3.3. Research context in an Indonesian organizational setting 3.3.1. Organizational culture Organizational culture is an integral part of the culture of the society within which the organization exists. The culture of a particular organization has been said to be closely related to the values of the individual members of the organization (Yudianti and Goodfellow 1997; Chu 2003; Ahlgren and Tett 2010). So, organizational culture in Indonesian SMEs is assumed to be influenced by Indonesian culture. To provide an

P a g e | 61

understanding of the culture of organizations in Indonesia, the general cultural background of Indonesia needs to be described. Many studies have used Hofstede’s concept of culture to explain the cultural background of a society (Chu 2003; Awal, Klingler et al. 2006; Ahlgren and Tett 2010; Al-Adaileh and Al-Atawdi 2010). Based on his research on IBM employees, (Hofstede 2001; Hofstede and Hofstede 2005) found four dimensions of culture that influence leadership and organizational culture in an organization: power distance, uncertainty avoidance, individualism and masculinity. The power distance concept focuses on the degree of equality or inequality among society members. Power distance is defined as the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally (Hofstede 2001; Hofstede and Hofstede 2005). It refers to the amount of physical and figurative distance that cultures place between subordinates and superiors (Yudhi 2007 p. 236). A high power distance index in a society indicates that inequalities of power and wealth have been allowed to grow within the society. A low power distance index, on the hand, stresses equality and opportunity amongst the society members. According to Hofstede & Hofstede (2005), Indonesia has a power distance index of 78. This high power distance index is indicative of a high level of inequality of power and wealth within the society. In the high power distance organization, employers and leaders tend to treat employees as family and employees tend to obey employers and leaders. In such a context, dependent on employer and managerial leadership style, a high power distance value may either stimulate or inhibit an organizational learning process.

P a g e | 62

The uncertainty avoidance index focuses on the level of tolerance for uncertainty and ambiguity within the society (Hofstede and Hofstede 2005; Minkov and Horstede 2011). A high uncertainty avoidance index indicates that a country has a low tolerance for uncertainty and ambiguity (Abu-Jarad, Yusof et al. 2010). This creates a ruleoriented society that institutes laws, rules, regulations, and controls in order to reduce the amount of uncertainty (Chu 2003). The ultimate goal of such a society is to control everything in order to eliminate or avoid the unexpected. As a result of this high uncertainty avoidance characteristic, the society does not readily accept change and is very risk adverse (Chang and Lee 2007). A Low Uncertainty Avoidance ranking indicates that the country has less concern about ambiguity and uncertainty and has more tolerance for a variety of opinions. For Indonesia, the uncertainty avoidance index is 48, and is at a lower level than the Asian average of 58 and the world average of 64 (Hofstede, 2001). This reflects a society that is less rule-oriented, more readily accepts change, and takes more and greater risks (Yudhi 2007) which are requirements for the existence of an organizational learning process. The Individualism concept focuses on the degree that a society reinforces individual or collective achievement and interpersonal relationships (Hofstede and Hofstede 2005). A High Individualism index for a society indicates that individuals tend to have looser relationships within the society (Hofstede, 2001; Yudhi 2007). A Low Individualism index, on the other hand, typifies societies of a more collectivist nature with close ties between individuals. Indonesia has one of the lowest levels in the world for its individualism index with a score of 14, compared to the higher average Asian score of 23 (Hofstede, 2001).

P a g e | 63

The Indonesian score on this dimension indicates that the Indonesian society is collectivist (Goodfellow 1997; Yudhi 2007). This is manifested in a close long-term commitment to the family, extended family, or extended relationships. The society fosters strong relationships among members and all who are responsible for their welfare. In the organizational context for a collectivist society, employees tend to be loyal to owners and managers, the relationships between employees and owner-managers and amongst organizational members tend to be aimed at maintaining harmony and avoiding direct confrontation (Yudhi 2007). This also permits the exchange of views without loss of face. Since one of the main manifestations of Indonesia’s uncertainty avoidance is the maintenance of an appearance of harmony in the workplace; an intermediary is generally used to remove the uncertainty associated with a confrontation. The masculinity concept focuses on the degree to which the society reinforces, or does not reinforce, the traditional masculine work role model of male achievement, control, and power (Bates and Khasawneh 2005; Iivari and Iivari 2011). A high score (masculine) on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the winner / best in field – a value system that starts in school and continues throughout organisational behaviour (Iivari and Iivari 2011). A low score (feminine) on the masculinity dimension means that the dominant values in society will be caring for others and the quality of life (Sudarwan and Fogarty 1996; Zu, Robbins et al. 2010). The fundamental difference between masculinity and femininity is what it is that motivates people to act either by wanting to be the best (masculine), or liking what you do (feminine). A feminine

P a g e | 64

society is one where quality of life is the sign of success and standing out from the crowd is not admirable (Chu 2003; Cheung, Wong et al. 2011). Indonesia scores (46) on this dimension and is thus considered low Masculine (Hofstede, 2001). While not the same as most North European countries who are very low in Masculinity and thus considered Feminine, Indonesia is less Masculine than other Asian countries such as Japan, China and India (Holden 2002; Koesmono 2005). In Indonesia, status and visible symbols of success are important but it is not always material gain that brings motivation (Yudhi 2007). Often it is the position that a person holds which is more important to them because of an Indonesian concept called “gengsi” – loosely translated as, “outward appearances” (Suppiah and Sandhu 2010). It is important that the “gengsi” be strongly maintained thereby projecting a different outward appearance aimed at impressing and creating the aura of status (Koesmono 2005). Minkov & Hofstede (2011) have added a new classification to the basic Hofstede cultural concept - long-term orientation. Long term orientation (LTO) focuses on the degree to which the society embraces, or does not embrace a long-term devotion to traditional forward thinking values. A high Long-Term Orientation ranking indicates that the country prescribes to the values of long-term commitments and respect for traditions (Minkov & Hofstede, 2011). This is thought to support a strong work ethic where long-term rewards are expected as a result of hard work. In this culture, change can occur more rapidly as long-term traditions and commitments do not become impediments to change. In their World Values Survey, Minkov & Hofstede (2010) found an Indonesian Long-Term Orientation score of 72 which showed that Indonesians are future oriented.

P a g e | 65

3.3.2. Transformational leadership In Indonesia, leadership is influenced by two main factors: traditional local values and modern global values (Amran and Kusbramayanti 2007). Traditional local values are mainly influenced by the ethnic grouping that is considered to be the main player in Indonesian business. There are five ethnic groups: Java, China, Minangkabau, Bugis and Makassar that are quite dominant in Indonesian entrepreneurship and business organizations (Goodfellow 1997; Marsh and Goodfellow 1997; Soeprihanto 2007) and their leadership values influence overall Indonesian leadership values (Brahmasari and Suprayetno 2008). Yudianti & Goodfellow, (1997) indicated that traditional local values were mainly represented by the “tri pakarti utama” or “the three pre-eminent attitudes” principles of leadership which contained values that were embedded in the relationship between leaders and followers. The three main values of leadership indicate that the ideal relationship between leaders and followers should be that leaders should set a good example, be disciplined and be recognised for their achievements. The traditional leadership values show the importance of the role of a leader to influence and motivate employees to achieve organizational objectives. Indonesians are collectivist (Sudarwan and Fogarty 1996; Brahmasari and Suprayetno 2008; Sungkar 2008). Jung, Chow and Wu (2003) found that in collectivist cultures, transformational leadership was more effective because followers would identify with and be drawn towards the traits that emphasised collective organisational goals and the sharing of a common workplace mission. Transformational leadership was said to promote greater participation within collectivist cultures because followers were more likely to accept and to identify with their leader’s ideology due to a high power distance value and an acceptance of authority (Jung, Bass et al. 1995).

P a g e | 66

As a collectivist country, the relationship between leaders and followers in Indonesia is similar to a father-child relationship where the leader acts as an initiator, inspirer and innovator and as Yudianti & Goodfellow, (1997) have indicated; the leader plays a very important role as an initiator, manager and internal consultant. Consequently, leaders should provide a good example to their subordinates by exhibiting positive attitudes and providing measured, wise words, and exemplary behaviour. Leaders should also be independent and creative in their relationship with employees; and every leader should be recognised for their achievement and their sense of responsibility towards their employees. In such an organizational situation, problems or conflicts within organizations should be solved by “musyawarah and mufakat” or “concensus not confrontation” (Yudianti and Goodfellow 1997; Yudhi 2007). In addition, leaders in Indonesian organizations share the Asian values that maintain the harmonious relationship between leaders and followers and include attention to familial networks, and the avoidance of confrontation and conflict.

In accordance with

Ahearne, Mathie and Rapp (2001), in the organizational context, empowerment and change values that are consistent with the leaders’ vision would be the main tools to be used to influence organizational members to achieve organizational goals. 3.3.3. Employee Empowerment in Indonesia Employee empowerment in an organization occurs in line with the development of organizational activities. Employee empowerment is a continuous process (Jon 1996; Honold 1997; Houtzagers 1999; Seibert, Silver et al. 2004; Chang and Liu 2008) required to adapt to ongoing daily changes in organizations. When a change in an organization occurs, all organizational members need to renew their cognitive skills and behavioural capabilities to enable them to gain organizational benefits from the change.

P a g e | 67

The need for skills and capabilities renewal implicitly requires an organization to empower its employees. Employee empowerment in Indonesian organizations occurs since an employee is selected to be a member of an organization (Bennington and Habir 2003). In the selection process, an employee has been assessed in accordance with organizational needs and the employee’s capabilities. Suitability for the work and the capability of the new employee are expected to link a person’s work role with his or her behaviour, beliefs and values. As the organization starts to employ the new employee, continuous personal development is carried out by using formal and informal training during daily organizational activities. Thus, the employee will feel that the work that is performed is very important and meaningful both for him or her and for the organization. 3.4. Organizational learning in an SME context SMEs are different from large enterprises in terms of knowledge acquisition, dissemination and exploitation (Martin 2001; Wickramnsinghe and Sharma 2005). If an organizational culture allows it and the manager-owner supports it, a relatively small number of employees will enable a faster flow of knowledge amongst organizational members to deliver an optimal benefit from the knowledge (Cegarra-Navarro, Jiménez et al. 2007; Akhavan and Jafari 2008). In addition, the decision making process of how to exploit the gained knowledge is mainly determined by the manager or owner of the enterprise.

P a g e | 68

The growth of interest in organizational learning in an SME context is increasing especially after the realisation of the importance of the role of SMEs during economic crises and their great contribution to global economic growth (Easterby-Smith, Snell et al. 1998; Kotnour 2000; Real, Leal et al. 2006). One of the reasons for the growing interest in organizational learning is the rapid and ongoing changes in the business environment. A continuously changing business environment produces a need for faster knowledge acquisition, distribution, interpretation and the embedding of these into organizational systems to allow for the better usage of such enhancements, whenever needed, by all enterprises including SMEs. The existence of organizational learning in an SME context has been studied by many researchers (Chaston, Badger et al. 1999; Chaston, Badger et al. 2000; Chaston, Badger et al. 2001; Alegre and Chiva 2008; Birdthistle 2008; Chiva and Alegre 2009; Lee, Park et al. 2010). Specific studies of organizational learning in an Asian cultural context have also been conducted. Examples of these are studies by Rhee, Park and Lee (2010) who studied organizational learning as a driver of innovativeness in a South Korean SME context and Zhao, Li, Lee and Chen (2009) who investigated organizational learning and organizational performance relationships in China. The general conclusion from these studies was that organizational learning occurs in an SME context and that this occurrence needs more empirical study.

P a g e | 69

3.5. Research issues The previous sections of this chapter have described the importance of organizational learning as well as the importance of SMEs either in a worldwide economy or in an Indonesian economy. As has been discussed in section 1.3, four research issues will be investigated in this study namely the concepts and dimensions of organizational learning, the antecedents of organizational learning, an empirical model of organizational learning in a SME context and organizational learning in a developing country, Indonesia. Firstly, a literature review conducted by the researcher, revealed that there is no definitive definition of organizational learning that is accepted by academics and practitioners. There is no consensus as to what organizational learning is (Marsick and Watkins 2003; Yang, Watkins et al. 2003; Yang, Watkins et al. 2004; Bates and Khasawneh 2005; Lipshitz, Friedman et al. 2007; Argyris 2009; Argote 2011). Consequently, there is no agreement on what dimensions should be included in the organizational learning concept (Hernandez and Watkins 2003; Yang, Watkins et al. 2003; Yang, Watkins et al. 2004; Jyothibabu, Farooq et al. 2010; Argote 2011). By examining SMEs in a developing country, Indonesia, this study was developed to contribute to a better understanding of the concepts and dimensions of organizational learning. Secondly, organizational learning as a multi-disciplinary field needs to be investigated comprehensively. Some researchers have included organizational culture, leadership and empowerment as integral components of organizational learning (Bhatnagar 2006; Jyothibabu, Farooq et al. 2010). On the other hand, other researchers have claimed that organizational culture, leadership and empowerment are enabling aspects of

P a g e | 70

organizational learning and have separated them from the organizational learning process (Popper and Lipshitz 2000; Lloréns Montes, Ruiz Moreno et al. 2005; GarciaMorales, Llorens-Montes et al. 2006; Garcia-Morales, Llorens-Montes et al. 2008). So, this research was designed to analyse organizational learning comprehensively. Thirdly, although both organizational learning and SMEs are important for economic development (World Bank, 2011) and can be an agent for innovation (Zhao, Lee et al. 2009), only a few research studies have been conducted into the effect of organizational learning on SMEs. Examples of such studies that have been carried out, are those by Rhee, Park and Lee (2010) who studied organizational learning as a driver of innovativeness in a South Korean SME, context, Zhao, Li, Lee and Chen (2009) who investigated the organizational learning and organizational performance relationship in China and Michna (2009) who studied organizational learning and organizational performance in Polish SMEs. The occurrence of organizational learning in an SME context is still not conclusive. Some researchers find that organizational learning does exist in an SME context (for example van Gils and Zwart 2004; Alegre and Chiva 2008; Goh and Ryan 2008; Panagiotakopoulos 2011), while other researchers still doubt if organizational learning occurs in SME organizations (Sigh, Reynolds et al. 2001; Birdthistle 2008). This research was designed to contribute to the examination of organizational learning practices in an SME context. In relation to organizational performance, while some researchers found a positive influence of organizational learning on SME performance (for example Zhao, Li et al 2009; Michna 2009; Park and Lee, 2010) other researchers found no influence (for example Chaston, Badger & Sadler-Smith, 1999; Birdthistle 2008). In their research on

P a g e | 71

SMEs in Devon and Cornwall, in the United Kingdom, Chaston, Badger & SadlerSmith (1999) found no relationship between organizational learning and organizational performance as measured by sales growth in that they found that a continuous effort to gain and manipulate knowledge did not have a significant association with sales growth. Similarly, Birdthistle (2008) in his research on family based SMEs in Ireland, only found a tendency for there to be a learning orientation without any relationship to performance. Finally, organizational learning research has been mainly conducted in developed countries while such research in relation to developing countries is still scant, especially in regard to Indonesian SMEs where the culture is very different to that of developed economies such as those where previous research has been conducted. This research was designed to contribute to the examination of the organizational learning phenomenon in a developing country with an Asian cultural background, namely Indonesia. Further details of previous research results on organizational learning in relation to organizational performance will be provided in chapter 4. 3.6. Conclusion This chapter has discussed the importance of organizational learning in the context of Indonesian SMEs. The following chapter will describe the development of the research model and the development of the organizational learning hypotheses.

P a g e | 72

CHAPTER 4 MODEL AND HYPOTHESES DEVELOPMENT 4.1. Introduction The research background was covered in chapter 1 and was continued with concepts and definitions in chapter 2. Chapter 3 presented contextual research issues in the form of the importance of organizational learning and its antecedents to SMEs, and to leadership as well as the cultural background in Indonesia. This chapter develops a structural model and develops hypotheses based on the model. The outline of chapter 4 is shown in figure 4.1 Figure 4.1 Outline of Chapter 4 4.1. Introduction

4.2. Conceptual framework of organizational learning models

4.3. Model development for this research

4.4. Proposition and hypotheses

4.5. Construct development

4.6. Conclusion

Source: developed for this thesis

P a g e | 73

4.2. Conceptual framework of organizational learning models As organizational learning relates to individuals and interactions between individuals in an organization as well as a supportive environment and managerial intervention (Drew and Smith 1995; Drejer 2000; Chang and Huang 2002; Burnes, Cooper et al. 2003; Chang and Lee 2007; Birkenkrahe 2008; Au, Carpenter et al. 2009; Ahlgren and Tett 2010; Cho 2010; Lam and Lambermont-Ford 2010; López Sánchez 2010), organizational

learning

models

need

to

consider

organizational

cultures,

transformational leadership and employee empowerment. Previous researchers have proposed models to investigate organizational learning practices based on chosen schools of thought (Bontis, Crossan et al. 2002; LlorenMontes, Javier-Moreno et al. 2005; Garcia-Morales, Llorens-Montes et al. 2006; Aragón-Correa, García-Morales et al. 2007; Garcıá-Morales 2008; Jyothibabu, Farooq et al. 2010). The models have either tried to explain a single aspect of organizational learning (Crossan, Lane et al. 1999; López, Peón et al. 2005) or have aimed to explain its relationships with other organizational aspects of performance (Lloren-Montes, Javier-Moreno et al. 2005; López, Peon et al. 2005; García-Morales 2011; SantosVijande, López-Sánchez et al. 2011). The models have thus shown only a single relationship between organizational learning and organizational performance (López, Peón et al. 2005; Škerlavaj, Song et al. 2010; Jiménez-Jiménez and Sanz-Valle 2011) or have provided for a complex interaction of organizational learning with its antecedents leading to better organizational performance (Garcia-Morales, Moreno et al. 2006; Chang and Lee 2007; Jyothibabu, Farooq et al. 2010).

P a g e | 74

For example, López, Peón and Ordás (2005) proposed a model showing that organizational learning with the dimensions of knowledge acquisition, distribution, interpretation and organizational memory will lead to organizational innovation, competitiveness and economic financial results. Knowledge acquisition, distribution, interpretation, and organizational memory formed the organizational dimensions that created a system that boosted organizational innovation and competitiveness. Organizational learning and innovation and competitiveness were expected to result in improved economic and financial performance. The López, Peón and Ordás (2005) model is presented in figure 4.2:

Figure 4.2: Single organizational learning and organizational performance model

Acquisition Innovation and competitiveness Distribution Organization al Learning

Interpretation

Economic Financial results Organizational Memory

Source: López, Peón, Ordás (2005b, p. 238)

Although the López, Peón and Ordás (2005) model is quite simple, the model does not explain how knowledge acquisition, distribution, interpretation and organizational memory occur and how these processes influence organizational performance. As a continuous

process,

knowledge

acquisition,

distribution,

interpretation

and

P a g e | 75

organizational memory need transformational leadership (Coad and Berry 1998; Lam 2002; LeBrasseur, Whissell et al. 2002; Mirkamali, Thani et al. 2011) a suitable organizational culture (Barrette, Lemyre et al. 2008; Imovski, Skerlavaj et al. 2008; Škerlavaj, Song et al. 2010), and empowered employees (Scott-Ladd and Chan 2004; Berkhout, Hertin et al. 2006) in order to achieve better performance. Another model that embraced organizational learning and its antecedents was proposed by Jyothibabu, Farooq, and Pradan (2010). In their model, organizational learning existed at two levels, a people level and a structural level. The people level consisted of four dimensions, continuous learning (CL), dialogue inquiry (DI), team learning (TL), and employee empowerment (EE). Continuous learning related to the occurrence of support and reward for learning to gain needed skills to cope with the changes in the work environment. Dialogue inquiry related to the openness of all organizational members in communicating all aspects in relation to their organization. Team learning related to the freedom of a team to complete tasks and reward team performance. The structural level consisted of three dimensions, leadership learning (LL), system connection (SC) and embedded system (ES). Leadership learning related to a leader’s attitude to supporting the continuous efforts of all organizational members. System connection related to the organizational conditions that allow organizational members to interact with their environment to gain knowledge, while embedded system related to the incorporation of acquired knowledge into an organizational system. The outcomes of the learning were individual level learning (ILL), group level learning (GLL) and organizational level learning (OLL) which all led to organizational performance (OP). Individual level learning related to employees’ capabilities emerging as a result of a continuous learning process. Group level learning related to group

P a g e | 76

effectiveness in sharing and accomplishing group tasks while organizational level learning related to organizational strategy and structure that allowed for the innovativeness and effectiveness of the organization. It was suggested that individual, team and organizational level learning might lead to better organizational performance. The model is presented in Figure 4.3: Figure 4.3: Jyothibabu, Farroq and Pradan (2010) model Learning dimensions P E O P L E

L E V E L

Learning outcomes

CL DI

ILL TL

EE S T R U C T U R A L L E V E L

GLL

OP

LL

SC

OLL ES

Source: Jyothibabu, Farroq & Pradan (2010, p.307)

The Jyothibabu, Farroq & Pradan (2010) model was intended to embrace all of the dimensions of organizational learning. While the model seems comprehensive, it mixed

P a g e | 77

up the dimensions of organizational learning enablers and antecedents and organizational culture, leadership and empowerment in organizational learning, as a process (Aycan, Kanungo et al. 1999; Bushardt, Lambert et al. 2007; Baek-Kyoo and Ji Hyun 2010; Hung, Yang et al. 2010; Škerlavaj, Song et al. 2010). Organizational culture, embedded in a system of connection at the structural level(Devi, Chong et al. 2007; Yiing and Ahmad 2009), leadership and employee empowerment are three dimensions which enable processes of organizational learning (Chang and Lee 2007; Zhang and Bartol 2010). Using leadership and organizational culture to operationalise learning as two antecedents of organizational learning, Chang and Lee(2007) proposed another integrative model. Leadership and organizational culture were proposed to influence the job satisfaction of employees directly and indirectly through the operation of a learning organization. Their model is presented in Figure 4.4: Figure 4.4: Chang and Lee model

Leadership

Operation of Learning organization

Organization al Culture

Source: Chang & Lee (2007, p. 176)

Job satisfaction of employee

P a g e | 78

The Chang and Lee (2007) model had integrated leadership and organizational culture as an antecedent of organizational learning. Organizational learning, however, needs autonomous and empowered employees to cope with continuous changes that are required in the process(Scott-Ladd and Chan 2004; Zhang and Bartol 2010; van Grinsven and Visser 2011) of acquiring, disseminating and exploiting knowledge. Organizational

learning

occurs

when

employees

have

individual

capabilities(Dimitriades 2005; Donnison 2008) and are supported by a suitable organizational environment (Zhang and Bartol 2010). Authority delegation (López, Peon et al. 2006), autonomy(den Hartog and de Hoogh 2009), job enrichment (Lopéz, Peonet al., 2006) and participative management (Ahmad and Oranye 2010) (and mainly transformational leadership) are some of the fundamental elements in the process of organizational learning. Employees are allowed to participate in decision making (Castro, Perinan et al. 2008) and express their views and concerns (Stewart, McNulty et al. 2008). In addition, employees are supported to develop their capabilities (Amy 2008) and opportunities are provided for development (Vakola and Nikolaou 2006). In conclusion, integrating empowerment as an antecedent of organizational learning is crucial for the process of organizational learning and to enhance organizational performance. 4.3. Model development for this research The previous section has shown three basic models of organizational learning and organizational outcomes. The López, Peón and Ordás’ (2005b) model shows how organizational learning is expected to influence organizational innovation and organizational performance either directly or indirectly through innovation. Jyothibabu, Farroq & Pradan (2010) have included empowerment at the people level on an

P a g e | 79

individual level while leadership at a structural level that influences individuals, groups and organizational level learning, through which better organizational performance is expected to be achieved. Chang and Lee’s (2007) model puts leadership and organizational culture as antecedents of organizational learning. These three models were used as a framework to develop a model for this study. The models provide an explanation of the relationships between learning dimensions and results or antecedents as well as organizational outcomes. The models show how knowledge acquisition – intuiting, interpreting, integrating and institutionalizing, can influence organizational outcomes and organizational conditions as well as leadership support for its continuation. Thus, the models develop the ‘4I’s of the Crossan, Lane and White (1999) framework by adding enablers and outcome aspects. As organizational learning is socially constructed and determined by the infrastructure of social relations within the organization and the employee’s capabilities, the process of organizational learning contains four related processes of intuiting, interpreting, integrating and institutionalizing that occur on an individual, group and organizational level (Crossan, Lane et al. 1999; 2011). The process is believed to be influenced by organizational culture, transformational leadership and employee empowerment (refer to section 2.3). At the individual level, organizational members receive stimuli either from sources that are external or internal to the organization. An individual processes the stimuli based on a specific frame of thinking or cognitive map. As cognitive maps evolve from different background experiences and cultures of individuals, stimuli may be interpreted differently (Senge 2006).The cognitive maps exist below an individual level of awareness (Crossan, Lane et al. 1999; Senge 2006). To communicate, the content of

P a g e | 80

individual cognitive maps, must surface and be made more explicit. At this stage, an individual interprets the stimuli to become explicit knowledge (Berson, Nemanich et al. 2006). Integration occurs at the group level and involves the sharing of individual interpretations (Vera and Crossan 2004). The sharing of individual interpretations leads to a common understanding among organizational members (Bontis, Crossan et al. 2002). Individual interpretational sharing may exist in storytelling, discussion and individual presentations which lead to shared understandings (Di Milia and Birdi 2010). Institutionalizing occurs at the organizational level by which individual and group learning are engrained within an organization (Bontis, Crossan et al. 2002; Crossan and Bedrow 2003; Di Milia and Birdi 2010). At this stage, individual and group learning have been embedded within the organization’s structures, systems, culture, and strategy (Bontis, Crossan et al. 2002), and have been embedded into the organizational memory (Guido 2007). In all levels of the processes, organizational culture, leadership and empowerment have crucial roles. At the individual level, learning process and willingness to share are influenced by values, norms and individual perceptions of reward and consequences of learning and sharing knowledge activities (Jansen, Vera et al. 2009; Al-Adaileh and AlAtawdi 2010; Baek-Kyoo and Ji Hyun 2010; Duden 2011; Lee and Lan 2011). Organizational culture provides basic norms and rules for all organizational members and the effective development of organizational learning requires leadership support, allowed by organizational culture and executed by empowered people.

P a g e | 81

4.3.1. Organizational learning and organizational performance A causal relationship between organizational learning and organizational performance has been investigated by many previous researchers who found a positive association between organizational learning and organizational performance (for example LlorenMontes, Javier-Moreno et al. 2005; García-Morales, Lloréns-Montes et al. 2007; Garcıá-Morales 2008; Jyothibabu, Farooq et al. 2010). Continuous knowledge acquisition, dissemination and exploitation have been expected to increase organizational profit, employee’s welfare and organizational sustainability and it is expected that organizational learning has a causal relationship with organizational performance. Bontis, Crossan and Hulland (2002) in their research on 64 mutual fund companies in Canada, showed that individual level learning, group level learning and organizational learning have a valid direct association with organizational performance. The standardized path coefficient of organizational level learning to organizational performance was found to be positive, which was cited as evidence of a causal relationship between organizational learning and performance. Other recent empirical research has supported the existence of a direct path from organizational learning to organizational performance (Garcia-Morales, Mathias-Reche et al., 2011) because in a model of organizational learning and performance, the path coefficient from organizational learning to organizational performance was found to provide evidence of a positive influence of organizational learning on organizational performance.

P a g e | 82

Quantitative empirical studies using regression-correlation and structural equation modelling generally find a positive relationship between organizational learning dimensions and organizational performance dimensions. Studies that have employed such quantitative methods are shown in Table 4.1

Researcher(s)

Table 4.1 Previous research result of the influence of OL on OP Location & Finding relationships Respondents

Montes, Moreno

Chief executive of

Organizational learning significantly

& Morales (2005) large Spanish firms

influences organizational performance

López, Peon,

Knowledge acquisition, distribution,

Large Spanish firms

interpretation and organizational memory had

Ordas (2005)

positive association with innovation and competitiveness and economic financial results.

Fang & Wang

Survey on steel,

Organizational learning increased

(2006)

machinery makers and

manufacturing product quality and capability

electrical in Taiwan

of employees

Spanish firms

Organizational learning has a significant

Real, Leal, and

influence on organizational performance;

Roldán (2006)

capability of generating competitive advantages.

Škerlavaj,

CEOs or senior

Information acquisition and information

Štemberger,

managers of

interpretation had positive and significant

Škrinjar, and

Slovanian enterprises

effect on Return of Assets and value added per employee.

Dimovski(2007) Aragón-Correa,

Farming,

Organizational learning had a significant

García-Morales,

manufacturing,

influence on organizational performance

and Cordón-

construction and

Pozo(2007)

services

Source: literature review

P a g e | 83

Table 4.1 Previous research result of the influence of OL on OP (continued) Organizational learning has a positive Akgün, Keskin, Turkish firms Byrne, and Aren

relationship with product innovativeness;

(2007)

openness and experimentation; knowledge transfer and integration.

Chang & Lee

Financial industry,

Organizational learning has a positive effect on

(2007)

manufacturing

employee job satisfaction.

industry and service industry in Taiwan García-Morales,

Manufacturing,

Organizational learning has a positive

Llorén-Montes,

construction and

influence on organizational performance

and Verdú-

service firm in Spain

Jover(2008) Hung, Yang,

Taiwanese high-tech

Organizational learning in individual, group

Lien, McLean,

industry

and organizational levels had a positive association with competitive advantage,

and Kuo (2010)

productivity, profit, total sales and customers’ satisfaction

Liao and Wu

Taiwanese IT and

Organizational learning measured by

(2010)

financial enterprises

management commitment to learning, system perspective, openness and experimentation, knowledge transfer and integration affected organizational behaviour, quality of product, process, market and strategic innovation.

Jiménez-Jiménez

South-east Spain

Knowledge acquisition, distribution,

& Sanz-Valle

interpretation and organizational memory had

(2011)

a positive significant association with company image, market share, and profitability

Source: literature review

P a g e | 84

The previous research findings have supported the idea that the existence of organizational learning practices leads to better organizational performance. Continuous knowledge acquisition, dissemination, exploitation and storage have been identified in a number of studies (Lloren-Montes, Javier-Moreno et al. 2005; López, Peon et al. 2005; Montes Peon 2006; Garcıá-Morales 2008; Hung, Yang et al. 2010; Liao and Wu 2010; Jiménez-Jiménez and Sanz-Valle 2011) as leading to better profit, innovation, customer and employee job satisfaction. Based on these results a relationship between organizational learning and organizational performance is expected to exist as is shown in Figure 4.5 Figure 4.5. Proposed OL – OP relationship

OL

OP

Source: developed for this thesis research

4.3.2. Organizational learning and organizational culture In 1993, Cook and Yanow asserted that organizational learning processes should be viewed from a shared culture perspective. More recently, Schein (2004) has supported this view and has suggested that organizational culture directly influences the quality of learning, interpretation of other’s behaviours, and the determination of subsequent behaviours. Other researchers have explored the interaction between organizational learning and organizational culture. Graham and Nafukho (2007) showed that organizational culture has an important role in building an organizational learning infrastructure within an organization. Similarly, Jung& Takeuchi(2010) claimed that

P a g e | 85

organizational learning had occurred when organizational culture permitted it and that this indicated a crucial role of organizational culture in the occurrence of organizational learning. Thus, organizational culture has been found to be essential for organizational learning to be able to take place. There are three main aspects of organizational culture which influence the existence of organizational learning: participation, openness, and psychological safety (Mumford, Scott et al. 2002; Jung and Takeuchi 2010). Employees may be more effective in their current job if the organizational structure allows them to participate in decision making (Lucas and Kline 2008),if their organization has openness to new ideas (Weldy 2009) and if they have a psychological belief that learning and acquiring new knowledge and elaborating it for the benefit of the organization will be recognized and will create a better future for them and for their organization (Graham and Nafukho 2007; van Grinsven and Visser 2011). In modelling the relationship between organizational learning and organizational culture in an Israeli banking business, Barkai & Samuel (2005)found a positive path from organizational culture to organizational learning. Organizational culture is embedded in organizational design which can explain the interaction between organizational members and the flow of authority and responsibility (Barrette, Lemyre et al. 2008; Al-Adaileh and Al-Atawdi 2010). It influences the pattern of organizational decision making, the pattern of interactions between organizational members and the motivation of all organizational members to achieve a high level of performance (Barkai and Samuel 2005).

P a g e | 86

As a result of research that they carried out, Garcıá-Morales, Lloréns-Montes and Verdú-Jover (2008 p. 304) has suggested that “good organizational design increases organizational learning”. The reason for this can be explained by values and patterns of interaction between organizational members being seen in organizational design with information flow and patterns of knowledge sharing being formally reflected in the design of organizational structures (García-Morales, Lloréns-Montes et al. 2008). In an Asian context, in research on international non-profit organizations in Bangkok, Thailand, Prugsamatz (2010) found that organizational culture influences knowledge acquisition and sharing and the contribution of ideas from employees. Similarly, in their research in Taiwanese enterprises, Chang and Lee(2007) found that clan culture, mission culture and adaptive culture had influenced building shared vision, personal mastery and systematic cooperation positively and significantly. As has been discussed in section 3.4and as in the case of other Asian Countries, Indonesians are collectivist. Walumbwa, Lawler, & Avolio (2007) found that in collectivist cultures, transformational leadership is more effective because followers would identify with and be drawn towards the traits that emphasised collective organisational goals and the sharing of a common workplace mission. Transformational leadership was said to promote greater participation within collectivist cultures because followers were more likely to accept and to identify with their leader’s ideology due to a high power distance value and the acceptance of authority (Jung, Chow et al. 2003). In addition, individual relationships were necessary to develop a vision, set a direction and inspire confidence, to gain benefits from environmental changes and to increase salespersons’ performances Paparoidamis (2005).

P a g e | 87

Based on these findings of there being a relationship between organizational learning and organizational culture in large enterprises, it is proposed that organizational culture will also influence organizational learning in SEMs and the proposed relationship is shown in Figure 4.6 Figure 4.6. Proposed OC – OL –OP relationship

OC

OL

OP

Source: developed for this thesis research

4.3.3. Organizational learning and transformational leadership Research into the relationships between transformational leadership and organizational learning has been conducted by many European researchers (for example AragónCorrea, García-Morales et al. 2007; García-Morales, Jiménez-Barrionuevo et al. 2011) and in Asia (for example Jung, Chow et al. 2003; Amitay, Popper et al. 2005; Gumuslouglu and Ilsev 2009). Generally, the research results have indicated that transformational leadership has a positive relationship with organizational learning, employee creativity, organizational innovation and organizational performance. The positive relationship has related to the role of leadership to ‘set proper conditions for individuals, group, networks and system to enact emergent behaviours that promote learning’ (Hannah and Lester 2009 p. 35).

P a g e | 88

Leadership intervention in organizational learning exists at three levels, namely the micro-level, meso-level and macro-level (Altman and Iles 1998; Hannah and Lester 2009). In the micro-level, leaders build developmental readiness with key knowledge and targeted developmental learning experiences (Hannah and Lester 2009). At the meso-level, leaders create semi-autonomous learning networks, improve social exchange quality and participation and embed knowledge catalysts. At the macro-level, leaders enforce emergent knowledge, balance exploration and exploitation and codify infrastructure and resources to diffuse, share and embed the emergent knowledge in the organization’s structure (Hannah and Lester 2009). Aragón-Correa, García-Morales, and Cordón-Pozo (2007) investigated the relationship between transformational leadership in 408 large Spanish firms. Their finding showed that transformational leadership had a strong, significant influence on organizational learning, indirectly affecting firm innovation and that organizational learning positively influenced performance mainly through innovation. More recently, García-Morales, Jiménez-Barrionuevo, and Gutiérrez-Gutiérrez (2011) investigated the influence of transformational leadership on organizational performance through the dynamic capabilities of the organizational learning and innovation of 168 Spanish firms. They also found that transformational leadership positively influenced organizational performance through organizational learning and innovation, that organizational learning influenced organizational performance positively, both directly and indirectly through organizational innovation and that organizational innovation positively influenced organizational performance.

P a g e | 89

In an Asian context, Chang and Lee (2007) studied the relationship between organizational learning and leadership in Taiwanese enterprises. They found that transformational leadership had a positive and significant influence on building shared vision, personal mastery and systematic cooperation. Based on the previous general finding of there being a relationship between organizational learning and transformational leadership in large enterprises, the relationship between leadership and organizational learning to be examined in this thesis research is proposed to be as shown in Figure 4.7 Figure 4.7. Proposed TL – OL –OC and OP Relationships

OC

TL

OL

OP

Source: developed for this thesis research

4.3.4. Organizational learning and empowerment Employees with adequate skills who are able to cope with continuous change in a daily organizational context are required for organizational learning to occur (Allahyari, Shahbazi et al. 2011). Consequently, many previous researchers have included empowerment as an integral component of organizational learning (Ahmad and Oranye 2010; Jyothibabu, Farooq et al. 2010; Angeles 2011; Jyothibabu, Pradhan et al. 2011). However, other researchers have conceptualized empowerment as an independent

P a g e | 90

construct and not as a component of organizational learning. Skerlavaj and Dimovski (2006) claimed that empowerment enables knowledge sharing, dissemination and utilization. A causal relationship between empowerment and organizational learning in large enterprises has been investigated by previous organizational learning researchers. For example, Bontis, Crossan and Hulland (2002) studied the organizational learning process and empowerment in the Investment Funds Institute of Canada. The result showed that empowerment was positively associated with organizational learning, employees’ abilities to contribute to their organization in different ways and to stimulate a sense of pride in their job. A sense of direction and a sense of impact were also found to be positively associated with both organizational learning and organizational innovation and performance (Bontis, Crossan et al. 2002). In another study, Prugsamatz (2010) found that empowerment in the form of the enhancement of creativity, creation of new knowledge and generation of different ideas had a positive association with the occurrence of organizational learning. It is therefore considered a logical extension for empowerment also to be expected to have a relationship with organizational learning in SMEs. Because employees in SMEs are small in number and hence potentially more closely associated with the business, the effect of empowerment on the relationship could be expected to be greater in the case of SMEs than in the case of larger companies.

P a g e | 91

Based on the previous findings, the relationship in SMEs between organizational learning and empowerment is proposed to be as shown in Figure 4.8 Figure 4.8. Proposed TL-EP -OC– OL-OP relationship OC

TL

OL

OP

EP

Source: Developed for this thesis research

4.3.5. Organizational culture and transformational leadership Schein (2004) asserted that leadership creates and modifies organizational culture and according tothe Mirkamali, Thani, and Alami (2011) research in larger corporations, leadership determines organizational culture. This thesis research therefore assumes that leadership influences organizational culture in SMEs. In a continuously changing organizational environment, leaders continuously create and set competitive values for all organizational members (Graham and Nafukho 2007) and leaders cultivate organizational cultures to build organizational competences and commitment to performance (Dull 2010). Pors (2007) conducted a survey and interviewed directors and staff members of 24 public libraries in Denmark to investigate the adoption of management tools, the organizational culture and leadership in a library context. He found that changes and innovation culture were connected to leadership. His research also revealed that development competencies and knowledge sharing were extremely important. In

P a g e | 92

addition, he found that transformational leaders were the critical element in structural and cultural change. The proposed relationship between transformational leadership and organizational culture in SMEs is therefore shown in figure 4.9 Figure 4.9. Proposed TL- OC- EP - OL- OP relationship OC

TL

OL

OP

EP

Source: Developed for this thesis research

4.3.6. Transformational leadership and empowerment Two important requirements for the occurrence of organizational learning are for there to be enthusiastic and highly motivated employees who are keen to work and to perform well. To be enthusiastic and highly motivated, employees need there to be a delegation of responsibility and an independence of task performance (Appelbaum and Honegar 1998; Peterson and Zimmerman 2004; Ahearne, Mathie et al. 2005; Ahmad and Oranye 2010). In such situations, it is suggested that transformational leadership is needed (Avolio, Zhu et al. 2004; Adair 2005; Baek-Kyoo and Ji Hyun 2010; Bonias, Timothy et al. 2010). Empowerment involves the delegation of responsibility to followers, the enhancement of their capacity to think for themselves in producing new and creative ideas (Dvir, Eden et al. 2002) and trusting them to execute the new creative ideas (Seibert, Wang et al. 2011). Employees who believe that their leaders can be trusted are also encouraged to develop their capacity to perform (Maranto-Vargas and Rangel 2007).In addition, transformational leadership emphasizes the independence and proactivity of followers, and favours empowerment strategies rather than control strategies

P a g e | 93

(Bass 2000; Serfontein 2006) thus providing some of the requirements for the existence of organizational learning. The empirical relationship between transformational leadership and empowerment in an organizational learning context in larger businesses has been investigated by many researchers (Dvir, Eden et al. 2002; Avolio, Zhu et al. 2004; Garcıá-Morales 2008; Stewart, McNulty et al. 2008). In particular, Avolio, Zhu, Koh and Bhatia (2004) found that intellectual stimulation enhanced employee imagination and creativity. Such intellectual stimulation could produce a sense of choice or self-determination in followers. Moreover, intellectual stimulation may be one way in which leaders can show followers that they value their contribution. This can stimulate feelings of perceived competence or self-efficacy and impact. Individualized consideration of followers’ needs for achievement and growth can also encourage them to take on increasingly bigger responsibilities in developing their full potential paving the way to the cognitive states of empowerment (Bass 2000; Avolio, Zhu et al. 2004). The proposed relationship between transformational leadership and empowerment in SEMs is therefore shown in figure 4.10. Figure 4.10. Proposed TL-OC-EP-OL-OP relationship OC

TL

OL EP

Source: Developed for this thesis research

OP

P a g e | 94

4.3.7. Organizational culture and empowerment Organizational culture involves the beliefs, values and patterns of interactions within an organization that “…specify desired behaviours and outcomes to guide sustain goaldirected efforts of organizational members” (Peterson and Zimmerman 2004 p. 135). Patterns of interaction and decision making processes have been found to determine employee’s enthusiasm, confidence and capability and organizational culture (Fuller, Morrison et al. 1999; Jones, Jimmieson et al. 2005). Rationality in a decision making process stimulates employees to do their job well and to focus on their performance and job

accomplishment.

Values

of

nurturing

innovation

create

confidence

in

experimentation and in the creativity of organizational members (Naranjo-Valencia, Jiménez-Jimenéz et al. 2011). In large companies, many studies have examined the patterns of relationships between empowerment and organizational culture (for example McEwan and Sackett 1997; Tjosvold, Hui et al. 1998; Nyhan, Cressey et al. 2004; Wong, Tjosvold et al. 2010). McEwan & Sackett (1997) found that empowerment is related closely to organizational culture. Other researchers such as Tjosvold, Hui, and Law (1998); Smith & Mouly (1998); Quinn & Spreitzer (1997) also found a positive association between organizational culture and empowerment as did Nyhan, Cressey, Tomassini, Kelleher, and Poell (2004).

P a g e | 95

Based on the above information it is proposed that organizational culture will also influence empowerment in SEMs and the anticipated pattern of such relationships are shown in Figure 4.11. Figure 4.11. Proposed TL-OC-EP-OL-OP relationships OC

TL

OL

OP

EP

Source: Developed for this thesis research

4.3.8. Comprehensive Conceptual Model Davisand Daley (2008) have examined which of the organizational learning dimensions have the greatest effect on various performance variables. Their results reinforce the proposed SEM relationship model as being integrative in nature and the suggestion that organizational learning needs to be implemented at both the people and system levels. On a system level, patterns of interaction and organizational values allow for the occurrence of organizational learning, because on an individual level, employees will feel empowered and leaders will support knowledge sharing. Organizational learning has been said to be a dynamic process based on information flow, which implies moving information and knowledge among the different levels of action, going from the individual to the group level, and then to the organizational level and back again (Huber 1991; Crossan, Lane et al. 1999; Cegarra-Navarro, Jiménez et al.

P a g e | 96

2007; Guido 2007). This process stems from the knowledge acquisition of the individuals and progresses through the exchange and integration of this knowledge until a body of collective knowledge is created (Hedberg and Wolff 2003), embedded in the organizational processes and culture (Naranjo-Valencia, Jiménez-Jimenéz et al. 2011). This collective organizational knowledge, which is stored in the organizational memory (Walsh and Fisher 2005), has an impact on the type of knowledge acquired and the way in which it is interpreted and shared. What an individual learns in an organization greatly depends on what is already known by the other members of the organization - in other words, on shared knowledge and the common knowledge base (Simon 1991; Simonin 1997; Bell, Mengüç et al. 2010). Jyothibabu, Farroq, and Pradhan (2010) studied organizational learning in fourteen Indian thermal companies. They found that employee empowerment had a direct and positive association with individual level learning, embedded systems, system connections, leadership, team learning and continuous learning and an indirect positive association with organizational performance. Their research also revealed that employee empowerment correlated significantly with continuous learning, dialogue inquiry, team learning and the embededness of systems. In order to cope with the three organizational learning antecedents – organizational culture, leadership and empowerment, this research has proposed a model that incorporates a combination of the Jyotibabu Farroq, and Pradhan (2010) and the Chang and Lee (2007) models. The proposed model assumes that organizational learning occurs if leadership supports its occurrence (Amitay, Popper et al. 2005; GarcíaMorales, Llorens-Montes et al., 2008; Yukl, 2009) and organizational culture permits the occurrence of organizational learning (Chang & Lee, 2007) as long as employees

P a g e | 97

have the necessary skills and capabilities to exhibit organizational learning practices in daily work situations (Rankinen, Suominen et at., 2009; van Grinsven & Visser, 2011). The chosen model shows a comprehensive interaction between organizational learning antecedents – organizational culture, transformational leadership and empowerment and the outcome of organizational learning as measured by organizational performance. Transformational leadership has been said to inspire a shared vision, values, interest, hopes and dreams of an expected organizational future (Amy 2008); to create a learning culture and to enable organizational learning to occur (Rebelo and Gomes 2011). Transformational leadership along with a supportive organizational culture and empowered employees is assumed to enhance the occurrence of organizational learning that leads to performance improvement. The relationships between the constructs to be examined in this thesis research are shown in Figure 4.12:

Figure 4.12 Proposed final model OC

OL

TL

EP

Source: developed for this thesis research

OP

P a g e | 98

4.4. Proposition and hypothesis The previous section covered the direction and patterns of association between the constructs. This section further identifies these proposed relationships by setting them out in the form of 10 hypotheses which will be tested in this thesis research. 4.4.1. Organizational learning and organizational performance Many previous researchers have investigated the relationship between organizational learning and organizational performance (for example López, Peón et al. 2004; Lloréns Montes, Ruiz Moreno et al. 2005; Yeung, Lai et al. 2007; Garcıá-Morales 2008; Di Milia and Birdi 2010; Jyothibabu, Farooq et al. 2010; Wang, Wang et al. 2010; GarcíaMorales, Jiménez-Barrionuevo et al. 2011; Jiménez-Jiménez and Sanz-Valle 2011). Some studies have provided support for the existence of a positive relationship between organizational learning and firm performance (Bontis, Crossan et al. 2002; López, Peón et al. 2004; Lloréns Montes, Ruiz Moreno et al. 2005; Jiménez-Jiménez and Sanz-Valle 2011). Goh & Ryan (2008) studied the link between learning capability and competitive advantage, as measured by the long-term market financial performance of a group of learning companies. They concluded that organizations with an organizational learning characteristic performed better than their competitors. Similarly, in their research on Dutch & Belgian SMEs, van Gils and Zwart (2004) found that knowledge sharing and learning increased turnover, produced higher profits and extended the product range. A similar study of SME producers of ceramics in Spain, Alegre and Chiva (2008) found that experimentation, risk taking, interaction with the external environment, dialogue and participative decision making, influenced organizational performance

P a g e | 99

when measured as an increase in product innovation. One of the most recent research exercises conducted by Panagiotakopoulos (2011) in Greek SMEs found that a continuous effort to acquire and manipulate knowledge in SME organizations had a significant influence on SME survival and growth. In addition, he found that organizational learning reduced errors, introduced advanced technology, enhanced worker employability and met shortage needs in the researched SME organizations. Other researchers, however, found that organizational learning in SME does not influence organizational performance. In their research on SMEs in Devon and Cornwall, in the United Kingdom, Chaston, Badger & Sadler-Smith (1999) found no relationship between organizational learning and organizational performance as measured by sales growth. They found that a continuous effort to gain and manipulate knowledge did not have a significant association with sales growth. Similarly, Birdthistle (2008) in his research on family based SMEs in Ireland, only found a tendency towards learning orientation without it having any relationship to performance. In this thesis research organizational learning was posited as having a relationship with organizational performance and the following null hypothesis was tested: Hypothesis Ho1: there is no significant relationship between organizational learning and organizational performance

4.4.2. Organizational culture and organizational learning Organizational culture has frequently been investigated to see if it is a key requirement for organizational learning to occur (for example: López, Peón et al. 2004; GarciaMorales, Llorens-Montes et al. 2006; Boudrias, Gaudreau et al. 2009; Prugsamatz 2010;

P a g e | 100

García-Morales 2011; Naranjo-Valencia, Jiménez-Jimenéz et al. 2011). The pattern of relationships embedded in an organizational structure and the shared values between organizational members can influence how employees share and use knowledge for the benefit of the whole organization. Values and customs in the organization will influence knowledge acquisition, dissemination and exploitation (Lejeune and Vas 2009). Organizational culture influences openness to new ideas from employees, customers and the exploitation of information stored as organizational knowledge. When openness values are embedded in an organizational structure, employees will be stimulated to discuss mistakes and to learn from them while levels of trust between organizational members will promote employee initiatives to adapt their operational goals to environmental requirements in order to meet organizational objectives. An organizational structure as an indicator of authority and responsibility as well as an information flow will influence how knowledge is shared and exploited. In this thesis research organizational culture was posited as being an influence on organizational learning and the following null hypothesis was tested Hypothesis Ho2a: There is no significant relationship between organizational culture and organizational Learning

4.4.3. Organizational culture and empowerment It is suggested that the employment of rational decision making and the holding of innovative values by organizational members will create conditions for goal internalization, perceived control and perceived competence from organizational members (Menon 2001; Ajmal, Kekale et al. 2009; Suppiah and Sandhu 2010). A positive association between organizational culture and empowerment have been

P a g e | 101

identified in previous studies (Smith and Mouly 1998; Tjosvold, Hui et al. 1998; Nyhan, Cressey et al. 2004; Smith 2005; Law and Ngai 2008; Wong, Tjosvold et al. 2010). Sharing knowledge between organizational members which is an important aspect of organizational learning needs openness and tolerance of differences in opinions (Law and Ngai 2008) and rationality in final decision making. Exploiting knowledge for the benefit of the organization only occurs if the norms and values of the organizational members support it (Jing, Avery et al. 2011). Openness to new ideas and the structural flow of the decision-making process are said to be crucial for the organizational learning process (Awal, Klingler et al. 2006). Other aspects of organizational culture such as the impact of decision making, common missions and trust are believed to influence employees’ enthusiasm, focus on work and effective job performance.

Consideration of the impact of decision making on

employees’ may influence employees’ enthusiasm to work toward pre-determined organizational objectives. Sharing a common sense of mission that all organizational members think is worth striving to achieve can enable employees to focus on what is to be done to work effectively (Bih-Shiaw and Weining 2003; Simons, Germans et al. 2003; Wallace, Johnson et al. 2011). In this thesis research, organizational culture was posited as being an important influence on empowerment and the following null hypothesis Ho2b tested the association between organizational culture and empowerment. Hypothesis Ho2b: There is no significant relationship between organizational culture and empowerment

P a g e | 102

4.4.4. Transformational leadership and organizational learning

Organizational learning and transformational leadership research findings have suggested that there is a relationship between the style of transformational leadership and the existence of organizational learning (Barkai and Samuel 2005; Aragón-Correa, García-Morales et al. 2007; Hannah and Lester 2009). The style of transformational leadership can set up suitable conditions for employees, teams and organizational systems to result in effective knowledge acquisition, dissemination and exploitation (Cavaleri, Seivert et al. 2005; Lloréns Montes, Ruiz Moreno et al. 2005; GarcıáMorales 2008). Transformational leaders can stimulate employees’ levels of learning, can improve group level knowledge sharing and can enforce emergent knowledge, balance exploration and exploitation and codify infrastructure and resources to diffuse, share and embed the emergent knowledge at the organizational level. Transformational leadership can facilitate organizational learning by stimulating dialog and conditions of openness (Field 2011). Previous large business studies have provided evidence of a positive relationship between transformational leadership and organizational learning (Tsui, Zhang et al. 2006; Chang and Lee 2007; Hannah and Lester 2009) and the existence of a positive relationship between transformational leadership and organizational learning (LlorenMontes, Javier-Moreno et al. 2005; Garcıá-Morales 2008; García-Morales, JiménezBarrionuevo et al. 2011). The communication of visions, empathy and sharing of relevant up-to-date information can influence the processing of knowledge and its dissemination and exploitation by organizational members. The sharing of relevant information among organizational members or team members has been described as

P a g e | 103

being a determination of the existence of organizational learning (Dvir, Eden et al. 2002; Patterson 2009; Menges, Walter et al. 2011). As the large business literature review provided evidence of a positive relationship between transformational leadership and organisational learning, the following null hypothesis was tested: Hypothesis Ho3a: There is no significant relationship between transformational leadership and organizational learning 4.4.5. Transformational leadership and organizational culture According to Amitay, Popper and Lipshitz (2005) transformational leadership is critical for shaping organizational culture. Transformational leadership has been said to inspire a shared vision, values, interest, hopes and dreams and an expected organizational future (Amy 2008) and to create a learning culture and to enable organizational learning to occur (García-Morales, Lloréns-Montes et al. 2008; García-Morales, JiménezBarrionuevo et al. 2011; Rebelo and Gomes 2011). Transformational leadership builds a framework of readiness for developmental learning experiences (Bass 1990; Serfontein 2006; Aslan, Diken et al. 2011), and creates semi-autonomous learning networks (Bass 2000), improves social exchange quality and participation and embeds knowledge catalysts (García-Morales, JiménezBarrionuevo et al. 2011). Another role of transformational leadership is that it enforces emergent knowledge, balances exploration and exploitation and codifies infrastructure and resources to diffuse, share and embed the emergent knowledge in the organization structure(García-Morales, Lopez-Martín et al. 2006; Hannah and Lester 2009).

P a g e | 104

Transformational leadership sets up a pattern of values to accommodate continuous changes in an organizational environment and to gain benefits from the changes (Sarin and McDermott 2003) and removes defensive routines in the organizational system that inhibit the process of organizational learning (Philips 2003). Jung and Takeuchi (2010) in their study of SME manufacturing in Japan found that supportive leadership had a significant association with organizational culture. Similarly, Prugsamatz (2010) in her study of non-profit organizations in Bangkok, Thailand found a positive significant relationship between transformational leadership and cultural practices. Hence, considerable empirical evidence exists linking transformational leadership and organizational culture. As the large business literature review provided evidence of the influence of transformational leadership on organizational culture, the following null hypothesis was tested : Hypothesis Ho3b: There is no significant relationship between transformational leadership and organizational culture 4.4.6. Transformational leadership and empowerment Many studies have examined the relationship between transformational leadership and empowerment amongst followers (for example Chang and Lee 2007; Nailon, Delahaye et al. 2007; Wang and Lee 2009; Lee and Wei 2011). Dimensions of transformational leadership such as individual consideration, intellectual stimulation, inspirational motivation, and idealized influence are said to influence continuous efforts to control their own work by employees (Duvall 1999; Bass, Avolio et al. 2003; Serfontein 2006; Lee and Wei 2011). In addition, transformational leadership is said to guide and

P a g e | 105

motivate a common vision of the organization members and to encourage the development of good communication networks and a spirit of trust (Avolio, Waldman et al. 1991; Avolio, Zhu et al. 2004; Bono and Judge 2004). Empirical studies have revealed a positive association between transformational leadership and empowerment (for example Dvir, Eden et al. 2002; Kark, Shamir et al. 2003; Avolio, Zhu et al. 2004; García-Morales, Lloréns-Montes et al. 2008). Dvir, Eden, Avolio, and Shamir (2002) found evidence that transformational leadership led to empowerment, self-efficacy, and independent thinking. Similarly, Avolio, Zhu, Koh and Bhatia (2004) also found that transformational leadership led to empowerment and commitment. Based on the previous study results, in relation to transformational leadership and empowerment, the following null hypothesis was tested: Hypothesis Ho3c: There is no significant relationship between transformational leadership and empowerment. 4.4.7. Transformational leadership and organizational performance Individual consideration, intellectual stimulation, inspirational motivation and idealized influence as dimensions of transformational leadership were assumed to influence organizational performance indirectly – through organizational learning (LlorenMontes, Javier-Moreno et al. 2005; Aragón-Correa, García-Morales et al. 2007; Chang and Lee 2007; García-Morales, Lloréns-Montes et al. 2008). Transformational leadership is said to influence organizational learning leading to the achievement of better organizational performance.

P a g e | 106

Dvir, Eden, Avolio, and Shamir (2002) found that transformational leadership which was measured by individual consideration, intellectual stimulation, inspirational motivation, and idealized influence, had a positive association with employee commitment, and satisfaction. This was similar to a finding by LeBrasseur, Whissell, and Ojha (2002) that transformational leadership improved the service quality of Canadian hospitals. However, Brown and Arendt (2011) found that transformational leadership had no relationship to organizational performance. In relation to the influence of transformational leadership on organizational performance, the following null hypothesis was tested: Hypothesis Ho3d: There is no significant relationship between transformational leadership and organizational performance

4.4.8. Empowerment and organizational learning Many studies have examined the relationships between empowerment and organizational learning (for instance Chaston, Badger et al. 2000; Chaston, Badger et al. 2001; Bontis, Crossan et al. 2002; López, Peón et al. 2005; Michana 2009). Employee’s goal internalization, perceived control and perceived competence enhances the process of knowledge acquisition, dissemination and exploitation. A sense of pride in their job, sense of direction and sense of impact were found to be positively associated with both organizational learning and organizational innovation and performance(Bontis, Crossan et al. 2002). In her research on the relationship between organizational learning, SMEs and performance in Poland, Michana (2009)found that organizational learning correlated significantly with employee empowerment. Other researchers have also found a

P a g e | 107

positive correlation between organizational learning and empowerment (Schein 1999; Chaston, Badger et al. 2000; Roche 2002; López, Peón et al. 2005; Michana 2009). As previous large business empirical studies have provided evidence of a positive influence of empowerment on organizational learning, the following null hypothesis was tested: Hypothesis Ho4: There is no significant relationship between empowerment and organizational learning 4.5. Construct development Having discussed a model of the relationships to be examined in this research and the hypotheses that are to be tested, the following section outlines the dimensions that were identified as underlying each construct. 4.5.1 Organizational learning As has been discussed in chapter 2 section 2.2.1, although research into organizational learning increased significantly during the 1990s, there is still no agreement about how to measure it and what items comprise organizational learning. In general, previous researchers have conceptualized organizational learning as a continuous process to acquire, disseminate and exploit information and knowledge in an organization (Crossan, Lane et al. 1995; Bontis, Crossan et al. 2002; Crossan and Bedrow 2003; Jung, Chow et al. 2003; Bapuji and Crossan 2004; Berson, Nemanich et al. 2006; Argote 2011; Crossan, Maurer et al. 2011). This concept has been used in constructing a measure of organizational learning by a number of researchers (Bontis, Crossan et al. 2002; López, Peón et al. 2005; Montes Peon 2006; López Sánchez 2010; López-

P a g e | 108

Cabrales, Real et al. 2011; López Sánchez, Santos et al. 2011; Santos-Vijande, LópezSánchez et al. 2011). Organizational learning is believed to be a latent construct and many researchers have treated it as a second order latent construct (Jerez-Gomez, Cespedes-Lorente et al. 2005; López, Peón et al. 2005; Panayides 2007; Azadegan and Dooley 2010; Škerlavaj, Song et al. 2010; Jiménez-Jiménez and Sanz-Valle 2011; Nasution, Mavondo et al. 2011). Many other researchers, have however, treated organizational learning as a first order construct (Bontis, Crossan et al. 2002; Lloren-Montes, Javier-Moreno et al. 2005; Garcia-Morales, Llorens-Montes et al. 2006; Aragón-Correa, García-Morales et al. 2007; Garcıá-Morales 2008; García-Morales 2011). Jerez-Gomez, Cespedes-Lorente, and Valle-Cabrera (2005) believed that organizational learning is a second order construct indicated by four first order constructs. The first order constructs were management commitment, system perspective, openness and experimentation and knowledge transfer and integration. Similarly, Jiménez-Jiménez and Sanz-Valle (2011) believed that organizational learning is a second order constructs also indicated by four first order constructs which, however, in their case were knowledge acquisition, knowledge distribution, knowledge interpretation and organizational memory. Azadegan & Dooley (2010), on the other hand, also treated organizational learning as a second order construct but considered it to be one that was indicated by only two first order constructs namely explorative learning and exploitative learning. All of the indicators of the second order organizational learning construct that were suggested by these three studies are shown in Table 4.2.

P a g e | 109

Table 4.2 Previous measures of organizational learning (Second order) Indicator Study Sub-construct Scale Seven- 1. The managers frequently involve their staff in JerezManagement important decision making processes. point Gomez, commitment 2. Employee learning is considered more of an LikertCespedesexpense than an investment (R). type Lorente, 3. The firm’s management looks favourably on scale and Vallecarrying out changes in any area to adapt to Cabrera and/or keep ahead of new environmental (2005)

System perspective

Openness and experimentation

Knowledge transfer and integration

situations. 4. Employee learning capability is considered a key factor in this firm. 5. In this firm, innovative ideas that work are rewarded. 1. All employees have generalized knowledge regarding this firm’s objectives 2. All parts that make up this firm (departments, sections, work teams, and individuals) are well aware of how they contribute to achieving the overall objectives. 3. All parts that make up this firm are interconnected, working together in a coordinated fashion. 1. This firm promotes experimentation and innovation as a way of improving the work processes. 2. This firm follows up what other firms in the sector are doing, adopting those practices and techniques it believes to be useful and interesting. 3. Experiences and ideas provided by external sources (advisors, customers, training firms, etc.) are considered a useful instrument for this firm’s learning. 4. Part of this firm’s culture is that employees can express their opinions and make suggestions regarding the procedures and methods in place for carrying out tasks 1. Errors and failures are always discussed and analysed in this firm, on all levels. 2. Employees have the chance to talk among themselves about new ideas, programs, and activities that might be of use to the firm. 3. In this firm, teamwork is not the usual way to work (R) 4. The firm has instruments for sharing knowledge.

Source: literature review developed for this study

P a g e | 110

Table 4.2 Previous measures of organizational learning (Second order- Continued) Seven- 1. Frequently experiments with important new Azadegan Explorative ideas or ways of doing things & Dooley learning point 2. Employees frequently come up with creative (2010) Likertideas that challenge conventional ideas type 3. Compared to competition, a high per cent of scale sales come from new products launched in the 1.

Exploitative learning

2. 3.

JiménezKnowledge Jiménez acquisition & SanzValle (2011) Knowledge distribution

Fivepoint Likert scale

1. 2. 3. 1.

2.

3.

Knowledge interpretation

1. 2. 3.

Organizational memory

1.

2. 3.

4.

past three years At this supplier a strong emphasis is placed on improving efficiency This supplier excels at refining existing technologies This supplier frequently adjusts procedures, rules and policies to make things work better. The employees attend fairs and exhibitions regularly There is a consolidated and resourceful R&D policy New ideas and approaches to work performance are experimented continuously The company has formal mechanisms to guarantee the sharing of the best practices among the different fields of the activity There are individuals within the organization who take part in several teams or divisions and who also act as links between them There are individuals responsible for collecting, assembling and distributing internal employees’ suggestions. All members of the organization share the same aim to which they feel committed Employees share knowledge and experiences by talking each other Teamwork is a very common practice in the company The company has directories or e-mail filed according to the field they belong to, so as to find an expert on a concrete issue at any time The company has up-to-date databases and of its clients There is access to the organization’s databases and documents through some kind of network (Lotus Notes, Intranet etc.) Databases are always kept up-to-date

Source: literature review developed for this study However, as has been mentioned, research that was reported by Jyothibabu, Farooq, and Pradan (2010) considered organizational learning to be a first order construct that was indicated by a number of measures. Bontis, Crossan, and Hulland (2002) and Jyothibabu, Farooq, and Pradhan (2010) used ten items while Garcia-Morales, Moreno, and Llorens-Montes (2006) used five items and García-Morales, Llorens-Montes, and

P a g e | 111

Verdú-Jover (2007) used four items to measure organizational learning. The nature of the scales that were used by these researchers and the scale indicators for these four studies are shown in Table 4.3.

Study Bontis, Crossan, Hulland (2002)

Table 4.3 Previous measures of organizational learning (First order) Scale Number Indicator of item 1. Diverse views Seven 10 2. Rethink decisions point 3. Right people Likert4. Understand point of view type 5. Conflict resolution Scale 6. Adaptable group 7. Common understanding 8. Share successes 9. Share failures 10. Idea generation

GarciaMorales, Moreno, LlorensMontes, (2006)

Seven point Likerttype Scale

5

1. There is cohesion of vision in the organization’s different units 2. Management in the organization has a shared vision of the organization’s future 3. Our organization agrees on what is important to the firm 4. A high degree of the changes proposed by the shared vision are achieved 5. Our organization has a clear vision of the objectives and mission that guide our business strategies.

GarciaMorales, LlorensMontes, VerdúJover(2007)

Seven point Likerttype Scale

4

1. The firm has acquired and used much new and relevant knowledge that provide competitive advantage over the last 3 years 2. The firm’s member have acquired some critical capacities and skill that provide competitive advantage over the last 3 years 3. The firm’s improvement have been influenced fundamentally by new knowledge entering the firm over the last 3 years 4. The firm is a learning a organization

Source: literature review developed for this study

P a g e | 112

Table 4.3 Previous measures of organizational learning (First order - Continued) 1. My organization has a clear cut vision mission Jyothibabu, Six 10 and strategy for the future Farooq, point 2. My organizational structure supports its strategic Pradan(2010) Likertdirection type 3. My organizational culture is innovative. scale

4. My organizational structure allows people to work effectively 5. My organization has built a culture of trust among people 6. My organization has developed operational procedures to guide its activities and help employees and groups to work efficiently 7. My organization maintains an up to date database of its knowledge inventory 8. My organization has developed systems to nurture knowledge management 9. My organization assesses the impact of each function or activity in the context of its effect on the entire organization 10. In my organization the skills of existing staff are developed in line with business objectives

Source: literature review developed for this study As can be seen in tables 4.2 and 4.3., the organizational learning concept has been considered to relate to how knowledge is acquired, disseminated and shared among organizational members. It is therefore suggested that the processes of organizational learning are being accomplished at an individual level, and then being shared among organizational members and stored in the organizational structure and system. Organizational learning is an organization’s enhanced ability to acquire, disseminate and use knowledge in order to adapt to a changing external and internal environment requires openness, experimentation, trust and a good knowledge data base (Adler and Zirger 1998; Abell and Simons 2000; Argote 2011; García-Morales, JiménezBarrionuevo et al. 2011). According to Chen (2005) supporting employees to think from a global perspective is an indication of openness. Thinking from a global perspective enables employees to acquire information that is relevant to their job and to elaborate it in order to complete their job (Grinsven and Visser 2011; Jiménez-Jiménez

P a g e | 113

and Sanz-Valle 2011). It is said to enable knowledge transfer from an external organizational environment and the sharing of the information with other employees (Schulz 2008). In addition, according to Garcia-Morales, Llorens-Montes, Verdú-Jover (2006) thinking from a global perspective enables employees to foresee environmental changes and to make the adjustments needed to complete their tasks. Supporting employees to discuss their mistakes and to learn from them may lead to more creative and innovative employees (Spector and Davidsen 2006).Rewarding employee initiatives to handle certain innovative work may promote enthusiasm and commitment to work by the employees. However, risks of failing to meet an expected goal may either encourage or discourage employees to work creatively and effectively but requires there to be support for employees who take calculated risks (Spector and Davidsen 2006) Employee willingness to help each other to learn creates a condition of sharing and trust. Learning together either in a formal team or in an informal one may be the basis for building organizational knowledge (Spector and Davidsen 2006).Building trust among employees is an important aspect of creating an harmonious working environment in an organization (Spector and Davidsen 2006). Finally, maintaining an up-to-date database of employee skills enables an organization to quickly use it’s employee’s skills in order to complete a certain task or to improve their skills. By drawing on all of the items used in previous organizational learning studies, this thesis research created a pool of 16 items that could be used to measure organizational learning. These items are shown in Table 4.4.

P a g e | 114

Variable title

OL1

Table 4.4. Pool of organizational learning items and their sources Item Source

Employees are encouraged to think from a Bontis, Crossan et al. (2002); global perspective Spector & Davidsen, (2006); Allegre & Chiva (2008) OL2 employees are encouraged to bring Bontis, Crossan et al. (2002); customers’ views into their decision- Jerez-Gomez, Cespedesmaking processes Lorente et al.(2005); Skerlavaj and Dimovski (2006) OL3 makes its learned lessons available to all Bontis, Crossan et al. (2002); employees Jerez-Gomez,CespedesLorenteet al., (2005); Spector & Davidsen, (2006) OL4 employees are stimulated to openly discuss Templeton, Lewis et al.(2002); mistakes in order to learn from them. Jyothibabu, Farooq et al. (2010), Wong, Tjovold et al., (2010) OL5 rewards employees who show initiative Allegre & Chiva(2008); Jyothibabu, Farooq et al., (2010) OL6 supports employees who take calculated Allegre & Chiva(2008); risks Jyothibabu, Farooq et al.(2010) OL7 employees help each other to learn Jimenez-Jimenez and SanzValle (2011), López, Peón et al.(2005) OL8 employees spend time building trust with Jyothibabu, Farooq et al., each other (2010); Panayides, (2007) OL9 employees are rewarded for learning Jyothibabu, Farooq et al., (2010) OL10 employees are given time to support their Spector & Davidsen, (2006) learning Jyothibabu, Farroq et al., (2010) OL11 I am free to initiate changes as needed Jyothibabu, Farooq et al., (2010) OL12 I am free to adapt operational goals as Bontis, Crossan et al., (2002) needed OL13 the owner-manager builds an alignment of Spector & Davidsen, (2006) vision across different structural levels Jyothibabu, Farroq et al., (2010) OL14 all organizational members share similar Bontis, Crossan et al., (2002); visions and missions Panayides, (2007) OL15 enables employees to get necessary Jerez-Gomez, Cespedesinformation quickly and easily Llorente (2005); Skerlavaj, Stemberger et al., (2007) OL16 maintains an up-to-date database of Bontis, Crossan et al., (2002), employee skills López, Peon et al. (2005) Source: developed for this research

P a g e | 115

4.5.2. Organizational culture In an organizational learning context, organizational culture creates the condition and system of knowledge acquisition, dissemination, exploitation and storage. As a process, organizational learning exists in specific conditions and organizational cultures (Lugosi and Bray 2008; Ahlgren and Tett 2010; Suppiah and Sandhu 2010; Zheng, Baiyin et al. 2010; Zu, Robbins et al. 2010). According to Lejeune & Vas, (2009); Popper & Lipshitz, (2000); and Ryan, Windsor, Ibragimova, & Prybutok (2010), the specific conditions, norms, values and interactions that occur between organizational members when acquiring, disseminating and exploiting knowledge is determined by the flow of authority and responsibility embedded in the organizational structure. As with organizational learning, although many studies have investigated the association of organizational culture with organizational learning, there is still no agreement on how to measure it and of what items it is comprised. Some studies have treated organizational culture as a second order construct (Chang and Lee 2007; Lugosi and Bray 2008; Fard, Rostamy et al. 2009; Wang, Su et al. 2011) while others have treated it as a first order construct (Bontis, Crossan et al. 2002; Jyothibabu, Farooq et al. 2010; Prugsamatz 2010; Jyothibabu, Pradhan et al. 2011). Chang and Lee (2007) believed that organizational culture was a latent variable indicated by four first order constructs namely clan culture, mission culture, adaptive culture and bureaucratic culture. Four first order constructs used to measure an organizational latent variable were also used in a Fard, Rostamy, Taghiloo (2009) study. Fard, Rostamy, and Taghiloo (2009) named their four first order constructs as bureaucratic culture, competitive culture, participative culture and learning culture. A slightly different approach to measuring the organizational culture concept was

P a g e | 116

proposed by Wang, Su, and Yang (2011). Using Hofstede’s (2001) concept of culture, Wang, Su, and Yang (2011) used three first order constructs namely individualism – collectivism, power distance and uncertainty avoidance to measure organizational culture in an organizational learning context. The first order constructs, scale types and measuring items used in these studies are shown in Table 4.5. Table 4.5 Previous measures of organizational culture (Second order) Item Study First order Scale construct Seven 1. My company highly emphasizes humanity and Chang Clan point respect to every member just like a large family & Lee Culture Likert- 2. My company highly emphasizes development of (2007) type human resource, being kind to employees and scale encouraging teamwork cooperation 3. The coherent power of my company is employees’ loyalty and devotion to my company and high emphasis on teamwork cooperation 1. The coherent power of my company is high Mission emphasis on work performance and targeted culture achievement 2. All company members can pay close attention to work performance and achievement orientation 1. All company members are vested with the spirit Adaptive of innovation and adventure culture 2. My company aggressively makes R&D effort for novel products and strategies in the hope of becoming the innovator among peering industries 1. My company is well regulated and all members Bureaucratic severely obey work codes for daily tasks culture 2. The power to enhance the coherence of my company is high emphasis of organization codes and policies and the maintenance of normal administrative operation Source: literature review developed for this study

P a g e | 117

Table 4.5 Previous measures of organizational culture (Second order - Continued) 1. Inflexibility Fard, Bureaucratic Five point 2. Rigid regulation Rostamy, culture Likert 3. High level of centralization & -type 4. Affirmative leadership style Taghiloo 1. High flexibility (2009) Competitive scale 2. Low integration culture 3. Contract relation between employee and the organization 4. Low loyalty 5. Low cultural identity Participati 1. Achieving to quantitative objectives ve culture 2. Low flexibility 3. High integration 4. Loyalty 5. Personal commitment 6. Team working 7. High level of society acceptance 8. Tendency to satiability Learning 1. Trend to change culture 2. Knowledge expansion 3. Sensitive and responsive to external changes 4. Complex environment 5. Competitive advantage 6. Information about the environment 7. Gathering environmental information and process 8. Service development 9. Encourage innovation, creativity and learning 10. Organizational commitment. IndividualWang, Su Five 1. Our firm emphasizes cooperation and collectivism & Yang ismpoint 2. Our firm encourages joint responsible for the collectivism (2011) Likert successes and failures type 3. Close cooperation is preferred over working scale independently Power 1. The hierarchical line is very distinct in our firm Distance and it is not allowed to be passed. 2. The juniors are not allowed to argue against the superior, and they must follow the will of the superior 3. The superior has the last word, and the juniors cannot discuss with them Uncertainty 1. Top manager encourage the development of avoidance innovative strategies, knowing well that some will fail 2. We believe that change in market creates a positive opportunity for us 3. We have a strong preference for high-risk projects with chances of high return Source: literature review developed for this study

P a g e | 118

As a set of values and a basic assumption created and developed through the life of an organization as suggested by Lahteenmaki, Toivonen, and Mattila (2001), organizational culture was also suggested to be a first order construct though there was no agreement on how many items represented it and the terms used to represent it. Researchers who used a first order construct and identified their measurement items were Jyothibabu, Farooq, and Pradhan (2010) who used an embedded system to express organizational culture, and Bontis, Crossan, and Hulland (2002). The scale types and measurement items used by these researchers are shown in Table 4.6. Table 4.6 Organizational culture measures (First order) Study Number Scale Indicator of item Bontis, 10 Seven 1. Structure / strategy Crossan, & point 2. Structure / work Hulland Likert- 3. Strategy/environment (2002) type 4. Vision scale 5. Culture of trust 6. Procedures 7. Innovative culture 8. Systems/strategy 9. Systems 10. Databases Jyothibabu, Six 1. My organization recognizes people for taking Farooq, & point initiative Pradhan, Likert 2. My organization gives people choices in their 2010 scale work assignments 3. My organization invites people to contribute to the organization’s vision 4. My organization gives people control over resources they need to accomplish their work 5. My organization supports employees to balance work and family 6. My organization builds alignment of visions across different levels and work groups Source: literature review developed for this study

P a g e | 119

Several aspects emerge from a study of the measurement items used in the previous studies namely that organizational culture embraces values and processes of decision making, processes of knowledge sharing, a spirit of innovation, a level of trust in the organization (Lucas and Kline 2008) and knowledge management values. Other considerations are the rationality of the decision making process, the performance measurement system, the system of mission sharing and the system of cooperation among organizational departments, the structure of authority and responsibility and a system that promotes knowledge management (Calantone, Cavusgil et al. 2002). Drawing on these previous studies, this research identified a pool of measurement items that could be used to measure organizational culture and these are shown in Table 4.7.

P a g e | 120

Table 4.7. Pool of organizational culture items and their sources Variable Item Title OC1 all decision-making is made through a rational process OC2

considers the impact of decisions on employee morale

OC3

OC5

creates systems to measure gaps between current and expected performance all organizational members share a common sense of mission that most think is worth striving to achieve co-operation amongst departments is important

OC6

innovation is the most important goal

OC7

is open to receiving new ideas from organizational customers

OC8

the structure supports its strategic direction

OC9

the organizational culture is innovative

OC10

the organizational structure allows employees to work effectively the organization has built a culture of trust amongst employees

OC4

OC11

OC12

the organization has developed operational procedures to help employees to work efficiently OC13 the organization has developed systems to nurture knowledge management Source: developed for this research

Source Allegre & Chiva (2008); Škerlavaj, Song et al.(2010) Chang & Lee (2007); Skerlavaj, Song et al., (2007) Skerlavaj, Song et al., (2007) Bontis, Crossan et al. (2002) Templeton, Lewis et al., (2002) Gómez, Lorente et al., (2004) Škerlavaj, Song et al.,(2010) Skerlavaj, Song et al., (2007); Jyothibabu, Farooq et al., (2010) Jyothibabu, Farooq et al., (2010); Bontis, Crossan et al., (2002); Jyothibabu, Farooq et al., (2010) Jyothibabu, Farooq et al., (2010) Skerlavaj, Song et al., (2007); Jyothibabu, Farooq et al., (2010) Bontis, Crossan et al., (2002); Skerlavaj, Song et al., (2007) Jyothibabu, Farooq et al., (2010)

4.5.3. Transformational Leadership This study conceptualized transformational leadership in an organizational learning context and defined it as an influencing relationship between leaders and followers who intend real changes and outcomes that reflect their shared purposes. In a similar vein to

P a g e | 121

organizational culture, some scholars have treated transformational leadership as a second order construct (Bass 1990; Smith 1993; Bass, Avolio et al. 2003; Brown and Arendt 2011). The first order constructs measuring transformational leadership as proposed by Brown and Arendt (2011) in their second order construct of transformational leadership are shown in Table 4.8. Table 4.8 Previous measures of transformational leadership (Second order) Researcher First order Scale Indicator constructs Brown & Idealized Five-point 1. Power and confidence Arendt influence Likert-type 2. Sense of purpose (2011) scale 3. Sense of mission 4. Value and beliefs Inspirational 1. Enthusiasm of goals motivation 2. Confidence in goals 3. Optimism for the future 4. Vision for the future Individualized 1. Threats employees as individuals consideration 2. Recognizes different needs of employees 3. Develops strengths in employees 4. Teaching and coaching Intellectual 1. Offers differing perspectives stimulation 2. Employee looks at differing perspectives 3. New methods of completing tasks 4. Examines own beliefs Source: literature review developed for this study Other studies have treated transformational leadership as a first order construct (LlorenMontes, Javier-Moreno et al. 2005; Aragón-Correa, García-Morales et al. 2007; Chang and Lee 2007; Nailon, Delahaye et al. 2007; Garcıá-Morales 2008; García-Morales, Lloréns-Montes et al. 2008; García-Morales, Jiménez-Barrionuevo et al. 2011). The scale type and the number of items and indicators used in previous studies by such researchers are shown in Table 4.9

P a g e | 122

Table 4.9 Previous measures transformational leadership (First order) Study Scale Number Indicator of item AragónSeven 5 1. Give priority to seeking new opportunities for Correa, point their organization GarcíaLikert2. Develop a clear common view of final aims more Morales, & type than short term objectives CordónScale 3. Emphasize motivating the rest of the company Pozo more than controlling (2007) 4. Act as the organization’s leading force more than a as a supervisor 5. Coordinate colleagues on the job Chang & Seven 11 1. I believe my director has sufficient capability to Lee (2007) point overcome hardship from jobs Likert2. Whenever my director pinpoints my fault, he will type kindly consider my self-esteem Scale 3. Whenever my director is punishing me, he will definitely pose impartial attitude without personally dogmatic discretion 4. I regard my director as the best example of success 5. Whenever I make some faults on my job, my director will kindly communicate with me and find out the faults to take appropriate actions 6. My director can share his delight and hardship with me 7. My director can encourage me to have sufficient courage to face challenges 8. My director takes care of me just like one of my family elders 9. My director can orient me with a new director and help me solve problems 10. My director can hand me over with the ultimate mission for customer service 11. On the job, I cannot show my hearty respect and actually finish the instruction from my director GarcíaSeven 4 1. The firm’s management is always on the lookout Morales, point for new opportunities LlorénsLikert 2. The firm’s management has a clear common view Montes, & type of its final aims Verdúscale 3. The firm’s management always acts as the Jover(2008) organization’s leading force 4. The firm’s management always acts as the organization’s leading force 5. The organization has leaders who are capable of motivating and guiding their colleagues on the job Source: literature review developed for this study

P a g e | 123

Table 4.9 Previous measures of transformational leadership (First order – continued) Seven 14 My supervisor: Kirkman, Mathieu, point 1. Articulates a vision Cordery, Likert 2. Provides an appropriate model Rosen, & type 3. Facilitates the acceptance of group goals Kukenberger scale 4. Makes clear that she/he expects a lot from us all (2009) of time 5. Insists on only the best performance 6. Will not settle for second best 7. Acts without considering my feelings ® 8. Shows respect for my personal feelings 9. Treats me without considering my personal feelings ® 10. Considers my personal feeling before acting 11. Challenges me to think about old problem in new way 12. Asks questions that prompt me to think about the way I do things 13. Has stimulated me to think the way I do things 14. Has challenged me to re-examine some of my basic assumptions about my work. Source: literature review developed for this study Both the first and second order approaches to the measurement of transformational leadership identify several main items that should be used to measure transformational leadership in an organizational learning context namely vision sharing, empathy, fairness, willingness to help, sharing up-to-date information and continuous search for opportunities to learn. Based on the previous research, the pool of items that were identified for use in measuring transformational leadership in this research are shown in Table 4.10.

P a g e | 124

Table 4.10. Pool of transformational leadership items and their sources Variable Item Source title LD1 my manager communicates her/his vision to Bontis, Crossan et al., employees at every possible opportunity (2002); den Hartog & de Hoogh (2009) LD2 helps employees to balance their work and Akgün, Keskin et al., family (2007); den Hartog & de Hoogh (2009) LD3 the owner/manager sincerely wants good Chang & Lee (2007) relations with his/her employees Panayides, (2007) LD4 my manager helps me if I have difficulty in Chang & Lee (2007) doing my job Wong, Tjosvold et al., (2010) LD5 my manager is willing to solve problems that Templeton et al., (2002); occur Wong, Tjosvold et al., (2010) LD6 is well managed. Jyothibabu, Farooq et al., (2010); Yang, Watkins et al., (2004) LD7 my manager does not hold back promotion for Gómez et al. (2004); good performers Yang, Watkins et al., (2004) LD8 I meet my supervisor/team leader at least once Jyothibabu et al., (2010) a day. Yang, Watkins et al., (2004) LD9 my supervisor usually tells me things before I den Hartog & de Hoogh hear them on the grapevine (2009);Wong, Tjosvold et al., (2010) LD10 my manager supports requests for learning Jyothibabu, Farroq et al., opportunities (2010); Yang, Watkins et al., (2004) LD11 my manager shares relevant up-to-date Akgün, Keskin et al., information with employees (2007); Jyothibabu, Farooq et al., (2010) LD12 my manager continually looks for opportunities Akgün, Keskin et al., to learn (2007); Jyothibabu, Farooq et al., (2010) Source: literature review developed for this study 4.5.4. Empowerment Empowerment, as defined by Rankinen et al., (2009), is a process whereby the individual feels confident that he or she can successfully execute a certain action during organizational change. Empowerment is crucial for promoting organizational learning

P a g e | 125

(Bih-Shiaw and Weining 2003). In relation to organizational learning, some studies have treated empowerment as a second order construct (Menon 2001; MacIntosh and Doherty 2007; Biron and Bamberger 2010; Zhang and Bartol 2010; Biron and Bamberger 2011), while other studies have considered it to be a first order construct (Bontis, Crossan et al. 2002; Chauhan and Bontis 2004; Garcia-Morales, Moreno et al. 2006; Jyothibabu, Farooq et al. 2010; Prugsamatz 2010). Menon (2001) believed that empowerment was a second order construct with three subconstructs namely goal internalization, perceived control and perceived competence, while Zang and Bartol (2010) measured empowerment as a second order construct with four first order constructs of meaning, competence, self-determination, and impact. The first order constructs, scales and measurement items used in the two studies are shown in Table 4.11 Table 4.11. Selected previous measures of empowerment (Second order) Study First order Scale Item construct Menon, Goal Six 1. I am inspired by what we are trying to (2001) internalization point achieve as an organization Likert- 2. I am inspired by the goals of the type organization scale 3. I am enthusiastic about working toward the organization’s objectives 4. I am keen on our doing well as an organization 5. I am enthusiastic about the contribution my work makes to organization Perceived 1. I can influence the way work is done in my Control department 2. I can influence decisions taken in my department 3. I have the authority to make decisions at work 4. I have the authority to work effectively 5. Important responsibilities are part of my job Source: literature review developed for this study

P a g e | 126

Table 4.11. Selected previous measures of empowerment (Second order - continued) Six Menon, Perceived 1. I have the capabilities required to do my point (2001) Competence job well Likert2. I have the skills and abilities to do my job type well scale 3. I have the competence to work effectively 4. I can do my work efficiently 5. I can handle the challenges I face at work.

Zhang & Meaning Bartol (2010)

Five point Likerttype scale

1. The work I do is very important to me.

2. My work activities are personally meaningful to me. 3. The work I do is meaningful to me. 1. I am confident about my ability to do my Competence jobs. 2. I am self-assured about my capabilities to perform my work activities. 3. I have mastered the skills necessary for my job. 1. I have significant autonomy in determining Selfhow I do my job. determination 2. I can decide on my own how to go about doing my work 3. I have considerable opportunity for independence and freedom in how I do my job. 1. My impact on what happens in my Impact department is large 2. I have a great deal of control over what happens in my department 3. I have significant influence over what happens in my department Source: literature review developed for this study There have been three research studies that have measured empowerment as a first order construct although there has been no agreement as to the number of measurement items. Bontis, Crossan, and Hulland (2002) used 10 items, García-Morales, LlorénsMontes, and Verdú-Jover (2006a) used 4 items, Prugsamatz (2010) used 5 items while Jyothibabu, Farooq, and Pradhan (2010) used 6 items. The number of items, scales and indicator items used in previous studies are shown in Table 4.12.

P a g e | 127

Study

Bontis, Crossan, and Hulland (2002)

Table 4.12. Selected previous measures of empowerment (First order) Numbe Scale Indicator r of item 10 Seven 1. Pride -point 2. Energy Likert 3. Growth 4. Confidence type 5. Focus scale

GarcíaMorales, LlorensMontes, & VerdúJover (2006a)

4

Seven point Likert type scale

Prugsamatz (2010)

5

Six point rating scale

Jyothibabu, Farooq, & Pradan (2010)

6

Sixpoint Likert scale

6. Innovation 7. Accomplishment 8. Aware issues 9. New ideas 10. Knowledgeable 1. Tendency to increase in self-esteem when a job is done correctly 2. Feel a great personal satisfaction with a well-done job 3. Perform a job that helps employees to satisfy their personal aspirations and achieve the growth 4. Development of employees competences, skills and abilities both professional and human. 1. Enhancement of creativity 2. Creation of new knowledge 3. Timely decision making 4. Generation of different ideas 5. Contribution toward organization-wide decision making 1. My organization recognizes people for taking initiative 2. My organization gives people choices in their work assignment 3. My organization invites people to contribute to the organization vision 4. My organization gives people control over resources they need to accomplish their work 5. My organization support employees who take calculated risks 6. My organization builds alignment of visions across different levels and work groups

Source: literature review developed for this study Enthusiasm and passion for the job, confidence and a focus on meeting previously set performance standards and an ability to plan and to implement solutions are some aspects of empowerment that have been believed to have an influence on organizational learning. Based on this belief and the measurement items used in previous studies, the

P a g e | 128

pool of items used to assess empowerment in this thesis research is presented in Table 4.13. Table 4.13. Pool of empowerment items and their sources Item

Variable title EP1 my work is important to me

Source

Bontis, Crossan et al., (2002) Jyothibabu, Farroq et al., (2010) EP2 I am enthusiastic about working toward the Henderson, Creedy et al., organization’s objectives (2010); Jyothibabu et al., (2010) EP3 I am eager for the organization to care for all of Akgün, Keskin et al., its employees (2007); Wong et al. (2010) EP4 I am keen on doing my job well Henderson, Creedy et al.(2010); Jyothibabu, Farroq et al., (2010) EP5 I feel confident in being able to do my work Bontis, Crossan et al., well (2002); Henderson, Creedy et al., (2010) EP6 I am able to focus precisely on what is to be Bontis, Crossan et al., done to execute my work effectively (2002); Henderson, Creedy et al., (2010) EP7 I know I can perform better than the preBontis et al., (2002); determined performance standard Henderson, Creedy et al., (2010) EP8 I have high levels of energy at work Bontis, Crossan et al., (2002); Uner & Turan (2010) EP9 I feel I can influence the way work is done in Bontis, Crossan et al., my department (2002); Henderson, Creedyn et al., (2010) EP11 I feel my co-workers respect my ideas in Bontis, Crossan et al., relation to completing our jobs (2002); Henderson, Creedy et al., (2010) EP12 I am aware of critical issues that affect my work Bontis, Crossan et al., (2002); Jyothibabu, Farroq et al., (2010) EP13 I am capable of analysing the causes of Jyothibabu, Farooq et al., problems (2010) EP14 I have the ability to plan and to implement Jyothibabu, Farooq et al., solutions (2010) Source: literature review developed for this study

P a g e | 129

4.5.5 Organizational performance An organization can create, retain and transfer knowledge and use this to improve effectiveness, efficiency and quality of work life resulting in organizational growth and survival (García-Morales, Lopez-Martín et al. 2006). However in order to assess the impact of such effects on organizational performance it is necessary to measure it. Because there are a number of aspects of performance, organizational performance is believed to be multidimensional. Previous studies in organizational learning have treated organizational performance as being multidimensional and as either a second order construct (Sarin and McDermott 2003; Yilmaz, Alpkan et al. 2005; Akgün, Lynn et al. 2006; Prajogo 2006; Yilmaz and Ergun 2008; Azadegan and Dooley 2010; Prajogo and McDermott 2011) or as a first order construct (Bontis, Crossan et al. 2002; Aragón-Correa, García-Morales et al. 2007; García-Morales, Lloréns-Montes et al. 2007; Panayides 2007; Panayides 2007; Garcıá-Morales 2008; García-Morales 2011). Yilmaz, Alpkan and Ergun (2005) believed that organizational performance consisted of two first order constructs of financial market performance and qualitative performance while Azadegan & Dooley (2010) and Prajogo and McDermott (2010) believed that four first order constructs indicated a second order organizational performance construct. The first order constructs, their scales and their indicator items are shown in Table 4.14.

P a g e | 130

Table 4.14. Selected previous measures of organizational performance (Second order) Study First order Scale Items construct Yilmaz, Financial and Five 1. Sales growth Alpkan, market point 2. Market share Ergun performance Likert- 3. Return on assets (2005) type 4. Overall profitability Qualitative scale 1. Quality improvement performance 2. New product development capability 3. Employee satisfaction 4. Employee commitment Azadegan & Cost 1. Using this supplier has enhanced our Dooley, Performance ability in reaching internal manufacturing (2010) cost reduction goals 2. Using this supplier has helped improve our manufacturing cost as compared to our competitors. Quality 1. Using this supplier has enhanced our performance ability in reaching defect rate reduction goals 2. Using this supplier has helped improve our defect rate as compared to our competitors Product 1. Using this supplier has enhanced our development ability in new product introduction time performance reduction goals 2. Using this supplier has helped improve our new product introduction time compared to our competitors Delivery 1. Using this supplier has enhanced our performance ability in reaching delivery speed and reliability improvement goals 2. Using this supplier has helped improve our delivery speed and reliability as compared to our competitors Flexibility 1. Using this supplier has enhanced our performance ability in responding to customization requests 2. Using this supplier has helped improve our ability to respond to customization requests as compared to our competitors Source: literature review developed for this study

P a g e | 131

Table 4.14. Selected previous measures of organizational performance (Second order - Continued) Azadegan Delivery Seven 3. Using this supplier has enhanced our point ability in reaching delivery speed and & Dooley, performance (2010) Likertreliability improvement goals type 4. Using this supplier has helped improve our scale delivery speed and reliability as compared to our competitors Flexibility 3. Using this supplier has enhanced our performance ability in responding to customization requests 4. Using this supplier has helped improve our ability to respond to customization requests as compared to our competitors Prajogo & Process Five 1. “Fool-proof” (preventive-oriented McDermott quality point processes (2011) Likert- 2. Standardized and documented instruction type 3. Use of statistical techniques (e.g. SPC) scale 1. The performance of our product Product 2. Conformance to specifications of our quality product 3. Reliability of our product 1. The level of newness (novelty) Product 2. The speed of new product development innovation 3. The number of new products introduced 4. The number of “early market entrants” 1. The technological competitiveness Process 2. The speed new technology adoption innovation 3. The up-datedness (novelty) of the technology 4. The rate of technology change. Source: literature review developed for this study However, as has been previously identified, some studies have treated organizational performance as a first order construct. Although there have been these studies that have tried to examine organizational performance as a first order construct, there has been no agreement as to how many items should be used. Bontis, Crossan, and Hulland (2002) used 10 items, Panaydes (2007) 8 items, García-Morales, Llorens-Montes, and VerdúJover (2007) and Hung, Yang, Lien, McLean, and Kuo (2010) used 6 items while Zhao, Li, Lee, and Chen (2011) used five items. The numbers of items, scales and indicator measures used in these studies are shown in Table 4.15

P a g e | 132

Table 4.15. Selected previous measure of organizational performance (First order) Study Number Scale Indicator of item Bontis et 10 Seven- 1. Organization is successful al., (2002) point 2. Employee satisfaction Likert 3. Individuals happy type 4. Client needs met scale 5. Respected organization 6. Group meets targets 7. Group performs as a team 8. Group contributes 9. Positioned for future 10. Satisfied with sales performance. Panayides 8 Seven- 1. Profitability compared to business unit (2007) point objectives Likert 2. Profitability compared to industry average type 3. Market share compared to business unit scale objectives 4. Market share compared to major competitor 5. Sales growth compared to industry average 6. Sales volume compare to business unit objectives 7. Return on investment compared to industry average 8. Overall assessment of your company’s performance compared to industry average García6 Seven- Relative to your main competitor, what is your Morales, point firm’s profitability in the last 3 years in the LlorensLikert following aspects Montes, type 1. The firm’s profitability measured as profits and Verdúscale over assets (economic profitability) Jover(2007) 2. The firm’s profitability measured as profits over own resources (financial profitability) 3. The firm’s profitability measured as profits over sales (percentage of profits over billing total) 4. The firm’s market share in its main products and markets 5. The degree of employee satisfaction 6. The capacity for acquiring, transmitting and using new knowledge learned Source: literature review developed for this study

P a g e | 133

Table 4.15. Selected previous measures of organizational performance (First order - Continued) 6 Five1. During the past three years, change in competitive Hung, Yang, Lien, point advantage relative to your largest competitor has McLean, Likert markedly improved and type 2. During the past three years, change in market share Kuo(2010) scale relative to your largest competitor has markedly improved 3. During the past three years, change in profit relative to your largest competitor has markedly improved 4. During the past three years, change in cost (product or service) relative to your largest competitor has educed 5. During the past three years, change in sales revenue relative to your largest competitor has greatly increased 6. During the past three years, change in customer satisfaction relative to your largest competitor has greatly increased Zhao, Li, 5 Seven- 1. Change in market share Lee, and point 2. Change in sales volume Chen Likert 3. Change in firm reputation (2011) Type 4. Change in operating profit scale 5. Change in asset size Source: literature review developed for this study By consolidating the measures used in these different studies, this research identified ten items to be used to assess organizational performance and these are shown in Table 4.16. This table lists the various items that were developed as consolidated measures and the journal articles from which information has been incorporated into the different items.

P a g e | 134

Variable title

OP1

Table 4.16. Pool of organizational performance items and their sources Description Source

OP4

more employees are working in this organization than did last year my organization has a greater market share than it had last year my organization has sold more than it did last year my organization meets its performance targets

OP5

I am happy working here

OP6

I believe the organization’s future is secure

OP7

the customers are happy with the products that they buy

OP8

my organization has a strategy that positions it well for the future there is continuous improvement in my organization my organization is successful

OP2 OP3

OP9 OP10

Skerlavaj et al., (2007) García-Morales et al., (2007);Zhao et al. (2011) Akgün et al., (2007); Skerlavaj et al., (2007) Bontis et al., (2002) Jyothibabu et al., (2010) Bontis et al., (2002); Skerlavaj et al., (2007); Jyothibabu et al., (2010) Bontis et al., (2002) Jyothibabu et al., (2010) Bontis et al., (2002); Skerlavaj et al., (2007); Jyothibabu et al., (2010) Bontis et al., (2002) Škerlavaj (2007) Jyothibabu et al., (2010); López et al., (2005) Bontis et al., (2002); Jyothibabu et al., (2010)

Source: literature review developed for this study 4.5.6 Respondent characteristics Respondent characteristics were collected in order to compare the sample of respondents to the general population and to identify the degree of generalisability of the research results. The information that was collected was as follows: 4.5.6.1 Gender The recording of the gender of the respondents allowed for a comparison of the sample with the overall characteristics of the Indonesian population.

P a g e | 135

4.5.6.2 Number of employees The number of employees was used to assess enterprise size. The enterprises that employed the respondents were categorised as micro, small, medium and large enterprises based on a classification used by Statistic Indonesia of fewer than 10 employees representing a micro enterprise, 10 to 19 a small enterprise, 20 to 99 a medium enterprise and 100 and more a large enterprise. This research was designed to examine SMEs because firm size may influence the flow of information and extent of knowledge sharing (Akgün, Keskin et al. 2007; Prajogo and McDermott 2011) and because as Wang et al., (2011) found, firm size had a negative association with competitive intensity and market change, power distance and individualism-collectivism.

As this study was designed to examine organizational

learning in an SME context, only data from small enterprises (10 – 19 employees) and medium enterprises (20 – 99) was retained. 4.5.6.3 Education The education level of the respondents was collected and respondents were classified as elementary-junior high school, senior high school/vocational study, diploma, bachelor (S1), masters degree and doctoral degree qualified people.

4.5.6.4 Tenure The length of employment was identified in respect of the following categories.(1) up to 3 years, (2) 4 to 7 years, (3) 8 to 12 years and (4) more than 12 years.

P a g e | 136

4.5.6.5 Age of the firm The period of existence of the employing firm was classified into groups of (1) up to 3 years, (2) 4 to 7 years, (3) 8 to 12 years and (4) more than 12 years. 4.5.6.6 Sector The business type was classified as being either service or trading or manufacturing. As has been described in section 3.2, this study examined two types of businesses namely service and trading businesses. 4.6 Conclusion There is no universally accepted model of organizational learning that has been investigated by organizational learning researchers although many studies have set out to examine it. Some studies have included relationships with organizational learning such as those with organizational culture, leadership and empowerment, as dimensions of organizational learning, while other researchers have suggested that they believed them to be independent constructs. This thesis research has addressed the examination of organizational culture, leadership and empowerment as antecedents and indicators of organizational learning. The development of each construct and the testing of the hypotheses are set out in chapter 5

P a g e | 137

CHAPTER 5 RESEARCH METHODOLOGY 5.1. Introduction The previous chapter covered the relationship between organizational learning and organizational performance. This chapter will outline the research design and research methodology. The structure of chapter 5 is shown in figure 5.1: Figure 5.1 Outline of Chapter 5 5.1. Introduction

5.2. Research problem and hypotheses

5.3. Research paradigm

5.4. Research design

5.5. Sampling design

5.6. Operation definition

5.7. Questionnaire design

5.8. Administration of the main survey

5.9. Data analysis

5.10 Conclusion Source: Developed for this thesis

P a g e | 138

5.2. Research problem and hypotheses The quality of a scientific research project is limited by the quality of the problem definition (Zikmund, Babin et al. 2010). To ensure satisfactory quality for this research project, the research problem and research objectives as well as the research questions have been identified in chapter one, while research hypotheses were developed in chapter four. A summary of the research problem, research objectives, research questions and research hypotheses are shown in table 5.2. Figure 5.2. Research Problem, objectives, questions and hypotheses Research Problem How does organizational learning and its antecedents influence the performance of small and medium Indonesian enterprises (SMEs). Research Objectives: 1. To develop and to test a comprehensive model of the relationships between organizational learning, leadership, empowerment, organizational culture and SME performance 2. To explore the strengths of the relationships between organizational learning, leadership, empowerment, organizational culture and Indonesian SME performance.

Research Questions: 1. Can the testing of a comprehensive model of the relationships between SME organizational performance and organizational learning and its antecedents – organizational culture, transformational leadership and empowerment produce a valid outcome? 2. What are the relationships between organizational learning, and its antecedents and the performance of Indonesian SMEs?

Hypothesis Ho1: There is no significant relationship between organizational learning and organizational performance Hypothesis Ho2a: There is no significant relationship between organizational culture and organizational learning Hypothesis Ho2b: There is no significant association between organizational culture and empowerment. Hypothesis Ho3a: There is no significant relationship between transformational leadership and organizational learning Hypothesis Ho3b: There is no significant relationship between transformational leadership and organizational culture Hypothesis Ho3c: There is no significant relationship between transformational leadership and empowerment Hypothesis Ho3d: There is no significant relationship between transformational leadership and organizational performance Hypotheses Ho4: There is no significant relationship between empowerment and organizational learning

Source: Developed for this research.

P a g e | 139

5.3. Research paradigm The previous section has provided a summary of the research problem, research objectives and research questions. This section will discuss the research paradigm and research elements in an organizational context. 5.3.1. The four research paradigms in organizational science Organizational

science

acknowledges

four

research

paradigms:

positivism,

constructivism, critical theory and realism (Sobh and Perry 2006). In the positivism paradigm, knowledge is statistically generalised to a population through the statistical analysis of observations. In the constructivism paradigm, research findings are related to individual views of the world and their multiple constructed realities while in the critical theory paradigm, knowledge is generalized by its appropriateness to the subjective conventions of society. In the realism paradigm, knowledge is generalized by analytically showing empirical findings nested within theories. Of the four paradigms, positivism is the most popular paradigm for empirical organizational research. In their review of organizational research methods, Aguinis, Pierce, Bosco and Muslin (2009) found that positivist paradigms were adopted for nearly all empirical organizational studies. Organizational phenomena were measured as independent facts about a single apprehensible reality (Healy and Perry 2000). In other words, organizational phenomena were observed and described from an objective viewpoint without interfering with the organizational phenomena being studied (Zikmund, Babin et al. 2010; Babbie 2011). This often involves manipulation of reality with variations in an independent variable or a few independent variables to identify regularities in, and to form relationships

P a g e | 140

between, some organizational aspects (Couper, Traugott et al. 2001; Babbie 2011). Predictions can be made on the basis of the previously observed and explained realities and their inter-relationships (Zikmund 2003). A summary of the research paradigm and its elements are presented in table 5.1.

Element Ontology

Epistemology

Table 5.1 Scientific research paradigms Paradigm Constructivism Positivism Critical Theory Reality is real Multiple local “virtual” and and specific reality shaped apprehensible “constructed by social, realities” economic, ethnic, political, cultural, and gender values over time

Finding true – researcher is objective by viewing reality through a “one-way mirror”

Created findings – researcher is a “passionate participant” within the world being investigated

Common Mostly In-depth methodologies concerned with unstructured testing theory. interviews, Thus mainly participant quantitative observation, methods such action as: survey, research, and experiments, grounded and theory verification of research hypotheses Source: Sobh & Perry, (2006 p. 1195).

Value mediated findings – researcher is a transformative intellectual” who changes the social world within which participants live Action research and participant observation

Realism Reality is “real” but only imperfectly and probabilistically apprehensible and so triangulation from many sources is required to try to know it Finding probably true – researcher is value-aware and needs to triangulate any perceptions he or she collecting.

Mainly qualitative methods such as case studies and convergent interviews.

P a g e | 141

5.3.2. Justification of the paradigm used in this thesis From the four research paradigms, the positivism paradigm was chosen for this research. The chosen paradigm is justified by two main reasons, independence of the researcher and the suitability of the investigation of the organizational phenomena. In addition, as has been previously mentioned, a positivism paradigm is generally used in organizational research (Lloren-Montes, Javier-Moreno et al. 2005; García-Morales, Lloréns-Montes et al. 2007; Garcıá-Morales 2008). 5.3.3. Scientific research elements As can be seen in table 5.1 (page 139), a researcher works in three aspects of scientific research namely ontology, epistemology and methodology (Sobh and Perry 2006). Ontology relates to the existence of reality in the context of the research and concerns the determination whether some categories of being are fundamental and asks in what sense the items in those categories can be said to exist. Epistemology is the relationship between reality and the researcher, and is concerned with the nature, sources and limits of knowledge. Methodology covers the techniques used by the researcher to discover that reality (Sobh & Perry, 2006, p.1194). In short, ontology answers questions as to what is the form and nature of reality, epistemology answers the question as to what is the nature of the relationship between the researcher and the phenomena to be researched, while methodology answers the question of how a researcher finds out whatever he or she believes can be found (Babbie 2011). This research investigates the existence of organizational learning practice and its antecedents in relation to organizational performance. The researcher objectively

P a g e | 142

assessed the existence of organizational phenomena without interference and surveyed organizational learning practices. The survey results were quantitatively analysed using the AMOS release 20 software. 5.3.4. Positivistic research method Table 5.1 shows that positivism is concerned with theory or model testing and the main research method is quantitative. Quantitative methods claim that knowledge is created by applying statistical reasoning to a small part of a population so as to draw conclusions about the population (Babbie 2011). Creswell and Clark (2007) suggested the use of quantitative methods when the research problem identifies factors that influence an outcome or an understanding of the best predictors of outcomes. Quantitative research involves identifying the characteristics of an observed phenomenon or exploring possible correlations among two or more phenomena (Leedy and Ormrod 2010). Types of quantitative research include: correlational research, developmental designs, observational studies, and survey research (Creswell 2009). In addition, quantitative methods establish a deductive analysis/framework. They begin with an hypothesis to be tested, and use standardized instruments (Cresswell, 2009; Leedy & Ormrod, 2010). Cresswell (2009) describes quantitative data techniques as data condensers enabling the researcher to see the big picture. This was a key objective at this stage of the research. In order to develop and test suitable measures of organizational learning and its association with organizational performance, a quantitative method needed to be employed. In addition, this research focuses on testing a model which posits relationships amongst many variables and their associations with organizational learning variables.

P a g e | 143

Although the positivism paradigm is mainly concerned with a quantitative method, the role of a qualitative method is also crucial for supporting quantitative results. Qualitative research is research whose findings are not subject to quantification or quantitative analysis (Alexander, Thomas et al. 2008; Creswell 2008) can help to identify unobserved heterogeneity in quantitative data as well as previously unknown explaining variables (Kelle 2006). The researcher collects open-ended data from which emerging data (s)he develops themes (Creswell 2009) and organises the findings to answer the research questions. In such an approach, the researcher utilizes an inductive framework to guide the research and the emerging themes (Leedy and Ormrod 2010). Methods of collecting data when using a qualitative approach can be of following types: naturalism,

ethnography,

ethnomethodology,

grounded

theory,

case

studies,

phenomenological research and narrative research (Creswell and Clark 2007; Leedy and Ormrod 2010; Babbie 2011). Naturalism assumes that an object of social reality exists and can be observed and reported accurately while ethnography focuses on detailed and accurate reports of social life. Ethnomethodology focuses on the discovery of implicit, usually unspoken assumptions and agreements as does grounded theory (Leedy and Ormrod 2010). Many organizational researchers use mixed, qualitative and quantitative methods (Aguinis, Pierce et al. 2009). A mixed methods approach combines quantitative and qualitative approaches. Mixed methods require a considerable amount of time, as both quantitative and qualitative methods need to be reviewed and explained (Alexander, Thomas et al. 2008). Results from qualitative interviews can help to identify unobserved heterogeneity in quantitative data as well as previously unknown explanatory variables and misspecified models (Kelle 2006). Results from the

P a g e | 144

qualitative part of a mixed-methods design can help to understand previously incomprehensible quantitative findings or confirm recent quantitative findings (Aguinis, Pierce et al. 2009). 5.3.4. Justification for quantitative research design In this research, a quantitative methods approach was firstly used so that the study could use predetermined instruments to collect data that could be statistically assessed (Strati 2000; Creswell 2009). Furthermore, the utilization of a quantitative approach was considered to be appropriate and justifiable because the study was designed to summarize research finding using descriptive statistics, to explore possible associations between variables for each construct and between constructs as well as the influence of one construct on another construct using Structural Equation Modeling (Hair, Black et al. 2010). 5.4. Research design A research design is a logical arrangement (Babbie 2011), a master plan specifying the methods and procedures for collecting data and analysing the needed information (Zikmund, Babin et al. 2010). It specifies the type of research, sampling methods, sources of data, procedures for collecting data, measurement issues, and data analysis plans (Babbie 2011). A good research design is crucial if a quality research report is to be produced (McDaniel and Gates 2007; Zikmund, Babin et al. 2010). Scientific research design has seven steps (Ezzy 2006; Zikmund, Babin et al. 2010). Research activity starts with the assessment of relevant existing knowledge of a phenomenon; then the formulation of concepts and propositions, statement of hypotheses, the design of research to test the hypotheses, the acquisition of meaningful

P a g e | 145

data; analysis and evaluation of the data and finally the proposal of an explanation of the phenomenon and a statement of any new problems raised by the research. The seven scientific research design steps and the chapters where the thesis activities are made clear, are shown in Figure 5.3. Figure 5.3 Steps in Research Design

Step

Activity

This thesis

Step 1

Assessment of relevant existing knowledge of a phenomenon

Chapter 1

Step 2

Formulation of concepts and proposition

Chapter 2 and Chapter 3

Step 3

Statement of hypotheses

Chapter 4

Step 4

Design research to test the hypotheses

Chapter 5

Acquisition of meaningful data

Chapter 6

Step 5

Step 6

Step 7

Analysis and evaluation of data

Proposal of an explanation of the phenomenon and a statement of new problems raised by the research

Source: Adapted from Ezzy, 2006, p.33; Zikmund et al., 2010 p. 45

Chapter 6

Chapter 7

P a g e | 146

5.4.1 Justification for the research design In research practices, the research design is determined by the type of research being conducted and the purpose of the study (Neuman 2007; Sekaran and Bougie 2010). Zikmund, Babin, Carr, and Griffin (2010) states that based on the purpose of the research, there are three types of research design: exploratory research, descriptive, and causal. Exploratory research is conducted to clarify and define the nature of a problem (Zikmund, Babin et al. 2010; Babbie 2011). It can be used to define a problem precisely, identify courses of action, develop hypotheses and establish priorities for further research (Malhotra, Hall et al. 2006). Sources of data for exploratory research are secondary data, surveys and qualitative inputs (Malhotra, Hall et al. 2001; Babbie 2011). Descriptive research is conducted to describe characteristics of research objects, for example to estimate the percentage of units in a specified population or to determine the degree to which variables are associated and to make specific predictions (Malhotra, Hall et al. 2006; Sekaran and Bougie 2010). In descriptive research the sources of information are secondary data, survey research, panels and observations (Malhotra, Hall et al. 2006; Babbie 2011). Descriptive research is recommended when the proposed research is centred on providing accurate, statistically reliable data (Neuman 2007). The main purpose of descriptive research is to seek the answer to who, what, when, where and how questions (Zikmund 2003; Neuman 2007; Babbie 2011). Causal research is conducted to explore and establish cause-and-effect relationships, if any, between variables where the research problem has been clearly defined (Sarantakos 2005; Zikmund, Babin et al. 2010). This type of research is appropriate if the aim of the research is to determine the nature of the relationships between the causal

P a g e | 147

variables and effects that have to be predicted, so it must be a well-planned and structured design (Zikmund, Babin et al. 2010; Babbie 2011). Causal research is done to examine cause-and-effect relationships and to identify such relationships and to provide evidence regarding their relationships (Zikmund 2003). It also attempts to establish that when one event has occurred, another event will follow (Malhotra, Hall et al. 2006; Zikmund, Babin et al. 2010). A summary of the characteristics of the three different types of research is presented in table 5.2. Table 5.2 Characteristics of different types of business research Exploratory Descriptive research Causal research Research Amount of

Highly ambiguous

Partially defined

Clearly defined

Research question

Research questions

Research hypothesis

Early stage of

Later stage of

Later stages of

decision making

decision making

decision making

Unstructured

Structured

Highly structured

Discovery oriented,

Can be confirmatory

Confirmatory

productive but still

although more

oriented. Fairly

speculative. Often in

research is

conclusive with

need of further

sometimes still

managerially

research

needed. Results can

actionable results

be managerially

often obtained

uncertainty Key research statements When conducted

Usual research approach Nature of results

actionable Adapted from Zikmund, Babin, Carr, and Griffin (2010)

P a g e | 148

As a research project is a continuous investigation process from problem discovery to the description of the characteristics of a phenomenon and finally to determining the level of influence among phenomena of interest (Ezzy 2006; Babbie 2011), this thesis has employed all three categories to gather as much appropriate information as was needed. The study has employed exploratory research as the tool for gaining an understanding of the nature of the problem of organizational learning since the concepts of organizational learning are multifaceted and complicated (Lipshitz, Popper et al. 2002; Friedman, Lipshitz et al. 2005). Indeed, little is known about the subject of organizational learning in an Indonesian context. Therefore, this study is intended to comprehensively investigate the key antecedents of organizational learning in the context of Indonesia. The exploratory research that was done involved in-depth interviews with two SME owners and three SME employees in Makassar – Capital City of South Sulawesi, Indonesia. A descriptive research design was employed to describe the characteristics of the respondents and those of each variable and each construct of interest (Strati 2000). Arithmetic means, standard deviations and variances were used to describe these characteristics. Finally, a causal research design was employed to test a comprehensive organizational learning model. In accordance with the research objectives, this research was intended to investigate the existence of organizational learning and its influence on perceived SME performances in Indonesia. Causal research was considered appropriate for this investigation of the influence of organizational learning on SME performance. Strategic implications of the practices were observed to produce an understanding of the relationship between organizational learning as related to SMEs. The causal research

P a g e | 149

was carried out in order to test the postulated relationships between organizational learning and organizational performance and among organizational learning and organizational culture, leadership and empowerment (García-Morales, Lloréns-Montes et al. 2007; Jyothibabu, Farooq et al. 2010; García-Morales, Jiménez-Barrionuevo et al. 2011; Jyothibabu, Pradhan et al. 2011). 5.4.2. Primary survey methods A survey is a popular data collection method used in a positivism paradigm (Strati 2000; Zikmund, Babin et al. 2010; Babbie 2011). The survey approach refers to a group of methods which allow for the use of quantitative analysis, where data for a large number of organizations are collected through methods such as mail questionnaires, telephone interviews, or from published statistics, and these data are analyzed using statistical techniques (Zikmund, Babin et al. 2010; Babbie 2011). By studying a representative sample of organizations, the survey approach seeks to discover relationships that are common across organizations and hence to provide generalizable statements about the object of study (Babbie 2011). Surveys enable the researcher to obtain data about practices, situations or views at one point in time through questionnaires (Leedy and Ormrod 2010). Data covering information (facts, opinions, motivations, awareness, and attitudes) is gathered by communicating with a representative sample of people (Malhotra, Hall et al. 2006; Zikmund, Babin et al. 2010). Surveys are mostly used because they provide a quick, inexpensive, and accurate means of assessing information about a population (Zikmund, Babin et al. 2010). The use of surveys permits a researcher to study more variables at one time than is typically possible in laboratory or field experiments, whilst data can be collected about real world environments.

P a g e | 150

There are two basic media that can be used for survey research namely human interactive media and electronic interactive media (Strati 2000; Ibeh, Brock et al. 2004; Zikmund, Babin et al. 2010). Human interactive media are personal forms of communication in which a message is directed at an individual (or a small group) who then have an opportunity to interact with the communicator (Couper, Traugott et al. 2001; Ibeh, Brock et al. 2004). Some of the human interactive survey types are door-todoor personal interviews, mall-intercept interviews and telephone interviews. The use of electronic interactive media is a method of communication between the researcher and the respondent using digital technology (Malhotra, Hall et al. 2006; Zikmund, Babin et al. 2010). The advent of digital technology has created an opportunity for conducting electronic surveys such as e-mail surveys, Internet/Web surveys, converted CATI (ComputerAssisted Telephone Interviewing) surveys, Bulletin Boards, Downloadable surveys and interactive kiosks (Ibeh, Brock et al. 2004; Zikmund, Babin et al. 2010). Table 5.3 provides a comparative evaluation of some prospective survey methods, which could be used in this research.

P a g e | 151

Table 5.3. Advantages and Disadvantages of Typical Survey Methods Criteria

Door-to-door interview

Mall intercept personal interview Fast

Telephone interview

Mail survey

Internet survey

Speed of data

Moderate to fast

Very fast

Instantaneous; 24/7

Confined, possible urban bias Moderate to low

High

Slow, researcher has no control over return of questionnaire High

Geographic flexibility

Limited to moderate

Respondent cooperation

Excellent

Good

Moderate: poorly designed questionnaire will have low response rate

Quite versatile

Extremely versatile

Moderate

Questionnaire length

Long

Moderate to long

Moderate

Not versatile: requires highly standardized format Varies depending on incentive

Varies depending on web site; high from consumer panels Extremely versatile

Versatility of questioning

Item nonresponse rate Possibility for respondent misunderstanding

Low

Medium

Medium

High

Low

Low

Average

Degree of interviewer influence on answers

High

High

Moderate

High: no interviewer present for clarification None: interviewer absent

Supervision of interviewers

Moderate

Moderate to high

Anonymity of Respondent

low

Low

High: especially with central location interviewing Moderate

Ease of call-back or follow-up

Difficult

Difficult

Easy

Easy: but takes time

Cost

Highest

Moderate to high

Low to moderate

Lowest

Source: Zikmund, Babin, Carr, and Griffin (2010)

High (worldwide)

Moderate: length customized according to answers Software can minimise High

None

Not applicable

Not applicable

High

Respondent can Be either anonymous or known Difficult, unless e-mail address is known Low

P a g e | 152

The table shows an evaluation of some survey methods namely telephone survey, mail survey, e-mail survey and Internet/web survey across criteria such as flexibility of data collection, diversity of questions, response rate, speed and cost. Flexibility of data collection is determined primarily by the extent to which respondents can interact with the interviewer and the survey questionnaire (Malhotra 1999; Malhotra, Hall et al. 2006). Both telephone and Web survey methods offer moderate to high flexibility of data collection (Malhotra, Hall et al. 2006; McCabe, Couper et al. 2006; Malhotra 2008). In the Internet survey method for instance, a questionnaire can be administered in an interactive mode (Couper, Traugott et al. 2001). Thus researchers can use various question formats, personalize the questionnaire, and handle complex skip patterns (McCabe, Couper et al. 2006). Mail and e-mail surveys have low flexibility because these survey modes do not allow for interactions between interviewers and respondents (McCabe, Couper et al. 2006; Zikmund, Babin et al. 2010). The diversity of questions that can be asked depends on the degree of interaction the respondent has with the interviewer and the questionnaire, as well as the respondent’s ability to actually see the questionnaire (Dillman, Phelps et al. 2009). The Internet survey method is categorized as having a moderate to high ability to ask a diversity of questions (McCabe, Couper et al. 2006). Since an Internet survey can ask a diversity questions, an Internet/Web survey will reflect moderate to good evaluations of most of these criteria, such as a high possibility of obtaining sensitive information, a very high response speed, and no potential for any interviewer bias. However, the limitation of this survey method, is a very low response rate (Couper, Traugott et al. 2001; Dillman and Smyth 2007; Dillman, Phelps et al. 2009). This weakness can be partly resolved by

P a g e | 153

sending e-mails to the targeted respondents as reminders (McCabe, Couper et al. 2006; Malhotra 2008). 5.4.3. Justification for web-based survey Data for this research was collected using a web-based survey. The web-based survey is revolutionizing the way that researchers collect data (Couper 2000; McCabe, Couper et al. 2006; Zikmund, Babin et al. 2010). The internet represents a fast, convenient, and economic communication medium, which has experienced substantial growth and has penetrated rapidly into all aspects of human life (McCabe, Couper et al. 2006; Malhotra 2008; Dillman, Phelps et al. 2009). Its unique features – world-wide reach, around-theclock availability, ability to collect real time feedback, access to low incidence populations and narrow topics, extremely low cost and fast speed, the ability to automatically send respondents to the next question they should answer, has resulted in web based surveys being adopted by many researchers (Malhotra 2008; Fleming and Bowden 2009; Zikmund, Babin et al. 2010). Questionnaires can be posted on a web site and respondents can be invited to go to the particular URL and to participate in the survey. Web based data collection methods cut down on the expense associated with traditional mail surveys and also reduce data entry errors since the data can be automatically recorded rather than being transcribed from a paper form into an electronic format (Stanton and Rogelberg 2001; McCabe, Couper et al. 2006). As a result of the many advantages of web based data collection, the Web Survey has become widely used in social science research over the last ten years (Couper 2000; Couper, Traugott et al. 2001; Crawford, Couper et al. 2001; Fleming and Bowden 2009). Practitioners have increasingly been replacing telephone and mail surveys by Internet-based surveys (Brawner, Felder et al. 2001; Stanton and Rogelberg 2001; Kim

P a g e | 154

2006). This change has been supported by the fact that there has been found to be no difference between the responses to internet and paper base surveys (Brawner, Felder et al. 2001) Since SME owners and managers are concerned with networking and eager to participate in a web-survey (Suarez-Balcazar and Taylor-Ritzler, 2009) a web-based survey was considered to be a good approach to use in this thesis research. 5.5. Sampling Design Sampling is the process of using a small number of items or parts of a larger population to draw conclusions about the whole population (Zikmund, Babin et al. 2010). Basically the sampling design process includes some steps that are broadly used for business research. For this study, a seven step sampling process was employed (Zikmund, Babin et al. 2010). This is shown in Figure 5.4.

P a g e | 155

Figure 5.4 Sampling design process Define the target population Select a sampling frame Determine if a probability or non-probability sampling method will be chosen Plan procedure for selecting sampling units Determine sample size Select actual sampling units Conduct fieldwork Source: Zikmund, Babin, Carr, and Griffin (2010, p. 391)

5.5.1. Target population The first step in developing a sampling design is to identify the target population. The population for this study was defined as every Human Resource Development – Power group (HRD-Power group) member who works in an SME organization or who is an owner of an SME in the trade and service sector. World Bank Data (2011) showed that the trade and service sector contributions to the Indonesian economy increased from 37.2% in 2006 to 42.3% in 2011. SMEs in the trade and service sector are an important source of employment (Tambunan and Nasution 2006; Ardic, Mylenko et al. 2011; The World Bank 2011), thus justifying the choice of the target population.

P a g e | 156

5.5.2. Select sampling frame The sample frame for this research was members of HRD-Power group. The group members are owners, human resource/personal managers and employees of SMEs who are interested in human development and organizational development, and continuously discuss and exchange information in relation to the topic. The HRD-Power group was chosen as the members come from all over Indonesia and therefore provided a good coverage of the trade and service SME business sectors. Through the group, The Ministry of Cooperation and Small and Medium Enterprises disseminates plans, strategy and training to develop cooperation with SMEs across Indonesia

(Depkop 2010). New policy or training and development plans including

business opportunities as well as market information for SMEs are provided for the members (Baskoro 2011). 5.5.3. Determine if a probability or non-probability sampling method will be chosen When conducting a survey or experiment an entire population may be too large to be able to be accessed and so researchers use samples drawn from that population (Strati 2000; Babbie 2009). Types of probability sampling designs include: simple random sampling (SRS), systematic sampling, and stratified sampling. Non-probability sampling methods are considered less reliable than probability sampling (Babbie 2011). Types of non-probability sampling include: convenience, quota and purposive (Malhotra, Hall et al. 2006; Zikmund, Babin et al. 2010).

P a g e | 157

This study used a probability sampling technique which means that every member of the target population had a known, non-zero probability of selection (Malhotra, Hall et al. 2006; Zikmund, Babin et al. 2010) 5.5.4. Plan procedure for selecting sampling units The HRD-Power group has 8985 members of whom 4913 actively participate in discussions and information exchanges in relation to human resource development. The membership profile revealed that 2237 were potential respondents as SME owners, managers or employees in the service and trade sectors. One thousand e-mails were sent to randomly selected members of this group. 5.5.5. Determine sample size The required sample size depends on factors such as the homogeneity of the population, considerations of the proposed data analysis techniques as well as the availability of time and money for the study (Malhotra, Hall et al. 2008; Zikmund, Babin et al. 2010). Because there is often a lower response rate for Web based surveys than for other survey methods (Malhotra 1999; Zikmund 2000; Brawner, Felder et al. 2001; Ranchhod and Zhou 2001; Hewson, Yule et al. 2003; Zikmund, Babin et al. 2010) and because multiple responses may be received and need to be eliminated (Mann and Stewart 2000; Brawner, Felder et al. 2001; Ranchhod and Zhou 2001; McDaniel and Gates 2002; Hewson, Yule et al. 2003), it was decided to use a sample size of 1,000. This number would be expected to be sufficient to provide at least 500 responses that could then if necessary be split into two 250 response samples to be used in the development and the testing of the constructs and a structural equations model (SEM) (Tabachnick and Fidell 2007; Hair, Black et al. 2010).

P a g e | 158

5.5.6. Conduct fieldwork After selecting the respondents, e-mails were sent out inviting participation in the survey. The invitational email and two follow up reminder emails were sent directly from the Qualtrics web survey software to the selected respondents who were ready to participate from 1 May to 1 July 2011. 5.6. Operational definitions Chapter 4 presented the organizational learning (refer to section 4.5.1), organizational culture (section 4.5.2), leadership (section to 4.5.3), empowerment (section 4.5.4) and organizational performance (section 4.5.5) constructs. Operational definitions of the constructs are summarised in table 5.5. Table 5.4 Operation Definition Concept Organizational Learning (OL)

Conceptual definition organization’s enhanced ability to acquire, disseminate and use knowledge in order to adapt to a changing external and internal environment

Source: developed for this thesis

Statement: (In) the organization where I am now working: 1. encouraging employees to think from a global perspective 2. to bring customers’ views into their decision-making processes 3. existence of previous knowledge available to all employees 4. stimulating employees to discuss mistakes openly 5. rewards employees for showing initiative 6. supporting employees to take calculated risks 7. employees help each other to learn 8. employees spend time building trust with each other

Measurement type/scale Interval data from a 7 point Likert type scale with anchor points of (1) strongly disagree to (7) strongly agree

P a g e | 159

Table 5.4 Operation Definition (Continued) Organization al Learning

Organization al culture

organization’s enhanced ability to acquire, disseminate and use knowledge in order to adapt to a changing external and internal environment

9. organisation rewarding employees for learning 10. giving employees time to support their learning 11. I am free to initiate changes as needed 12. able to adapt operational goals as needed 13. sharing vision and mission across different structural levels 14. all organizational members share similar vision and mission 15. enabling employees to get necessary information quickly and easily maintaining an up-to-date database of employee skills a set of values and (In) the organization where I am now basic assumption working: 1. all decision-making is made through a that an rational process organization has created and 2. considers the impact of decisions on employee morale developed through the life of 3. creates systems to measure gaps between current and expected the organization to enable it to performance adapt to 4. all organizational members share a common sense of mission that most environmental think is worth striving to achieve changes to enable the organization 5. co-operation amongst departments is to improve its important 6. innovation is the most important goal performance. 7. is open to receiving new ideas from organizational customers 8. the structure supports its strategic direction 9. the organizational culture is innovative 10. the organizational structure allows employees to work effectively 11. the organization has built a culture of trust amongst employees 12. the organization has developed operational procedures to help employees to work efficiently 13. the organization has developed systems to nurture knowledge management

Source: developed for this thesis

Interval data from a 7 point Likert type scale with anchor points of (1) strongly disagree to (7) strongly agree

Interval data from a 7 point Likert type scale with anchor points of (1) strongly disagree to (7) strongly agree

P a g e | 160

Table 5.4 Operation Definition (Continued) 1. my manager communicates Transformational an influencing her/his vision to employees at Leadership relationship every possible opportunity between leaders 2. my manager helps employees to and followers balance their work and family who intend real 3. the owner/manager sincerely changes and wants good relations with his/her outcomes that employees reflect their my manager helps me if I have shared purposes difficulty in doing my job

Empowerment

A process whereby the individual feel confident he or she can successfully execute a certain action during organizational change

Source: developed for this thesis

Interval data from a 7 point Likert type scale with anchor points of (1) strongly disagree to 4. my manager is willing to solve (7) problems that occur strongly is well managed agree 5. my manager does not hold back promotion for good performers 6. I meet my supervisor/team leader at least once a day 7. my supervisor usually tells me things before I hear them on the grapevine 8. my manager supports requests for learning opportunities 9. my manager shares relevant upto-date information with employees 10. my manager continually looks for opportunities to learn 11. my manager shares relevant upto-date information with employees 12. my manager continually looks for opportunities to learn 1. My work is important to me Interval data 2. I am enthusiastic about working from toward the organization’s a 7 point Likert objectives 3. I am eager for the organization to type scale care for all of its employees with 4. I am keen on doing my job well anchor points 5. I feel confident in being able to of (1) strongly do my work well disagree to 6. I am able to focus precisely on what is to be done to execute my (7) work effectively strongly agree 7. I know I can perform better than the pre-determined performance standard

P a g e | 161

Table 5.4 Operation Definition (Continued) Empowerment

A process whereby the individual feel confident he or she can successfully execute a certain action during organizational change

Organizational performance

Ability of an organization to create employment, improve effectiveness, efficiency and quality of work life resulting in organizational growth and survival.

Demographics

Respondents demographic and socio-economic characteristics

8. I have high levels of energy at work 9. I feel I can influence my work unit to meet a pre-determined performance standard 10. I can influence the way work is done in my department 11. I feel my co-workers respect my ideas in relation to completing our jobs 12. I am aware of critical issues that affect my work 13. I am capable of analysing the causes of problems I have the ability to plan and to implement solutions 1. more employees are working in this organization than did last year 2. my organization has a greater market share than it had last year 3. my organization has sold more than it did last year 4. my organization meets its performance targets 5. I am happy working here 6. I believe the organization’s future is secure 7. the customers are happy with the products that they buy 8. my organization has a strategy that positions it well for the future 9. there is continuous improvement in my organization 10. my organization is successful Gender Size Education Tenure Age Business Sector

Interval data from a 7 point Likert type scale with anchor points of (1) strongly disagree to (7) strongly agree

Interval data from a 7 point Likert type scale with anchor points of (1) strongly disagree to (7) strongly agree

Nominal Ordinal Ordinal Ordinal Ordinal Nominal

Source: developed for this thesis This table has listed the details of the measures that could contribute to the development of parsimonious measures of the different constructs and thereby provide a strong base for the face validity of the measures that will be eventually developed.

P a g e | 162

5.6.1. The development of parsimonious constructs When assessing models containing a large number of variables, large amounts of accumulated error produce a model with a poor fit (Bagozzi & Heatherton 1994; Baumgartner & Homberg 1996; Dabholkar, et al., 1996). Thus, Bagozzi and Heatherton (1994) have indicated that no total disaggregation model is likely to indicate a good fit to the data if there are more than four or five measures per construct. Hinkin (1995) and Baumgartner and Homberg (1996) also suggested that four or five good indicator items should be utilised to measure a construct, as did Fabrigar et al (1999) who provided justification for the retention of four items to represent a construct. Thomas, Sussman, and Henderson (2001) have noted that part of the process of scale development is the development of parsimonious instruments, utilising the fewest number of items that adequately capture all aspects of a construct and reduce the level of accumulated error. It was therefore decided that for each of the constructs, a reduced four item scale would be used. Based on the Thomas, Sussman, and Henderson (2001) approach to scale reduction, confirmatory factor analysis, would be used to remove items with the lowest factor loadings followed by an assessment of the goodness of fit. Item exclusion would also be checked by an examination of the reliability and validity of the scale. The scales were developed to be parsimonious ones in accordance with the recommendations of writers such as Mulaik et al. (1989), Bentler and Mooijaart (1989) and James, et al., (2009) and also taking note of the recommendation in Hair et al.(2006), p.786 that ’ four indicator constructs should be utilised where possible.’ They were then validated for the different environment in which they were used.

P a g e | 163

5.7. Questionnaire design The previous sections have outlined the research paradigm, research design, sampling design and operational variables. A positivism paradigm and web-survey data collection method was adopted for this research. Chapter four outlined the construct development and the domain of organizational learning and its antecedents as well as their influence on organizational performance. This section will present the survey instrument that was used to collect the necessary data. 5.7.1. Questionnaire development To be able to discover meaningful research findings, a researcher has to ask good questions (Strati 2000). Good questions will generate high quality responses (Strati 2000; Malhotra, Hall et al. 2006; Babbie 2011). This research followed the steps in questionnaire development provided by Malhotra et al., (2008) as shown in figure 5.5

P a g e | 164

Figure 5.5 Questionnaire development guidelines Description

Treatment in this thesis

Specify the information needed

Sub-section 5.7.1.1

Specify the type of interviewing method

Sub-section 5.7.1.2

Determine the content of individual questions

Sub-section 5.7.1.3

Design the questions to overcome the respondent’s inability

Sub-section 5.7.1.4

Decide on the question structure

Sub-section 5.7.1.5

Determine the question wording

Sub-section 5.7.1.6

Arrange the questions in proper order

Sub-section 5.7.1.7

Identify the form and layout

Sub-section 5.7.1.8

Reproduce the questionnaire

Sub-section 5.7.1.9

Eliminate bugs by pretesting

Sub-section 5.7.1.10

Source: Malhotra, Hall, Shaw, & Oppenheim (2008)

5.7.1.1. Specify the information needed Specifying the information needed is the first step in designing a questionnaire (Malhotra, Hall et al. 2008). The information needed must be based on theoretical foundations (DeVellis 2003). Two main perspectives have emerged in the collection of organizational learning specific information (Easterby-Smith, Crossan et al. 2000; Bapuji and Crossan 2004; Chiva, Alegre et al. 2007). The first perspective looks for the presence of learning enablers in the organization through their questionnaire (LlorenMontes, Javier-Moreno et al. 2005; Garcıá-Morales 2008) while the second perspective

P a g e | 165

looks for results of learning in the organization (Jyothibabu, Farooq et al. 2010; Jyothibabu, Pradhan et al. 2011). Chapter four specified the information required (refer to 4.5). This thesis research used an integrated measurement scale to capture the learning enablers, learning results and performance outcomes. This was done by integrating and modifying two existing scales, and validating the resultant scale that was used in a different context. The new scale was required to provide quantitative data that could be used to understand the relationships between learning enablers, learning outcomes and performance in a learning organization. 5.7.1.2. Specify the type of interviewing method The questionnaire has to be designed according to the method to be used to obtain the necessary data. A self-administered questionnaire can be paper-based or electronic based. The details of self-administered questionnaires that could be used in this thesis research are presented in figure 5.6. Figure 5.6 Details of self-administered questionnaires

Self-administered questionnaires

Paper questionnaire

Mail

In-person drop off

Inserts

Source: Zikmund et al., 2010, p. 219

Electronic questionnaire

Fax

E-mail

Internet web site

Interactive kiosk

Mobile phones

P a g e | 166

This research employed a web-based survey to collect data so the questionnaire was made as simple as possible since with a web-based survey, the visual design may have a paradoxical effect (Malhotra 2008; Dillman, Phelps et al. 2009). The reasons for this are that fancy visual effects in surveys may make the task more enjoyable but may take more time to download and have a higher requirement of the users’ computer system, or be more likely to cause system overload and even system crash, and therefore be likely to decrease the response rate. Although download time has become less of an issue as more and more people have broadband, it still can be important, especially in areas without high rates of broadband adoption. Dilman et al. (2009) suggest that using a plain questionnaire without colour and HTML tables provides a better result than a fancy version of the questionnaire. Deutskens et al.

(2006) found a ‘‘visual

presentation’’ condition, which included a picture and product logo, resulted in lower response rates than a text-only version of a questionnaire. Similarly, (Couper 2000) found little support for the argument that including images increases respondents’ enjoyment or reduces the perceived burden of web-based surveys. 5.7.1.3. Determining the content of individual questions/statements Every question or statement in a questionnaire should contribute to information needed or serve some specific purpose (Malhotra, Hall et al. 2006; Zikmund, Babin et al. 2010) so as to make a questionnaire simple and short while embracing all the required information. Malhotra (2000) suggests that the length of a questionnaire needs to be limited while question spaces need to be minimized. After reviewing previous research in organizational learning, statements in this research were divided into five sub-sections:

P a g e | 167

organizational learning, organizational culture, leadership, empowerment, and organizational performance (refer to section 5.5) The type of question, language used and order of items may all bias response. Thus consideration should be given to the order in which items are presented, e.g. it is best to avoid presenting controversial or emotive items at the beginning of the questionnaire. To engage participants and prevent boredom, demographic and/or clinical data may be presented at the end (Dillman, Phelps et al. 2009; Leedy and Ormrod 2010). Certain questions should be avoided, e.g. those that lead the respondent or include double negatives or double-barrelled questions (Bowling 1997). A mixture of both positively and negatively worded items may minimize the danger of acquiescent response bias, i.e. the tendency for respondents to agree with a statement, or respond in the same way to items. These considerations were taken into account in the development of the questionnaire that was used for this thesis research. 5.7.1.4. Design the questions to overcome the respondent’s inability Respondents cannot be assumed to provide accurate and reasonable answers to all questions (Malhotra, Hall et al. 2008). Researchers should thus consider the respondent’s ability to provide desired information (Creswell and Clark 2007; Creswell 2009; Zikmund, Babin et al. 2010). Respondents for this research were SME owners, managers and employees in service and trade organizations and were targeted because, based on their experience, they would be able to provide the required information. 5.7.1.5. Decide on the question structure Three measurement scales were used to capture all of the information needed in this study namely nominal, ordinal and interval scales. Nominal scales were used in

P a g e | 168

identifying gender and SME sectors. Ordinal scales were used to rank respondent’s age, tenure, number of employees and education. The last measurement scales used, namely interval scales, were in the form of Likert type scales and were used to measure the respondent’s perceptions of organizational learning, organizational culture, leadership, empowerment and organizational culture. Within research in organizational learning Likert type scales are most commonly used (Stevens and Dimitriadis 2004; Aragón-Correa, García-Morales et al. 2007; GarcíaMorales, Lloréns-Montes et al. 2007; García-Morales, Lloréns-Montes et al. 2007; García-Morales, Jiménez-Barrionuevo et al. 2011). A Likert type scale uses fixed choice response formats and is designed to measure attitudes or opinions (Malhotra, Hall et al. 2006; Leedy and Ormrod 2010). This scale assumes that the strength/intensity of experience is linear, i.e. on a continuum from strongly agree to strongly disagree, and makes the assumption that attitudes can be measured (Babbie 2011). Respondents may be offered a choice of five to seven or even nine point pre-coded responses with the neutral point being neither agree nor disagree. Some controversy exists as to whether a neutral point should be offered. If this option is removed, the respondent is forced to choose a response, which may lead to respondent irritation and increase non-response bias (Babbie 2011) and so for this research a neutral point was included for all of the Likert type scales that were used. It is accepted that scores from a Likert type scale response format can be treated as interval data and to allow for the use of common parametric tests (Tabachnick and Fidell 2007). As with any data set, subsequent statistical analysis should be determined

P a g e | 169

by the normality of the distribution of the data and whether the data meets the underlying assumptions of the proposed statistical test. It would be unusual to develop a questionnaire that relied upon a single-item response, and multi-item scales are generally used in preference to single-item scales to avoid bias, misinterpretation and reduce measurement error (Malhotra, Hall et al. 2008; Zikmund, Babin et al. 2010). In this research, constructs that were based on multi-item scales were therefore used. Such constructs have Likert type sub-scales that ‘tap’ into the main construct. Such scales are the most commonly used in attitude measurement survey instruments and three reasons account for this great popularity: conformity with current research practice, ease of scale construction, and standards for measurement evaluation that align with test theory. 5.7.1.6. Determine the question/statement wording Question/statement wording is the translation of the desired question/statement content and structure into words that respondents will be able to clearly and easily understand (Zikmund, Babin et al. 2010). To ensure that this requirement was met, this research followed the guidelines provided by Malhotra et al., (2008) and Zikmund et al., (2010) so that ordinary words were used and potentially ambiguous terms implicit alternatives and leading questions were avoided. 5.7.1.7. Arrange the questions/statements in proper order Question/statement order is very important for the successful collection of the desired data (Zikmund, Babin et al. 2010). Following the general guidelines for proper ordering of questions (Malhotra, Hall et al. 2008; Zikmund, Babin et al. 2010), the questionnaire used for this research commenced with an explanation of how to express an opinion by

P a g e | 170

using the seven-point scale and was followed by the sections covering organizational learning, organizational culture, leadership, empowerment, and finally organizational performance. 5.7.1.8. Produce the questionnaire A web-based survey was used for this research and to encourage the respondents to become involved in the survey and to complete the questionnaire, it was essential to make the file size of the questionnaire and other related files on the questionnaire website as small as possible. Apart from the reasons for succinctness previously mentioned, this was also important because the bandwidth of the Internet protocol used by Indonesian Internet providers is relatively narrow. Furthermore, the speed of downloading Internet files from a service provider to the computer connected to the Internet is relatively slow. Thus small files were made to create a faster downloading process and a need for a shorter time to be used with a consequent lower connection cost for the respondents. 5.7.1.9. Eliminate bugs by pretesting Questionnaire pretesting may increase the reliability and validity of questionnaires and avoid making mistakes in the main survey (Czaja 1998). The generation of items during questionnaire development requires considerable pilot work to refine wording and content. In this research this was addressed by means of the use of an initial pilot study. Upon approval of the research by the Southern Cross University Ethics Committee, the researcher went to Indonesia in June 2010. Four colleagues from the Atma Jaya University Makassar were invited to discuss the content of the questionnaire and then examined the translation of the questionnaire into Bahasa Indonesia. Based on suggestions regarding content and suggestions for translations, the questionnaire was

P a g e | 171

revised. Then two SME owners and three SME employees were given the questionnaire to complete and to comment upon. After ensuring that the questionnaire had embraced all of the identified variables measuring the constructs of interest, the questionnaire was uploaded into the Qualtrics software to be used for the collection of the research data. 5.7.2. Reliability Reliability refers to whether the questions or statements consistently measure a construct and can be estimated on a post-hoc basis. ((Leedy and Ormrod 2010; Babbie 2011). Reliability refers to the extent to which a scale produces consistent results if measurements are made repeatedly, and if measures are free from error and therefore yield consistent results (Hair, Anderson et al. 1995; Malhotra 1999; Zikmund 2000). Construct or composite reliability is a widely used to measure reliability, and utilises Cronbach’s alpha. The formula (Hair, Anderson et al. 1995) that was used to determine construct reliability was:

(∑ std .loading ) Construct reliability = (∑ std .loading ) + ∑∈ 2

2

j

A commonly used threshold value for acceptable reliability is .70 (Nunnally and Bernstein 1994; Leedy and Ormrod 2010), although this is not an absolute standard (Malhotra, Hall et al. 2008; Hair, Sarstedt et al. 2011). The study will use this threshold level of 0.70.

P a g e | 172

5.7.3 Validity The ability of a scale or measuring instrument to measure what is intended to be measured is called validity (Leedy and Ormrod 2010; Zikmund, Babin et al. 2010). Major validity measures that should be considered by researchers are content validity, criterion validity and construct validity (Malhotra 1999; Zikmund 2000). These measures were also employed in this research. 5.7.3.1. Content validity Content (or face) validity refers to how adequately the magnitude analysed has been described in the form of items (Anderson 2004). Unlike other types of validity, there is no definitive quantitative criterion by which to evaluate content validity (Buckley and Chapman 1996) with the said evaluation being based on qualitative aspects (Yang, Wang et al. 2006; Babbie 2011). To assure face or content validity, items can be generated from a number of sources including consultation with experts in the field, proposed respondents and a review of associated literature. In addition, a key strategy in item generation is to revisit the research questions frequently and to ensure that the items reflect these and remain relevant (Malhotra, Hall et al. 2008; Leedy and Ormrod 2010). It is during this stage that the proposed sub-scales of a questionnaire are identified (Babbie 2009) and it is ensured that items are representative of any constructs or latent variables. In this thesis research, two methods of ensuring content validity, were used, these were: (1) an exhaustive review of the literature and (2) a preliminary qualitative research exercise using personal interviews with three employees and two SME owners.

P a g e | 173

5.7.3.2. Criterion validity Criterion validity is the ability of a measure to correlate with other measures of the same construct (Zikmund 2000; Babbie 2011). This type of validity can be classified as either “concurrent validity” or “predictive validity”. Concurrent validity is a classification of criterion validity whereby a new measure correlates with a criterion measure taken at the same time (Zikmund, Babin et al. 2010). Meanwhile, predictive validity assesses the ability of a measure to predict a future event or to correlate with a criterion measure administered at a later time (Zikmund 2000; Leedy and Ormrod 2010). This research was only able to evaluate concurrent validity since there were no similar available measures that could be used to assess predictive validity. 5.7.3.3. Construct validity Construct validity refers to the degree to which inferences can legitimately be made from the operationalizations in the study to the theoretical constructs on which those operationalizations were based (Anderson 2004; Hair, Black et al. 2010). In this research, construct validity was evaluated on the basis of confirmatory factor analysis (CFA) and an evaluation of the average variance extracted (AVE) of the constructs. 5.7.4. Ethical considerations Many ethical issues apply in relation to social science (McDaniel and Gates 2002; Neuman 2007). These are: 1) that proper steps are taken to ensure the well-being of the respondent. 2) that the respondents’ rights to privacy are respected 3) that deception is not used

P a g e | 174

4) that the respondent’s right to be informed about the purpose of the research is observed 5) that confidentiality is maintained 6) that data is collected honestly, 7) that objectivity in reporting data is observed (Dillman, Phelps et al. 2009). In discussing the ethical considerations for quantitative researchers in an organizational setting, Brown, Trevino, & Harrison (2005) stated that ethical consideration refers to the value of ethical codes in relation to research. Guidelines published by the Southern Cross University Human Research Ethics Committee (HREC) were adopted for the survey questionnaire. The HREC considered and approved the research proposal associated with this thesis research. According to HREC guidelines, the researcher conducting the survey should be identified. For this purpose, the researcher provided an e-mail address and a mobile telephone number for respondents in case they needed assistance or required verification of issues or wished to complain regarding the research. In addition, in order to prevent this study from including any unfavourable ethical issues, the researcher proceeded as follows: 1. Participation in the survey was completely voluntary. 2. There was only one cookie placed into the questionnaire page on the Website. This was used to capture the remote host of each respondent. This option was needed to ensure that each respondent only made one response. This was important to avoid

P a g e | 175

multiple responses that might have occurred. No record of these remote host computers was retained and any duplicate responses were deleted. 3. A necessary consideration was the security of the respondent’s computer, the questionnaire Web site and the Web server where the Web site was hosted. It was considered important to make sure that the respondent’s computer would not suffer any harm as a consequence of any viruses or worms that could result from an Internet connection. Because of those considerations, the Web survey was hosted on the Southern Cross University Web server, which was protected by an efficient firewall and anti-virus program. 5.8. Administration of the survey The data collection method used for this research survey was an Internet or Web based survey. As has been previously described, each questionnaire item was developed from the earlier literature in the area of organizational learning. Some modification was also done in order to fit the questionnaire to both the objectives of the research and the conditions of the Internet infrastructure in Indonesia. The data was collected by using the Qualtrics Web Survey software that was provided by Southern Cross University. The questionnaire was formulated in English and then translated into Bahasa Indonesian. Firstly, the researcher, who is fluent in both languages, carried out the translation from English to Bahasa Indonesian. Then a team of four, the Head of Atma Jaya English Language Centre, an English speaking Economics, an Organizational Behaviour Lecturer and a Human Resource Management Lecturer from Atma Jaya University Makassar checked the translation for translational accuracy by means of a back-translation.

P a g e | 176

5.9. Data analysis Previous sections have discussed the data collection method. This section will discuss the method that was used to analyse the received data. 5.9.1. Managing non-response error and non-response bias Response rate is defined as the percentage of the total potential respondents who completed questionnaires. Non-response error arises when some of the potential respondents included in the sample do not respond. If the non-respondents differ from the respondents on the characteristics of interest, the sample estimates will be seriously biased (non-response bias) (Malhotra, Hall et al. 2008). In analysing survey data, non-response data may exist (Durrant 2009). To compensate for the non-response data some imputation methods may be used (Durrant, 2009), to fill in missing data with plausible values to produce a complete dataset. Imputation is carried out to reduce non-response bias. There are two main imputation methods, the mean imputation and the deductive methods where either the mean of a numeric variable is used to replace all missing item or deductive methods are used to impute each missing variable using logical relations between another numeric variable for each missing item. Deductive methods include regression imputation – missing values are filled in by using predicted regression based value or, hot deck imputation – missing values are filled in by being selected from a relevant class, or nearest-neighbour – missing values are filled in by the smallest distance to non-response unit, and repeated imputation – missing values are filled in by a repeated single random value. There were only seven missing values in the data set and as the AMOS software required a dataset with no missing values, nearest-neighbour imputations were used so that the missing

P a g e | 177

values were filled in by using the nearest item in the same construct to provide a value for each of the seven missing values (Durrant 2009). 5.9.2. Method of Analysis The first analysis that was conducted was a descriptive analysis. At this stage, responses or raw data were used to describe the nature of the respondents (Kumar, Aaker et al. 1999; Zikmund 2000). This covered frequency distributions, measures of central tendency, such as mean, median and mode (Malhotra, Hall et al. 2008; Zikmund, Babin et al. 2010). The second method of analysis that was utilized in this study was inferential analysis. This analysis was used to evaluate the relationship aspects of the research. The statistical method that was used in this study was Structural Equation Modelling (SEM). 5.9.3. Structural equation modeling (SEM) Structural Equation Modeling (SEM) is a multivariate technique, which can be described as a combination of factor analysis and path analysis (Tabachnick and Fidell 2007; Zikmund, Babin et al. 2010). It is a statistical technique that allows the analyst to simultaneously examine a series of dependence relationships between exogenous and endogenous variables (Tabachnick and Fidell 2007; Hair, Black et al. 2010). An exogenous variable is one whose variability assumed to be determined by causes outside the causal model under consideration. An endogenous variable, on the other hand, is one whose variation is to be explained by exogenous and other endogenous variables in the causal model (Joreskog and Sorborn 1989; Byrne 2001). SEM can be used to test complex hypotheses, particularly those involving networks of path relations, that are evaluated against multivariate data (Bollen 2001; Grace 2008)

P a g e | 178

and was therefore particularly suitable for use in this thesis research. The advantage of using structural equation modeling (SEM) is that this method (1) provides a straightforward method of simultaneously dealing with multiple relationships while providing statistical efficiency and (2) is able to assess the relationships comprehensively so as to provide a transition from exploratory to confirmatory analysis (Diamantopoulos and Siguaw 2000; Kline 2005; Grace 2008). This thesis research used SEM to evaluate the relationships between organizational learning and its antecedents namely organizational culture, leadership and empowerment as well as its relationship to organizational performance. 5.9.4. Justification for the method of data analysis The structural equation modeling (SEM) technique is widely used in many fields of study such as education, marketing, psychology, sociology, management and even genetics (Hu and Bentler 1999; Anderson 2004; Hair, Sarstedt et al. 2011). Organizational learning is a multi-faceted concept (Lipshitz, Popper et al. 2002; Vera and Crossan 2003; Bapuji and Crossan 2004; Naot, Lipshitz et al. 2004) consequently it was considered that using the SEM technique would provide a better understanding of the concept as has been suggested by writers such as (Bontis, Crossan et al. 2002; Lloren-Montes, Javier-Moreno et al. 2005; Garcıá-Morales 2008; Moreno, Fernandez et al. 2009; Tamayo-Torres, Ruiz-Moreno et al. 2011). In order to ensure the appropriate use of structural equation modelling to produce valid results, steps for using this method should be appropriately employed. Hair et al. (2010) recommend a six step process when using structural equation modeling (SEM), namely (1) developing a theoretically based model, (2) constructing a path diagram of causal relationships, (3) converting the path diagram into a set of structural and measurement

P a g e | 179

equations, (4) choosing the input matrix type and estimating the proposed model, (5) assessing the identification of the model, (6) evaluating the results for goodness-of-fit and making any indicated modifications to the model if theoretically justified. The six-stage process for Structural Equation Modeling followed the process suggested by Hair et al (2010) as shown in Figure 5.7. Figure 5.7 Six-stage Process for Structural Equation Modeling

Stage 1

Defining the individual constructs

Stage 2

Develop and specify the Measurement Model

Stage 3

Designing a study to produce empirical results

Stage 4

Assessing Measurement Model validity

Refine measures and design a new study

No

Measurement model valid?

Yes

Proceed to test structural model with stages 5 and 6

Stage 5

Assessing Measurement Model validity

Stage 6

Assessing Measurement Model validity

Refine model and test with new data

No

Source: Hair et al., 2010, p. 654

Measurement model valid?

Yes

Draw substantive conclusion and recommendation

P a g e | 180

Step 1 Defining the individual constructs The theoretically based model for the study was previously identified in Chapter 4 Figure 4.5. The model was developed from theoretical foundations that supported a proposed set of relationships (Byrne 2010; Hair, Black et al. 2010). The theoretical model for this study was developed from the literature review in Chapters 2, 3 and 4. In the model, there was one exogenous latent variable namely transformational leadership and four endogenous latent variables namely organizational learning, organizational culture, empowerment and organizational performance. Step 2 Develop and specify the measurement model A path diagram is a method that is used to portray relationships (Hair, Black et al. 2010). In this step, the theoretical

model developed for this thesis research was

conceptualized in the form of a path model. The process of translating the conceptual model for this study into a path diagram was carried out by using the graphical interface of the statistical analysis program called AMOS 20. The relationships between the constructs or latent variables in the model as described in step one were drawn as a path diagram as shown in figure 5.8. Figure 5.8 Path diagram of proposed construct relationships Organizational Culture Transformationa l Leadership

Organizational Learning

Organizational Performance

Empowerment

Source: developed for this thesis, (error terms and construct indicator variables are not shown)

P a g e | 181

A modeller will often specify a set of theoretically plausible models in order to assess whether the model proposed is the best of the set of possible models (Medsker, Williams et al. 1994; Hair, Black et al. 2010). Not only must the modeller account for the theoretical reasons for building the model as it is, but the modeller must also take into account the number of data points and the number of parameters that the model must estimate to identify the model. An identified model is a model where a specific parameter value uniquely identifies the model, and no other equivalent formulation can be given by a different parameter value. Two main components of models are distinguished in SEM: the structural model showing potential relationships between endogenous and exogenous latent variables or constructs, such as shown in Figure 5.4 and the measurement model showing the relationships between constructs or latent variables and their indicators (Grace 2008; Byrne 2010). The AMOS program and its graphical interface was used to draw the path model. The program then derived the structural equations from the path model diagram. The theoretical latent variables or constructs were unobservable (Chou and Bentler 1995; Hair, Sarstedt et al. 2011), and observed variables or indicators were used to measure each latent variable (Marsh, Hau et al. 2004; Kline 2005). The result of this process was the specification of the model in more formal terms through a series of equations that defined the structural equations linking the constructs and the measurement model, which specified which variables measured which constructs (Hair, et al., 2006).

P a g e | 182

Step 3 Designing a study to produce empirical results When using Amos (Analysis of Moment Structures), Hair, Black, Babin and Anderson (2010) recommends that researchers use covariance matrices, they also suggest that covariance matrices should be employed whenever a test of theory is being performed, as the covariances will satisfy the assumptions of the methodology and are the appropriate form of the data for validating causal relationships. For this research, the program derived the covariance matrix from the raw data, which was provided in the form of an SPSS data file. A maximum likelihood (ML) estimation was used in evaluating the organizational learning model. This method of estimation has been the most commonly used approach in structural equation modelling (SEM) (Chou and Bentler 1995; Hair, Sarstedt et al. 2011). ML estimates have been found to be quite robust to violations of normality, and often provide good estimates even when the data are not normally distributed (Jöreskog 2005; Hair, Black et al. 2010). Evaluation of the normality of the measures used in this research did indicate a minor level of non-normality in the case of some of the variables. Step 4 Assessing measurement model validity The validity of the measurement model and its constructs was assessed by means of confirmatory factor analysis and an evaluation of the variance extracted. Step 5 Specify the structural model In simple terms, an identification problem is the inability of the proposed model to generate unique estimates (Hair, Black et al. 2010). As structural models become more complex, there is no guaranteed approach for ensuring that the model is identified

P a g e | 183

(Bollen 2001). Based on Hair et al. (2010) testing for an identification problem can be performed as follows, firstly the model should be re-estimated several times, each time with different starting values. If the results do not converge at the same point each time, the identification should be examined more thoroughly. The second test in assessing possible identification effects on a single coefficient is firstly to estimate the model and to obtain the coefficient estimate. Then the coefficient should be fixed at its estimated value and the equation should be re-estimated. Step 6 Assess structural model validity To evaluate the extent to which the theoretical model matched the data that was collected goodness-of-fit indexes were used. In Structural Equation Modelling (SEM) there is no single statistical test for measuring or testing the hypothesis of a model that fits well (Tabachnick and Fidell 2007; Hair, Black et al. 2010). Basically, there are two classifications of fit indexes, namely “absolute fit indexes” and “incremental fit indexes” (Hu and Bentler 1995; Hu and Bentler 1999; Sharma, Mukherjee et al. 2005) Absolute fit indexes directly assess how well the model reproduces the sample data (Hu and Bentler 1995), tests of this nature are the Chi-square (χ2), Normed Chi-square (χ2/df), Goodness-of-Fit Index (GFI) and Adjusted Goodness-of-Fit Index (AGFI), Standardised Root Mean-square Residual (RMR), and Root Mean-Square Error of Approximation (RMSEA). Incremental fit indexes or comparative fit indexes, measure the proportionate improvement in fit by comparing a target model with a more restricted, nested baseline model (Hu and Bentler 1995; Kline 2005). Incremental fit indexes can be categorized into three types of indexes namely “type-1”,” type-2” and “type-3”.

P a g e | 184

This study used eight fit indexes to test the fit of the model to the data. The fit indexes that were used in this study and their recommended threshold values were as follows. 1. Chi-square statistic (χ2) The Chi-square statistic (χ2) is the most fundamental measure of overall fit in structural equation modelling (Byrne 2010; Hair, Black et al. 2010). However, the χ2 is very sensitive to sample size differences and the measure has a great tendency to indicate significant differences for equivalent models when the sample size exceeds 200 (Tabachnick and Fidell 2007; Hair, Black et al. 2010). Invariably (but not always), given a sample size of above 200 cases, no models will be found to fit the data based on the χ2 tests (Barret, 2007, 820). The statistically significant levels of χ2 indicate the probability that these differences are solely due to sampling variations (Hair, Black et al. 2010). The non-significant differences which are indicated by low χ2 values and significance levels greater than .05 or .01 mean that the actual and predicted input matrices are not significantly different (Hair, Black et al. 2010). Hair et al., (2010) provide a guideline that the number of cases (N) should not be more than 250 and observed variables should be between 12 and 30, if a significant fit is to be obtained. 2. Normed chi-square (χ2/df) The Normed Chi-square (χ2/df) or Wheaton et al. (1977) relative/normed chi-square (χ2/df) is used to reduce the χ2 sensitivity to sample size. It is commonly reported by researchers as a measure of fit (Kline 1998). This index is produced by dividing χ2 by its degrees of freedom, which results in a lower value. Values less than 3.0 are frequently suggested as an acceptable fit between model and data (Kline 1998; Arbuckle and Wothke 1999). However, there is no consensus regarding an acceptable

P a g e | 185

ratio for this statistic and recommendations range from as high as 5.0 (Wheaton, Muthen et al. 1977; Lewis, Templeton et al. 2005) to as low as 2.0 (Tabachnick and Fidell, 2007). 3. Goodness of fit index (GFI) The Goodness-of-Fit statistic (GFI) was created by Jöreskog and Sörbom (1989) as an alternative to the Chi-Square test and calculates the proportion of variance that is accounted for by the estimated population covariance (Tabachnick and Fidell, 2007). It is a measure that is analogous to a squared multiple correlation in that it indicates the proportion of the observed covariances explained by the model-implied covariances (Jöreskog 2005; Kline 2005; Hair, Black et al. 2010). Values of GFI theoretically range from 0 (poor fit) to 1 (perfect fit) (Arbuckle and Wothke 1999; Kline 2005; Hair, Black et al. 2010). Higher values indicate a better fit, but no absolute threshold levels for acceptability have been established. A GFI greater than 0.90 is accepted as a good fit and values of between 0.80 and 0.90 as a marginal fit (Jöreskog 2005; Sharma, Mukherjee et al. 2005). 4.

Adjusted goodness of fit index (AGFI)

The Adjusted Goodness of Fit Index (AGFI) (Jöreskog and Sörbom 1989) is an extension of the GFI to offset the effect of more saturated models reducing fit (Tabachnick and Fidell 2007), The GFI is adjusted by a ratio of degrees of freedom for the proposed model to the degrees of freedom of the null model (Hooper, Coughlan et al. 2008; Hair, Black et al. 2010). Values for the AGFI range between 0 and 1 and it is generally accepted that values of 0.90 or greater indicate well fitting models (Tabachnick and Fidell 2007; Byrne 2010; Hair, Black et al. 2010).

P a g e | 186

5. Standardised root mean square residual (SRMR) The SRMR is the standardised square root of the difference between the residuals from a comparison between the sample covariance matrix and the hypothesised covariance model (Hooper, Coughlan et al. 2008). The indices show the differences between the observed and model-implied covariances (Kline 1998). As the average discrepancy between the observed and predicted covariances increases, so does the value of the SRMR (Diamantopoulos and Siguaw 2000; Kline 2005). Values for the SRMR range from zero to 1.0 with well fitting models yielding values of less than .05 (Diamantopoulos and Siguaw 2000; Byrne 2010), however values as high as 0.08 are deemed acceptable (Hu and Bentler, 1999). 6. Root mean square error of approximation (RMSEA) The RMSEA shows how chosen parameter estimates would fit the population’s covariance matrix. It attempts to correct for the tendency of the Chi-square statistic to reject any specified model with a sufficiently large sample (Diamantopoulos and Siguaw 2000; Byrne 2010). The RMSEA favours parsimony in that it will choose the model with the least number of parameters. The value represents the goodness-of-fit that could be expected if the model were estimated in the population, not just in a sample (Hair, Anderson et al. 1995). Values of less than .05 indicate good fit and values between .05 and .08 represent acceptable fit (Steiger 2007) and between .08 and 1.00 represent a marginal fit (MacCallum, Browne et al. 1996).

P a g e | 187

7. Tucker-Lewis index (TLI) This index is intended to quantify the degree to which a particular exploratory factor model is an improvement over a zero factor model when assessed by maximum likelihood (Hu and Bentler 1995; Hair, Black et al. 2010). The superiority of TLI is that this index is unaffected by model complexity and it expresses fit per degree of freedom (Kline 1998; Hair, Black et al. 2010). Values between .80 and .90 indicate acceptable fit and the recommended value is .90 or greater (Kline 1998). Hu and Bentler (Hu and Bentler 1995; Hurley and Hult 1998; Sharma, Mukherjee et al. 2005) suggested that values close to 0.95 and greater indicate a well fitting model. In the case where the N is more than 250 and there are observed variables of between 12 and 30, a TLI index of > 0.92 indicates a good fit (Hair, Black et al. 2010). 8. Comparative fit index (CFI) The comparative fit index is based on the non-centrality parameter of the Chi-square of the goodness-of-fit test statistic (Tanaka 1993; Barret 2007; Hooper, Coughlan et al. 2008). CFI estimates the comparative difference in non-centrality between the estimated model and a null or independence model (Sharma, Mukherjee et al. 2005; Hair, Black et al. 2010). The values of CFI range between 0 and 1 and values close to .95 are considered representative of a well fitting model (Byrne 2001; Hair, Black et al. 2010). Similarly to TLI, according to Hair et al. (2010), a CFI index of > 0.92 indicates a good fit in the case where N is more than 250 and the number of observed variables is between 12 and 30. One of the most important limitations of all fit indices is that they cannot address whether the choice of items, indicators, observers was adequate and their meaning and

P a g e | 188

use are always contingent on a broader purview of the relevant construct (Westen and Rosenthal 2005). The indices and recommended thresholds for each index are shown in Table 5.5 Table 5.5 Summary of goodness-of-fit indices used in the research Index Name Abbreviation Type Cut-off value 2 Chi-square χ Model Fit P > 0.05 (at α equals to 0.05 level) 2 Normed Chi-square χ /df Absolute Fit 1.0 < χ2/df < 5.0 and Model Parsimony Goodness of Fit Index GFI Absolute Fit Values > 0.90 indicate satisfactory fit Adjusted Goodness of AGFI Absolute Fit Values ≥ 0.90 indicate Fit Index acceptable fit Standardised Root SRMR Absolute Fit Values ≤ 0.8 indicate good Mean-square Residual fit Root Mean Square Error RMSEA Absolute Fit Value ≤ 0.05 indicate good Approximation fit; Values 0.05 < RMSEA ≤ 0.08 indicate acceptable fit; and 0.08 < RMSEA ≤1.00 is marginally fit. Tucker Lewis Index TLI Incremental Fit Values ≥ 0.95 representative of a well fitting model Comparative Fit Index CFI Incremental Fit Values ≥ 0.95 representative of a well fitting model Source: Developed from Hair et al. (2011); Hair et al., (2010); Hu and Bentler (1995); Kline (2005); Byrne (2010)

Based on the fit indices, a final decision can be made as to whether or not to make any theoretically justified modifications to the proposed model. Such modifications may sometimes be necessary because as Byrne (2010) has asserted, a proposed research model will not fit the data well if the model has been miss-specified. The common sources of misspecification are the incorrect inclusion or exclusion of a parameter, and the lack of covariation of measurement errors (Bollen 1989; Hair, Black et al. 2010).

P a g e | 189

However any modifications that are contemplated on the basis of error covariation have to be made with great caution and only if there is a theoretical justification for such a modification. Once the model is deemed acceptable, the next step is to examine possible model modifications to improve the theoretical explanation of the goodness-of-fit results (Hair, Black et al. 2010). Indicators that can be used to assess model improvements have been developed from an examination of the residuals of the predicted covariance or correlation matrix. Hair, Anderson, Tatham, and Black (1995) have suggested that residual values should be statistically significant at a .05 level. In addition, the number of non-significant paths also need to be checked as even if all fit indices show a favourable fit, the model fit may not be truly supported if there are too many nonsignificant paths (O’Boyle and Williams 2011). 5.10. Conclusion This chapter has outlined the research methodology that was followed, in a rational framework. The measurement process and the appropriate data collection method that were used as well as a justification for the method used, were set out. Data were collected by carrying out an Internet/Web Survey using the Qualtrics online survey software and the SPSS and AMOS release 20 programs were then used to analyse the research data. The next chapter will provide the results of the analysis of the data that was collected.

P a g e | 190

CHAPTER 6 ANALYSIS OF DATA 6.1. Introduction

The previous chapter has outlined the research methodology and the choice of the analytical procedures to be used for the testing of the hypotheses. The results of the analysis of the data that was collected together with the development of reliable measures for each of the five constructs of interest are now presented in this chapter. The contents of chapter 6 are shown in Figure 6.1 Figure 6.1 Outline of Chapter 6 6.1. Introduction 6.2. Assessment of survey response

6.3. Data screening

6.4. Descriptive finding

6.5. Measurement model assessment

6.6. Bivariate construct assessment

6.7. Structural model assessment

6.8. Testing of hypotheses

6.9. Conclusion Source: developed for this thesis

P a g e | 191

6.2. Assessment of survey response This section provides details of the examination of the survey responses. 6.2.1. Assessing survey response adequacy After receiving approval from the Southern Cross University Human Research Ethics Committee on 13 October 2010 with approval number of ECN-10-176, the researcher selected the potential respondents (see 5.5). During the period from 1 November to 31 January 2011, randomly selected managers and SME employees in the service and trade sectors, who were registered as HRD-Power members, were contacted by e-mail and asked if they would participate in the research. One thousand respondents were contacted and 574 agreed to participate in the research. The membership profiles of the respondents were selected to be employees in personnel affairs or persons interested in human resource development, as is reflected in the data analysis. Questionnaires were provided using Qualtrics, a commercial web-based survey software that is subscribed to by Southern Cross University and 574 completed questionnaires were received from these participants. However, seventy three responses were removed because the respondents had only partially completed the questionnaire. This resulted in an overall response rate of 50.1% (501 responses). Seven missing values in these questionnaires were filled in by using the nearest item in the same construct as suggested by Durrant (2009). 6.2.2. Respondent characteristics The characteristics of the respondents and the organisations that employed them are outlined in this section. These characteristics were gender, number of employees, education, tenure, years of operation of the enterprise and the main type of enterprise.

P a g e | 192

These characteristics were used to check the representativeness of the respondents for this thesis research. 6.2.2.1. Gender Gender was used to investigate the extent to which the respondents represented the overall population of Indonesian SMEs. More than half or 282 (56.3 percent) of the respondents were male, as can be seen in Table 6.1. There were 219 females making up 43.7 percent of the sample. The respondent proportion of male and female persons in the sample was close to that of the overall proportion of genders that are found in Indonesian SMEs where managers or employees are 54.5% male and 45.5% female (The World Bank 2011). Table 6.1 Respondents’ gender Gender

Valid Frequency

Percent

Percent

Male

282

56.3

56.3

Female

219

43.7

43.7

Total

501

100.0

100.0

Source: Analysis of survey data collected for this thesis.

6.2.2.2. Number of Employees The distribution of the respondents in terms of the type of organisation by which they were employed is presented in Table 6.2. From this table it can be seen that 234 or 46.7 percent of the respondents came from small enterprises with between 10 to 19 employees per employing enterprise while 267 or 53.3 percent of the respondents came from medium-sized enterprises with 20 to 99 employees.

P a g e | 193

Table 6.2 Number of employees Valid

Group

Frequency

Percent

Percent

Small Enterprise

234

46.7

46.7

Medium Enterprise

267

53.3

53.3

Total

501

100.0

100.0

Source: Analysis of survey data collected for this thesis. Although more respondents were from medium enterprises (ME) than small enterprises, some previous research has found no significant differences between small and medium enterprises in relation to organizational learning practices (Rebelo and Gomes 2011). However, Sørensen and Stuart (2000) did find that larger enterprises could have better practices in regard to organizational learning. The relatively even distribution of the two types of enterprises in the sample provided good coverage of both types of enterprises. 6.2.2.3. Education More than half of the respondents were tertiary educated. As can be seen in Table 6.3, there were 259 respondents with bachelor degrees or sarjana lengkap (S1) representing 51.7 percent of the sample, 52 respondents had a post-graduate level of education with 45 or 9 percent of the sample having a master’s degree and 7 or 1.4 percent of the sample having a doctoral degree.

There were some respondents with lower levels of

education, with 10 or 2 percent of the respondents having only graduated from elementary-junior high school (year 12) and 106 respondents having a senior high school/vocational (year 15) certificate.

P a g e | 194

Table 6.3 Respondents’ education Education Elementary-Junior High School Senior high school/vocational study Diploma Bachelor degree (S1) Master degree (S2) Doctoral degree (S3) Total

Frequency 10 106 74 259 45 7 501

Percent 2.0 21.2 14.8 51.7 9.0 1.4 100.0

Valid Percent 2.0 21.2 14.8 51.7 9.0 1.4 100.0

Source: Analysis of survey data collected for this thesis Education levels may influence the acceptance of organizational learning practices by employees (Sørensen and Stuart 2000). It was therefore important that the respondents used in this research should have a range of education levels as was reflected in this sample. 6.2.2.4. Tenure Most respondents were relatively newly employed by their organizations. As can be seen in Table 6.4, 160 or 31.9 percent of the respondents had worked for fewer than 4 years and 168 or 33.5 percent had worked in their organizations for from four to seven years. Tenure relates to the length of the experience of organizational learning practices by employees. When an employee is recruited, the employee will adopt organizational practices and share his/her skills and knowledge with other organizational members. Previous research has shown that tenure can influence organizational learning practices (eg. Lucas and Kline 2008). The mix of frequencies of lengths of employment in the sample meant that both employees with fewer than 4 years of service and those with more than 11 years of service were included in the investigations that were carried out in this thesis research.

P a g e | 195

Table 6.4. Respondents’ employment tenure Tenure Less than 4 years 4 to 7 years 8 to 11 years More than 11 years Total

Frequency 160 168 86 87 501

Percent 31.9 33.5 17.2 17.4 100.0

Valid Percent 31.9 33.5 17.2 17.4 100.0

Source: Analysis of survey data collected for this thesis 6.2.2.5. Age The organizations that employed the respondents were a combination of new establishments and older enterprises. Most of the enterprises had been in operation for more than 11 years. As can be seen from Table 6.5, 226 or 45.1 percent of the respondents’ organizations had been in operation for more than 11 years, 137 or 27.3 percent had operated for between 8 and 11 years. Only 38 or 7.6 percent of the enterprises were relatively new establishments and had been in operation for fewer than 3 years, while 100 or 20 percent of the enterprises had been in operation for between 4 and 7 years. Table 6.5 Organization age

Valid Less than 4 years 4 to 7 years 8 to 11 years More than 11 years Total

Frequency 38 100 137 226 501

Percent 7.6 20.0 27.3 45.1 100.0

Source: Analysis of survey data collected for this thesis

Valid Percent 7.6 20.0 27.3 45.1 100.0

P a g e | 196

In their research of 107 Portuguese companies, Rebelo and Gomes (2011) found that an organization’s age had an influence on organizational learning by allowing for more experience and organizational competencies to be gained. The length of operation of an organization may create an organisation that operates more efficiently and more competitively (Sørensen and Stuart 2000). The mixture of enterprises of different ages, in the sample therefore meant that this research was able to encompass such effects of different ages of the operation of enterprises. 6.2.2.6. Business Sector In this thesis trade will refer to those businesses involved in the selling of goods not specifically manufactured by them and therefore encompasses retail and wholesale businesses. Service businesses are those that provide offers to customers that do not include physical goods and hence conform to the concept of intangible business offerings as defined by the marketing discipline. As has been described in chapter 5 (section 5.5.1) this research was aimed at investigating two SME sectors with the highest growth levels over the last five years (2005-2009). The service and trade sectors grew on average by 8.9 and 8.7 percent respectively for the five year time period (Statistics Indonesia 2010). In 2008, the service sector contributed 47 percent of Indonesian gross domestic product and employed 40 percent of the Indonesian workforce (Hidayat, 2010). Although the contribution of the two sectors was crucial for the Indonesian economy, both sectors were less competitive than the same sectors in other economies such as China, Australia and the Philippines (Hidayat, 2010). There was therefore a need to investigate organizational learning processes in the service and trade sectors with a view to identifying how to increase the competitiveness of both sectors.

P a g e | 197

Business sector Service Trade Total

Table 6.6 Main business sector Frequency Percent 235 46.9 266 53.1 501 100.0

Valid Percent 46.9 53.1 100.0

Source: Analysis of survey data collected for this thesis

As can be seen in Table 6.6. the sample was relatively evenly split between service and trading enterprises. Thus 266 or 53.1 percent of the respondents were from trading enterprises while 235 or 46.9 percent of the respondents were from the service sector. Previous research (eg. Škerlavaj, Štemberger et al. 2007; Rebelo and Gomes 2011) has shown no difference in organizational learning practices between service and trading enterprises. Having discussed the respondent’s characteristics, section 6.3 will outline the process of data screening that was followed in order to develop parsimonious, reliable and valid constructs. 6.3. Data screening Having described the respondent characteristics in the previous section, this section will describe the screening of the data that was collected. Upon importing the raw data into SPSS, missing values were identified and replaced as described in section 5.9.1.

P a g e | 198

6.3.1. Normal distribution Assessment of the skewness and kurtosis of individual variables provides an indication of normality (Tabachnik & Fidell, 2001). Examination of PP plots can be used to assess normality. Any such possibilities were therefore explored during the analysis of the data. 6.3.2. Homoscedasticity The next requirement for multivariate techniques is that dependent variables should exhibit equal levels of variance across the range of predictor variables ( Hair, et.al., 2010). That is that the variability of scores for one variable should be approximately the same as the values for other variables. Absence of homoscedasticity makes hypothesis tests either too stringent or too insensitive (Hair, et.al, 2010). Homoscedasticity can be examined visually using data plots (Hair et al., 2010) and such an examination showed that homoscedasticity did exist (refer to appendix 4). 6.4. Descriptive finding An objective of this research was to investigate the antecedents of organizational learning in Indonesian SMEs. The descriptive statistics for such antecedents are presented in the following sub-sections. 6.4.1. Organizational learning This section describes the development of a measure representing organizational learning. In chapter 2, organizational learning was defined as an organization’s enhanced ability to acquire, disseminate and to use knowledge in order to adapt to a changing external and internal environment (Hoe and McShane 2010). Based on the

P a g e | 199

literature review in chapter 4, the organizational learning construct was measured by the using the indicators shown in Table 6.7. Table 6.7. Descriptive statistics for the indicators of organizational learning Variable Statement: Mean Std. Variance Deviation (In) the organization where I am now working:... OL1 encouraging employees to think from a global 5.04 1.52 2.34 perspective OL2

to bring customers’ views into their decision-

5.19

1.51

2.23

5.05

1.45

2.10

5.16

1.60

2.57

making processes OL3

existence of previous knowledge available to all employees

OL4

stimulating employees to discuss mistakes openly

OL5

rewards employees for showing initiative

5.05

1.71

2.93

OL6

supporting employees to take calculated risks

5.01

1.63

2.67

OL7

employees help each other to learn

5.36

1.49

2.23

OL8

employees spend time building trust with each

5.38

1.52

2.30

other OL9

organisation rewarding employees for learning

5.38

1.58

2.50

OL10

giving employees time to support their learning

5.29

1.50

2.26

OL11

I am free to initiate changes as needed

4.66

1.70

2.90

OL12

able to adapt operational goals as needed

4.63

1.61

2.60

OL13

sharing vision and mission across different

5.01

1.61

2.61

5.25

1.56

2.44

5.23

1.56

2.43

5.17

1.62

2.64

structural levels OL14

all organizational members share similar vision and mission

OL15

enabling employees to get necessary information quickly and easily

OL16

maintaining an up-to-date database of employee skills

Source: Analysis of survey data collected for this thesis

P a g e | 200

As can be seen in Table 6.7, most organizational learning variables averaged more than 5 on a scale of 1 to 7 thus revealing a relatively high level of organizational learning practices. “Building trust among employees” (OL8) and “organization rewarding employees for learning” (OL9) evidenced the highest mean values of all of the variables used to measure organizational learning. Both of these were indications of the existence of organizational learning practices in the organisations. The second highest mean value was “employees help each other to learn” (OL7) and this indicated a general openness among employees (Schulz, 2008). Two items OL11 and OL12 were found to have means of less than five. The mean values for “feeling free to initiate changes” and “able to adapt operational goals as needed”,

were found to be lower than other items that

were used to measure organizational learning. This finding indicated that freedom to initiate changes or to adapt to operational goals when needed during daily working situation relatively are less in evidence than the other fourteen organizational learning measurement items. Respondents’ response dispersions from the means of the organizational learning indicator items were quite similar. The lowest dispersion was in item OL3: “existence of previous knowledge available to all employees”. So respondents were relatively in agreement that previous explicit knowledge stored in their organization is easily accessed. On the other hand, the highest dispersion was item OL5: “rewards employees who show initiative”, which reflected a high level of variation in the respondents’ responses when compared with the other items that measured organizational learning. The descriptive statistics for the organizational learning construct indicators supported the existence of organizational learning in the enterprises under study. On a seven-point scale, respondents tended to choose a score that was above the mid-point of the

P a g e | 201

response categories for the indicators of “considering a global perspective”, “bringing customers’ views into their decision-making processes”, “using previous knowledge”, “stimulating open discussion on mistakes”, “rewarding initiative”, “risk taking”, “learning”, “building trust”, “possibility of changing and adapt operational goals as needed”, “sharing vision and mission across different structural levels”, “enabling employees to get necessary information quickly and easily”, and “maintaining an up-todate database of employee skills”. 6.4.2. Organizational culture Organizational culture has been defined as a set of values that enable an organization to change and develop during the life of the organization to adapt to environmental changes and to improve its performance (Lahteenmaki, Toivonen et al. 2001). Descriptive statistics for the indicators of organizational culture are shown in Table 6.8. As can be seen in Table 6.8, all of the organizational culture indicator variables reflected an average score of more than 5 on a seven-point scale thus revealing a level of agreement amongst the respondents in regard to the organizational culture indicators. “Co-operation amongst departments is important” (OC5) evidenced the highest mean value. The second highest mean value was “all decision-making is made through a rational process” (OC1) and respondents generally agreed strongly with this statement. The lowest mean value was “considers the impact of decisions on employee morale” (OC2) however on average there was general agreement with this statement.

P a g e | 202

Table 6.8 Descriptive statistics for the indicators of organizational culture Variable Description: Mean Std. Deviation

(In) the organization where I am now working: …

OC1

all decision-making is made through a rational

Variance

5.34

1.58

2.50

5.06

1.57

2.48

5.15

1.60

2.55

5.29

1.46

2.13

process OC2

considers the impact of decisions on employee morale

OC3

creates systems to measure gaps between current and expected performance

OC4

all organizational members share a common sense of mission that most think is worth striving to achieve

OC5

co-operation amongst departments is important

5.45

1.51

2.29

OC6

innovation is the most important goal

5.29

1.57

2.46

OC7

is open to receiving new ideas from organizational

5.28

1.47

2.20

customers OC8

the structure supports its strategic direction

5.32

1.51

2.30

OC9

the organizational culture is innovative

5.09

1.61

2.60

OC10

the organizational structure allows employees to

5.16

1.58

2.50

5.23

1.57

2.45

5.11

1.61

2.60

5.12

1.56

2.45

work effectively OC11

the organization has built a culture of trust amongst employees

OC12

the organization has developed operational procedures to help employees to work efficiently

OC13

the organization has developed systems to nurture knowledge management

Source: Analysis of survey data collected for this thesis

Responses to the organizational culture indicator variables evidenced a similar dispersion pattern to that shown for the organizational learning indicator variables. The lowest spread of scores was for item OC4: “all organizational members share a common sense of mission that most think is worth striving to achieve” and indicated

P a g e | 203

that the respondents’ response to this item evidenced the greatest level of concordance. Two indicator variables that evidenced the `highest levels of dispersion, were firstly “organizational culture is innovative” (OC9), where views as to whether innovativeness did or did not exist in the respondents’ organizations differed to the widest extent. A second indicator variable with the same level of divergence of views was OC12 “the organization has developed operational procedures to help employees to work efficiently”. The descriptive statistics for the organizational culture indicator variables indicated a high level of agreement with the existence of organizations that supported organizational learning. On average, the respondents’ tended to agree strongly with the existence of a rational decision making process; the consideration of the impact of decisions; the existence of systems to measure performance; mission sharing; the importance of co-operation amongst departments; innovation; openness to customers ideas; strategic direction; innovativeness; the flexibility of organizational structures; the presence of a culture of trust; the existence of efficient working procedures and the nurturing of knowledge management. Having discussed the descriptive finding for the organizational culture indicator variables, the next subsection will discuss another influence on organizational learning namely transformational leadership.

P a g e | 204

6.4.3. Transformational leadership Transformational Leadership is defined as a style of leadership that heightens the consciousness of collective interest among the organization's members and helps them to achieve their collective goals (García-Morales, Jiménez-Barrionuevo et al. 2011). Twelve items were used to assess transformational leadership and descriptive statistics for these twelve variables indicating transformational leadership are presented in Table 6.9 Table 6.9. Descriptive statistics for the indicators of transformational leadership Mean Std. Variance Variable Statement: Deviation (In) the organization where I am now working: ... LD1 my manager communicates her/his vision to 5.06 1.64 2.70 employees at every possible opportunity LD2

helps employees to balance their work and family

5.03

1.60

2.58

LD3

the owner/manager sincerely wants good relations

5.14

1.59

2.52

5.18

1.57

2.46

with his/her employees LD4

my manager helps me if I have difficulty in doing my job

LD5

my manager is willing to solve problems that occur

5.24

1.50

2.25

LD6

is well managed

5.20

1.54

2.39

LD7

my manager does not hold back promotion for

5.23

1.68

2.82

good performers LD8

I meet my supervisor/team leader at least once a day

4.74

1.79

3.22

LD9

my supervisor usually tells me things before I hear

4.99

1.59

2.54

5.21

1.57

2.46

5.30

1.55

2.42

5.20

1.56

2.45

them on the grapevine LD10

my manager supports requests for learning opportunities

LD11

my manager shares relevant up-to-date information with employees

LD12

my manager continually looks for opportunities to learn

Source: Analysis of survey data collected for this thesis

P a g e | 205

As can be seen from Table 6.9, on a seven-point scale, all but two of the leadership indicator variables averaged more than 5. The results thus showed an average level of agreement with leadership aspects by the respondents. “My manager shares relevant upto-date information with employees” (LD11) evidenced the highest mean value which indicated agreement among respondents that their managers facilitated the sharing of up-to-date information. The second highest mean value was for “my manager is willing to solve problems that occur” (LD5) which indicated a level of agreement among respondents that in their organization, their managers acted as facilitators in solving organizational problems. The lowest mean value was for “meeting supervisor/team leader at least once a day” (LD8) Responses evidenced similar dispersion patterns. The standard deviations ranged between 1.50 and 1.79. The indicator variable with the lowest dispersion was LD5: “my manager is willing to solve problems that occur”. This indicated that the respondents’ had the greatest degree of concordance in regard to this item. On the other hand, LD8 “I meet my supervisor/team leader at least once a day”, had the highest level of dispersion of the twelve leadership variables. Descriptive statistics for the leadership construct indicator measures suggested a high level of agreement with the existence of leadership that supported organizational learning. The respondents’ tended to agree with the ongoing efforts of the leader to share his/her vision, with helping employees to balance their work and family, with promoting good relations with employees, with helping employees and solving problems that occur with promoting employees fairly and with supporting learning and wanting to share up-to-date information.

P a g e | 206

6.4.4. Empowerment Empowerment is defined as a process whereby the individual feels confident he or she can successfully execute a certain action during organizational change (Rankinen, Suominen et al. 2009). Fourteen items, were used to assess empowerment practice. The descriptive statistics for these indicator variables are presented in Table 6.10. Table 6.10. Descriptive statistics for the indicators of empowerment Variance Mean Std. Variable Statement: Deviation (In) the organization where I am now working: .... EP1 My work is important to me 5.67 1.43 2.05 EP2

I am enthusiastic about working toward the

5.23

1.52

2.32

5.75

1.51

2.29

organization’s objectives EP3

I am eager for the organization to care for all of its employees

EP4

I am keen on doing my job well

5.93

1.29

1.67

EP5

I feel confident in being able to do my work well

5.65

1.54

2.37

EP6

I am able to focus precisely on what is to be done to

5.74

1.16

1.35

5.55

1.43

2.07

execute my work effectively EP7

I know I can perform better than the pre-determined performance standard

EP8

I have high levels of energy at work

5.42

1.44

2.06

EP9

I feel I can influence my work unit to meet a pre-

5.31

1.50

2.24

5.21

1.53

2.33

5.38

1.20

1.43

determined performance standard EP10

I can influence the way work is done in my department

EP11

I feel my co-workers respect my ideas in relation to completing our jobs

EP12

I am aware of critical issues that affect my work

5.34

1.49

2.21

EP13

I am capable of analysing the causes of problems

5.57

1.17

1.37

EP14

I have the ability to plan and to implement solutions

5.50

1.48

2.18

Source: Analysis of survey data collected for this thesis

P a g e | 207

As can be seen in Table 6.10, on a seven-point scale, the scores on all of the indicators of empowerment averaged more than 5.2. These results revealed reasonably high agreement among respondents on all of the indicators of empowerment. “I am keen on doing my job well” (EP4) had the largest mean score indicating a commitment by employees to perform well. The second highest mean was “I am eager for the organization to care for all of its employees” (EP3) which showed the average employees’ desires to be cared for by the organisation for which they were working. The lowest mean value was for the variable “I can influence the way work is done in my department” (EP10) that showed that the respondents had the lowest level of agreement with their capability to bring about changes in their departments. The dispersion of the responses evidenced relatively similar patterns. The variances ranged from 1.37 to 2.37. The lowest level of dispersion was for item EP13: “I am capable of analysing the causes of problems” which evidenced the highest degree of respondent consensus. On the other hand, “I feel confident in being able to do my work well” (EP5) reflected the widest dispersion of responses. The descriptive statistics for the indicators of the empowerment construct indicated a high level of agreement. The respondents tended to agree with the importance of their job, their enthusiasm for work, keenness to do a job well, confidence to work well and to achieve a pre-determined result.

P a g e | 208

6.4.5. Organizational performance Organizational performance was defined as the ability of an organization to create, retain and transfer knowledge to improve effectiveness, efficiency and quality of work life leading to organizational growth and survival (Garcia-Morales, Llorens-Montes et al. 2006). Ten items were used to assess organizational performance and these are shown in Table 6.11. Table 6.11. Descriptive statistics for the indicators of organizational performance Mean Std. Variable Statement: Deviation

(In) the organization where I am now working: …..

OP1

more employees are working in this organization

Variance

4.92

1.65

2.72

5.16

1.47

2.44

than did last year OP2

my organization has a greater market share than it had last year

OP3

my organization has sold more than it did last year

5.34

1.46

2.16

OP4

my organization meets its performance targets

5.23

1.47

2.12

OP5

I am happy working here

5.42

1.71

2.16

OP6

I believe the organization’s future is secure

5.20

1.69

2.87

OP7

the customers are happy with the products that they

5.40

1.29

1.66

5.39

1.47

2.16

buy OP8

my organization has a strategy that positions it well for the future

OP9

there is continuous improvement in my organization

5.28

1.64

2.68

OP10

my organization is successful

5.38

1.44

2.06

Source: Analysis of survey data collected for this thesis

As can be seen from Table 6.11, except for OP1 “more employees are working in this organization than did last year”, all of the performance measures had mean values of more than five and were above the scale mid-point of 3.5. The largest mean was for OP5 “I am happy working here” which showed that respondents were generally happy

P a g e | 209

with their workplace. The second highest mean value was for “the customers are happy with the products that they buy” (OP7) and reflected the respondents’ general agreement with the statement. The lowest mean value was for OP1 “more employees are working in this organization than did last year”. The responses were quite diverse and indicated a difference in the levels of variation in the opinions of the respondents. The highest dispersion was for OP1 “more employees are working in this organization than did last year” indicating that there was a range of responses to this question and hence that the sample covered a range of businesses with different levels of growth. The lowest level of dispersion and hence the greatest degree of concordance in responses was for “the customers are happy with the products that they buy” (OP7). 6.4.6. Conclusions from the descriptive statistics The indicator variables mainly had mean values of more than 5 indicating that respondents tended to agree with the statements. Knowledge acquisition items in organizational learning such as reward, trust and openness for learning were rated relatively highly by the respondents. For organizational learning indicator variables the variables with the highest mean values were “cooperation amongst department for organizational culture”, “manager shares up-to-date information for leadership and intention to do job well for empowerment”. In the case of the performance construct, there was an overall opinion that the respondents’ organizations were successful. This result might be a function of the owner/managers of the enterprises being optimistic about their future and is to be expected since the fact that the sample was drawn from existing businesses meant that there should be an orientation towards success or a belief

P a g e | 210

in success as unsuccessful companies or ones that were perceived as being likely to be unsuccessful would probably have ceased to operate. Having discussed the descriptive statistics for the research construct indicators, the next section will cover the development and the testing of a set of parsimonious constructs. 6.5. Assessing the constructs This section addresses the construct development process used to develop and to test the latent variables that were examined in the research. The results of the assessment of the construct reliability and discriminant validity are reported. To ascertain that the analyses were correctly carried out, the process of developing each latent variable or construct strictly followed the approach to multivariate model building as suggested by Hair et al. (2006). The AMOS 20 program was used to conduct the evaluations. The data collected for this research was split into odd and even data sets. Construct models were firstly developed and purified using the odd numbered dataset before the final model was tested using the even numbered dataset. The use of split data sets to firstly purify and to then test the constructs followed the recommendations of a number of writers such as Sethi and King (1991) and Gerbing and Anderson (1988). The next sub-section will outline the construct development and assessment for each construct. The constructs that were developed and tested were organizational learning, organizational culture, transformational leadership, empowerment and organizational performance. Drawing on procedures discussed in Chapter 5, this section examines the results of developing and testing the constructs by comparing the theoretical measurement model against reality, as represented by the sample. The process for determining dimensionality, factor loadings, variance extracted and reliability for each

P a g e | 211

of the indicator variables used to measure the constructs of interest in this research, are outlined. 6.5.1. Organizational learning Descriptive statistics were presented in Table 6.7 in section 6.4.1. This section describes the development of a measure representing organizational learning, which exhibited good psychometric properties. The organizational learning construct was initially developed from sixteen observed variables that were drawn from the literature. This provided face validity. Using an odd numbered data set, the associations between the organizational learning indicator items were assessed using confirmatory factor analysis to determine the fit of the indicators of organizational learning to the construct. All indicator measures evidenced high loadings thus indicating unidimensionality and internal consistency for the scale (Hair, Anderson et al. 2006; Tabachnick and Fidell 2007) Figure 6.2 Initial organizational learning construct model e1

e2

OL1

OL2

e3

.72

e5

e4

OL3

.76

OL4

OL5

.69

.82

e6

e 7

OL6

.78

e8

OL7

.73

OL8

.86

.91

e9

e10

OL9

OL10

.86

.83

OL E69

Source: Developed for this research

.70

e11

e12

OL11

OL12

OL13

.74

.73

.58

e13

e14

e15

OL14

.86

OL15

.82

e16

OL16

P a g e | 212

The standardized regression weights were also investigated. As can be seen in Table 6.12, the results from the testing of this model produced standardized regression weights that were all significantly different from zero and above the 0.50 threshold level for acceptability (Hair, Anderson et al. 2006). Table 6.12 Organizational learning standardized regression weights Observed variable Odd data set Indicator Goodness OL1 .73 √ OL2 .76 √ OL3 .70 √ OL4 .82 √ OL5 .78 √ OL6 .73 √ OL7 .86 √ OL8 .91 √ OL9 .86 √ OL10 .83 √ OL11 .70 √ OL12 .58 √ OL13 .74 √ OL14 .73 √ OL15 .86 √ OL16 .83 √ Source: Developed for this research The construct model, however, failed to meet the required levels for the goodness-of-fit indices either for the absolute fit indices, incremental fit indices or parsimonious model fit indices. As can be seen in Table 6.13, none of the fit indices met the required cut-off levels and therefore the fit was found to be poor.

P a g e | 213

Table 6.13 Initial goodness-of-fit indices for organizational learning construct model Goodness-of-fit measure Odd data Cut-off Good fit? Fit level set value Chi square χ2 511.11 Probability P .00 >.05 × Poor Normed chi square χ2/df 4.92 <3.0 × Poor Goodness of Fit Index GFI .80 ≥.90 × Marginal Adjusted Goodness of Fit AGFI .74 ≥.90 × Poor Index Tucker Lewis Index TLI .87 ≥.95 × Poor Comparative Fit Index CFI .88 ≥.95 × Poor Standardized Root Mean SRMR .52 ≤.05 × Poor Square Residual Root Mean Square Error RMSEA .13 ≤.08 × Poor Approximation Source: Developed for this research As has been described in the previous chapter 5 (section 5.6.1), in order to obtain a more parsimonious model it was decided to use only four observed measures for this construct and the four indicator variables with the highest loadings were therefore chosen to be tested in a final purified model, this resulted in the elimination of the indicator variables numbers OL2, OL3, OL4, OL5, OL6, OL7, OL9, OL10, OL11, OL12, OL13, OL14, and OL15. The revised, four item model was retested using the even numbered data set. The scales were developed to be parsimonious ones in accordance with the recommendations of writers such as Mulaik et al. (1989), Bentler and Mooijaart (1989) and James, et al., (2009) and also taking note of the recommendation in Hair et al.(2006), p.786 that ’ four indicator constructs should be utilised where possible.’ They were then validated for the different environment in which they were used. The parameter estimates exhibited the correct sign and size (Hair, Anderson et al. 2006; Byrne 2010). No parameters had standardised estimates exceeding 1.00 nor were any variances negative while the fit indices all met the required cut-off levels. The fit indices for the purified construct are presented in Table 6.14 below.

P a g e | 214

Table 6.14 Goodness-of-fit indices for final organizational learning construct model Goodness-of-fit measure Even data Cut-off Good set value Fit? Chi square χ2 1.85 Probability P .40 >.05 √ Normed chi square χ2/df .92 <3.0 √ Goodness of Fit Index GFI .99 ≥.90 √ Adjusted Goodness of Fit AGFI .98 ≥.90 √ Index Tucker Lewis Index TLI 1.00 ≥.95 √ Comparative Fit Index CFI 1.00 ≥.95 √ Standardized Root Mean SRMR .01 ≤.05 √ Square Residual Root Mean Square Error RMSEA .00 ≤.08 √ Approximation Source: Developed for this research

Fit level Good Good Good Good Good Good Good Close

The path model for the final parsimonious organizational learning construct with its loadings is shown in Figure 6.3

Figure 6.3. Final construct measuring organizational learning E 1

OL1: in my organization, employees are encouraged to think from a global perspective .80

E 2

OL8: in my organization, employees spend time building trust with each other

.93 OL

E3

OL9: in my organization employees are rewarded for learning

.91

.86 E 4

OL16: my organization maintains an up-to-date database of employee skills

Source: Developed for this research

P a g e | 215

The standardized regression weights were all significantly different from zero and ranged between .80 and .93 which were above the recommended threshold level of .50 (Hair, Anderson et al., 2006). In addition all of the goodness-of-fit indices were above or below the cut-off values. The variance extracted value for the construct was 0.77 which was above the recommended cut-off value for construct validity of 0.5 (Hair, Anderson et al. 2006). 6.5.2. Organizational culture The organizational culture construct was measured using 13 indicators. Using an odd numbered data set, the associations between the organizational learning indicator items were assessed using confirmatory factor analysis to determine the fit of the indicators of organizational culture to the construct. All indicator measures evidenced high loadings thus indicating unidimensionality and internal consistency for the scale (Hair, Anderson et al. 2006; Tabachnick and Fidell 2007). Figure 6.4 Initial organizational culture construct model

e17

e18

e19

e20

e21

e22

e23

e24

e25

e26

e27

OC1

OC2

OC3

OC4

OC5

OC6

OC7

OC8

OC9

OC10

OC11

.84

E68

.83

.91

.89

.89

.87

.80

OC

Source: Developed for this research

.92

.85

.88

.88

e28

OC13

OC12

.89

e29

.84

P a g e | 216

The standardized regression weights were also assessed and were all significantly different from zero and above the 0.50 threshold level for acceptability (Hair, Anderson et al. 2006) as shown in Table 6.15

Table 6.15 Initial organizational culture construct standardized regression weights Observed variable Odd data set Indicator Goodness OC1 .84 √ OC2 .83 √ OC3 .91 √ OC4 .89 √ OC5 .88 √ OC6 .87 √ OC7 .80 √ OC8 .92 √ OC9 .85 √ OC10 .88 √ OC11 .88 √ OC12 .89 √ OC13 .84 √ Source: Developed for this research

Although as shown in Table 6.15, all the standardized regression weights for the organizational culture indicator variables were above .50 (Hair, Anderson et al. 2006), apart from the SRMR measure, the model failed to meet the goodness-of-fit criteria (see Table 6.16).

P a g e | 217

Table 6.16 Initial goodness-of-fit indices for organizational culture construct model Goodness-of-fit measure Odd data Cut-off Good Comment set value fit? Chi square χ2 448.44 Probability P .00 >.05 × Poor Normed chi square χ2/df 6.90 <3.0 × Poor Goodness of Fit Index GFI .77 ≥.90 × Poor Adjusted Goodness of Fit Index AGFI .68 ≥.90 × Poor Tucker Lewis Index TLI .89 ≥.95 × Poor Comparative Fit Index CFI .91 ≥.95 ≈ Satisfactory Standardized Root Mean Square SRMR .04 ≤.05 √ Good Residual Root Mean Square Error RMSEA .15 ≤.08 × Poor Approximation Source: Developed for this research

Further investigation suggested that OC2, OC4, OC5, OC6, OC7, OC9, OC10, OC12, and OC13 did not fit well and that they should be eliminated in order to produce a more parsimonious four indicator construct. Table 6.17 Goodness-of-fit indices for final organizational culture model Goodness-of-fit measure Even data Cut-off God set value fit? Chi square χ2 6.26 Probability P .04 >.05 × 2 Normed chi square χ /df 3.13 <3.0 × Goodness of Fit Index GFI .98 ≥.90 √ Adjusted Goodness of Fit AGFI .94 ≥.90 √ Index Tucker Lewis Index TLI .98 ≥.95 √ Comparative Fit Index CFI .99 ≥.95 √ Standardized Root Mean SRMR .01 ≤.05 √ Square Residual Root Mean Square Error RMSEA .09 ≤.08 ≈ Approximation Source: Developed for this research

Fit level

Poor Poor Good Good Good Good Good Marginal

Apart from the Chi-square value which has been identified as being problematic for samples of this size, the test of the model using the even numbered data set produced a good fit. The RMSEA value was marginally above the desired cut-off value of 0.08, but

P a g e | 218

it was less than the level of 0.1 which is stated by Hair et al. (2006) as being an acceptable level. The variance extracted value for the construct was 0.82 which was above the recommended cut-off value for construct validity of 0.5 (Hair et al. 2006). The final purified measure of organizational culture is shown in Figure 6.5.

Figure 6.5. Final organizational culture construct measure

E 1

OC1: In my organization all decision-making is made

through a rational process .91

E 2

OC3: My organization creates systems to measure gaps between current and expected performance

.91 OC

E 3

E 4

OC8: the structure supports its strategic direction

OC11: the organization has built a culture of trust amongst employees

.94

.94

Source: Developed for this research

6.5.3. Transformational Leadership The transformational leadership construct was initially measured by using 12 indicators providing good face validity. Using an odd numbered data set, the associations between the transformational leadership indicator items were assessed using confirmatory factor analysis to determine the fit of the indicators. All indicator measures evidenced high loadings thus indicating unidimensionality and internal consistency for the scale (Hair, Anderson et al. 2006; Tabachnick and Fidell 2007).

P a g e | 219

Figure 6.6. Initial transformational leadership construct model e31

e30

LD1

LD2

.82

e32

e33

LD3

.88

LD4

.83

e34

LD5

.89

eld

.85

e35

e36

LD6

.89

e37

LD7

.85

LD8

.68

.81

e38

e39

LD9

LD10

.81

.84

e40

LD11

e41

LD12

.79

TL

Source: Developed for this research

The results from the initial test of this construct model produced standardized regression weights that were all significantly different from zero and above the 0.50 threshold level for acceptability (Hair, Anderson et al., 2006) as shown in Table 6.18

Table 6.18 Initial transformational leadership standardized regression weights Observed variable Odd data set Indicator Goodness LD1 .82 √ LD2 .88 √ LD3 .83 √ LD4 .89 √ LD5 .85 √ LD6 .89 √ LD7 .85 √ LD8 .68 √ LD9 .81 √ LD10 .81 √ LD11 .84 √ LD12 .79 √ Source: Developed for this research

P a g e | 220

However, except for the SRMR measure, the model failed to meet the goodness-of-fit criteria (see Table 6.19). Table 6.19 Goodness-of-fit indices for transformational leadership construct model Goodness-of-fit measure Odd Cut-off Good Fit level data set value fit? Chi square χ2 233.17 Probability P .00 >.05 × Poor Normed chi square χ2/df 4.32 <3.0 × Poor Goodness of Fit Index GFI .86 ≥.90 ≈ Marginal Adjusted Goodness of Fit AGFI .80 ≥.90 ≈ Marginal Index Tucker Lewis Index TLI .93 ≥.95 ≈ Satisfactory Comparative Fit Index CFI .94 ≥.95 ≈ Satisfactory Standardized Root Mean SRMR .03 ≤.05 √ Good Square Residual Root Mean Square Error RMSEA .12 ≤.08 × Poor Approximation Source: Developed for this research

The modification indices indicated that the elimination of LD1, LD3, LD5, LD8, LD9, LD11, and LD12 would create a better fitting and more parsimonious four indicator model. As the leadership concept was adequately covered by the remaining items, the proposed deletion was accepted. Testing the model using the even numbered data set showed a good model fit as shown in Table 6.20.

P a g e | 221

Table 6.20 Goodness-of-fit indices for final transformational leadership construct model Goodness-of-fit measure Even data Cut-off Good Fit level set value fit? 2 Chi square χ 2.99 Probability P .22 >.05 √ Good 2 Normed chi square χ /df 1.49 <3.0 √ Good Goodness of Fit Index GFI .99 ≥.90 √ Good Adjusted Goodness of Fit AGFI .96 ≥.90 √ Good Index Tucker Lewis Index TLI .99 ≥.95 √ Good Comparative Fit Index CFI .99 ≥.95 √ Good Standardized Root Mean SRMR .01 ≤.05 √ Good Square Residual Root Mean Square Error RMSEA .05 ≤.08 √ Good Approximation Source: Developed for this research

The final transformational leadership construct consisted of four indicators LD2 “in my organization, manager helps employees to balance their work and family”, LD4 “my manager helps me if I have difficulty in doing my job”, LD6 “my organization is well managed”, and LD11 “my manager shares relevant up-to-date information with employees”. The indicator loading values for the four variables were between 0.88 and 0.93 and above the cut-off value of 0.5. The variance extracted value for the construct was 0.82 which was above the recommended cut-off value for construct validity of 0.5 (Hair et al. 2006). The final construct measuring Transformational Leadership is shown in Figure 6.7.

P a g e | 222

Figure 6.7. Final transformational leadership construct measure E 1

LD2: in my organization, manager helps employees to

balance their work and family .89

E 2

LD4: my manager helps me if I have difficulty in doing my job .90

E 3

E 4

LD6: my organization is well managed

LD11: my manager shares relevant up-to-date information with employees

TL

.88

.93

Source: Developed for this research

6.5.4. Empowerment

The empowerment concept was measured using fourteen indicators. Using an odd numbered data set, the associations between the empowerment indicator items were assessed using confirmatory factor analysis to determine the fit of the indicators of empowerment to the construct. All indicator measures evidenced high loadings thus indicating unidimensionality and internal consistency for the scale (Hair et al., 2006; Tabachnick and Fidel, 2001). The initial empowerment construct is presented in Figure 6.8.

P a g e | 223

Figure 6.8 Initial empowerment construct model e41

e42

EP1

EP3

EP2

.87

e44

e43

.89

e45

EP5

EP4

.88

.74

e46

EP6

.88

eep

.71

e47

EP7

e48

EP8

.84

.75

e49

e51

e50

EP9

EP10

.85

.84

e52

EP11

.61

e53

EP12

.83

e54

EP13

.71

EP14

.90

EP

Source: Developed for this research To examine the goodness of fit of the initial empowerment construct, the odd numbered dataset was used. The result from the testing of this model produced standardized regression weights that were all significantly different from zero and above the 0.50 threshold level for acceptability (Hair, et al., 2006) as shown in Table 6.21 Table 6.21 Initial empowerment standardized regression weights Observed variable Odd data set Indicator Goodness EP1 .87 √ EP2 .89 √ EP3 .88 √ EP4 .74 √ EP5 .88 √ EP6 .71 √ EP7 .84 √ EP8 .75 √ EP9 .85 √ EP10 .84 √ EP11 .61 √ EP12 .83 √ EP13 .71 √ EP14 .90 √ Source: Developed for this research

P a g e | 224

Although all of the empowerment standardized regression weights were above .50 (Hair et al., 2006), the model failed to meet the goodness-of-fit criteria (see Table 6.22). Table 6.22 Goodness-of-fit indices for initial empowerment construct model Goodness-of-fit measure Odd data Cut-off Good fit? Fit level set value Chi square χ2 977.99 Probability P .00 >.05 × Poor Normed chi square χ2/df 12.70 <3.0 × Poor Goodness of Fit Index GFI .62 ≥.90 × Poor Adjusted Goodness of AGFI .49 ≥.90 × Poor Fit Index Tucker Lewis Index TLI .73 ≥.95 × Poor Comparative Fit Index CFI .77 ≥.95 × Poor Standardized Root SRMR .08 ≤.05 × Poor Mean Square Residual Root Mean Square RMSEA .22 ≤.08 × Poor Error Approximation Source: Developed for this research

Further examination of the initial fourteen-item measurement model using the oddnumbered data set suggested the elimination of EP2, EP4, EP5, EP6, EP8, EP9, EP10, EP11, EP12, and EP13. The elimination of these 10 observed variables created a more parsimonious four indicator model and produced a model that fitted the data well when tested using the even data set as shown in Table 6.23

P a g e | 225

Table 6.23 Goodness-of-fit indices for final empowerment construct model Goodness-of-fit measure Even data Cut-off God set value fit? Chi square χ2 3.66 Probability P .16 >.05 √ Normed chi square χ2/df 1.83 <3.0 √ Goodness of Fit Index GFI .99 ≥.90 √ Adjusted Goodness of Fit AGFI .96 ≥.90 √ Index Tucker Lewis Index TLI .99 ≥.95 √ Comparative Fit Index CFI .99 ≥.95 √ Standardized Root Mean SRMR .01 ≤.05 √ Square Residual Root Mean Square Error RMSEA .06 ≤.08 √ Approximation Source: Developed for this research.

Fit Level Good Good Good Good Good Good Good Good

The final empowerment construct along with the indicator loadings are shown in Figure 6.9. The variance extracted value for the construct was 0.86 which was above the recommended cut-off value for construct validity of 0.5 (Hair et al. 2006). Figure 6.9. Final empowerment construct measure

E 1

EP1: my work is important to me .92

E 2

EP3: I am eager for the organization to care for all of its employees

E 3

EP7: I know I can perform better than the predetermined performance standard

E 4

EP14: I have the ability to plan and to implement solutions

Source: Developed for this research

.92

.94

.92

EP

P a g e | 226

6.5.5. Organizational performance Subjective evaluations using ten indicator statements were used to assess organizational performance. Using the odd numbered data set, the associations between the organizational performance indicator items were assessed using confirmatory factor analysis to determine the fit of the indicators of organizational performance to the construct. All indicator measures evidenced

high loadings thus indicating

unidimensionality and internal consistency for the scale (Hair, Anderson et al. 2006; Tabachnick and Fidell 2007). The initial organizational performance construct is shown in Figure 6.10.

Figure 6.10 Initial organizational performance construct e55

e56

OP1

e57

OP2

.61

OP3

.77

e58

e59

OP4

.79

.85

e60

OP5

.82

eld

e61

OP6

.41

OP7

.70

e62

OP8

.92

.49

e63

OP9

e64

OP10

.88

OP

Source: Developed for this research

The standardized regression weights, for variables OP6 and OP9 were below the 0.50 threshold level for acceptability and consequently these variables were eliminated from the organizational performance construct.

P a g e | 227

Table 6.24 Initial organizational performance standardized regression weights Observed variable Odd data set Indicator Goodness OP1 .61 √ OP2 .77 √ OP3 .79 √ OP4 .85 √ OP5 .82 √ OP6 .41 × OP7 .70 √ OP8 .92 √ OP9 .49 × OP10 .88 √ Source: Developed for this research

The results of the goodness-of-fit test of the eight indicator construct are shown in Table 6.20. As can be seen, except for the GFI, the fit indices showed a poor fit. Table 6.25 Goodness-of-fit indices for organizational performance construct model Goodness-of-fit measure Odd data Cut-off Good Fit level set value Fit? Chi square χ2 96.87 Probability P .00 >.05 × Poor 2 Normed chi square χ /df 4.84 <3.0 × Poor Goodness of Fit Index GFI .92 ≥.90 √ Good Adjusted Goodness of Fit AGFI .85 ≥.90 ≈ Marginal Index Tucker Lewis Index TLI .93 ≥.95 ≈ Marginal Comparative Fit Index CFI .95 ≥.95 √ Good Standardized Root Mean SRMR .04 ≤.05 √ Good Square Residual Root Mean Square Error RMSEA .12 ≤.08 × Poor Approximation Source: Developed for this research

After further modification index assessment, the observed variables OP1, OP2, OP4, and OP8 were eliminated to create a parsimonious four indicator model and the subsequent model showed a good fit to the data, when tested using the even numbered dataset, as can be seen in Table 6.26

P a g e | 228

Table 6.26 Goodness-of-fit indices for final organizational performance construct model Goodness-of-fit measure Even data Cut-off Good Fit level set value fit? Chi square χ2 4.08 Probability P .13 >.05 √ Good Normed chi square χ2/df 2.04 <3.0 √ Good Goodness of Fit Index GFI .99 ≥.90 √ Good Adjusted Goodness of Fit AGFI .95 ≥.90 √ Good Index Tucker Lewis Index TLI .98 ≥.95 √ Good Comparative Fit Index CFI .99 ≥.95 √ Good Standardized Root Mean SRMR .02 ≤.05 √ Good Square Residual Root Mean Square Error RMSEA .06 ≤.08 √ Good Approximation Source: Developed for this thesis The final organizational performance construct with its factor loadings are shown in Figure 6.11. The variance extracted value for the construct was 0.76 which was above the recommended cut-off value for construct validity of 0.5 (Hair et al. 2006) Figure 6.11 Final measure for organizational performance

E 1

E 2

OP3: my organization has sold more than it did last

year OP5: I am happy working here

.88 .93

E 3

E 4

OP7: the customers are happy with the products that they buy

.78

OP10: my organization is successful

.90

Source: Developed for this thesis

OP

P a g e | 229

Having discussed construct development, the next section will examine the discriminant validity of the constructs.

6.6. Assessment of discriminant validity

The previous section has discussed the purification of the constructs to be used in this thesis research and has evaluated the convergent validity on the basis of the fit of each construct model to the data as well as the variance extracted value for each construct. According to Churchill (1979) construct validity should be based on an assessment of both convergent and discriminant validity and this section therefore details the assessment of the discriminant validity for the constructs. In order to assess discriminant validity, Hair, Anderson, Tatham and Black (2006, p.778) recommend examining the intercorrelations between all of the pairs of constructs. The square of this value should then be less than the variance extracted value for each of the pair of constructs. This method of evaluation then signals whether or not the amount of association of the indicator variables for each construct is larger than the level of association between the constructs. Variance extracted values for each of the pair of constructs that are both larger than the squared correlation between the constructs indicate that the constructs are different from one another. However, this test is a conservative measure of discriminant validity and failure of this test will not automatically rule out the use of any constructs. This section will detail the evaluation of the inter-correlations between the constructs, their comparison with the variance extracted values and hence the determination of the discriminant validity for the constructs.

P a g e | 230

6.6.1. Organizational learning – Organizational performance

Many researchers have identified a causal relationship between organizational learning and organizational performance (Yeung, Lai et al. 2007; García-Morales, LlorénsMontes et al. 2008; Jyothibabu, Farooq et al. 2010; Wang, Wang et al. 2010). Some studies provide evidence of a positive relationship between organizational learning and firm performance (Bontis, Crossan et al. 2002; García-Morales, Lloréns-Montes et al. 2008; Jiménez-Jiménez and Sanz-Valle 2011). Using the even numbered data set, the correlation between the organizational learning construct and the organizational performance construct was assessed. The square of this value was then compared to the variance extracted values for each of the constructs. These results are shown in Table 6.35. The intercorrelation between organizational learning and organizational performance is shown in Figure 6.12 and the fit indices for the correlated construct model are shown in Table 6.27. Figure 6.12 Organizational learning – Organizational performance

OL

OL1

E41

OL8

E48

OL9

E49

OL16

E50

OP3

E59

OP5

E61

OP7

E63

OP10

E66

.76

OP

Source: analysis of survey data collected for this thesis

P a g e | 231

Table 6.27 Goodness-of-fit indices of OL-OP Goodness-of-fit measure Odd data Cut-off set value 2 Chi square χ 43.67 Probability P .00 >.05 2 Normed chi square χ /df 2.30 <3.0 Goodness of Fit Index GFI .96 ≥.90 Adjusted Goodness of Fit AGFI .92 ≥.90 Index Tucker Lewis Index TLI .97 ≥.95 Comparative Fit Index CFI .98 ≥.95 Standardized Root Mean SRMR .03 ≤.05 Square Residual Root Mean Square Error RMSEA .07 ≤.08 Approximation Source: analysis of survey data collected for this thesis

Good Fit??

Fit Level

× √ √ √

Poor Good Good Good

√ √ √

Good Good Good



Good

6.6.2. Organizational learning – Organizational culture Previous researchers have explored the interactions between organizational learning and organizational culture. Schein (2004) claimed that organizational culture promotes organizational learning. Similarly, Graham and Nafukho (2007) showed that organizational culture is important for building an organizational learning infrastructure within an organization. Using the even numbered data set, the correlation between the organizational learning construct and the organizational culture construct was assessed. The square of this value was then compared to the variance extracted values for each of the constructs. These results are shown in Table 6.35. The inter-correlation between organizational learning and organizational performance is shown in Figure 6.13 and the fit indices for the correlated construct model are shown in Table 6.28

P a g e | 232

Figure 6.13 Organizational learning – Organizational culture

OL

OL1

E41

OL8

E48

OL9

E49

OL16

E50

OC1

E30

OC3

E32

OC8

E33

OC11

E34

.94

OC

Source: analysis of survey data collected for this thesis

Table 6.28 Goodness-of-fit indices for OL-OC construct model Goodness-of-fit measure Odd data Cut-off Good set value Fit? 2 Chi square χ 40.54 Probability P .00 >.05 × 2 Normed chi square χ /df 3.38 <3.0 × Goodness of Fit Index GFI .95 ≥.90 √ Adjusted Goodness of Fit AGFI .90 ≥.90 √ Index Tucker Lewis Index TLI .97 ≥.95 √ Comparative Fit Index CFI .98 ≥.95 √ Standardized Root Mean SRMR .02 ≤.05 √ Square Residual Root Mean Square Error RMSEA .09 ≤.08 ≈ Approximation Source: analysis of survey data collected for this thesis

Fit level

Poor Poor Good Good Good Good Good Marginal

P a g e | 233

6.6.3. Organizational learning – Transformational leadership Previous researchers have investigated the association between organizational learning and transformational leadership and found a positive association (eg. Garcia-Morales, Llorens-Montes et al. 2006; Yang 2007; Goh and Ryan 2008; Michana 2009). Using the even numbered data set, the correlation between the organizational learning construct and the organizational performance construct was assessed. The square of this value was then compared to the variance extracted values for each of the constructs. These results are shown in Table 6.35. The inter-correlation between organizational learning and transformational leadership is shown in Figure 6.14 and the fit indices for the correlated construct model are shown in Table 6.29. Figure 6.14 Organizational learning – Transformational leadership

OL

OL1

E41

OL8

E48

OL9

E49

OL16

E50

LD2

E3

LD4

E4

LD6

E9

LD11

E10

.87

TL

Source: analysis of survey data collected for this thesis

P a g e | 234

Table 6.29 Goodness-of-fit indices for OL-TL construct model Goodness-of-fit measure Odd data Cut-off Good set value fit? Chi square χ2 40.54 Probability P .00 >.05 × Normed chi square χ2/df 2.13 <3.0 √ Goodness of Fit Index GFI .96 ≥.90 √ Adjusted Goodness of Fit AGFI .92 ≥.90 √ Index Tucker Lewis Index TLI .98 ≥.95 √ Comparative Fit Index CFI .99 ≥.95 √ Standardized Root Mean SRMR .02 ≤.05 √ Square Residual Root Mean Square Error RMSEA .07 ≤.08 √ Approximation Source: analysis of survey data collected for this thesis

Fit Level Poor Good Good Good Good Good Good Good

6.6.4. Organizational learning – Empowerment Bontis, Crossan and Hulland (2002) found that empowerment is positively associated with organizational learning and organizational performance. Employees’ abilities to contribute to their organization in different ways, to have a sense of pride in their job, a sense of direction and a sense of impact were positively associated with both organizational learning and organizational innovation and performance. Similarly, Prugsamatz (2010) found that empowerment in the form of the enhancement of creativity, creation of new knowledge and generation of different ideas had a positive association with the occurrence of organizational learning. Using the even numbered data set, the correlation between the organizational learning construct and the empowerment construct was assessed. The square of this value was then compared to the variance extracted values for each of the constructs. These results are shown in Table 6.35.

P a g e | 235

The inter-correlation between organizational learning and empowerment is shown in Figure 6.15 and the fit indices for the correlated construct model are shown in Table 6.30 Figure 6.15 Organizational learning – Empowerment

OL

OL1

E41

OL8

E48

OL9

E49

OL16

E50

EP1

E13

EP3

E17

EP7

E24

EP14

E25

.79

EP

Source: analysis of survey data collected for this thesis

Table 6.30 Goodness-of-fit indices for OL-EP construct model Goodness-of-fit measure Odd data Cut-off Good set value fit? Chi square χ2 53.50 Probability P .00 >.05 × 2 Normed chi square χ /df 2.82 <3.0 √ Goodness of Fit Index GFI .95 ≥.90 √ Adjusted Goodness of Fit AGFI .91 ≥.90 √ Index Tucker Lewis Index TLI .97 ≥.95 √ Comparative Fit Index CFI .98 ≥.95 √ Standardized Root Mean SRMR .03 ≤.05 √ Square Residual Root Mean Square Error RMSEA .08 ≤.08 √ Approximation Source: analysis of survey data collected for this thesis

Fit level

Poor Good Good Good Good Good Good Good

P a g e | 236

6.6.5. Organizational culture – Transformational leadership Transformational leadership creates and modifies organizational culture (Schein 2004). Robelo and Gomes (2011) have asserted that transformational leadership may create an organizational culture that promotes organizational learning. Empirical research that investigated the pattern of relationships between organizational culture and leadership found a positive association (eg. Lee, Lee et al. 2007; Jung and Takeuchi 2010; Prugsamatz 2010). Using the even numbered data set, the correlation between the organizational culture and the transformational leadership construct was assessed. The square of this value was then compared to the variance extracted values for each of the constructs. These results are shown in Table 6.35. The inter-correlation between transformational leadership and organizational culture is shown in Figure 6.16 and the fit indices for the correlated construct model are shown in Table 6.30. Figure 6.16 Transformational leadership – Organizational culture

TL

LD2

E3

LD4

E4

LD6

E9

LD11

E10

OC1

E30

OC3

E32

OC8

E33

OC11

E34

.90

OC

Source: analysis of survey data collected for this thesis

P a g e | 237

Table 6.31 Goodness-of-fit indices for OC-TL construct model Goodness-of-fit measure Odd data Cut-off Good set value fit? Chi square χ2 51.52 Probability P .00 >.05 × Normed chi square χ2/df 2.59 <3.0 √ Goodness of Fit Index GFI .95 ≥.90 √ Adjusted Goodness of Fit AGFI .91 ≥.90 √ Index Tucker Lewis Index TLI .98 ≥.95 √ Comparative Fit Index CFI .98 ≥.95 √ Standardized Root Mean SRMR .02 ≤.05 √ Square Residual Root Mean Square Error RMSEA .08 ≤.08 √ Approximation Source: analysis of survey data collected for this thesis

Fit level

Poor Good Good Good Good Good Good Good

6.6.6. Organizational culture – Empowerment The association between organizational culture and empowerment has gained the interest of many researchers. Empirical researchers have found a positive correlation between organizational culture and empowerment (eg. Castro, Perinan et al. 2008). Using the even numbered data set, the correlation between the organizational culture construct and the empowerment construct was assessed. The square of this value was then compared to the variance extracted values for each of the constructs. These results are shown in Table 6.35. The inter-correlation between organizational culture and empowerment is shown in Figure 6.17 and the fit indices for the correlated construct model are shown in Table 6.32.

P a g e | 238

Figure 6.17 Organizational culture – Empowerment

OC

OC1

E30

OC3

E32

OC8

E33

OC11

E34

EP1

E59

EP3

E61

EP7

E63

EP14

E66

.74

EP

Source: analysis of survey data collected for this thesis

Table 6.32 Goodness-of-fit indices for OC-EP construct model Goodness-of-fit measure

Odd data set 38.41 .00 2.02 .96 .93

Chi square χ2 Probability P Normed chi square χ2/df Goodness of Fit Index GFI Adjusted Goodness of Fit AGFI Index Tucker Lewis Index TLI .98 Comparative Fit Index CFI .98 Standardized Root Mean SRMR .02 Square Residual Root Mean Square Error RMSEA .06 Approximation Source: analysis of survey data collected for this thesis

Cut-off value

Good fit?

Fit Level

>.05 <3.0 ≥.90 ≥.90

× √ √ √

Poor Good Good Good

≥.95 ≥.95 ≤.05

√ √ √

Good Good Good

≤.08



Good

P a g e | 239

6.6.7. Transformational leadership – Organizational performance Transformational leadership is assumed to have a positive association with organizational performance. Empirical researches have provided evidence of a positive association between the two constructs (Lim, 1995; Fuller et al., 1999; Philips, 2003; Bushardt, et al., 2007; Yiing & Ahmad, 2009) Using the even numbered data set, the correlation between transformational leadership and organizational performance was assessed. The square of this value was then compared to the variance extracted values for each of the constructs. These results are shown in Table 6.35. The

inter-correlation

between

transformational

leadership

and

organizational

performance is shown in Figure 6.19 and the fit indices for the correlated construct model are shown in Table 6.34 Figure 6.18 Transformational leadership – Organizational performance

TL

LD2

E3

LD4

E4

LD6

E9

LD11

E10

OP3

E59

OP5

E61

OP7

E63

OP10

E66

.76

OP

Source: analysis of survey data collected for this thesis

P a g e | 240

Table 6.33 Goodness-of-fit indices for TL-OP Construct Model Goodness-of-fit measure

Odd data set 65.27 .00 3.44 .94 .90

Chi square χ2 Probability P 2 Normed chi square χ /df Goodness of Fit Index GFI Adjusted Goodness of Fit AGFI Index Tucker Lewis Index TLI .95 Comparative Fit Index CFI .97 Standardized Root Mean SRMR .04 Square Residual Root Mean Square Error RMSEA .09 Approximation Source: analysis of survey data collected for this thesis

Cut-off value

Good fit?

Fit level

>.05 <3.0 ≥.90 ≥.90

× × √ √

Poor Poor Good Good

≥.95 ≥.95 ≤.05

√ √ √

Good Good Good

≤.08



Marginal

6.6.8. Transformational leadership – Empowerment Transformational leadership directly shapes employee attitudes and work experiences (Dewettinck and van Ameijde 2010). Transformational leader behaviours have been found to have a direct relationship to employee empowerment (Dewettinck & van Ameijde, 2010). Using the even numbered data set, the correlation between the transformational leadership construct and the empowerment construct was assessed. The square of this value was then compared to the variance extracted values for each of the constructs. These results are shown in Table 6.35. The inter-correlation between transformational leadership and empowerment is shown in Figure 6.19 and the fit indices for the correlated construct model are shown in Table 6.34.

P a g e | 241

Figure 6.19 Transformational leadership – Empowerment

TL

LD2

E3

LD4

E4

LD6

E9

LD11

E10

EP1

E13

EP3

E17

EP7

E24

EP14

E25

.70

EP

Source: analysis of survey data collected for this thesis

Table 6.34 Goodness-of-fit indices for TL-EP construct model Goodness-of-fit measure

Even data set 52.81 .00 2.78 .95 .91

Chi square χ2 Probability P 2 Normed chi square χ /df Goodness of Fit Index GFI Adjusted Goodness of Fit AGFI Index Tucker Lewis Index TLI .97 Comparative Fit Index CFI .98 Standardized Root Mean SRMR .03 Square Residual Root Mean Square Error RMSEA .08 Approximation Source: analysis of survey data collected for this thesis

Cut-off value

Good fit?

Fit level

>.05 <3.0 ≥.90 ≥.90

× √ √ √

Poor Good Good Good

≥.95 ≥.95 ≤.05

√ √ √

Good Good Good

≤.08



Good

P a g e | 242

6.7. Discriminant validity assessment

Table 6.35 shows the comparisons between the variance extracted (VE) values for each of the constructs and the squared correlations between the constructs. Table 6.35 Discriminant validity Construct pair

Square of correlation estimate

VE VE 0.77 0.82 0.58 OL OP 0.77 0.82 0.87 OL OC 0.77 0.86 0.73 OL LD 0.77 0.76 0.64 OL EP 0.82 0.81 0.86 LD OC 0.86 0.82 0.62 LD OP 0.86 0.76 0.49 LD EP 0.82 0.82 0.64 OC OP 0.82 0.76 0.55 OC EP 0.76 0.82 0.70 EP OP Source: analysis of survey data collected for this thesis

Discriminant Validity Confirmed? √ × √ √ √ √ √ √ √ √

In this table it can be seen that in the case of OL-OC the variance extracted values were slightly smaller than the squared correlation between the constructs. While some previous researchers have claimed that these constructs would be measuring the same effect (for example García-Morales, Jiménez-Barrionuevo et al. 2011) other researchers (Jyothibabu, Farooq et al. 2010) have indicated that the constructs were not identical and should be examined separately. (Lloréns Montes, Ruiz Moreno et al. 2005) Montes, Moreno and Morales (2005) similarly obtained a VE value that was lower than their Rsquare value (VE =0.742 and R-square of 0.86) for a leadership – organization relationship. Although this thesis research indicated support for there being similarity between the two constructs the inter-correlation value also indicated that the constructs were not identical and it was therefore decided to use the two constructs as independent measures in the research while at the same time being wary of any possible multi-

P a g e | 243

collinearity effects. To check that the two constructs were not identical, a further test that was suggested by Fornell and Larker (1981) was used. The chi-square value for the intercorrelated constructs was compared between two models of the correlated constructs. In one model, the correlation between the two constructs was constrained by fixing it to one and the chi-square value was determined. The chi-square value for an unconstrained correlation model was then determined. This test produced chi-square values where the chi-square value of the constrained correlation model was larger (108.04) than that of the unconstrained model (105.03), thus showing a slightly better fit for the unconstrained model and supporting the concept that the two constructs were not the same.

6.8. Construct Reliability Construct reliability was examined by determining the reliability values using the formula as outlined in Hair et al. (2006, p.777). The construct indicator loadings, construct reliability and variance extracted (VE) values for the organizational learning, organizational culture, transformational leadership, empowerment and organizational performance constructs are shown in Table 6.36

P a g e | 244

Table 6.36 Construct reliability OP OC

Construct OL Indicator Variable Loading Loading OL1 0.80 OL8 0.93 OL9 0.91 OL16 0.86 OP3 0.88 OP5 0.93 OP7 0.78 OP10 0.90 OC1 OC3 OC8 OC11 LD2 LD4 LD6 LD11 EP1 EP3 EP7 EP14 Variance Extracted 0.77 0.82 Construct reliability 0.93 0.95 Source: data analysis for this research

LD

Loading. Loading

EP Loading

0.91 0.91 0.94 0.94 0.89 0.90 0.88 0.93

0.82 0.95

0.86 0.96

0.92 0.92 0.94 0.92 0.76 0.93

Nunnally and Bernstein (1994) suggested guidelines for interpreting the reliability index. In exploratory research, modest reliability in the range of 0.50 to 0.60 will suffice. For basic research, reliability beyond 0.70 is necessary, while in an applied setting a reliability of 0.90 should be the minimum. The high reliability values of all measurement scales for this research, 0.93, 0.95, 0.95, 0.96, and 0.93 respectively for organizational

learning,

organizational

performance,

organizational

culture,

transformational leadership and empowerment indicated that all of the scales reflected a satisfactory level of reliability.

P a g e | 245

6.9. Analysis of data: Specifying and testing the model Chapter four described the constructs and the proposed model to be tested in this thesis research while chapter five described the steps to be used to test the model. The previous sections of this chapter have discussed the respondent characteristics the descriptive statistics and the between construct relationships. These procedures have been used to ensure that measures exhibiting good psychometric properties for each of the constructs of interest were developed. This section applies the procedures outlined in Chapter 5, in order to complete the specification of the structural model and the testing of the structural model and the associated research hypotheses.

6.9.1. Specifying the structural model As has been described in Chapter 5 (section 5.9.3), the process of specifying the structural model involves representing the theory visually using a path diagram, clarifying which constructs are exogenous and endogenous and several related issues, such as identification. The research model represents an identification of the structural antecedents and consequences of organizational learning on organizational performance. The theoretically-based model, including a set of hypothesis was explained in Chapter 4. It represented a basic path diagram, which now needs to be specified in detail prior to being tested using the AMOS program.

P a g e | 246

6.9.2. Testing the model The structural model for organizational learning that was developed for this thesis research consisted of one exogenous variable, four endogenous variables and 20 observed variables. The exogenous variable was transformational leadership. The four endogenous variables were organizational learning, organizational performance, organizational culture and empowerment. The exogenous and the four endogenous variables were each indicated by four observed variables. The initial structural model and its path values is shown in Figure 6.20.

P a g e | 247

Figure: 6.20 Initial organizational structural model

Source: analysis of survey data collected for this thesis

P a g e | 248

An evaluation of the goodness-of-fit indices for this structural model produced a model with GFI and AGFI values of .87 and .83 respectively (see Table 6.37). RMSEA at a level of .09 was higher than the cut-off value (.08) but the SRMR at .03 showed a good fit. It was considered that minor adjustments to the model would be acceptable if any such adjustments were minor, were considered to be rational and resulted in a better fitting model.

Table 6.37 Goodness-of-fit indices for initial Organizational Learning construct model Goodness-of-fit measure Grand data Cut-off Good Fit level set value Fit Chi square χ2 790.90 × Probability P .00 >.05 Poor Normed chi square χ2/df 4.85 <3.0 × Poor Goodness of Fit Index GFI .87 ≥.90 ≈ Marginal fit Adjusted Goodness of Fit AGFI .83 ≥.90 ≈ Marginal Index fit Tucker Lewis Index TLI .93 ≥.95 ≈ satisfactory fit Comparative Fit Index CFI .95 ≥.95 √ Good fit Standardized Root Mean SRMR .03 ≤.05 √ Good fit Square Residual Root Mean Square Error RMSEA .09 ≤.08 ≈ Marginal Approximation fit Source: analysis of survey data collected for this thesis

With sample sizes of more than 200 cases, models often will not evidence a chi-square value that indicates a good fit (viz p>0.05), so the low p value that was obtained from this analysis was not a matter for concern. Examination of the model using the modification indices provided by the AMOS program suggested that the fit of the model could be improved if a path from empowerment to organizational performance was added. Since the new path had

P a g e | 249

conceptual foundations (Jyothibabu et al., 2010; Prugsamatz, 2010; van Grinsven & Visser, 2011), this new path was considered to be a rational addition and was added. The modified model with the additional path is shown in Figure 6.21 Figure: 6.21 Final organizational learning structural model

Source: analysis of survey data collected for this thesis

P a g e | 250

Assessment of the goodness-of-fit indices for the structural model revealed a satisfactory fit to the data according to the majority of the eight fit indices (see Table 6.38). Two absolute indices, the SRMR and RMSEA were below the ideal cut-off levels of 0.05≤ and 0.08≤ respectively. The SRMR has been identified as being one of the best measures of fit and the EQS Structural Equations Program Manual states that “In an extensive simulation study the SRMR was found by Hu and Bentler (1995, unpublished) to discriminate between fitting and misspecified models substantially better than any other fit index” (Bentler 1995, p.272). The Incremental Fit Indices, TLI and CFI, were within the cut-off level for a good fit indicating that the data fitted the model well. Fit indices that are sensitive to sample size such as Chi-Square, normed Chi-Square for absolute fit indices and GFI and AGFI for incremental fit indices did not meet the desired cut-off values. As these goodness of fit indices are known to be affected by the size of the sample, this was not considered to be a problem (Hu & Bentler, 1995; Hair et al., 2010).

P a g e | 251

Table 6.38 Goodness-of-fit indices for final organizational learning construct model Goodness-of-fit measure Grand Cut-off Good Fit level data set

value

fit?

Chi square

χ2

693.90

Probability

P

.00

>.05

×

Poor

Normed chi square

χ2/df

4.28

<3.0

×

Poor

Goodness of Fit Index

GFI

.88

≥.90



Marginal fit

Adjusted Goodness of Fit Index

AGFI

.85

≥.90



Marginal fit

Tucker Lewis Index

TLI

.95

≥.95



Good fit

Comparative Fit Index

CFI

.96

≥.95



Good fit

SRMR

.03

≤.05



Good fit

RMSEA

.08

≤.08



Good fit

Standardized Root Mean Square Residual Root Mean Square Error Approximation

Source: analysis of survey data collected for this thesis Table 6.39 shows the standardized residuals for the model as estimated by AMOS 20. The threshold level of significance for any residual was set at the 99% level of significance or at a value of ±2.58 (Hair et al., 2010; Jöreskog, & Sörbom, 1993). The standardised residual covariances were all within this level of significance and did not suggest that there were any problems with the fit of the data to the model.

P a g e | 252

Table 6.39 Final model standardised residual covariances OP7

OP10 OP5

OP3 OL16 OL9

OL8

OL1

OC11 OC8 OC3 OC1

EP14 EP7

EP3

EP1 LD11 LD6

LD4

OP1 0 OP10

.0

.0

OP5

-.03

.03

0

OP3

.27

.22

-.19

OL16

-.66

-.23

-1.39 -1.34

0 0

OL9

-.99

-.23

-.773

-.15 0

OL8

-.22

.01

-.589 -.71

-.14

.48 0

OL1

.19

.11

.151

-.11

-.28

.30

-.18 0

.54

OC11

-.16

1.24

.468

.62

-.33

-.43

-.21 -0.69 0

OC8

-.21

1.31

.259

-.34

.76

-.48

-.02 0.49

OC3

.63

.51

-.296 -.41

.62

-.27

-.17 -0.07 0.15

-0.04

OC1

-.67

.67

-.160

1.27

-.36

.15

-0.15 -0.08

EP14

-.89

.09

.119

-.06

-.64

.22

-.07 -0.06 -0.33 0.36

-0.23

0

EP7

.82

-.43

.362

1.22

-.56

.62

-.55 0.41

-0.33 -0.12 -0.13 -0.40

0.14

EP3

-.30

-.21

.572

.08

-.88

.47

.96

0.42

-0.29 -0.07

EP1

.35

-1.4

-.552

.05

-.90

.01

-.21 0.16

LD11

.13

1.4

1.208 1.19

.66

-.07

-.05 -0.36 0.56

0.28

LD6

.86

2.10 1.379 2.34

-.08

.77

.23

-0.83 0.31

0.07

-0.15

-0.41

LD4

1.51

.00

-.001

.56

-.47

-.26

-.20 -0.70 0.10

0.17

0.21

-0.91 -0.41 -0.29 -0.22

LD2

.00

.03

-.380

.17

.08

-.21

-.37 -0.45 -0.53 -0.33 -0.06 -0.53

.24

0.12

0.74

-0.10 0

0.31

0.58

-0.64 0.00

0

0.05

0

-0.17 0.83 -0.31

0 0

0.02

0.19 -0.08 0.14

0

0.21 0.21

0.34 0.08 0.65

0.36

0.64 0.98 0.55 -0.14 0.14

-0.45 -1.05 -0.75 -0.65

0 -0.61

0

-0.14 0.16

0.20 0.12 0.33

Source: analysis of survey data collected for this thesis

The structural model path values and associated significance tests are shown in Table 6.40.

0

P a g e | 253

Table 6.40 Final organizational learning SEM model parameter estimates Regression Estimate S.E. C.R. P Label OC <--LD 1.292 .057 22.573 *** par_11 EP <--LD .499 .141 3.524 *** par_2 EP <--- OC .419 .102 4.096 *** par_9 OL <--LD .070 .088 .800 .423 par_10 OL <--EP .141 .035 4.000 *** par_16 OL <--- OC .643 .071 9.033 *** par_17 OP <--EP .623 .061 10.191 *** par_20 OP <--OL .308 .063 4.864 *** par_21 OC1 <--- OC 1.000 OL16 <--OL 1.200 .061 19.740 *** par_1 OP3 <--OP 1.000 EP7 <--EP 1.009 .035 28.940 *** par_3 EP3 <--EP 1.076 .036 29.896 *** par_4 EP14 <--EP 1.065 .034 30.976 *** par_5 EP1 <--EP 1.000 LD6 <--LD 1.351 .055 24.587 *** par_6 LD4 <--LD 1.397 .055 25.393 *** par_7 LD2 <--LD 1.404 .057 24.624 *** par_8 OL9 <--OL 1.223 .059 20.860 *** par_12 OL8 <--OL 1.225 .056 21.893 *** par_13 LD11 <--LD 1.388 .054 25.466 *** par_14 OC11 <--- OC 1.035 .034 30.627 *** par_15 OL1 <--OL 1.000 OC3 <--- OC 1.043 .035 29.709 *** par_18 OC8 <--- OC 1.015 .032 31.640 *** par_19 op7 <--OP .796 .042 19.060 *** par_22 OP5 <--OP 1.063 .044 24.178 *** par_23 OP10 <--OP 1.067 .042 25.355 *** par_24 Source: analysis of survey data collected for this thesis

One of the path values namely that from OL to LD was not significantly different from zero, however all other path values were significantly different from zero.

P a g e | 254

6.10. Testing the mean differences in respondent characteristics. The size of the respondent’s organisation, their length of time in the organization (tenure) and the age of the organization may influence organizational learning practice. To explore whether there were differences in respect of these three aspects, a composite organizational learning score was created as a weighted average of the scores of the four organizational learning indicators for the organizational learning construct. This value was then used as the dependent variable in a three-way ANOVA analysis. The mean differences between the scores for the categorical variables of size of the organization, respondents’ length of time in the organization and the age of the organization together with their interactions, were examined. This method was used to evaluate the organizational learning practices that related to age, size and tenure, which were not items that were incorporated in the model and hence could not be evaluated by means of a multi-group invariance analysis. The results are shown in Table 6.41. Table 6.41 Mean differences in organizational learning scores by respondent and organizational characteristics Characteristics

F-value

p-value

Power

SMEs Size (OB2)

3.9

0.05

0.51

Respondent’s tenure (OB4)

1.08

0.37

0.34

SMEs Age (OB5)

1.28

0.28

0.34

SME Age by Respondents’ Tenure OB4*OB5

2.60

0.01

0.94

SME Size by Respondents’ Tenure by SME

2.66

0.01

0.90

Age OB2*OB4*OB5 Source: analysis of survey data collected for this thesis

P a g e | 255

As can be seen in Table 6.41, there was a small significant difference in the mean organizational learning scores for organizations of different sizes. There were two sizes of organizations reflected in the data, those with between 10 to 19 employees (mean organizational learning value of 4.4) and those with between 20 and 99 employees (mean organizational learning value of 4.8). This finding supported the Sørensen and Stuart (2000) research finding that larger organizations have better practices in regard to organizational learning but disagreed with that of Rebelo and Gomes (2011) who found that there was no significant difference between small and medium sized enterprises in relation to organizational learning practices. The examination of the mean differences for respondent’s tenure, and the age of the SMEs as shown in Table 6.41, found no significant difference in the composite organizational learning scores, although the power for these tests was low and it cannot be said with any certainty that there was no such effect.

However, there was a

significant interaction effect between respondents, tenure and the age of the organization so that when both of these were taken into account there was a significant difference in the mean organizational learning scores at a power level of 0.94. The joint effects of these two categorisations was in line with previous findings that independently assessed effects of tenure by (eg. Lucas and Kline 2008), and length of operation of an organization by Sørensen and Stuart (2000) may create better organizational learning practices. The three-way interaction between size, tenure and age of organization was also significant, however in view of the two previous findings, this result was meaningless.

P a g e | 256

6.11. Testing of the hypotheses The previous section established that the research results supported the acceptance of the final organizational learning model. This section sets out the results of the tests of the hypotheses. Hypothesis Ho1: there is no significant relationship between organizational learning and organizational performance The indicator variables chosen to measure organizational learning (OL) were “employees are encouraged to think from a global perspective” (OL1), “employees spend time building trust with each other” (OL8), “employees are rewarded for learning” (OL9), and “maintains an up-to-date database of employee skills” (OL16) while Organizational Performance (OP) was measured with “my organization has sold more than it did last year” (OP3), “I am happy working here” (OP5), “the customers are happy with the products that they buy” (OP7), and “my organization is successful” (OP10). A positive coefficient that was significantly different from zero at the 99.5% level was found for the relationship between organizational learning and organizational performance (standardized coefficient = 0.29, C.R = 4.86, p=0.00). The positive value of this coefficient rejected hypothesis Ho1, and supported the existence of a significant relationship between organizational learning and organizational performance.

P a g e | 257

Hypothesis Ho2a: There is no significant relationship between organizational culture and organizational learning

The indicator variables that measured organizational culture (OC) were “all decisionmaking is made through a rational process” (OC1), “creates systems to measure gaps between current and expected performance” (OC3), “the structure supports its strategic direction” (OC8), and “the organization has built a culture of trust amongst employees” (OC11) while the organizational learning measures were “employees are encouraged to think from a global perspective” (OL1), “employees spend time building trust with each other” (OL8), “employees are rewarded for learning” (OL9), and “maintains an up-todate database of employee skills” (OL16). The significant values of the paths linking organisational culture and organizational learning rejected the null hypothesis of there being no relationship between organizational culture and organizational learning at the 99.5% level (standardized estimate = 0.78, C.R = 9.03, and p= 0.00). The model also supported organizational culture influencing organizational learning through empowerment. The standardised estimated indirect effect of organizational culture through the empowerment path was 0.07 (0.46 × 0.16). So, the total effect of organizational culture on organizational learning was 0.85. Based on this result, the hypothesis that there is no significant relationship between organizational culture and organizational learning was rejected and the alternate hypothesis of organizational culture having a significant relationship to organizational learning was supported.

P a g e | 258

Hypothesis

Ho2b:

There

is

no

significant

association

between

organizational culture and empowerment. Rational decision making process, performance measurement system, organizational structure to support strategic direction and culture of trust among employees as the indicators for organizational culture were investigated in relation to the opinions of employees of the importance of their jobs, their care for employees’ welfare, their ability to perform better and their ability to plan and implement a solution as the indicators of empowerment. Identification of a significant path linking the constructs rejected the null hypothesis and supported the alternate hypothesis. This path coefficient was significantly different from zero at the 99.5% level (Standardized coefficient = 0.46, C.R = 4.10, and p=0.00). The significant value of the coefficient supported the alternate hypothesis of organizational culture being associated with empowerment. Hypothesis

Ho3a:

There

is

no

significant

relationship

between

transformational leadership and organizational learning The indicators used to measure transformational leadership were “helps employees to balance their work and family” (LD2), “my manager helps me if I have difficulty in doing my job” (LD4), “my organization is well managed” (LD6) and “my manager shares relevant up-to-date information with employees” (LD11) while the organizational learning indicator measures were “employees are encouraged to think from a global perspective” (OL1), “employees spend time building trust with each other” (OL8), “employees are rewarded for learning” (OL9), and “maintains an up-todate database of employee skills” (OL16).

P a g e | 259

The path coefficient for the direct relationship between transformational leadership and organizational learning was not significantly different from zero thus indicating that the path value could have been zero. (Standardized Estimate = 0.06, C.R = 0.8, and p = 0.423), and supporting the null hypothesis.

However, there was also an indirect

relationship between transformational leadership and organizational learning through organizational culture and through organizational performance as mediating constructs. The path of LD

OL contributed a standardised path value of 0.73 (0.94 ×

OC

0.78) while the path of LD

EP

OL had standardised path value of 0.06 (0.39 ×

0.16). Thus there was an overall indirect significant relationship between transformational leadership and organisational learning through the mediating influences of organizational culture and organizational performance. The overall significant path value for this relationship was 0.85 which indicated a strong association. Thus the null hypothesis that there is no significant relationship between transformational leadership and organizational learning was rejected and the alternate hypothesis that leadership is significantly related to organizational learning was supported. Hypothesis

Ho3b:

There

is

no

significant

relationship

between

transformational leadership and organizational culture “Helping employees to balance their work and family relationships”, “helping employees if they have difficulty in doing their job”, “well managed enterprises and sharing relevant up-to-date information attitude from managers”, as indicators of transformational leadership were investigated with “decision making process”, “performance measurement system”, “organizational structure to support strategic

P a g e | 260

direction” and “culture of trust among employees” as indicators for organizational culture. The significant values that were determined for the paths linking the constructs did not support this hypothesis, and hypothesis Ho3b that there is no significant relationship between transformational leadership and organizational culture was rejected. A positive coefficient that was significantly different from zero at the 99.5% level was found for the relationship between transformational leadership and organizational culture (standardized coefficient estimate = 0.78, C.R = 22.57, and p=0.00). The significant value for this coefficient supported the alternate hypothesis that transformational leadership is related to organizational culture. Hypothesis

Ho3c:

There

is

no

significant

relationship

between

transformational leadership and empowerment The chosen four indicators for transformational leadership were: “managers help employees to balance their work and family” (LD2), “managers help employee to solve difficulties in doing their job” (LD4), “well managed organization” (LD6) and “manager sharing relevant up-to-date information with employees” (LD11) were investigated in relation to

empowerment as determined from its four indicators:

“importance of work for employee” (EP1), “organizational care for all employees” (EP3), “employees’ ability to perform better than the pre-determined performance standard” (EP7), and the “ability to plan and to implement solutions” (EP14). The significant values for the paths linking the constructs rejected the null hypothesis. A positive coefficient that was significantly different from zero at the 99.5% level was found for the relationship between transformational leadership and empowerment (standardized estimate = 0.50, C.R = 3.52, and p=0.00). The significant value for this

P a g e | 261

coefficient supported the alternate hypothesis that there is a relationship between transformational leadership and empowerment. Hypothesis

Ho3d:

There

is

no

transformational

significant

relationship

leadership

and

between

organizational

performance As can be seen in Figure 6.21 on page 249, there are two paths linking transformational leadership to organizational performance one being mediated by empowerment and the other by organizational learning. The total effects of a path that was mediated by organizational culture, empowerment and organizational learning was 0.25 (0.85 × 0.29) while path LD

EP

OP was 0.25 (0.39 × 0.65). The total effect of the two

paths was 0.50 indicating a significant relationship between transformational leadership and organizational performance, thus rejecting the null hypothesis and supporting the alternate hypothesis. Hypothesis

Ho4:

There

is

no

significant

relationship

between

empowerment and organizational learning The indicators for empowerment were “my work is important to me” (EP1), “I am eager for the organization to care for all of its employees” (EP3), “I know I can perform better than the pre-determined performance standard” (EP7), and “I have the ability to plan and to implement solutions” (EP14). The organizational learning indicator measures were “employees are encouraged to think from a global perspective” (OL1), “employees spend time building trust with each other” (OL8), “employees are rewarded for learning” (OL9), and “maintains an up-to-date database of employee skills” (OL16).

P a g e | 262

The significant path linking the constructs rejected hypothesis Ho4a and supported the alternate hypothesis of a relationship between empowerment and organizational learning. A positive coefficient that was significantly different from zero at the 99.5% level was found for this relationship between empowerment and organizational learning (standardized estimate = 0.16, C.R = 4.00, and p=0.00). Table 6.42 summarises the research hypotheses and the associations that were tested. The standardised coefficients for direct, indirect and total effects, direct effect significance levels, and mediating variables are also shown. Table 6.42 Standardized direct, indirect and total effects of constructs Hypotheses Direct effect Indirect Mediating Total Hypothesis effect variable(s) effect Test Result No. Associat- Direc- Std. Sig. Std. Std. ion tion coef. level Coef. Coef. Ho1 OL-OP + .29 .00 .29 Rejected Ho2a OC-OL + .78 .00 .07 EP .85 Rejected Ho2b OC-EP + .46 .00 .46 Rejected Ho3a TL-OL + ns ns .81 OC and EP .81 Rejected Ho3b TL-OC + .94 00 .94 Rejected Ho3c TL-EP + .39 00 .39 Rejected Ho3d TL-OP + .50 OL, OC, .50 Rejected and EP Ho4a EP-OL + .16 .00 .16 Rejected Source: data analysis for this research ns = not significant 6.12. Conclusion The purpose of this chapter has been to report the research results obtained from the testing of the proposed model of organizational learning and the relationship to organizational performance. The chapter commenced with information on the level of survey response, data screening, descriptive statistics, construct model assessment, construct validity and reliability assessment and the testing of the overall model and its associated hypotheses.

P a g e | 263

The results showed that after the addition of a path linking empowerment and organizational learning, the structural model fitted the data well. All of the constructs of interest were found to have positive associations with one another. The overall outcome of the test of the model was that organizational learning was found to have a significant relationship with organizational performance. Chapter 7 will discuss the meanings of the results and their implications for theory development.

P a g e | 264

CHAPTER 7 SUMMARY AND CONCLUSIONS 7.1. Introduction The construct models and the structural model have been presented and discussed in the previous chapters. This chapter summarizes the results that were reported in Chapter 6 and discusses their implication for theory and for management practice. The contribution of the study will be highlighted along with its limitations and future research opportunities will be identified. The structure of Chapter 7 is presented in Figure 7.1. Figure 7.1. Structure of Chapter 7 7.1. Introduction

7.2. Summary

7.3. Conclusion

7.4. Implications

7.5. Contributions from the study

7.6. Limitations and suggestions for future research

7.7. Conclusion Source: developed for this thesis

P a g e | 265

7.2. Summary This study is concerned with organizational learning and its antecedents as well as their simultaneous influence on SME organizational performance in a developing country, Indonesia. The two main objectives of this study were to develop and to test a comprehensive model of organizational learning and its antecedents – transformational leadership, organizational culture and empowerment in relation to SME organizational performance; and then to explore the strengths of the relationships. To address these two main objectives, the thesis was divided into 7 chapters. Chapter 1 introduced the research by providing background information identifying a need to examine SME organizational learning in a developing country context. The country chosen for this study was Indonesia. The importance of organizational learning especially for developing country SMEs was highlighted. The aims of the research were identified as being important in terms of developing a comprehensive understanding of organizational learning, the conducting of an examination with a SME focus, the exploration of the existence of organizational learning in an SME context and the potential application of the research findings. In order to investigate the proposed research problem, definition and concepts of organizational learning and its antecedents as well as SME organizational performance were outlined in Chapter 2. As organizational learning is believed to be influenced by social and cultural contexts (Aycan, Kanungo et al. 1999; Graham and Nafukho 2007; Al-Adaileh and Al-Atawdi 2010), Chapter 3 examined the context of the research study. SMEs in both a global and in an Indonesian context play a crucial role in economic development either as a source of employment or of wealth distribution. The Hofstede (Hofstede 2001; Hofstede and Hofstede 2005)categorizations as applied to Indonesia as

P a g e | 266

well as an exploration of transformational leadership and empowerment in an Indonesian context were used to examine the dynamic nature of Indonesian SME businesses (Yudhi 2007). Organizational learning and its antecedent concepts in an Indonesian SME context set out the basis for the development of model and concurrent hypotheses and this was presented in Chapter 4. Chapter 5 set out the research method used in this researchto test the proposed model and its constructs. The research instrument used for data collection was a web-based mailed questionnaire. To obtain sufficient data to be able to test a or structural model, a thousand members of the HRD-power group that own or work in trade and service SME organizations were contacted using e-mail and invited to participate in the research. 574 of them agreed to participate, however seventy three responses needed to be removed because they were incomplete, resulting in a final effective response rate of 50.1% (501 responses). Chapter 6provided analyses of the data that was collected by means of the survey. An examination of the responses showed that organizational learning practices had been used by SMEs in their daily business activities. Further examination of a comprehensive model of organization learning, its antecedents, and their simultaneous influence on organizational learning found that the empirical data fitted the model well. The examination also found that organizational learning was significantly related to organizational performance. Chapter 7 discusses the outcomes of the analysis and the hypothesis test results and examines the implications of the research for theory, policy, and practice plus some possibilities for further research.

P a g e | 267

7.3. Conclusions The conclusion is organized into two subsections; the first section is a discussion of the results of the tests of the research hypotheses. The second section presents the conclusions in regard to the research problem. 7.3.1. Conclusions in regard to the research questions Research question 1: Can the testing of a comprehensive model of the relationships between

SME

organizational

performance

and

organizational learning and its antecedents – organizational culture, transformational leadership and empowerment produce a valid outcome? The final modified organizational learning structural model (refer to Figure 6.23, repeated in expanded name form in this chapter as Figure 7.1) showed that the proposed comprehensive model of organizational learning along with its antecedents and with organizational performance, fitted the data well. An assessment of the goodness-of-fit indices for the structural model revealed a satisfactory fit to the data according to the majority of the eight fit indices that were used (see Table 6.40). In particular, the SRMR and RMSEA were below the ideal cut-off levels of 0.05≤ and 0.08≤ respectively. In addition, the standardised residual covariances (see Table 6.41) did not suggest any need for there to be any modifications to the model. Thus, a comprehensive model of relationships between organizational learning and its antecedents along with its simultaneous relationship to organizational performance produced a valid outcome in an Indonesian SME context.

P a g e | 268

Research question 2: What are the relationships between organizational learning and its antecedents and the performance of Indonesian SMEs? The values for the paths linking the constructs showed the existence of significant relationships between the organizational learning construct, its antecedent constructs and organizational performance (see section 6.8). To test the postulated relationships between organizational learning and its antecedents and organizational performance, ten hypotheses that were identified in Chapter 4 (see section 4.4) were tested. The following sections provide a discussion of each of these hypotheses. 7.3.2. Conclusions in regard to the research hypotheses The testing of the structural model as reported in Chapter 6 produced the following figure shown as Figure 6.23 in chapter 6 and reproduced below in expanded name form as Figure 7.2.

P a g e | 269

Figure 7.2 Structural model and path values

.87

LD6: Organization is well managed

.89 Transformation al Leadership

.94

.88

.90

.93

OC11: Culture of trust amongst employees

.88 .89

OC8: Support for strategic direction

LD4: Leader helps employee in job difficulty

OC3: system to measure performance gap

date information

LD2: Leader cares of employee’s welfare

OC1: Rational decision making process

LD11: Leader and sharespath up-to- values Structural model

.91

.39 Organizational Culture

.46 Empowerment

NS .78 .16 .88

.90

.89

.91 .95 .65 OC14: ability to plan and implement solutions

EP7: Employee’s confidence to perform

EP3: Organizational care on employees

EP1: employee feel importance of work

Organizational Learning

.29

.92 .88 .84

OL1: think from global perspective OL8: employees spend time building trust OL9: employees are rewarded for learning OL16: maintains an up-todate database

Organizational Performance

.82 .90

.75

OP3: Sold more than the previous year OP5: employees are happy to work in the organization

.88

OP10: organization is successful

OP7: Customers are happy with product that they buy

Source: Figure 6.21 (error terms omitted, names added, NS= non-significant)

Except for a non-significant direct path between transformational leadership and organizational learning, all of the direct relationship paths between the constructs were found to be significantly different from zero. The non-significant path between transformational leadership and organizational learning shows that transformational

P a g e | 270

leadership does not influence organizational learning directly but does so through the mediums of empowerment and organizational culture, with the largest influence occurring by way of organizational culture. Details of results of the testing of the research hypotheses are presented in the following sub-sections. 7.3.2.1. Organizational learning – Organizational performance Hypothesis Ho1: there is no significant relationship between organizational learning and organizational performance A positive coefficient that was significantly different from zero at the 99.5% level (standardized coefficient = 0.29, C.R = 4.86, p=0.00) for the relationship between organizational learning and organizational performance showed that organizational learning had a significant relationship to organizational performance. Thus, H01 was rejected. Based on the indicators for organisational learning, the implication of this result is that encouraging employees to think from a global perspective, the existence of trust amongst employees, reward for learning and maintaining an up-to-date database of employee skills will promote better organizational performance as measured by increased sales and increased happiness of employees and customers. The findings revealed a different result from those of Chaston, Badger and SadlerSmith (1999) and Birdthistle (2008) that organizational learning has no relationship with organizational performance. On the other hand, the findings from this study provided additional evidence to that reported in other literature namely that organizational learning positively and significantly influences SME organizational performance (van Gils and Zwart 2004; Alegre and Chiva 2008; Goh and Ryan 2008; Panagiotakopoulos 2011).

The findings from this study also provided a different

viewpoint in regard to the influence of SME organizational learning on SME

P a g e | 271

performance since it used a different set of indicators of organizational learning and performance to those used in other studies. For example, in their research on Dutch & Belgian SMEs, van Gils and Zwart (2004) found that knowledge sharing and learning increased turnover, produced higher profits and an extension of the product range. A similar study of SME producers of ceramics in Spain, by Alegre and Chiva (2008) found that experimentation, risk taking, interaction with the external environment, dialogue and participative decision making, influenced organizational performance when measured as an increase in product innovation. One of the most recent research exercises conducted by Panagiotakopoulos (2011) in Greek SMEs found that a continuous effort to acquire and manipulate knowledge in SME organizations had a significant influence on SME survival and growth. While the relationship between organizational learning and the organizational performance of SMEs enjoys conceptual and empirical support, this study identified that trust was an important indicator of organizational learning and that employee happiness was an important indicator of organizational performance. On a seven point scale, the arithmetic mean for trust was 5.38 which indicated that respondents rated the item relatively highly. In addition, based on the confirmatory factor analysis, trust amongst employees had the highest loading on the organizational learning construct. In the organizational performance construct, employee happiness had the highest arithmetic mean and the highest construct loading. Thus, this study revealed that the existence of trust as a component of organizational learning will lead to better organizational performance where part of the performance measure is employee happiness.

P a g e | 272

7.3.2.2. Organizational culture – Organizational learning Hypothesis Ho2a: There is no significant relationship between organizational culture and organizational learning

Organizational culture is directly and indirectly related to organizational learning through empowerment and the total effect of organizational culture on organizational learning was 0.85. This result showed that organizational culture had a positive and significant relationship to organizational learning and was one of the major antecedents of organizational learning. A rational decision making process, a measured system of performance, clarity of strategic direction and trust between employees as aspects of organizational culture were related to organizational learning as measured by encouraging employees to think from global perspective, existence of trust among employees, reward for learning and maintaining an up-to-date database of employee skills. The findings extended

previous large business research results that showed that

organizational culture had an impact on the occurrence of organizational learning (for example: Egan, Yang et al. 2004; Bates and Khasawneh 2005; Chang and Lee 2007; Graham and Nafukho 2007; Barrette, Lemyre et al. 2008; Lucas and Kline 2008; Jung and Takeuchi 2010; Škerlavaj, Song et al. 2010) to SMEs. Two other large business studies in an Asian context also found a similar result. In their research into Taiwanese enterprises, Chang and Lee (2007) found that clan culture, mission culture and adaptive culture had influenced building shared vision, personal mastery and systematic cooperation positively and significantly. Similarly, in his research on international nonprofit organizations in Bangkok, Thailand, Prugsamatz (2010) found that organizational

P a g e | 273

culture influenced knowledge acquisition and sharing and contribution of ideas from employees. Although most of the previous research was carried out in developed countries and on large businesses, in this study, a similar pattern of an organizational culture – organizational learning relationship was found in Indonesian SMEs, namely in SMEs in a developing country with an Asian cultural background. In regard to the organizational culture construct, this study showed that organizational efforts to create a culture of trust amongst employees are an important aspect. A culture of trust that has been embedded in an organization as a major aspect of organizational culture was found to be positively related to the propensity of employees to engage in organizational learning. Thus SME organizational learning will be assisted when a culture of trust exists amongst employees. 7.3.2.3. Organizational culture - Empowerment Hypothesis Ho2b: There is no significant association between organizational culture and empowerment

A positive path coefficient that was significantly different from zero at the 99.5% level was found between organizational culture and empowerment (standardized coefficient = 0.46, C.R = 4.10, and p=0.00). This finding indicated that a rational decision making process, a performance measurement system, an organizational structure that supports strategic direction and a culture of trust among employees as the indicators for organizational culture were related to the opinions of employees in regard to the importance of their jobs, their care for employee welfare, their ability to perform better and their ability to plan and implement solutions as empowerment indicators.

P a g e | 274

The positive relationship between organizational culture and empowerment extended previous large business research results (Sigler and Pearson 2000; Bih-Shiaw and Weining 2003; Chu 2003; Nyhan, Cressey et al. 2004; Yiing and Ahmad 2009; BaekKyoo and Ji Hyun 2010) to SMEs. This Indonesian SME study also revealed an important new point namely that a culture of trust among employees leads to a confidence in employees being able to perform better than a predetermined standard. Thus, this study provided a new SME related insight namely that the existence of values that nurture trust in an organization will boost employee self-confidence and better performance. 7.3.2.4 Transformational leadership – Organizational learning Hypothesis Ho3a: There is no significant relationship between transformational leadership and organizational learning The model tested in this study suggested that transformational leadership was directly and indirectly related to organizational learning through organizational culture and empowerment. The path coefficient for the relationship between transformational leadership and organizational learning was not significantly different from zero thus indicating that the path value could have been zero. (Standardized Estimate = 0.06, C.R = 0.8, and p = 0.423). However, the indirect path of LD standardised path value of 0.73 (0.94 × 0.78) and the path of LD

OC EP

OL had a OL had a

standardised path value of 0.06 (0.39 × 0.16) producing a total effect of 0.85 and indicating the existence of a strong indirect relationship between transformational leadership and organizational performance. Thus there was an overall relationship between leadership and organisational learning through the mediating constructs of organizational culture and organizational performance. The hypothesis that there is no

P a g e | 275

significant relationship between transformational leadership and organizational learning was therefore rejected. This supported the alternative hypothesis that transformational leadership is significantly related to organizational learning. This relationship occurred through the mediating effects of organizational culture and empowerment. In regard to the finding of no significant direct effect of transformational leadership on organizational learning, the finding of this study differed from previous large business studies that suggested that transformational leadership positively and significantly influenced organizational learning practices (Coad and Berry 1998; Aragón-Correa, García-Morales et al. 2007; Garcıá-Morales 2008; García-Morales, JiménezBarrionuevo et al. 2011). However, it should be noted that since these studies did not use a model with potential mediating constructs, the overall effect that they noted could have subsumed the effects of these mediating variables. What this study has done has been to provide a more detailed appreciation of the route by which this relationship actually takes place. This study thus showed that in Indonesian SMEs, transformational leadership affects organizational culture which then affects the organizational learning process. The finding suggests that leaders may enhance organizational learning by allowing for rational decision making processes, the creation of systems to measure performance, the creation of organizational structures based on strategic direction, and the creation of a culture of trust between all organizational members. Consideration of the highest loading indicator for each construct showed that leaders’ actions to share up-to-date information with employees, to create a culture of trust among all organizational members should assist in building the trust of service and trade SME employees.

P a g e | 276

7.3.2.5. Transformational leadership – Organizational culture Hypothesis Ho3b: There is no significant relationship between transformational leadership and organizational culture A positive coefficient that was significantly different from zero at the 99.5% level was found for the relationship between transformational leadership and organisational culture (standardized coefficient estimate = 0.78, C.R = 22.57, p=0.00) showing that there was a significant relationship between transformational leadership and organizational culture in SMEs. The result was an extension of previous large business research results that found that transformational leadership influenced organizational culture(Lloren-Montes, JavierMoreno et al. 2005; Amy 2008; Garcıá-Morales 2008; Prugsamatz 2010; GarcíaMorales, Jiménez-Barrionuevo et al. 2011).Transformational leadership sets a pattern of trust values that accommodate continuous changes in the organizational environment, provides benefits from the changes (Sarin and McDermott 2003) and removes defensive routines in the organizational system that inhibit an organizational learning process (Philips 2003). However, in small businesses, the communications between employers and employees is likely to be more direct than it would be in large businesses. It is therefore interesting to find that even with a closer contact between employer and employee the leader’s willingness to share up-to-date information is a major aspect that is needed to create a culture of trust in an SME organization.

P a g e | 277

7.3.2.6. Transformational leadership – Empowerment Hypothesis Ho3c: There is no significant relationship between transformational leadership and empowerment A leader’s activities to help employees to balance their work with their family commitments and to solve difficulties experienced in doing their job, as well as the sharing of relevant up-to-date information with employees are required components of empowerment. A positive coefficient that was significantly different from zero at the 99.5% level was found for the relationship between SME transformational leadership and empowerment (standardized estimate = 0.50, C.R = 3.52, and p=0.00). While the result extended

previous large business findings that transformational

leadership influences empowerment (Kark, Shamir et al. 2003; Avolio, Zhu et al. 2004; Castro, Perinan et al. 2008; Gill, Fitzgerald et al. 2010), this study provided a new SME related insight namely that leaders’ willingness to share up-to-date information will enhance employees’ self-confidence in their ability to perform better. This new insight may also be applicable to large organizations. 7.3.2.7. Transformational leadership – Organizational performance Hypothesis Ho3d: There is no significant relationship between transformational leadership and organizational performance As was the case with the organizational culture construct, the transformational leadership construct was also indirectly related to organizational performance. Three constructs – organizational learning, organizational culture, and empowerment mediated transformational leadership and organizational performance relationship. As can be seen in Figure 7.1, there were two paths that linked transformational leadership

P a g e | 278

to organizational performance one being mediated by empowerment and the other by organizational learning. The overall effect of the path between transformational leadership and organizational performance that was mediated by organizational culture, empowerment and organizational learning was 0.25 (0.85 × 0.29) while path coefficient for the indirect effects of leadership empowerment organizational performance was 0.25 (0.39 × 0.65). So, the total effect of the two paths was 0.50 indicating an overall positive relationship between leadership and organizational performance. In the construct relationship between transformational leadership and organizational performance, the SME information produced a similar effect to that found in previous large

business

research

namely

that

transformational

leadership

influences

organizational performance (for example Aragón-Correa, García-Morales et al. 2007; Garcıá-Morales 2008; García-Morales, Jiménez-Barrionuevo et al. 2011; Menges, Walter et al. 2011). However, it should be noted that the measures used in these studies were not the same as those used in this SME study so that for example Dvir, et al., (2002) found that transformational leadership which was measured by individual consideration, intellectual stimulation, inspirational motivation, and idealized influence, had a positive association with employee commitment, and satisfaction. In regard to the manner in which transformational leadership was related to organizational performance, this study showed that in SMEs, transformational leadership affected organizational performance by having a culture of trust in the organization and enabling employees to build trust and to enhance their self-confidence.

P a g e | 279

7.3.2.8. Empowerment – Organizational learning Hypothesis Ho4a: There is no significant relationship between empowerment and organizational learning A positive coefficient that was significantly different from zero at the 99.5% level was found for the relationship between empowerment and organizational learning (standardized estimate = 0.16, C.R = 4.00, and p=0.00) indicating that empowerment was significantly associated with organizational learning. In identifying a relationship between empowerment and organizational learning constructs, this SME result extended the findings of previous large business research that empowerment influenced organizational learning (Bih-Shiaw and Weining 2003; Michana 2009; Baek-Kyoo and Ji Hyun 2010; Allahyari, Shahbazi et al. 2011; Grinsven and Visser 2011). However, it should again be noted that the measures used in these studies were not the same as those used in this research. Thus, in large businesses, employee’s goal internalization, perceived control and perceived competence was found to enhance the process of knowledge acquisition, dissemination and exploitation. A sense of pride in their job, sense of direction and sense of impact were also found to be positively associated with both organizational learning and organizational innovation and performance (Bontis, Crossan et al. 2002). In this Indonesian SME study, passion for the job, organizational care for employees, confidence in being able to perform better and an ability to plan and to implement solutions as items of empowerment influence openness to think, time to build trust, rewarding employees for learning, and maintaining up-to-date database of employee skills, were the measures that were used. Based on the empowerment construct

P a g e | 280

indicator loadings, this study showed that employee’s self-confidence in their capability to do a job was related to a propensity to build trust in organizational learning. 7.3.2.9. Empowerment – Organizational Performance Hypothesis Ho4b: There is no significant relationship between empowerment and organizational performance The research model originally proposed that organizational learning would mediate the relationship between empowerment and organizational performance. However, it was found that the addition of a direct path between empowerment and organizational performance would improve the fit of the model and this path was added since there was a rational basis for such an addition (Price, Bryman et al. 2004; Hechanova, Alampay et al. 2006; He, Murrmann et al. 2010; Biron and Bamberger 2011; Fock, Chiang et al. 2011). A positive path coefficient that was significantly different from zero at the 99.5% level was found for this direct SME relationship between empowerment and organizational performance (standardized estimate = 0.65, C.R = 10.19, and p=0.00). A significant relationship for the proposed indirect path of empowerment

organizational learning

organizational performance was also

found with a standardized estimate of 0.05 (0.16 × 0.29). So, the total effect of empowerment on organizational performance was 0.70 (0.65 + 0.05) indicating a strong association between empowerment and organizational performance. The result extended the results from previous large business research that indicated that empowerment positively influenced organizational performance (Patterson, West et al. 2004; Wall, Wood et al. 2004; Bhatnagar 2007; Grinsven and Visser 2011) to SMEs. However, in this Indonesian SME research, the construct indicators were different to those examined in previous large business studies and it was shown that in Indonesian

P a g e | 281

SMEs, employee passion for their job and competence to acquire, disseminate and exploit knowledge, leads to better organizational performance in form of increases in sales, employee happiness with their organization, customer satisfaction and the general success of the organization. A summary of the research hypotheses finding is presented in Table 7.1.

Table 7.1 Summary of research hypotheses Hypothesis Association/relationship

Finding

Ho1

Rejected

there is no significant relationship between organizational learning and organizational performance

Ho2a

There is no significant relationship between organizational

Rejected

culture and organizational learning Ho2b

There is no significant association between organizational

Rejected

culture and empowerment Ho3a

There is no significant relationship between transformational Supported leadership and organizational learning

Ho3b

There is no significant relationship between transformational

Rejected

leadership and organizational culture Ho3c

There is no significant relationship between transformational

Rejected

leadership and empowerment Ho3d

There is no significant relationship between transformational

Rejected

leadership and organizational performance Ho4a

There is no significant relationship between empowerment

Rejected

and organizational learning Ho4b

There is no significant relationship between empowerment and organizational performance

Source: Developed for this research

Rejected

P a g e | 282

7.3.3. Conclusions in regard to the research problems This study commenced by outlining the growing importance of organizational learning to organizational performance. Organizational learning antecedents were identified and a research problem was formulated as: How does organizational learning and its antecedents influence the performance of small and medium size Indonesian enterprises (SMEs). In order to answer the research problem, the researcher conducted a review of the literature, collected data and analysed the data using the SPSS release 19 and AMOS release 20 software. Existing models of organizational learning were examined. The literature review identified three organizational learning antecedents namely organizational culture, transformational leadership and empowerment. Using the SPSS release 19 software, it was found that

that using a seven-point Likert type scale with 1 indicating no

organizational learning practice while 7 indicated an occurrence of organizational learning, the arithmetic means of all of the observed variables were above the mid-point value of 3.5, thus showing that some organizational learning was occurring in Indonesian SMEs. The final organizational learning model parameter estimates (see table 6.42) shows that organizational learning and its antecedents are significantly related to performance in the case of small and medium size Indonesian enterprises (SMEs). Organizational learning affects organizational performance by promoting trust amongst employees in acquiring, disseminating, exploiting and storing knowledge.

P a g e | 283

7.3.4. Conclusions as to the mean differences in respondent characteristics. This study found that there is a small significant difference in the mean organizational learning scores for organizations of different sizes. There were two sizes of organizations reflected in the data, those with between 10 to 19 employees (mean organizational learning value of 4.4) and those with between 20 and 99 employees (mean organizational learning value of 4.8) which show that larger organizations probably have better practices in regard to organizational learning. The examination of the mean differences for respondent’s tenure, and the age of the SMEs, however, found no significant difference in the composite organizational learning scores, although the power for these tests was low and it cannot be said with any certainty that there was no such effect. However, there was a significant interaction effect between respondents, tenure and the age of the organization so that when both of these were taken into account there was a significant difference in the mean organizational learning scores at a power level of 0.94. 7.3.5 Mediation effects This research has identified that while transformational leadership influences organizational learning it does not have a direct effect, but influences organizational learning through empowerment and organizational culture. The path from transformational leadership to organizational learning by way of organizational culture with a value of 0.73 had a considerably greater influence than that exerted by means of the path from transformational leadership through empowerment with a value of 0.06. This finding is of major importance since it identifies that leaders aiming to bring about organizational learning should firstly focus on influencing the organization’s culture.

P a g e | 284

7.4. Research implications and contributions Some implications were identified from the results. The discussion of these implications is divided into three sections – implications for theory, for practitioners, and for policy decision makers. 7.4.1. Research implications for theory The research provides some implications for organizational learning theory and organizational development in general. As noted in chapter 3 (see section 3.5), there are a number of gaps in the organizational learning literature especially in regard to SMEs and developing countries: 1. There is a lack of consensus on what is organizational learning and its dimensions. 2. There is a lack of empirical research into how organizational learning influences organizational performance. 3. There is a lack of empirical research on organizational learning in an SMEs context. 4. There is a lack of empirical research on organizational learning in regard to the Indonesian culture. The study has addressed these gaps and made the following contribution to the literature: 1. This study adopted the Hoe and McShane (2010) definition of organizational learning that organization learning is an organization’s enhanced ability to

P a g e | 285

acquire, disseminate and to use knowledge in order to adapt to a changing external and internal environment. Using confirmatory factor analysis, from sixteen items used to measure organizational learning, a valid and reliable parsimonious four indicator construct covering the indicators of encouraging employees to think from global perspective, the existence of time for employees to build trust amongst themselves, rewarding employees for learning and maintaining an up-to-date database of employee skills was developed. This study treated organizational learning in a complex and comprehensive model that simultaneously assessed the relationship between a set of constructs that had been identified as antecedents of organizational learning – organizational culture, transformational leadership, and empowerment. An analysis was carried out to assess the interrelationships between organizational learning and its antecedents as well as between organizational learning and organizational performance. This analysis involved the testing of a proposed model. Data was collected and the model was found to fit the data well indicating that the postulated relationships between organizational learning and organizational performance and between organizational learning and its antecedents did exist. 2. SME organizational learning practices of allowing employees to think comprehensively, building trust among employees, rewarding employees for learning, and maintaining an up-to-date database of employee skills were positively related to organizational product sale, employee and customer happiness and the general successfulness of the organization. The SME based model showed that organizational culture and empowerment have a significant effect on organizational learning while transformational leadership has a

P a g e | 286

significant positive effect on organizational learning. Using the highest loadings for each construct, this study contributed to the organizational learning literature by identifying the role of trust among employees as a major promoter of the occurrence of organizational learning. A SME leader’s willingness to share relevant up-to-date information was related to the existence of a culture of trust in the organization the propensity for time to build trust amongst employees in the organizational learning construct, the boosting of employee confidence in the empowerment construct and a simultaneous increase in organizational sales in the organizational performance construct. 3. Organizational learning practices were found to occur in Indonesian SMEs. Sixteen observed variables that were used to assess organizational learning were rated above the mid-point on seven-point Likert type scales. Similarly, constructs that were postulated to be antecedents of organizational learning – organizational culture, transformational leadership and empowerment, were rated above their scale mid-points indicating the occurrence of organizational learning practices in Indonesian SMEs. In regard to organizational size, this study found that there was a small significant difference in the mean organizational learning scores for organizations of different sizes indicating that larger organizations probably have better practices in regard to organizational learning. In addition, it was found there was a significant interaction effect between respondents, tenure and the age of the organization so that when both of these were taken into account there was a significant difference in the mean organizational learning scores at a power level of 0.94. Thus organizational learning is likely to be greater in older

P a g e | 287

SME trade and service organizations with employees with longer levels of service. 4. In an Indonesian SME cultural context, organizational learning was mainly influenced by organizational culture. Of the three organizational learning antecedents, organizational culture was found to be the most influential of the antecedents of organizational learning with a standardized estimate = 0.78 compared to transformational leadership and empowerment with standardized estimates of 0.06 and 0.16 respectively. Thus the research contributed to the general organizational learning literature in its finding that that in SMEs, organizational culture is a major component of the organizational learning process. The development of organizational learning in Indonesian SMEs may be started by creating values of making rational decisions, creating systems to measure performance, creating organizational structures based on long term strategic directions and building trust amongst employees. An analysis of the organizational learning construct supported the importance of trust for organizational learning in an Indonesian SME cultural context. Trust values which were embedded in an organizational culture construct and time for building trust amongst employees in the organizational learning construct loaded highly. 7.4.2. Research implications for practitioners This study identified several aspects of organizational learning that may be used as the basis for an SME trade and service organization to boost performance in order to gain competitiveness and to survive. Based on the results from the study, the occurrence of organizational learning in a SME requires certain conditions and values,

P a g e | 288

transformational leadership and empowered employees. Several implications for practitioners can be drawn as follows: 1. There is a need to enhance SME commitment to organizational learning practices. The results from this study showed that organizational learning leads to better organizational performance, an increase in sales, happier employees and customers and the general success of the organization. Thus, encouraging SME employees to think globally, building trust amongst organizational members, rewarding employees for learning and maintaining an up-to-date database of employee skills need to be enhanced by creating a system of organizational values that promote these practices. This study revealed that trust amongst SME employees was an important aspect to be considered for organizational learning to occur, thus systems and conditions that build and maintain trust in an SME organization need to be created. 2. This study revealed that transformational leadership has a significant impact on the creation of values and conditions that support the occurrence of organizational learning in a SME. Thus, in order to boost the organizational learning process, SME owners and other practitioners should consider using a leadership style that enhances the values of continuous learning and experimentation to achieve a better organizational performance. SME owners or managers should design their organizations using a shared organizational vision, a rational approach to problem solving and a strategy that fosters learning, knowledge sharing and other human resource management practices which encourage continuous knowledge acquisition, dissemination, usage and storage.

P a g e | 289

3. Employee’s passion, commitment and capability to work in continuously changing organizational working environment should also be of concern to SME owners or managers as this may influence the success of their organizational learning process. Employee passions, commitment and capabilities may enable SME trade and service organizations to learn faster than their competitors can and may be a source of competitive advantage. 7.4.3 Implications for policy decision making SMEs have been claimed to be crucial for both global and Indonesian domestic economic activity by providing employment opportunities and generating incomes for many households and as an important engine for the development of local economies and communities (Tambunan 2008; The World Bank 2011). Consequently, much effort and resources have been devoted to SME development programs. This research provides three findings which have implications for policy decision making as presented below: 1. Organizational learning influences organizational performance, thus SME policy makers such as the Indonesian government or other non-governmental organizations need to include the organizational learning concept in guiding program developments. Explanations as to how to acquire, share, use and store knowledge continuously for the optimal benefit and competitiveness of SMEs should be included in training programs. When providing a workshop or a training program for SMEs, for example, policy makers should stimulate their participants to share their new skills and knowledge with other employees so that the workshop or training does not only benefit individual employees but the organization as a whole. To stimulate openness and to share employee’s skills

P a g e | 290

and knowledge, a SME organization needs to create condition of trust amongst all stakeholders of the organization. 2. As organizational culture was found to be an influential antecedent of organizational learning, when stimulating organizational learning in an SME context, policy makers should consider cultural backgrounds. Background values which relate to the decision making process, performance measurement system, organizational structure and trust as elements of organizational culture need to be considered in order to create conditions for the occurrence of SME organizational learning. 3. Transformational leadership was expected to be a major influence on SME organizational learning practice and this study revealed that in SMEs transformational leadership influences organizational learning through the creation of specific organizational aspects especially a culture of trust amongst all organizational members. Consequently, this study has indicated that in a SME organizational learning process, the main role of leadership is to create a culture of trust. 7.5. Limitations This study had the following limitations. 1. The study was a cross-sectional study, the behaviour of SME owner/managers or employees in relation to organizational learning may change as owner/managers increase their level of knowledge and face different business environments. The cross-sectional nature of the research covering a series of potentially dynamic concepts (organizational learning, organizational culture,

P a g e | 291

transformational leadership, empowerment and organizational performance) meant that the research only covered behaviour at a specific point in time and not behaviour over time. 2. All of the observed variables, including organizational performance, were measured using subjective information from respondents. However, this kind of information has been commonly used in previous studies (Appelbaum and Gallagher 2000; Aragón-Correa, García-Morales et al. 2007; Alegre and Chiva 2008; Andrea 2010), 3. This study used a web-based survey to gather its data. Every effort was made to prevent multiple responses from one individual and from non-intended respondents by equipping the survey form with a cookie to identify the remote host and computer IP addresses (Ranchhod and Zhou 2001). However, there was a very small possibility that a few responses might have been received from non-intended respondents. However it was considered that the small number of such possible incorrect respondents would have been too small to have any impact on the findings in this research. 4. This study focussed on the trade and services sectors of the Indonesian economy for the reasons that have been outlined in the thesis and is therefore applicable to that domain. 7.6. Opportunities for future research 1. A future longitudinal study could be conducted to examine any dynamic changes that might occur.

P a g e | 292

2. Similar SME based studies could be carried out in other countries and cultures. 3. A similar study should be conducted in Western and developed countries to gain better understanding of organizational learning in different national cultures and levels of development. 7.7. Conclusion This chapter has provided a summary of the research process and has addressed the research questions and the research problem before outlining the contribution that was made to addressing the knowledge gaps that were identified in the thesis and the implications of the research findings for academics and for practitioners. It has been shown that organizational learning occurs in Indonesian SMEs and that organizational learning has a significant influence on SME organizational performance. The nature and strength of the relationships between organizational culture, transformational leadership and empowerment as antecedents of organizational learning have been identified along with the importance that trust plays in promoting the occurrence and development of SME organizational learning practices.

P a g e | 293

List of References Abell, E., & Simons, S. 2000. How much you can bend before you break: an experience of using constructionist consulting as a tool for organizational learning in the corporate world. European Journal of Work and Organizational Psychology, 9(2): 159-175. Abu-Jarad, I. Y., Yusof, N. A., & Nikbin, D. 2010. A review paper on organizational culture and organizational performance. International Journal of Business and Social Science, 1(3): 26-46. Adair, J. 2005. How to Grow Leaders: the Seven Key Principles of Effective Leadership Development. London: Kogan Page. Adler, T. R., & Zirger, B. J. 1998. Organizational learning: implications of a virtual research and development Organization. American Business Review, 16(2): 5160. Aguinis, H., Pierce, C. A., Bosco, F. A., & Muslin, I. S. 2009. First decade of organizational research methods trends in design, measurement, and dataanalysis topics. Organizational Research Methods, 12(1): 69-112. Ahearne, M., Mathie, J., & Rapp, A. 2005. To empower or not to empower your sales force? An empirical examination of the influence of leadership empowerment behaviour on sustomer satisfaction and performance Journal of Applied Psychology, 90(5): 945-955. Ahlgren, L., & Tett, L. 2010. Work-based learning, identity and organisational culture. Studies in Continuing Education, 32(1): 17-27. Ahlstrom-soderling, R. 2003. SME strategic business network seen as learning organizations. Journal of Small Business and Enterprise Development, 10(4): 444-454. Ahmad, N., & Oranye, N. O. 2010. Empowerment, job satisfaction and organizational commitment: a comparative analysis of nurses working in Malaysia and England. Journal of Nursing Management, 18: 582-591.

P a g e | 294

Ahmed, A. M. 2002. Virtual integrated performance measurement. Journal of Quality & Reliability Management, 19(4): 414-441. Ahmed, P., Loh, A., & Zairi, M. 1999. Cultures for continuous improvement and learning. Total Quality Management, 10(4/5): 426-434. Ajmal, M. M., Kekale, T., & Takal, J. 2009. Cultural impacts on knowledge management and learning (project-based firms). VINE, 39(4): 339-352. Akbar, H. 2003. Knowledge levels and their transformation: towards the integration of knowledge creation and individual learning. The Journal of Management Studies, 40(8): 1997-2022. Akgün, A. E., Lynn, G. S., & Byrne, J. C. 2003. Organizational learning: a sociocognitive framework. Human Relations, 56(7): 839-868. Akgün, A. E., Keskin, H., Byrne, J. C., & Aren, S. 2007. Emotional and learning capability and their impact on product innovativeness and firm performance. Technovation, 27: 501-513. Akgün, A. E., Keskin, H., Byrne, J. C., & Aren, S. 2007. Emotional and learning capability and their impact on product innovativeness and firm performance. Technovation, 27: 501-513. Akgün, A. E., Lynn, G. S., & Yilmaz, C. 2006. Learning process in new product development teams and effects on product success - a sociocognitive perspective. Industrial Marketing Management Learning, 35(2): 210-224. Akhavan, P., & Jafari, M. 2008. Towards learning in SMEs: an empirical study in Iran. Development and Learning in Organizations, 22(1): 17-20. Al-Adaileh, R. M., & Al-Atawdi, M. S. 2010. Organizational culture impact on knowledge exchange: Saudi Telecom context. Journal of Knowledge Management, 15(2): 212-230. Al-Gharibeh, K. M. 2011. The knowledge enabler of knowledge transfer: an empirical study in telecommunications companies. IBIMA Business Review, DOI: 10.5171/2011.328944: 1-14.

P a g e | 295

Alegre, J., & Chiva, R. 2008. Assessing the impact of organizational learning capability on product innovation performance: An empirical test. Technovation, 28(6): 315-326. Alexander, V. D., Thomas, H., Cronin, A., Fielding, J., & Moran-Ellis, J. 2008. Mixed methods, researching social life. In N. Gilbert (Ed.), Research methods. London: Sage. Allahyari, R., Shahbazi, B., Mirkamali, S. M., & Kharazi, K. 2011. Survey of relationship between the psychological empowerment of employees with organizational learning. Procedia - Social and Behavioral Sciences, 30(0): 1549-1554. Allameh, S. M., & Davoodi, S. M. R. 2011. Considering transformational leadership model in branches of Tehran social security organization. Procedia Social and Behavioral Sciences, 15: 3131-3137. Allegre, J., & Chiva, R. 2008. Assessing the impat or organizational learning capability on product innovation performance: an empirical test. Technovation, 28: 315326. Altman, Y., & Iles, P. 1998. Learning, leadership, teams: corporate learning and organisational change. The Journal of Management Development, 17(1): 4455. Alvarez Gil, M. J. 1999. Strategic alliances, organisational learning and new product development: The cases of Rover and Seat. R & D Management, 29(4): 391404. Amitay, M., Popper, M., & Lipshitz, R. 2005. Leadership styles and organizational learning in community clinics. The Learning Organization, 12(1): 57-70. Amran, T. G., & Kusbramayanti, P. 2007. Leadership and organizational culture relationship analysis on job performance and satisfaction using SEM (Structural Equation Modelling) at Pt. Carita Boat Indonesia. Paper presented at the International Seminar on Industrial Engineering and Management, Menara Peninsula, Jakarta.

P a g e | 296

Amy, A. H. 2008. Leaders as facilitators of individual and organizational learning. Leadership & Organization Development Journal, 29(3): 212-234. An, Y. Y., & Reigeluth, C. M. 2005. A study of organizational learning at Smalltown hospital. Performance Improvement, 44(10): 5. Anderson, V. 2004. Research methods in human resource management. Chartered Institute of Personnel and Development, London Andrew, J. S. 2011. The project workplace for organizational learning development. International Journal of Project Management, 29(8): 986-993. Angeles, R. 2011. Pursuing organisational learning using absorptive capacity capabilities and the role of IT Infrastructure in RFID system initiatives: a cluster analysis study. International Journal of Internet and Enterprise Management, 7(2): 129. Antal, A. B., & Sobczak, A. 2004. Beyond CSR: organisational learning for global responsibility. Journal of General Management, 30(2): 77-98. Anuradha, K. T., & Gopalan, T. K. 2007. Trend and patterns in explicit organizational knowledge: A correspondence analysis and cluster analysis. The International Information and Library Review, 39(3–4): 247-259. Appelbaum, S. H., & Honegar, K. 1998. Empowerment: a constrating overview of organizations in general and nursing in peraticular - an examination of organizational factors, managaerial behavior, job design, and structural power. Empowerment in Organizations, 6(2): 21. Aragón-Correa, J. A., García-Morales, V. J., & Cordón-Pozo, E. 2007. Leadership and organizational learning's role on innovation and performance: Lessons from Spain. Industrial Marketing Management, 36(3): 349-359. Aramburu, N., Sáenz, J., & Rivera, O. 2006. Organizational learning, change process, and evolution of management system – empirical evidence from the Basque region. The Learning Organization, 13(5): 434-454.

P a g e | 297

Arbuckle, J. A., & Wothke, W. 1999. Amos 4.0 User's Guide. Chicago: SmallWaters Corp. Ardic, O. P., Mylenko, N., & Saltane, V. 2011. Small and medium enterprises - a crosscountry analysis with a new data set. Policy Research Working Paper 5538, The World Bank (January). Argote, L., & Ingram, P. 2000. Knowledge transfer in organizations: learning from the experience of others. Organizational Behavior and Human Decision Processes, 82(1): 1-8. Argote, L., Ingram, P., Levine, J. M., & Moreland, R. L. 2000. Knowledge transfer in organizations: learning from the experience of others. Organizational Behavior and Human Decision Processes, 82(1): 8. Argote, L. 2001. Organizational Learning: Creating, Retaining, and Transferring Knowledge. Boston, MA: Kluwer Academic Publishers. Argote, L. 2011. Organizational learning research: past, present and future. Management Learning, DOI: 10.1177/1350507611408217: 1-8. Argote, L., & Miron-Spektor, E. 2011. Organizational learning: From experience to knowledge. Organization Science, DOI: 10.1287/orsc.1100.0621. Argyris, C. 1999. On Organizational Learning (2nd ed.). Oxford: Blackwell Publisher. Argyris, C., & Schön, D. A. 1978. Organizational Learning: A Theory of Action Perspective. Reading, MA: Addison-Wesley. Asian Development Bank. 2011. Asian Development Bank Annual Report, Vol. 1. Mandaluyong City, Philippines: Aslan, Ş., Diken, A., & Şendoğdu, A. A. 2011. Investigation of the effects of strategic leadership on strategic change and innovativeness of SMEs in a perceived environmental uncertainity. Procedia - Social and Behavioral Sciences, 24(0): 627-642.

P a g e | 298

Aswicahyono, H., Brooks, D. H., & Manning, C. 2011. Exports and employment in Indonesia: the decline in labor-intensive manufacturing and the rise of services. ADB Economics Working Paper Series No. 279. Au, Y. A., Carpenter, D., Chen, X., & Clark, J. G. 2009. Virtual organizational learning in open source software development projects. Information and Management, 46(1): 9-15. Austin, M. S., & Harkins, D. A. 2008. Assessing change: can organizational learning “work” for schools? The Learning Organization, 15(2): 105-125. Avolio, B. J., Waldman, D. A., & Yammarino, F. 1991. The four Is of transformational leadership. Journal of European Industrial Training, 15(4): 7. Avolio, B. J., Zhu, W., Koh, W., & Bhatia, P. 2004. Transformational leadership and organizational commitment: mediatig role of psychological empowerment and moderating role of structural distance. Journal of Organizational Behavior, 25(8): 951-968. Awal, D., Klingler, J., Rongione, N., & Stumpf, S. A. 2006. Issues on organizational culture: a case study. Journal of Organizational Culture, Communication and conflict, 10(1): 79-97. Aycan, Z., Kanungo, R. N., & Sinha, J. B. P. 1999. Organizational culture and human resource management practices: The Model of Cultural Fit. Journal of CrossCultural Psychology, 30(4): 501-526. Ayse, S.-H. 2010. Organizational learning as a situated routine-based activity in international settings. Journal of World Business, 45(1): 41-48. Azadegan, A., & Dooley, K. J. 2010. Supplier innovativeness, organizational learning styles and manufacturer performance: An empirical assessment. Journal of Operations Management, 28(6): 488-505. Babbie, E. 2011. The Basics of Social Research. (Fifth Edition ed.). Belmont, CA: Wadsworth Cengage Learning.

P a g e | 299

Babbie, E. 2009. The Basics of Social Research (5 ed.). Belmont, CA: Wadsworth Cengage Learning Baek-Kyoo, J., & Ji Hyun, S. 2010. Psychological empowerment and organizational commitment: the moderating effect of organizational learning culture. Human Resource Development International, 13(4): 425-441. Baker, W. E., & Sinkula, J. M. 1999a. Learning orientation, market orientation, and innovation: integrating and extending models of organizational performance. Journal of Market - Focused Management, 4(4): 295-308 Bapuji, H., & Crossan, M. 2004. From questions to answers: reviewing organizational learning research. Management Learning, 35(4): 397-417. Barkai, I., & Samuel, Y. 2005. The use or organizational learning mechanisms: environmental, managerial, and cultural correlates. Academy of Management Best Conference paper, 8(1): 1-6. Barret, P. 2007. Structural equation modelling: adjudging model fit. Personality and Individual Differences, 42: 815-824. Barrette, J., Lemyre, L., Cornei, W., & Beauregard, N. 2008. Organizational learning among senior public-service executives: an empirical investigation of culture, decisional

latitude

and

supportive

communication.

Canadian

Public

Administration, 50(3): 333-354. Baskoro, W. 2011. UKM dan Internet: ‘Lagu Lama’ atau Peluang Baru? Daily Social, http://dailysocial.net/post/ukm-dan-internet-lagu-lama-atau-peluangbaru(accessed Desember 14, 2011). Bass, B. M. 1990. From Transactional to transformational leadership:learning to share the vision. Organizational Dynamics, 18(3): 13. Bass, B. M. 2000. The future of leadership in learning organizations. Journal of Leadership Studies, 7: 18-41.

P a g e | 300

Bass, B. M., Avolio, B. J., Jung, D. I., & Berson, Y. 2003. Predicting unit performance by assessing transformational and transactional leadership. Journal of Applied Psychology, 88(2): 207-218. Bates, R., & Khasawneh, S. 2005. Organizational learning culture, learning transfer climate and perceived innovation in Jordanian organizations. International Journal of Training and Development, , 9: 14. Beck, T., Demirguc-Kunt, A., & Levine, R. 2005. SMEs, growth, and poverty: crosscountry evidence. Journal of Economic Growth, 10: 199-119. Bell, S. J., Mengüç, B., & Widing Ii, R. E. 2010. Salesperson learning, organizational learning, and retail store performance. Journal of the Academy of Marketing Science, 38(2): 187-201. Bennington, L., & Habir, A. D. 2003. Human resource management in Indonesia. Human Resource Management Review, 13: 373-392. Benoit, C. A., & Mackenzie, K. A. 1994. A model of organizational learning and the diagnostic process supporting it. The Learning Organization, 1(3): 26-37. Bentler, P.M. and Mooijaart, A. 1989. Choice of structural model via parsimony: A rationale based on precision. Psychological Bulletin, 106(2):315-317.” Berkhout, F., Hertin, J., & Gann, D. M. 2006. Learning to adapt: organisational adaptation to climate change impacts. Climatic Change, 78(1): 135-156. Berson, Y., Nemanich, L. A., Waldman, D. A., Galvin, B. M., & Keller, R. T. 2006. Leadership and organizational learning: a multiple level perspective. The Leadership Quarterly, 17(6): 577-594. Bhatnagar, J. 2006. Measuring organizational learning capability in Indian managers and establishing firm performance linkage. The Learning Organization, 13(6): 416-433. Bhatnagar, J. 2007. Predictors of organizational commitment in India: strategic HR roles, organizational learning capability and psychological empowerment. International Journal of Human Resource Management, 18(10): 1782-1811.

P a g e | 301

Bierly, P. E., III, & Daly, P. S. 2007. Sources of external organisational learning in small manufacturing firms. International Journal of Technology Management, 38(1/2): 45-45. Biggs, T., & Shah, M. K. 2006. African SMEs, networks, and manufacturing performance. Journal of Banking & Finance, 30: 3043-3066. Bih-Shiaw, J., & Weining, L. 2003. Promoting organizational learning and self-renewal in Taiwanese companies: the role of HRM. Human Resource Management, 42(3): 223-241. Birdthistle, N. 2008. Family SMEs in Ireland as learning organizations. The Learning Organization, 15(5): 421-436. Birkenkrahe, M. 2008. System constellations as a tool supporting organisational learning and change processes. International Journal of Learning and Change, 3(2): 125-144. Biron, M., & Bamberger, P. 2010. The Impact of structural empowerment on individual wellbeing and performance: taking agent preferences, self-efficacy and operational constraints into account. Human Relations, 63: 163-191 Biron, M., & Bamberger, P. A. 2011. More than lip service: linking the intensity of empowerment initiatives to individual well-being and performance. The International Journal of Human Resource Management, 22(2): 258-278. Boehnke, K., Bontis, N., DiStefano, J. J., & DiStefano, A. C. 2003. Transformational leadership: An examination of cross-national differences and similarities. Leadership and Organization Development Journal, 24(1): 5-15. Bollen, K. A. 2001. Latent Variables in Psychology and the social sciences. Annual Review of Psychology, 53: 605-634. Bollen, K. A. 1989. Structural Equations with Latent Variables. New York: Willey & Son Inc. Bolman, L. G., & Deal, T. E. 2003. Reframing Organizations: Artistry, Choice and Leadership,. San Fransisco, CA: Jossey Bass.

P a g e | 302

Bonias, D., Timothy, B. L., G, S., & Stanton, P. 2010. Does psychological empowerment mediate the relationship between high performance work systems and patient care quality in hospitals? Asia Pacific Journal of Human Resources, 48(3): 319-337. Bono, J. E., & Judge, T. A. 2004. Personality and transformational and transactional leadership: a meta-analysis. Journal of Applied Psychology, 89(5): 901-910. Bontis, N., Crossan, M. M., & Hulland, J. 2002. Managing an organizational learning system by aligning stocks and flows. Journal of Management Studies, 39(4): 437-469. Boudrias, J.-S., Gaudreau, P., Andrẻ Savoie, A., & Morin, J. S. 2009. Employee empowerment – From managerial practices to employees’ behavioural empowerment. Leadership & Organization Development Journal, 30(7): 625638. Brahmasari, I. A., & Suprayetno, A. 2008. Pengaruh motivasi kerja, kepemimpinan dan budaya organisasi terhadap kepuasan kerja karyawan serta dampaknya pada kinerja perusahaan (studi kasus pada PT. Pei Hai International Wiratama Indonesia). Jurnal Manajemen dan Kewirausahaan, 10(2): 124-135. Brawner, C. E., Felder, R. M., Allen, R. H., Brent, R., & Miller, T. K. 2001. A Comparison of Electronic Surveying by E-mail and Web. Paper presented at the 2001 Annual American Society for Engineering Education, North Carolina State University. Brown, J. S., & Duguid, P. 1991. Organizational learning and communities-of-practice: towards a unified view of learning and innovation. Organizational Science, 2(1): 40-56. Brown, J. S., & Duguid, P. 2000. Chapter 7 - Organizational learning and communitiesof-practice: toward a unified view of working, learning, and innovation. In L. C. Robert, Jr, Sam B. IsraelitA2 - Robert L. Cross, Jr., & B. I. Sam (Eds.), Strategic Learning in a Knowledge Economy: 143-165. Boston: ButterworthHeinemann.

P a g e | 303

Brown, E. A., & Arendt, S. W. 2011. Perception or transformationa leadership behaviour and subordinates’ performance in hotels. Journal of Human Resources in Hospitality & Tourism, 10: 45-59. Brown, M. E., Trevino, L. K., & Harrison, D. 2005. Ethical leadership: a social learning perspective for construct development and testing. Organizational Behavior and Human Decision Processes, 97: 117-134. Buckley, P. J., & Chapman, M. 1996. Theory and method in international business research. International Business Review, 5(3): 233-245. Burke, S., & Gaughran, W. F. 2006. Intelligent environmental management for SMEs in manufacturing. Robotics and Computer-Integrated Manufacturing, 22(5–6): 566-575. Burnes, B., Cooper, C., & West, P. 2003. Organisational learning: The new management paradigm? Management Decision, 41(5/6): 452-464. Bushardt, S. C., Lambert, J., & Duhon, D. L. 2007. Selecting a better carrot: organizational learning, formal rewards and culture – a behavioural perspective. Journal of Organizational Culture, Communications and Conflict, 11(2): 6779. By, R. T., & Dale, C. 2008. The successful management of organisational change in tourism SMEs: initial findings in UK visitor attractions. The International Journal of Tourism Research, 10(4): 305. Byrne, B. M. 2001. Structural equation modeling with AMOS. Mahwah, New Jersey: Lawrence Erlbaum Associates. Byrne, B. M. 2010. Structural equation modeling with AMOS: basic concept, application, and programming (2 ed.). New York: Routledge: Taylor & Francis Group, LLC. Calantone, R., Cavusgil, S., & Zhao, Y. 2002. Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management, 31: 9.

P a g e | 304

Caloghirou, Y., Protogerou, A., Spanos, Y., & Papagiannakis, L. 2004. Industry – versus firm – specific effects on performance: contrasting SMEs and large-sized firms. Euroepean Management Journal, 22(2): 231-243. Carr, N., & Chambers, D. P. 2006. Cultural and organisational issues facing online learning communities of teachers. Education and Information Technologies, 11(3-4): 269-282. Castro, C. B., Perinan, M. M. V., & Bueno, J. C. C. 2008. Transformational leadership and follower’ attitudes: the mediating role of psychological empowerment. The International Journal of Human Resource Management, 19(10): 1842-1863. Cavaleri, S., Seivert, S., & and Lee, L. W. 2005. Knowledge Leadership: The Art and Science of the Knowledge-based Organization. Amsterdam: Elsevier. Cegarra-Navarro, J. G., Jiménez, D. J., & Martínez-Conesa, E. Á. 2007. Implementing e-business through organizational learning: An empirical investigation in SMEs. International Journal of Information Management, 27(3): 173-186. Chan, C. C. A., & Scott-Ladd, B. 2004. Organisational learning: Some considerations for human resource practitioners. Asia Pacific Journal of Human Resources, 42(3): 336-347. Chang, S.-C., & Huang, P.-C. 2002. Corporate multinationalism, organizational learning, and market reaction to international joint ventures: Evidence from Taiwan. Global Finance Journal, 13(2): 181-194. Chang, S.-C., & Lee, M.-S. 2007. A study on relationship among leadership, organizational culture, the operation of learning organization and employee's job satisfaction. The Learning Organization, 14(2): 155-185. Chang, L., & Liu, C. 2008. Employee empowerment, innovative behavior and job productivity of public health nurses: a cross-sectional questionnaire survey. International Journal of Nursing Studies, 45(10): 1442-1448.

P a g e | 305

Chang, H. H., & Ku, P. W. 2009. Implementation of relationship quality for CRM performance: Acquisition of BPR and organisational learning. Total Quality Management & Business Excellence, 20(3): 327. Chaston, I., Badger, B., Mangles, T., & Sadler-Smith, E. 2001a. The Internet and ecommerce: An opportunity to examine organisational learning in progress in small manufacturing firms? International Small Business Journal, 19(2): 1330. Chaston, I., Badger, B., Mangles, T., & Sadler-Smith, E. 2001. Organisational learning style, competencies and learning systems in small, UK manufacturing firms. International Journal of Operations & Production Management, 21(11): 1417-1432. Chaston, I., Badger, B., & Sadler-Smith, E. 1999a. The organisational learning system within small UK manufacturing firms. International Journal of Training and Development, 3(4): 269-277. Chaston, I., Badger, B., & Sadler-Smith, E. 1999. Organization Learning: research issues and application in SME sector firms. International Journal of Entrepreneurial Behavior & Research, 5(4): 191-203. Chaston, I., Badger, B., & Sadler-Smith, E. 2000. Organizational learning style and competences - a comparative investigation of relationship and transactionally orientated small UK manufacturing firms. European Journal of Marketing, 34(5/6): 625-642. Chauhan, N., & Bontis, N. 2004. Organisational learning via groupware: a path to discovery or disaster? International Journal of Technology Management, 27(6,7): 591-610. Chen, G. 2005. An organizational learning model based on western and Chinese management thoughts and practices,. Management Decision, 43(4): 479-500. Cheung, S. O., Wong, P. S. P., & Wu, A. W. Y. 2011. Towards an organizational culture framework in construction. International Journal of Project Management, 29(1): 33-44.

P a g e | 306

Chiva, R., & Alegre, J. 2009. Organizational learning capability and job satisfaction: an empirical assessment in the ceramic tile industry. British Journal of Management, 20(3): 323-340. Chiva, R., Alegre, J., & Lapiedra, R. 2007. Measuring organisational learning capability among the workforce. International Journal of Manpower, 28(3/4): 224-242. Cho, V. 2010. A study on the impact of organisational learning to the effectiveness of electronic

document

management

systems.

International

Journal

of

Technology Management, 50(2): 182-207. Choi, B., Poon, S. K., & Davis, J. G. 2008. Effects of knowledge management strategy on organizational performance: A complementarity theory-based approach. Omega, 36(2): 235-251. Chou, C.-P., & Bentler, P. M. 1995. Estimates and tests in structural equation modeling. In R. H. Hoyle (Ed.), Structural Equation Modeling: Concepts, Issues, and Applications: 37-55. Thousand Oaks: Sage. Chu, K. F. 2003. An organizational culture and the empowerment for change in SMEs in the Hong Kong manufacturing industry. Journal of Materials Processing Technology, 139(1–3): 505-509. Coad, A. F., & Berry, A. J. 1998. Transformational leadership and learning orientation. Leadership & Organization Development Journal, 19(3): 164-172. Cocca, P., & Alberti, M. 2010. A framework to assess performance measurementsystem in

SMEs.

International

Journal

of

Productivity

and

Performance

Management, 59(2): 186-200. Conger, J. A., & Kanungo, R. N. 1998. Charismatic Leadership in Organizations. Thousand Oaks, CA: Sage. Cook, S., & Yanow, D. 1993. Culture and organizational learning. Journal of Management Inquiry, 2(4): 18. Couper, M. P. 2000. Web surveys: A review of issues and approaches. Public Opinion Quarterly, 64: 464-494.

P a g e | 307

Couper, M. P., Traugott, M. W., & Lamias, M. J. 2001. Web survey design and administration. Public Opinion Quarterly, 65: 230-253. Crawford, S. D., Couper, M. P., & Lamias, M. J. 2001. Web surveys: Perceptions of burden. Social Science Computer Review, 19: 146-162. Creswell, J. W. 2008. Educational Research : Planning, Conducting and Evaluating Quantitative

and

Qualitative

Research.

Upper

Saddle

River,

N.J.:

Pearson/Merrill Prentice Hall. Creswell, J. W. 2009. Research Design : Qualitative, Quantitative, and Mixed Methods Approaches. Thousand Oaks, California: Sage Publication. Creswell, J. W., & Clark, V. L. P. 2007. Designing and conducting mixed methods research. Thousand Oaks, California: SAGE Publications. Crossan, M. M., & Bedrow, I. 2003. Organizational learning and strategic renewal. Strategic Management Journal, 24(11): 1087-1105. Crossan, M., Nicolini, D., & Easterby-Smith, M. P. V. 2000. Organizational learning: debates past, present and future. Journal of Management Studies, 37(6): 13. Crossan, M. M., Lane, H. W., & White, R. E. 1999. An organizational learning framework: from intuition to institution. Academy of Management Review, 24(3): 522-537. Crossan, M. M., & Guatto, T. 1996. Organizational learning research profile. Journal of Organizational Change Management, 9(1): 5. Crossan, M. M., Lane, H. W., White, R. E., & Djurfeldt, L. 1995. Organizational learning: dimensions for a theory. The International Journal of Organizational Analysis, 3(4): 337-360. Crossan, M. M., Maurer, C. C., & White, R. E. 2011. Reflections on the 2009 AMR Decade award: do we have a theory of organizational learning? Academy of Management Review, 36(3): 446-460.

P a g e | 308

Cuevas, S., Mina, C., Barcenas, M., & Rosario, A. 2009. Informal Employment in Indonesia, Vol. ADB Working Paper Series No. 156. Manila: Asian Development Bank. Cunningham, L. X., & Rowley, C. 2008. The development of Chinese small and medium enterprises and human resource management: A review. Asia Pacific Journal of Human Resources, 46(3): 353-379. Czaja, R. 1998. Questionnaire pretesting comes of age. Marketing Bulletin, 9: 52-66. Daneshgar, F., & Parirokh, M. 2007. A knowledge schema for organisational learning in academic libraries. Knowledge Management Research & Practice, 5(1): 2233. Davis, D., & Daley, B. J. 2008. The LO and its dimensions as key factors in firms’ performance. Human Resource Development International, 11(1): 51-66. de Geus, A. P. 1988. Planning as learning. Harvard Business Review: 1, pp. 70-74. Deng, P. S., & Tsacle, E. G. 2003. A market-based computational approach to collaborative organizational learning. The Journal of the Operational Research Society, 54(9): 924-935. den Hartog, D. N., & de Hoogh, A. H. B. 2009. Empowering behaviour and leader fairness and integrity: studying perceptions of ethical leader behaviour from a levels-of-analysis perspective. European Journal of Work and Organizational Psychology, 18(2): 199-230. Denison, D. R., & Mishra, A. 1995. Toward a theory of organizational culture and effectiveness. Organizational Science, 6: 204-223. Depkop. 2010. Data usaha mikro kecil menengah umkm dan usaha besar. Kementerian Koperasi dan Usaha Kecil dan Menengah Republik Indonesia. Deutskens, E., de Ruyter, K., & Wetzels, M. 2006. An assessment of equivalence between online and mail surveys in service research. Journal of Service Research, 8(4): 346-355.

P a g e | 309

DeVellis, R. F. 2003. Scale Development : Theory and Applications Thousand Oaks, Calif: SAGE. Devi, R. S., Chong, S. C., & Lin, B. 2007. Organisational culture and KM processes from the perspective of an institution of higher learning. International Journal of Management in Education, 1(1-2): 57-79. Dewettinck, K., & van Ameijde, M. 2010. Lingking leadership empowerment behavior to employee attitudes and behavioral intentions – testing the mediating role of psychological empowerment. Personnel Review, 40(3): 284-305 Diamantopoulos, A., & Siguaw, J. A. 2000. Introducing LISREL, London: Sage Publications DiBella, A. J., Nevis, E. C., & Gould, J. M. 1996. Understanding organizational learning capability. Journal of Management Studies, 33(3): 361-379. Dillman, D. A., Phelps, G., Tortora, R., Swift, K., Kohrell, J., Berck, J., & Messer, B. L. 2009. Response rate and measurement differences in mixed-mode surveys using mail, telephone, interactive voice response (IVR) and the Internet. Social Science Research, 38(1): 1-18. Dillman, D. A., & Smyth, J. D. 2007. Design effects in the transition to web-based surveys. American Journal of Preventive Medicine, 32(5S): S90-S96. Di Milia, L., & Birdi, K. 2010. The relationship between multiple levels of learning practices and objective and subjective organizational financial performance. Journal of Organizational Behavior and Human Decision Processes, 31(4): 481-498. Dimitriades, Z. S. 2005. Creating strategic capabilities: organizational learning and knowledge management in the new economy. European Business Review, 17(4): 314-324. Dimovski, V., Škerlavaj, M., Kimman, M., & Hernaus, T. 2008. Comparative analysis of the organisational learning process in Slovenia, Croatia, and Malaysia. Expert Systems with Applications, 34(4): 3063-3070.

P a g e | 310

Dixon, N. M. 1999. The Organizational Learning Cycle: How Can we Learn Collectively (2nd ed.). Aldershot: Gower Publishing. Dodgson, M. 1993. Organizational learning: a review of some literatures. Organization Studies, 14(3): 375-394. Donnison, P. 2008. Executive coaching across cultural boundaries: an interesting challenge facing coaches today. Development and Learning in Organizations, 22(4): 17-20. Drejer, A. 2000. Organisational learning and competence development. The Learning Organization, 7(4): 206-220. Drew, S. S. W., & Smith, P. A. C. 1995. The Learning organization: “change proofing” and strategy. The Learning Organization, 2(1): 4-14. Duden, A. 2011. Trust and leadership - learning culture in organizations. International Journal of Management Cases, 13(4): 218-223. Dull, M. 2010. Leadership and organizational culture: sustaining dialogue between practitioners

and

scholars.

Public

Administration

Review,

November/December: 857-866. Durrant, G. B. 2009. Imputation methods for handling itme-nonresponse in practice: methodological issues and recent debates. International Journal of Social Research Methodology, 12(4): 293-304. Dutton, C. 2003. Mentoring: The contextualisation of learning - mentor, protege and organisational gain in higher education. Education & Training, 45(1): 22-29. Duvall, C. K. 1999. Developing individual freedom to act empowerment in the knowledge organization. Participation & Empowerment: An International Journal, 7(8): 204-212. Dvir, T., Eden, D., Avolio, B. J., & Shamir, B. 2002. Impact of transformational leadership on follower development and performance: a field experiment. Academy of Management Journal, 45: 735-744.

P a g e | 311

Easterby-Smith, M., Snell, R., & Gherardi, S. 1998. Organizational learning: diverging communities of practice? Management Learning, 29(3): 259-272. Easterby-Smith, M., Crossan, M., & Nicolini, D. 2000. Organizational learning: debates past, present and future. Journal of Management Studies, 37(6): 783-796. Easterby-Smith, M., & Lyles, M. A. 2005. Handbook of organizational learning and knowledge management. In M. a. L. Easterby-Smith, M.A. (Ed.). Oxford: Blackwell Easterby-Smith, M., Lyles, M. A., & Tsang, E. W. K. 2008. Inter-organizational knowledge transfer: current themes and future prospects. Journal of Management Studies, 45(4): 677-690. Egan, T. M., Yang, B., & Bartlett, K. R. 2004. The Effects of organizational learning culture and job satisfaction on motivation to transfer learning and turnover intention. Human Resource Development Quarterly, 15(3): 279-301. Eissenbeis, S. A., van Knippenberg, D., & Boerner, S. 2008. Transformational leadership and tema innovation: integrating tema climate principles. Journal of Applied Psychology, 9(6): 1438-1446. Ekopuri, D. S., Widyadari, F., & Tamani, L. 2007. Small enterprise development policies in Indonesia. Turin: ILO Training Centre. Elkjaer, B. 2004. Organizational learning: the ‘third way. Management Learning, 35(4): 419-434. Elkjaer, B. 2005. From digital administration to organisational learning. Journal of Workplace Learning, 17(7/8): 533-544. Ellinger, A. D., Ellinger, A. E., Yang, B., & Howton, S. W. 2002. The relationship between the learning organization concept and firms’ financial performance: an empirical assessment. Human Resource Development Quarterly, 13(1): 5-21. Elliott, M., Dawson, R., & Edwards, J. 2009. Providing demonstrable return-oninvestment for organisational learning and training. Journal of European Industrial Training, 33(7): 657-670.

P a g e | 312

Entrialgo, M., Fernández, E., & Vázquez, C. J. 2000. Linking entrepreneurship and strategic management: evidence from Spanish SMEs. Technovation, 20(8): 427436. Ergeneli, A., Gohar, R., & Temirbekova, Z. 2007. Transformational leadership: Its relationship to culture value dimensions. International Journal of Intercultural Relations, 31: 703-724. Espinosa, E., & Porter, T. 2011. Sustainability, complexity and learning: insights from complex system approaches. The Learning Organization, 18(1): 54-72. Ezzy, D. 2006. The research process. In M. Walter (Ed.), Social Research Methods an Australian Perspective. London: Oxford. Fang, S.-C., & Wang, J.-F. 2006. Effects of organizational culture and learning on manufacturing strategy selection: an empirical study. International Journal of Management, 23(3): 503-513. Fard, H. D., Rostamy, A. A. A., & Taghiloo, H. 2009. How types of organisational cultures contribute in shaping learning organisations. Singapore Management Review, 31(1): 49-61. Field, L. 2011. Exploring the political underbelly of organizational learning – learning during pay and performance management change. The Learning Organization, 18(4): 272-287. Friedman, V., Lipshitz, R., & Popper, M. 2005. The mystification of organizational learning. Journal of Management Inquiry, 14(1): 19-30. Fiol, C., & Lyles, M. 1985. Organizational learning. Academy of Management Review, 10(4): 803-813. Fleming, C. M., & Bowden, M. 2009. Web-based surveys as an alternative to traditional mail methods. Journal of Environmental Management, 90(1): 284-292. Friedman, V., Lipshitz, R., & Popper, M. 2005. The mystification of organizational learning. Journal of Management Inquiry, 14(1): 19-30.

P a g e | 313

Fuller, J. B., Morrison, R., Jones, L., Bridger, D., & Brown, V. 1999. The effects of psychological empowerment on transformational leadership and job satisfaction. Journal of Social Psychology, 139(3): 389-391. García-Morales, V. J., Fernando Matias-Reche, & Antonio J. Verdú-Jover,. 2011. Influence of internal communication on technological proactivity, organizational learning, and organizational innovation in the pharmaceutical sector. Journal of Communication, 61: 150-177. Garcıá-Morales, V. J., Francisco Javier Lloréns-Montes, Antonio J. Verdú -Jover. 2008. The Effects of Transformational Leadership on Organizational Performance through Knowledge and Innovation. British Journal of Management, 19: 299-319. García-Morales, V. J., Jiménez-Barrionuevo, M. M., & Gutiérrez-Gutiérrez, L. 2011. Transformational leadership influence on organizational performance through organizational learning and innovation. Journal of Business Research(0). Garcia-Morales, V. J., Llorens-Montes, F. J., & Verdǔ-Jover, A. J. 2006a. Antecedents and consequences of organizational innovation and organizational learning in entrepreneurship. Industrial Management & Data System, 106(1): 21-42. García-Morales, V. J., Lopez-Martín, F. J., & Llamas-Sánchez, R. 2006. Strategic factors and barriers for promoting educational organizational learning. Teaching and Teacher Education, 22(4): 478-502. García-Morales, V. J., Lloréns-Montes, F. J., & Verdú-Jover, A. J. 2007. Influence of personal mastery on organizational performance through organizational learning and innovation in large firms and SMEs. Technovation, 27(9): 547-568. García-Morales, V. J., Lloréns-Montes, F. J., & Verdú-Jover, A. J. 2008. The effects of transformational leadership on organizational performance through knowledge and innovation. British Journal of Management, 19: 299-319. García-Morales, V. J., Lopez-Martín, F. J., & Llamas-Sánchez, R. 2006. Strategic factors and barriers for promoting educational organizational learning. Teaching and Teacher Education, 22(4): 478-502.

P a g e | 314

Garcia-Morales, V. J., Moreno, A. R., & Llorens-Montes, F. J. 2006b. Strategic capabilities and their effects on performance: entrepreneurial, learning, innovator and problematic SMEs. International Journal of Management and Enterprise Development, 3(3): 191-211. García-Morales, V. J., Lloréns-Montes, F. J., & Verdú-Jover, A. J. 2007. Influence of personal mastery on organizational performance through organizational learning and innovation in large firms and SMEs. Technovation, 27(9): 547-568. Garvin, D. 1994. Building a leaning organization. Business Credit, 96(1): 19-37. Gasston, J., & Halloran, P. 1999. Continuous software process improvement requires organisational learning: an Australian case study. Software Quality Journal, 8(1): 37-51. Gnyawali, D. R., & Steward, A. C. 2003. A contingency perspective on organizational learning: integrating environmental context, organizational learning processes, and types of learning. Management Learning, 34(1): 63-89. Godkin, L., & Allcorn, S. 2009. Institutional narcissism, arrogant organization disorder and interruptions in organizational learning. The Learning Organiation, 16(1): 40-57. Goh, S. C. 1998. Towards a learning organization: the strategic building blocks. SAM Advanced Management Journal,, 63(2): 15-21 Goh, S. 2003. Improving organizational learning capability: lessons from two case studies. The Learning Organization, 10(4/5): 216-227. Goh, S. C., & Ryan, P. J. 2008. The organizational performance of learning companies a longitudinal and competitor analysis using market and accounting financial data. The Learning Organization, 15(3): 225-239. Gómez, P. J., Lorente, C. J. J., & Cabrera, R. V. 2004. Training practices and organisational learning capability: Relationship and implications. Journal of European Industrial Training, 28(2-4): 234-256.

P a g e | 315

Goodfellow, R. 1997. Indonesian Business Culture. Singapore: Reed Academic Publishing Asia. Gorelick, C. 2005. Organizational learning vs the learning organization: a conversation with a practitioner. The Learning Organization, 12(4): 383-388. Grace, J. B. 2008. Structural equation modeling for observational studies. Journal of Wildlife Management, 71(1): 14-26. Graham, C. M., & Nafukho, F. M. 2007. Employees’ perception toward the dimension of culture in enhancing organizational learning. The Learning Organization, 14(3): 281-292. Grinsven, M. V., & Visser, M. 2011. Empowerment, knowledge conversion and dimensions of organizational learning. Learning Organization, 18(5): 392-405. Guido, F. 2007. The organizational learning curve. European Journal of Operational Research, 177(3): 1375-1384. Gumuslouglu, L., & Ilsev, A. 2009. Transformational leadership, creativity, and organizational innovation. Journal of Business Research, 62: 461-473. Gunsel, A., Siachou, E., & Acar, A. Z. 2011. Knowledge management and learning capability to enhance organizational innovativeness. Procedia - Social and Behavioral Sciences, 24(0): 880-888. Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. 2010. Multivariate Aata Analysis – A Global Perspective (7 ed.). New Jersey: Pearson. Hair, J. F., Sarstedt, M., Ringle, C. M., & Mena, J. A. 2011. An assessment of the use of partial least squares structural equation modelling in marketing research. Journal of the Academy Marketing Science, DOI 10.1007/s11747-011-0261-6. Hair, J. F. J., Anderson, R. E., & Tatham, R. L. 1995a. Multivariate Data Analysis with Readings Englewood Cliffs, N.J.: Prentice Hall. Hair, J. F. J., Anderson, R. E., Tatham, R. L., & Black, W. C. 1995b. Multivariate Data Analysis with Reading (4th ed.). New Jersey: Prentice Hall.

P a g e | 316

Halawi, L. A., McCarthy, R. V., & Aronson, J. E. 2006. Knowledge management and the competitive strategy of the firm. The Learning Organization, 13(4): 384397. Hannah, S. T., & Lester, P. B. 2009. A multilevel approach to building and leading learning organizations. The Leadership Quarterly, 20: 34-48. Hayashi, M. 2002. The role of subcontracting in SME development in Indonesia: micro-level evidence from the metalworking and machinery industry. Journal of Asian Economics, 13: 1-26. Healy, M., & Perry, C. 2000. Comprehensive criteria to judge validity and reliability of qualitative research within the realism paradigm. Qualitative Market Research An International Journal, 3(3): 118-126. Hedberg, B., & Wolff, R. 2003. Organizing, Learning, and Strategizing: From Construction to Discovery. Oxford: Oxford University Press. Henderson, A., Creedy, D., Boorman, R., Cooke, M., & Walker, R. 2010. Development and psychometric testing of the clinical learning organisational culture survey (CLOCS). Nurse Education Today, 30(7): 598-602. Hernandez, M., & Watkins, K. E. 2003. Translation, validation and adaptation of the Spanish version of the modified dimensions of the learning organization questionnaire”. Human Resource Development International, 6(2): 187-197. Hewson, C., Yule, P., Laurent, D., & Vogel, C. 2003. Internet Research Methods; A practical guide for the social and behavioural sciences. London: SAGE Publication Ho, L.-A., & Kuo, T.-H. 2009. Alternative organisational learning therapy: an empirical case study using behaviour and U Theory. Australian Educational Researcher, 36(3): 105-124. Hoe, S. L. 2008. Perceptions becoming reality: bridging the market knowledge gap. Development and Learning in Organizations, 22(2): 18-19.

P a g e | 317

Hoe, S. L., & McShane, S. 2010. Structural and informal knowledge acquisition and dissemination in organizational Learning An exploratory analysis. The Learning Organization, 17(4): 364-386. Hofstede, G. 2001. Culture’s Consequences, Comparing Values, Behaviors, Institutions, and Organizations across Nations. Thousand Oaks, CA: Sage Publications. Hofstede, G. H., & Hofstede, G. J. 2005. Cultures and Organizations : Software of the Mind (2nd ed.). New York McGraw-Hill. Holden, N. J. 2002. Cross-cultural Management: A Knowledge Management Perspective: Financial Times/Prentice-Hall. Hong, J. F. L., Easterby-Smith, M., & Snell, R. S. 2006. Transferring organizational learning systems to Japanese subsidiaries in China. Journal of Management Studies, 43(5): 1027-1059. Honold, L. 1997. A review of the literature on employee empowerment. Empowerment in Organizations, 5(4): 202-212. Hooper, D., Coughlan, J., & Mullen, M. R. 2008. Structural equation modeling: guidelines for determining model fit. The Electroinc Journal of Business Research Methods, 6(1): 53-60. House, R., Javidan, M., Hanges, P., & Dorfman, P. 2002. Understanding cultures and implicit leadership theories across the globe: an introduction to project GLOBE. Journal of World Business, 37: 3-10. Houtzagers, G. 1999. Empowerment, using skills and competence management. Participation & Empowerment: An International Journal, 7(2): 27-32. Hoy, F. 2008. Organizational learning at the marketing entrepreneurship interface. Journal of Small Business Management, 46(1): 152-157. Hsu, R., Lawson, D., & Liang, T. 2007. Factors affecting knowledge management adoption of Taiwan small and medium-sized enterprises. International Journal of Management and Enterprise Development, 4(1): 30-51.

P a g e | 318

Hsu, C.-C., & Pereira, A. 2008. Internationalization and performance: The moderating effects of organizational learning. Omega, 36(2): 188-205. Hu, L.-T., & Bentler, P. M. 1995. Evaluating model fit. In R. H. Hoyle (Ed.), Structural Equation Modeling: Concepts, Issues, and Aplications. p.76-99. Thousand Oaks: Sage Publication Hu, L. T., & Bentler, P. M. 1999. Cut-off criteria for fit indexes in covariance structure analysis: Conventional criteria versus new alternatives. Structural Equation Modelling, 6(1): 1-55. Hubbard, G. 2009. Measuring organizational performance: beyond the triple bottom line. Business Strategy and the Environment, 19: 177-191. Huber, G. P. 1991. Organizational learning: the contributing processes and the literature. Organization Science, 2(1): 88-116. Hung, R. Y. Y., Yang, B., Lien, B. Y.-H., McLean, G. N., & Kuo, Y.-M. 2010. Dynamic capability: Impact of process alignment and organizational learning culture on performance. Journal of World Business, 45(3): 285-294. Hult, G. T. M., Ferrell, O. C., & Hurley, R. F. 2002. Global organizational learning effects on cycle time performance. Journal of Business Research, 55(5): 377387. Hurley, R. F., & Hult, G. T. M. 1998. Innovation, market orientation, and organizational learning: an integration and empirical examination. Journal of Marketing, 62(3): 44-56. Ibeh, K., Brock, J. K.-U., & Zhou, Y. J. 2004. The drop and collect survey among industrial populations: theory and empirical evidence. Industrial Marketing Management, 33(2): 155-165. IFC.

2011.

Annual

report

2010.

International

Finance

Corporation,

http://www1.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate _site/annual+report/2011+printed+report/ar_printedreport/ar2011 Sept. 20, 2011)

(accessed

P a g e | 319

Imovski, V., Skerlavaj, M., Kimman, M., & Hernaus, T. D. 2008. Comparative analysis of the organizational learning process in Slovenia, Croatia, and Malaysia. Expert Systems with Applications, 34(4): 3063-3070. Iivari, J., & Iivari, N. 2011. The relationship between organizational culture and the deployment of agile methods. Information and Software Technology, 53(5): 509-520. Jakupec, V., & Garrick, J. 2000. Flexible learning, human resource and organisational development: putting theory to work. Report: ED437519. James, G.A., Kelley, M.E., R. Craddock, C., Holtzheimer, P.E., Dunlop, B., Nemeroff, C.,

Mayberg, H.S. and

Hu, X.P. 2009.

Exploratory Structural Equation

Modeling of Resting-state fMRI: applicability of group models to individual subjects,

Neuroimage.

45(3):

778–787.

doi:10.1016/

j.neuroimage.2008.12.049. Jansen, J. J. P., Vera, D., & Crossan, M. 2009. Strategic leadership for exploration and exploitation: the moderating role of environmental dynamism. The Leadership Quarterly, 20: 5-18. Jerez-Gomez, P., Cespedes-Lorente, J., & Valle-Cabrera, R. 2005. Organizational learning capability: a proposal of measurement. Journal of Business Research, 58(6): 715-725. Jiménez-Jiménez, D., & Cegarra-Navarro, J. G. 2007. The performance effect of organizational

learning

and

market

orientation.

Industrial

Marketing

Management, 36(6): 694-708. Jiménez-Jiménez, D., & Sanz-Valle, R. 2011. Innovation, organizational learning, and performance. Journal of Business Research, 64(4): 408-417. Jing, F. F., Avery, G. C., & Bergsteiner, H. 2011. Organizational climate and perforamcne in retail pharmacies. Leadership & Organization Development, 32(3): 224-242.

P a g e | 320

Jon, S. 1996. The balancing of empowerment. A strategic resource based model of organizing innovation activities in service and low-tech firms. Technovation, 16(8): 397-446. Jones, R. A., Jimmieson, N. L., & Griffiths, A. 2005. The impact of organizational culture and reshaping capabilities on change implementation success: the mediating role of readiness for change. Journal of Management Studies, 42(2): 361-387. Jöreskog, K. G. 2005. Structural Equation Modeling with Ordinal Variables Using LISREL, Retrieved August 20, 2010:

http://www.ssicentral.com/lisrel/

techdocs/ordinal.pdf. Jöreskog, K. G., & Sörbom, D. 1989. LISREL 7: A guide to the program and application (2nd ed.). Chicago: SPSS Inc. Jung, D. I., Bass, B. M., & Sosik, J. J. 1995. Bridging leadership and culture: A theoretical consideration of transformational leadership and collectivistic cultures. Journal of Leadership Studies, 2: 3-18. Jung, D., Chow, C., & Wu, A. 2003. The Role of transformational leadership in enhancing organizational innovation: hypotheses and some preliminary finding. The Leadership Quarterly, 14: 525-544. Jung, Y., & Takeuchi, N. 2010a. Performance implications for the relationships among top management leadership, organizational culture, and appraisal practice: testing two theory-based models of organizational learning theory in Japan. The International Journal of Human Resource Management, 21(11): 1931-1950. Jyothibabu, C., Farooq, A., & Pradhan, B. B. 2010. An integrated scale for measuring an organizational learning system. The Learning Organization, 17(4): 303-327. Jyothibabu, C., Pradhan, B. B., & Farooq, A. 2011. Organisational learning and performance - an empirical study. International Journal of Learning and Change, 5(1): 68-83.

P a g e | 321

Kaplan, R. S. N., David P. 2004. Strategy Maps – Converting Intangible Assets into Tangible Outcomes. Boston - USA: Harvard Business School. Kark, R., Shamir, B., & Chen, G. 2003. The two faces of transformational leadership: empowerment and dependency. Journal of Applied Psychology, 88: 246-255. Kelle, U. 2006. Combining qualitative and quantitative methods in research practice: purposes and advantages. Qualitative Research in Psychology, 3: 293-311. Kim, L.-S. 2006. A review of quantitative research in management control systems and strategy. In A. G. H. Christopher S. Chapman, & D. S. Michael (Eds.), Handbooks of Management Accounting Research, Vol. 2: 753-783: Elsevier. Kirkman, B. L., Mathieu, J. E., Cordery, J. L., Rosen, B., & Kukenberger, M. 2011. Managing a new collaborative entity in business organizations: understanding organizational communities of practice effectiveness. Journal of Applied Psychology, 96(6): 1234-1245. Klimecki, R., & Lassleben, H. 1998. Modes of organizational learning: indications from an empirical study. Management Learning, 29(4): 405-430. Kline, R. B. 1998. Principles and Practice of Structural Equation Modeling. New York: The Guilford Press. Kline, R. B. 2005. Principles and Practice of Structural Equation Modeling (2nd ed.). New York: The Guilford Press. Koesmono, H. T. 2005. The influence of organizational culture on employees’ motivation and satisfaction at SMEs wood processing in East JaVa (in Bahasa Indonesia). Jurnal Manajemen & Kewirausahaan, 7(2): 171-188 Kogut, B., & Zander, U. 2003. Knowledge of the firm and the evolutionary theory of the multinational corporation Journal of International Business Studies, 34: 516-529. Kontoghiorghes, C., Awbre, S. M., & Feurig, P. L. 2005. Examining the relationship between learning organization characteristics and change adaptation, innovation, and organizational performance. Human Resources Quarterly, 16(2): 185-213.

P a g e | 322

Koopman, P. L., Den Hartog, D. N., & Konard, E. 1999. National cultures and leadership profiles in Europe: Some results from the GLOBE study. European Journal of Work and Organizational Psychology, 8(4): 503-420. Kotnour, T. 2000. Organizational learning and practices in the project management environment. International Journal of Quality & Reliability Management, 17(4/5): 393-406. Kumar, V., Aaker, D. A., & Day, G. S. 1999. Essentials of Marketing Research. New York: John Wiley & Sons. Lahteenmaki, S., Toivonen, J., & Mattila, M. 2001. Critical aspects of organizational learning research and proposal for its measurement. British Journal of Management, 12: 113-129. Lam, A., & Lambermont-Ford, J.-P. 2010. Knowledge sharing in organisational contexts: a motivation-based perspective. Journal of Knowledge Management, 14(1): 51-66. Lam, Y. L. J. 2002. Defining the effects of transformational leadership on organisational learning: A cross-cultural comparison. School Leadership & Management, 22(4): 439-452. Lang, J. C. 2004. Social context and social capital as enablers of knowledge integration. Journal of Knowledge Management, 8(3): 89-105. Law, C. C. H., & Ngai, E. W. T. 2008. An empirical study of the effects of knowledge sharing and learning behaviors on firm performance. Expert Systems with Applications, 34(4): 2342-2350. LeBrasseur, R., Whissell, R., & Ojha, A. 2002. Organisational learning, transformational leadership and implementation of continuous quality improvement in Canadian hospitals. Australian Journal of Management, 27(2): 141-162. Lee, G., Bennett, D., & Oakes, I. 2000. Technological and organisational change in small to medium-sized manufacturing companies: a learning organisation

P a g e | 323

perspective. International Journal of Operations & Production Management, 20(5): 549-273. Lee, J., & Wei, F. 2011. The mediating effect of psychological empowerment on the relationship between participative goal setting and team outcomes – a study in China , 22(2), pp. 279–295. The International Journal of Human Resource Management, 22(2): 279-295. Lee, M. R., & Lan, Y.-C. 2011. Toward a unified knowledge management model for SMEs. Expert Systems with Applications, 38(1): 729-735. Lee, S., Park, G., Yoon, B., & Park, J. 2010. Open innovation in SMEs – an intermediated network model. Policy Research, 39: 290-300. Leedy, P. D., & Ormrod, J. E. 2010. Practical Research: planning and design. Upper Saddle River, N.J.: Pearson Education International. Lejeune, C., & Vas, A. 2009. Organizational culture and effectiveness in business schools: a test of the accreditation impact. Journal of Management Development, 28(8): 728-741. Levitt, B., & March, J. 1988. Organizational learning. Annual Review of Sociology, 14: 319-341. Lewis, B. R., Templeton, G. F., & Byrd, T. A. 2005. A methodology for construct development in MIS research. European Journal of Information System, 14: 388-400. Liao, S.-H., & Wu, C.-c. 2010. System perspective of knowledge management, organizational learning, and organizational innovation. Expert Systems with Applications, 37(2): 1096-1103. Limpibunterng, T., & Johri, L. M. 2009. Complementary role of organizational learning capability in new service development (NSD) process. The Learning Organization, 16(4): 326-348.

P a g e | 324

Lipshitz, R., Popper, M., & Oz, S. 1996. Building learning organizations: the design and implementation of organizational learning mechanisms. The Journal of Applied Behavioral Science, 32(3): 292-306. Lipshitz, R., Popper, M., & Friedman, V. J. 2002. A multifacet model of organizational learning. The Journal of Applied Behavior Science, 38(1): 78-98. Lipshitz, R., Friedman, V.J. and Popper, M. 2006. Demystifying Organizational Learning. Thousand Oaks, CA: Sage. Lipshitz, R., Friedman, V. J., & Popper, M. 2007. Demystifying Organizational Learning. Newbury Park, CA: Sage Publications. Lloréns Montes, F. J., Ruiz Moreno, A., & Garcı́a Morales, V. 2005. Influence of support leadership and teamwork cohesion on organizational learning, innovation and performance: an empirical examination. Technovation, 25(10): 1159-1172. López-Cabrales, Á., Real, J. C., & Valle, R. 2011. Relationships between human resource management practices and organizational learning capability. Personnel Review, 40(3): 344-363. López, P. S., Peón, J. M. M., & Ordás, C. J. V. 2004. Managing knowledge: the link between culture and organizational learning. Journal of Knowledge Management, 8(6): 93-104. López, P. S., Peón, J. M. M., & Ordás, C. J. V. 2005a. Human resource practices, organizational

learning

and

business

performance.

Human

Resource

Development International, 8(2): 147-164. López Sánchez, J. Á. 2010. Organisational learning and value creation in business markets. European Journal of Marketing, 44(11/12): 1612-1641. López Sánchez, J. Á., Santos, V. M. L., & Trespalacios, G. J. A. 2011. The effects of manufacturer's organizational learning on distributor satisfaction and loyalty in industrial markets. Industrial Marketing Management, 40(4): 624-635.

P a g e | 325

López, S. P., Peon, J. M. M., & Ordas, C. J. V. 2005b. Organizational learning as a determining factor in business performance. The Learning Organization, 12(3): 227-245. López, S. P., Peon, J. M. M., & Ordas, C. J. V. 2006. Human resource management as determining factor in organizational learning. Management Learning, 37(2): 215-239. Lucas, C., & Kline, T. 2008. Understanding the influence of organizational culture and group dynamics on organizational change and learning. The Learning Organization, 15(3): 277-287. Lucy, D. M., Ghosh, J., & Kujawa, E. 2008. Empowering women’s leadership: a case study of Bangladeshi Microcredit business. SAM Advanced Management Journal, Autumn 31-50. Lugosi, P., & Bray, J. 2008. Tour guiding, organisational culture and learning: lessons from an entrepreneurial company. The International Journal of Tourism Research, 10(5): 467. MacCallum, R. C., Browne, M. W., & Sugawara, H. M. 1996. Power analysis and determination of sample size for covariance structure modeling. Psychological Methods, 1(2): 130-149. MacIntosh, E., & Doherty, A. 2007. Extending the scope of organizational culture: the external perception of an internal phenomenon. Sport Management Review, 10: 45-64. Malhotra, N. 1999. Marketing Research An Applied Orientation (3rd ed.). New Jersey: Prentice-Hall. Malhotra, N. 2008. Completion time and response order effects in web surveys. Public Opinion Quarterly, 72(5): 914-934. Malhotra, N., Hall, J., Shaw, M., & Oppenheim, P. 2001. Marketing Research: An applied orientation (2nd ed.). French Forest: Pearson Education Australia.

P a g e | 326

Malhotra, N. K., Hall, J., & Oppenheim, P. S. 2006. Marketing research : an applied orientation (3 ed.). Frenchs Forest, N.S.W: Pearson/Prentice Hall. Malhotra, N. K., Hall, J., Shaw, M., & Oppenheim, P. P. 2008. Essentials of Marketing Research - an applied orietantion (2 ed.). French Forest: Pearson Education. Mann, C., & Stewart, F. 2000. Internet Communication and Qualitative Research: A Handbook for Researching Online. London: SAGE Publications Ltd. Maranto-Vargas, D., & Rangel, R. G.-T. 2007. Development of internal resources and capabilities as sources of differentiation of SME under increased global competition: a field study in Mexico. Technological Forecasting & Social Change, 74: 90-99 March, J. G., & Olsen, J. P. 1991. Exploration and exploitation in organizational learning. Organization Science, 2(1): 71-87. March, J. G., & Simon, H. A. 1958. Organizations. New York, NY: Wiley. Marsh, A., & Goodfellow, R. 1997. Management in Indonesia - A state transition. In R. Goodfellow (Ed.), Indonesian Business Culture: 141-159. Singapore: Reed Academic Publishing Asia. Marsh, H. W., Hau, K.-T., & Wen, Z. 2004. In search of golden rules: comment on hypothesis-testing approaches to setting cutoff values for fit indexes and dangers in overgeneralizing Hu and Bentler's (1999) findings. Structure Equation Modeling, 11(3): 320-341. Marsick, V. E., & Watkins, K. E. 2003. Demonstrating the value of an organization’s learning culture: The dimensions of the learning organization questionnaire. Advances in Developing Human Resources, 5(2): 132-131. Martin, L. 2001. Are women better at organisational learning? An SME perspective. Gender in Management, 16(5/6): 287-296. Mavin, S., & Cavaleri, S. 2004. Viewing learning organizations through a social learning lens. The Learning Organization, 11(2/3): 285-290.

P a g e | 327

Maynard, M. T., Mathieu, J. E., Marsh, W. M., & Ruddy, T. M. A. 2007. Multilevel investigation of the influences of employees’ resistance to empowerment,. Human Performance, 20(2): 147-171. Mayo, A. a. L., E. 1994. The Power of Learning: A Guide to Gaining Competitive Advantage. London: IPD House. McCabe, S. E., Couper, M. P., Cranford, J. A., & Boyd, C. J. 2006. Comparison of Web and mail surveys for studying secondary consequences associated with substance use: Evidence for minimal mode effects. Addictive Behaviors, 31(1): 162-168. McDaniel, C., & Gates, R. 2002. Marketing Research; The Impact of the Internet Cincinnati: South-Western. McDaniel, C. J., & Gates, R. 2007. Marketing research (7 ed.). Hoboken, N.J: John Wiley. McEwan, A. M., & Sackett, P. 1997. Theoretical considerations of employee empowerment

within

computer

integrated

manufacturing

production.

Empowerment in Organizations, 5(3): 129-139. McGill, M. E., Slocum, J. W., & Lei, D. 1992. Management practices in learning organisations. Management Dynamics, 21(1): 4-18. Medsker, G. J., Williams, L. J., & Holahan, P. J. 1994. A review of current practices for evaluating causal models in organizational behavior and human resources management research. Journal of Management Development, 20(2): 439-464. Menges, J. I., Walter, F., Vogel, B., & Bruch, H. 2011. Transformational leadership climate: Performance linkages, mechanisms, and boundary conditions at the organizational level. The Leadership Quarterly, 22(5): 893-909. Menon, S. T. 2001. Employee empowerment: an integrative psychological approach. Applied Psychology: An International Review, 50(1): 153-180.

P a g e | 328

Meyer,

T.

2011.

SMEs'

crucial

role

in

global

recovery.

http://www.businessdayonline.com/NG/Index.php/entrpreneur/entrepreneurnews/23645, accessed 23 Dec. 2011. Michana, A. 2009. The relationship between organizational learning and SME performance in Poland. Journal of European Industrial Training, 33(4): 356370. Minkov, M., & Horstede, G. 2010. Hofstede’s fifth dimension: new evidence from the world values survey. Journal of Cross-Cultural Psychology, XX(X): 1-12. Minkov, M., & Horstede, G. 2011. The evolution of Hofstede’s doctrine. Cross Cultural Management: An International Journal, 18(1): 10-20. Mirkamali, S. M., Thani, F. N., & Alami, F. 2011. Examining the role of transformational leadership and job satisfaction in the organizational learning of an automotive manufacturing company. Procedia - Social and Behavioral Sciences, 29(0): 139-148. Mitki, Y., Herstein, R., & Jaffe, E. D. 2007. Learning mechanisms for designing corporate identity in the banking industry. International Journal of Bank Marketing, 25(7): 452-468. Moilanen, R. 2005. Diagnosing and measuring learning organizations. The Learning Organization, 12(1): 71-89. Montes-Peon, J. M. 2006. Managing human resources towards achieving organisational learning. International Journal of Management Practice, 2(1): 1-21. Moreno, A. R., Fernandez, L. M. M., & Montes, F. J. L. 2009. The moderating effect of slack resources on the relationship between quality management and organisational learning. International Journal of Production Research, 47(19): 5501. Mulaik,S.A., James, L.R., Van Alstine, J., Bennett, N., Lind,S., and Dean Stilwell, C. 1989. Evaluation of Goodness-of-Fit Indices for Structural Equation Models. Psychological Bulletin, 105(3): 430-445

P a g e | 329

Mumford, J. G. 2011. From work-based learning to organisational development. Higher Education, Skills and Work - Based Learning, 1(1): 29-37. Mumford, M. D., Scott, G. M., Gaddis, B., & Strange. 2002. Leading creative people: orchestrating expertise and relationships. Leadership Quarterly, 13: 705-750. Nailon, D., Delahaye, B., & Brownlee, J. 2007. Leaning and Leading: how beliefs about learning can be used to promote effective leadership. Development and Learning in Organizations, 21(4): 6-9. Naot, Y. B.-H., Lipshitz, R., & Popper, M. 2004. Discerning the quality of organizational learning. Management Learning, 35(4): 451-472. Naranjo-Valencia, J. C., Jiménez-Jimenéz, D., & Sanz-Valle, R. 2011. Innovation or imitation? The role of organizational culture. Management Decision, 49(1): 5572. Narula, R. 2004. R&D collaboration by SMEs: new opportunities and limitations in the face of globalization. Technovation, 24: 153-161. Nasution, H. N., Mavondo, F. T., Matanda, M. J., & Ndubisi, N. O. 2011. Entrepreneurship: its relationship with market orientation and learning orientation and as antecedents to innovation and customer value. Industrial Marketing Management, 40: 336-345. Neely, A., Adams, C. and Kennerley, M. 2002. The Performance Prism – The Scorecard for Measuring and Managing Success. London: Pearson Education Limited. Neuman, W. L. 2007. Basics of Social Research : qualitative and quantitative approaches (2nd ed.). Boston Pearson/Allyn and Bacon. Nonaka, I., & Takeuchi, H. 1995. The Knowledge Creating Company: How Japanese Companies Create the Dynamics of Innovation. New York, NY.: Oxford University Press.

P a g e | 330

Nonaka, I., & Toyama, R. 2003. The knowledge-creating theory revisited: knowledge creation as a synthesizing process. Knowledge Management Research and Practice, 1: 2-11. Nunnally, J. C., & Bernstein, I. H. 1994. Psychometric theory (3rd ed.). New York: McGraw-Hill. Nyhan, B., Cressey, P., Tomassini, M., Kelleher, M., & Poell, R. 2004. European perspectives on the learning organization. Journal of European Industrial Training, 28(1): 67-92. O’Boyle, E. H., & Williams, L. J. 2011. Decomposing model fit: measurement vs. theory in organizational research using latent variables. Journal of Applied Psychology, 96(1): 1-12. Offermann, L. R., & Hellmann, P. S. 1997. Culture’s consequences for leadership behavior: National values in action. Journal of Cross-Cultural Psychology, 28(3): 342-351. Örtenblad, A. 2001. On differences between organizational learning and learning organization. The Learning Organization, 8(3): 125-132. Örtenblad, A. 2004. Toward a contingency model of how to choose the right type of learning organization. Human Resource Development Quarterly, 15(3). Panagiotakopoulos, A. 2011. Workplace learning and its organizational benefits for small enterprises – evidence from Greek Industrial firms. The Learning Organization, 18(5): 364-374. Panayides, P. M. 2007a. Effects of organizational learning in third-party logistics. Journal of Business Logistics, 28(2): 133-157. Panayides, P. M. 2007b. The impact of organizational learning on relationship orientation, logistics service effectiveness and performance. Industrial Marketing Management, 36(1): 68-80.

P a g e | 331

Patten, R. H., Rosengard, J. k., & Johnston, J. R. D. E. 2001. Microfinance success amidst macroeconomic failure: the experience of Bank Rakyat Indonesia during the East Asian crisis. World Development, 29(6): 1057-1069. Patterson, J. A. 2009. Organisational learning and leadership: on metaphor, meaning making, liminality and intercultural communication. International Journal of Learning and Change, 3(4): 382-393. Pavlov, A., & Bournce, M. 2011. Explaining the effects of performance measurement on performance – an organizational routines perspective. International Journal of Operations & Production Management, 31(1): 101-122. Peterson, N. A., & Zimmerman, M. A. 2004. Beyond the Individual: toward a nomological network of organizational empowerment. American Journal of Community Psychology, 34(1/2): 129-144. Pettigrew, A. M. 1979. On studying organizational culture. Administrative Science Quarterly, 24(4): 570-581. Philips, B. T. 2003. A four-level learning organisation benchmark implementation model. The Learning Organization, 10(2): 98-105. Popescu, D., Chivu, I., Ciocârlan-Chitucea, A., Popescu, D.-O., & Georgel, C. 2011. The learning organization challenges within the SMEs tourism field of activity. Procedia - Social and Behavioral Sciences, 24: 1098-1106 Popper, M., & Lipshitz, R. 2000. Organizational learning: mechanisms, culture, and feasibility. Management Learning, 31(2): 181-196. Prajogo, D. I. 2006. The relationship between innovation and business performance - a comparative study between manufacturing and service firms. Knowledge Process Management, 13(3): 218-225. Prajogo, D. I., & McDermott, C. M. 2011. The relationship between multidimensional organizational culture and performance. International Journal of Operations & Production Management, 31(7): 712-735.

P a g e | 332

Price, A. D. F., Bryman, A., & Dainty, A. R. 2004. Empowerment as a strategy for improving construction performance. Leadership and Management in Engineering, January: 27-37. Prieto, I. M., & Revilla, E. 2006. Learning capability and business performance: a nonfinancial and financial assessment. The Learning Organization, 13(20): 166185. Prugsamatz, R. 2010. Factors that influence organization learning sustainability in nonprofit organizations. The Learning Organization, 17(3): 243-267. Ranchhod, A., & Zhou, F. 2001. Comparing respondents of e-mail and mail surveys: understanding the implications of technology. Marketing Intelligence & Planning, 19(4): 254-262. Rankinen, S., Suominen, T., Kuok, K., Marja Lekane, L., & Doran, D. 2009. Work empowerment in multidisciplinary teams during organizational change. International Journal of Nursing Practice, 15: 403-416. Real, J. C., Leal, A., & Roldan, J. L. 2006. Determinants of organisational learning in the generation of technological distinctive competencies. International Journal of Technology Management, 35(1-4): 284-307. Real, J. C., Leal, A., & Roldán, J. L. 2006. Information technology as a determinant of organizational learning and technological distinctive competencies. Industrial Marketing Management, 35: 505-521. Rebelo, T. M., & Gomes, A. D. 2008. Organizational learning and the learning organization - Reviewing evolution for prospecting the future. The Learning Organization, 15(4): 294-308. Rebelo, T. M., & Gomes, A. D. 2011. Conditioning factors of an organizational learning culture. Journal of Workplace Learning, 23(3): 173-194. Rhee, J., Park, T., & Lee, D. H. 2010. Drivers of innovativeness and performance for innovative

SMEsin

South

Technovation, 30: 65-75.

Korea:

mediation

of

learning

orientation.

P a g e | 333

Rijal, S. 2010. Leadership style and organizational culture in learning organization: a comparative study. International Journal of Management and Information Systems, 14(5): 119-127. Robey, D., Boudreau, M.-C., & Rose, G. M. 2000. Information technology and organizational learning: a review and assessment of research. Accounting, Management and Information Technologies, 10(2): 125-155. Roche, E. 2002. The implementation of quality management initiatives in the context of organisational learning. Journal of European Industrial Training, 26(2-4): 142-153. Sadler-Smith, E., Spicer, D. P., & Chaston, I. 2001. Learning orientations and growth in smaller firms. Long Range Planning, 34(2): 139-158. Santora, J. C., & Sarros, J. C. 2008. Founders, leaders, and organizational life cycles: the choice is easy – learn or fail! Development and Learning in Organizations, 22(3): 12. Santos-Vijande, M. L., López-Sánchez, J. Á., & Trespalacios, J. A. 2012. How organizational learning affects a firm's flexibility, competitive strategy, and performance. Journal of Business Research, 65: 1079-1089 Sarantakos, S. 2005. Social research (3 ed.). New York Palgrave Macmillan. Sarin, S., & McDermott, C. 2003. The effect of team leader characteristics on learning, knowledge application, and performance of cross-functional new product development teams. Decision Sciences, 34(4): 707. Sarros, J. C., Cooper, B. K., & Santora, J. C. 2011. Leadership vision, organizational culture, and support for innovation in not-for-profit and for-profit organizations. Leadership & Organization Development Journal, 32(3): 291-309. Saru, E. 2007. Organisational learning and HRD: how appropriate are they for small firms? Journal of European Industrial Training, 31(1): 36-51. Savlovschi, L. I., & Robu, N. R. 2011. The role of SMEs in modern economy. Economia - Seria Management, 14(1): 277-282.

P a g e | 334

Schein, E. H. 1999. Empowerment, coercive persuasion and organizational learning: do they connect. The Learning Organization, 6(4): 163-173. Schein, E. H. 2004. Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass. Schulz, K.-P. 2008. Shared knowledge and understandings in organizations: its development and impact in organizational learning processes. Management Learning, 39(4): 457-473. Schulz, M. 2001. The uncertain relevance of newness: organizational learning and knowledge flows. Academy of Management Journal, 44(4): 661-682. Scott-Ladd, B., & Chan, C. C. A. 2004. Emotional intelligence and participation in decision-making: strategies for promoting organizational learning and change. Strategic Change, 13(2): 95-106. Seibert, S. E., Wang, G., & Courtright, S. H. 2011. Antecedents and consequences of psychological and team empowerment in organizations: a meta-analytic review. Journal of Applied Psychology, 96(5): 981-1003 Seibert, S. E., Silver, S. R., & Randolph, W. A. 2004. Taking empowerment to the next level: a multiple-level model of empowerment, performance and satisfaction. Academy of Management Journal, 47(3): 332-349. Sekaran, U., & Bougie, R. 2010. Research Methods for Business : a skill-building approach. Hoboke, N.J: Willey. Senge, P. M. 1990. The Fifth Discipline: The art and practice of the learning organization. London: Century Business. Senge, P. M. 2006. The Fifth Discipline: The art and practice of the learning organization (2nd ed.). London: Random House. Serfontein, S. 2006. Organisational Transformation: A quantum leap from the traditional to the entrepreneurial. Unpublished 0819588, University of Pretoria (South Africa), South Africa.

P a g e | 335

Sharma, S., Mukherjee, S., Kumar, A., & Dillon, W. R. 2005. A simulation study to investigate the use of cutoff values for assessing model fit in covariance structure models. Journal of Business Research, 58(7): 935-943. Shrivastava, P. 1983. A typology of organizational learning systems. Journal of Management Studies, 20(1): 7-29. Sigh, S. P., Reynolds, R. G., & Muhammad, S. 2001. A gender-based performance analysis of micro and small enterprises in Java, Indonesia. Journal of Small Business Management, 39(2): 174-182. Simon, H. A. 1991. Bounded rationality and organizational learning. Organization Science, 2(1): 125-132. Simonin, B. L. 1997. The importance of collaborative know-how: an empirical test of the learning organization. Academy of Management Journal, 40(25-30): 25. Simons, P. R. J., Germans, J., & Ruijters, M. 2003. Forum for organisational learning: Combining learning at work, organisational learning and training in new ways. Journal of European Industrial Training, 27(1): 41-48. Škerlavaj, M., & Dimovski, V. 2006. Study of the mutual connections among information-communication technologies, organisational learning and business performance. Journal for East European Management Studies, 11(1): 9-29. Škerlavaj, M., Song, J. H., & Lee, Y. 2010. Organizational learning culture, innovative culture and innovations in South Korean firms. Expert Systems with Applications, 37(9): 6390-6403. Škerlavaj, M., Štemberger, M. I., Škrinjar, R., & Dimovski, V. 2007. Organizational learning culture—the missing link between business process change and organizational performance. International Journal of Production Economics, 106(2): 346-367. Škerlavaj, M., & Dimovski, V. 2007. Towards network perspective of intraorganizational learning: bridging the gap between acquisition and participation

P a g e | 336

perspective. Interdisciplinary Journal of Information, Knowledge, and Management, 2: 43-58. Skule, S., & Reichborn, A. N. 2007. Building organisational capability with a learningconducive workplace. Training and Development in Australia, 34(5): 5-8. Smith, A. C., & Mouly, V. S. 1998. Empowerment in New Zealand firms: insights from two cases. Empowerment in Organizations, 6(3): 69-81. Smith, I. 2005. Continuing professional development and workplace learning 11: Managing the "people" side of organisational change. Library Management, 26(3): 152-155. Smith, P. 1993. The leadership alliance for organizational learning. In K. a. M. Watkins, V. (Ed.), Sculpting the Learning Organization: Lessons for the Learning Organization, Vol. 35-39. San Francisco, CA: Jossey-Bass. Sobh, R., & Perry, C. 2006. Research design and data analysis in realism research. European Journal of Marketing, 40(11/12): 1194-1209. Soeprihanto, J. 2007. Envisioning and communicationg vision process in Indonenesia autonomy era. In H. Y. Siry (Ed.), Building the Blue Print of Indonesia State: 203-234. Canberra: Perhimpunan Pelajar Indonesia. Somerville, M. M., & Nino, M. 2007. Collaborative co-design.A user-ventric approach for advancement of organizational learning. Performance Measurement and Metrics, 8(3): 180-188. Song, J. H., Joo, B.-K. B., & Chermack, T. J. 2009. The dimensions of learning organization questionnaire (DLOQ): A validation study in a Korean context. Human Resource Development Quarterly, 20(1): 43-64. Song, J. H., Uhm, D., & Yoon, S. W. 2011. Organizational knowledge creation practice. Leadership & Organization Development Journal, 32(3): 243-259. Spector, J. M., & Davidsen, P. I. 2006. How can organizational learning be modeled and measured? Evaluation and Program Planning, 29(1): 63-69.

P a g e | 337

Spreitzer, G. M. 1995. Psychological empowerment in the workplace: dimensions, measurement, and validation. Academy of Management Journal, 38: 14421465 Spreitzer, G. M., & Mishra, A. K. 2002. To stay or to go? Voluntary survivor turnover following on organizational downsizing. Journal of Organizational Behavior, 23(707-729). Stacey, R. 2003. Organizations as complex responsive processes of relating. Journal of Innovative Management, Winter 2002/2003: 27-39. Stanton, J. M., & Rogelberg, S. G. 2001. Using internet/intranet web pages to collect organizational research data. Organizational Research Methods, 4(3): 200-216. Stata, R. 1989. Organizational learning: the key to management innovation. Sloan Management Review, 30(3): 63-74. Statistics

Indonesia.

2010.

Statistik

Inodonesia

-

Statistical

year

book.

http://www.bps.go.id/ flip/flip11/index3.php, accessed June 2011. Steiger, J. H. 2007. Understanding the limitations of global fit assessment in structural equation modeling. Personality and Individual Differences, 42(5): 893-898 Stefanus, S. 2007. Kepemimpinan transformational dan pengaruhnya terhadap kepuasan atas kualitas kehidupan kerja, komitmen organisasi dan perilaku ekstra peran: studi pada guru-guru SMU di Kota Surabaya. Jurnal Ekonomi Manajemen UK PETRA, 98(1). Stevens, E., & Dimitriadis, S. 2004. New service development through the lens of organisational learning: evidence from longitudinal case studies. Journal of Business Research, 57(10): 1074-1084. Stewart, J. G., McNulty, R., Griffin, M. T. Q., & Fitzpatrick, J. J. 2008. Psychological empowerment and structural empowerment among nurse practitioners. Journal of the American Academy of Nurse Practitioners, 22: 27-34. Strati, A. 2000. Theory and Method in Organization Studies. London: Sage Publications.

P a g e | 338

Suarez-Balcazar, Y., Balcazar, F. E., & Taylor-Ritzler, T. 2009. Using the internet to conduct research with culturally diverse populations: challenges and opportunities. Cultural Diversity and Ethnic Minority Psychology, 15(1): 96104. Sudarwan, M., & Fogarty, T. J. 1996. Culture and accounting in Indonesia: An empirical examination. The International Journal of Accounting, 31(4): 463481. Sun, H. 2003. Conceptual clarifications for ‘organizational learning’, ‘learning organization’ and ‘a learning organization. Human Resource Development International 6(2): 153-166. Sungkar, Y. 2008. Indonesia’s state enterprises: from state leadership to international consensus. Journal of Indonesian Social Sciences and Humanities, 1: 95-120 Suppiah, V., & Sandhu, M. S. 2010. Organizational culture’s influence on tacit knowledge-sharing behaviour. Journal of Knowledge Management, 15(3): 462477. Swart, J., & Kinnie, N. 2010. Organisational learning, knowledge assets and HR practices in professional service firms. Human Resource Management Journal, 20(1): 64. Tamayo-Torres, J., Ruiz-Moreno, A., & Lloréns-Montes, F. J. 2011. The influence of manufacturing flexibility on the interplay between exploration and exploitation: the effects of organisational learning and the environment. International Journal of Production Research, 49(20): 6175. Tambunan, T., & Nasution, P. 2006. Pengkajian peningkatan daya saing usaha kecil menengah yg berbasis pengembangan ekonomi lokal Jurnal Pengkajian Koperasi dan UKM, 1(2): 26-40. Tambunan, T. 2008. SME development, economic growth, and government intervention in a developing country: the Indonesian story. Journal International Entrepreneurship, 6(147-167): 147.

P a g e | 339

Tambunan, T. 2010. The Indonesian experience with two big economic crises. Modern Economy, 1: 156-167. Tanaka, J. S. 1993. Multifaceted conceptions of fit in structural equation models. In K. A. Bollen, & J. S. Long (Eds.), Testing Structural Equation Models: 10-39. Newbury Park: Sage. Taormina, R. J. 2008. Interrelating leadership behaviours, organizational socialization, and organizational culture. Leadership & Organization Development Journal, 29(1): 85-102. Templeton, G. F., Lewis, B. R., & Snyder, C. A. 2002. Development of a measure for the organizational learning construct. Journal of Management Information Systems, 19(2): 175-218. Terzioglu, B., Schmidt, P., & Chan, E. S. K. 2010. Investigate Failing in Survey Method for Improving Business Research. Paper presented at the Annual Hawaii International Business Research Conference, Hilton Hawaiian Village. The World Bank. 2011. World Development Indicator: http://data.worldbank.org/ country/indonesia. Washington, D.C: The World Bank. Theimann, N. M., April, K., & Blass, E. 2006. Context tension: Cultural influences on leadership and management practice. Reflections, 7(4): 38-52. Thomas, J. B., Sussman, S. W., & Henderson, J. C. 2001. Understanding “strategic learning”: Linking organizational learning, knowledge management, and sensemaking. Organization Science, 12(3): 331-345. Thomas, K., & Allen, S. 2006. The learning organization: a meta-analysis of themes in the literature. The Learning Organization, 13(2): 123-139. Tjosvold, D., Hui, C., & Law, K. S. 1998. Empowerment in the manager-employee relationship in Hong Kong: Independence and Controversy. The Journal of Social Psychology, 138(5): 624-636. Toiviainen, H. 2007. Inter-organizational learning across levels: an object-oriented approach. Journal of Workplace Learning, 19(6): 343-358.

P a g e | 340

Torre, A. d. l., Pería, M. S. M., & Schmukler, S. L. 2010. Bank involvement with SMEs: beyond relationship lending. Journal of Banking and Finance, 34: 2280-2293. Tsang, E. W. K. 1997. Organizational learning and the learning organization: a dichotomy between descriptive and prescriptive research. Human Relations, 50(1): 73-89 Tsui, A. S., Zhang, Z.-X., Wang, H., Xin, K. R., & Wu, J. B. 2006. Unpacking the relationship between CEO leadership behavior and organizational culture. The Leadership Quarterly, 17(2): 113-137. Uden, L. 2007. How to promote competitive advantages for SMEs: issues, ideas and innovation. Journal of Business Systems, Governance and Ethics, 2(2): 1-14. Ugboro, I. O., & Obeng, K. 2000. Top management leadership, employee empowerment,

job

satisfaction,

and

customer

satisfaction

in

TQM

organizations: an empirical study. Journal of Quality Management, 5: 247-272. Uner, S., & Turan, S. 2010. The construct validity and reliability of the Turkish version of Spreitzer’s psychological empowerment scale. BMC Public Health, 10(117): 1-8. United Nations. 2011. The Millennium Development Goals Report 2011. United Nations, 2011. Vakola, M., & Nikolaou, I. 2006. Attitudes towards organizational change. What is the role of employees’ stress and commitment? . Employee Relations, 27(2): 160174. van Gils, A., & Zwart, P. 2004. Knowledge acquisition and learning in Dutch and Belgian SMEs: the role of strategic alliance. European Management Journal, 22(6): 685-692. van Grinsven, M., & Visser, M. 2011. Empowerment, knowledge conversion and dimensions of organizational learning. The Learning Organization, 18(5): 392405.

P a g e | 341

Vera, D., & Crossan, M. 2003. Organizational learning and knowledge management: toward an integrative framework. In M. a. L. Easterby-Smith, M.A. (Ed.), The Blackwell

Handbook

of

Organizational

Learning

and

Knowledge

Management: 122-141. Oxford: Blackwell Publishing,. Vera, D., & Crossan, M. 2004. Strategic leadership and organizational learning. The Academy of Management Review, 29(2): 222-240. Wallace, J. C., Johnson, P. D., Mathe, K., & Paul, J. 2011. Structural and psychological empowerment climates, performance, and the moderating role of shared felt sccountability: a managerial perspective. Journal of Applied Psychology, 96: 840-850. Walsh, K., & Fisher, D. 2005. Action inquiry and performance appraisals: Tools for organizational learning and development. The Learning Organization, 12(1): 26-41. Walumbwa, F. O., Lawler, J. J., & Avolio, B. J. 2007. Leadership, individual differences, and work-related attitudes: A cross cultural investigation. Applied Psychology: An International Review, 56(2): 212-230. Wang, D., Su, Z., & Yang, D. 2011. Organizational culture and knowledge creation capability. Journal of Knowledge Management, 15(3): 363-373. Wang, G., & Lee, P. D. 2009. Psychological empowerment and job satisfaction: an analysis of interactive effects. Group Organization Management, 34(3): 271296. Wang, Y.-L., Wang, Y.-D., & Horng, R.-Y. 2010. Learning and innovation in small and medium enterprises. Industrial Management & Data System, 110(2): 175-192. Weldy, T. G. 2009. Learning organization and transfer: strategies for improving performance. The Learning Organization, 16(1): 58-68. Wenger, E. 1998. Communities of Practice: Learning, Meaning and Identity. Cambridge: Cambridge University Press.

P a g e | 342

Westen, D., & Rosenthal, R. 2005. Improving construct validity: Cronbach, Meehl, and Neurath’s Ship. Psychological Assessment, 17(4): 409-412. Wheaton, B., Muthen, B., Alwin, D., F, & Summers, G. 1977. Assessing reliability and stability in panel models. Sociological Methodology, 8(1): 84-136. Wickramnsinghe, N., & Sharma, S. K. 2005. Key factors that hinder SMEs in succeeding in todays knowledge-based economy. International Journal of Management and Enterprise Development, 2(2): 141-158. Wieneke, A., & Gries, T. 2011. SME performance in transition economies: The financial regulation and firm-level corruption nexus. Journal of Comparative Economics, 39(2): 221-229. Williams, A. P. O. 2001. A belief-focused process model of organizational learning. Journal of Management Studies, 38: 67-85. Wong, A., Tjosvold, D., & Lu, J. 2010. Leadership values and learning in China: the mediationg role of psychological safety. Asia Pacific Journal of Human Resources, 24(1): 86-107. Woo, W. T., & Hong, C. 2010. Indonesia’s economic performance in comparative perspective and new policy framework for 2049. Bulletin of Indonesian Economic Studies, 46(1): 33-64. Yang, B., Watkins, K., & Marsick, V. 2003. Identifying valid and reliable measures for dimensions of a learning culture. Advances in Developing Human Resources, 5(2): 152-162. Yang, B., Watkins, K. E., & Marsick, V. J. 2004. The construct of the learning organization: dimensions, measurement, and validation. Human Resource Development Quarterly, 15(1): 31-55. Yang, Z., Wang, X., & Su, C. 2006. A review of research methodologies in international business. International Business Review, 15(6): 601-617.

P a g e | 343

Yang, C., Wang, Y.-D., & Niu, H.-j. 2007. Does industry matter in attributing organizational learning to its performance?: evidence from the Taiwanese economy. Asia Pacific Business Review, 14(4): 547-563. Yang, J. T. 2007. The impact of knowledge sharing on organizational learning and effectiveness. Journal of Knowledge Management,, 11(2): 83-90 Yanow, D. 2000. Seeing organizational learning: a “cultural” view”. Organization, 7: 247-268. Yeo, R. 2005a. Implementing organizational learning initiatives – insights from Singapore organizations – Part I. Development & Learning in Organizations, 19(2): 5-7. Yeo, R. 2005b. Revisiting the roots of learning organization: a synthesis of the learning organization literature. The Learning Organization, 12(4): 368-382. Yeo, R. K. 2006. Building knowledge through action systems, process leadership and organizational learning. Foresight, 8(4): 34-44. Yeung, A. C. L., Lai, K.-H., & Yee, R. W. Y. 2007. Organizational learning, innovativeness, and organizational performance: a qualitative investigation. International Journal of Production Research, 45(11): 2459-2477. Yiing, L. H., & Ahmad, B. K. Z. 2009. The moderating effects of organizational culture on the relationship behaviour and organizational commitment and job satisfaction and performance. Leadership & Organization Development Journal 30(1): 53-86. Yilmaz, C., Alpkan, L., & Ergun, E. 2005. Cultural determinants of customer- and learning-oriented value systems and their joint effects on firm performance. Journal of Business Research, 58: 1340-1352. Yilmaz, C., & Ergun, E. 2008. Organizational culture and firm effectiveness: An examination of relative effects of culture traits and the balanced culture hypothesis in an emerging economy. Journal of World Business, 43(3): 290306.

P a g e | 344

Yudhi, W. S. A. 2007. Indonesia and Australian culture divergences: a view of the future of Indonesia and Australia relations. In H. Y. siry (Ed.), Building the blue print of Indonesia state: 235-253. Canberra: Perhimpinan Pelajar Indonesia. Yudianti, N., & Goodfellow, R. 1997. An introduction to Indonesian corporate culture. In Doodfellow (Ed.), Indonesian Business Culture: 95-113. Singapore: Reed Academic Publishing Asia. Yuhee, J., & Takeuchi, N. 2010. Performance implications for the relationships among top management leadership, organizational culture, and appraisal practice: testing two theory-based models of organizational learning theory in Japan. International Journal of Human Resource Management, 21(11): 1931-1950. Yukl, G. 2009. Leading organizational learning: reflections on theory and research. Leadership Quarterly, 20: 49-53. Zagorsek, H., Marko, J., & Stanley, J. S. 2004. Comparing leadership practices between the United States, Nigeria, and Slovenia: Does culture matter? Cross Cultural Management, 11: 16-34 Zhang, X., & Bartol, K. M. 2010. Linking empowering leadership and employee creativity: the influence of psychological empowerment, intrinsic motivation, and creative process engagement. Academy of Management Journal, 53(1): 107-128. Zhao, Y., Li, Y., Lee, S. H., & Chen, L. B. 2011. Entrepreneurial orientation, organizational learning, and performance. Entrepreneurship Theory and Practice, March 2011: 293-317. Zheng, W., Baiyin, y., & McLean, G. N. 2010. Linking organizational culture, structure, strategy, and organizational effectiveness: mediating role of knowledge management. Journal of Business Research, 63(7): 763-771. Zikmund, W. G. 2000. Business Research Methods (Sixth ed.). Orlando: Harcourt College Publisher.

P a g e | 345

Zikmund, W. G. 2003. Business research methods. Mason, Ohio: Thomson/SouthWestern. Zikmund, W. G., Babin, B. J., Carr, J. C., & Griffin, M. 2010. Business Research Methods (8th ed.). Mason - USA: South Western Cengage Learning. Zu, X., Robbins, T. L., & Fredendall, L. D. 2010. Mapping the critical links between organizational culture and TQM/Six Sigma practices. International Journal of Production Economics, 123(1): 86-106.

P a g e | 346

Appendix 1

Questionnaire in English and Bahasa Indonesia

P a g e | 347

Dear Sir/Madam, I am a student in the School of Commerce and Management at Southern Cross University, researching towards a PhD in organizational learning and conducting a survey as part of my thesis research. The purpose of the research is to develop and to test a comprehensive model of the relationships between organizational learning, leadership, empowerment, organizational culture and small and medium enterprise (SME) performance. Your assistance in enabling me to carry out this research would be very much appreciated. All responses will be anonymous, however should you wish to receive a report on the aggregate results this will be able to be obtained by supplying an address to which the report can be sent. It is expected that the information in the report will enable you to enhance the competitive standing of your business. Your participation will only involve the completion of a web-based survey. This should take about 15 minutes. Participation is voluntary and your anonymity will be preserved with all responses being kept completely confidential. . I thank you in anticipation of your participation and would appreciate receiving your response as soon as you are able to complete the survey. If you need more information, please don’t hesitate to contact me or my principal supervisor at: Ferdinandus Sampe, 162 Ballina Rd, Lismore, NSW 2480 Phone +61421509208 +6281241812459 E-mail [email protected] [email protected]

Emeritus Prof. Don Scott School of Commerce and Management Telephone +61 2 66819267 Email: [email protected]

P a g e | 348

Please click on the relevant in the following tables based on your level of agreement or disagreement with the statements. For example, if you disagree strongly, you should choose 1 and if you agree strongly with the statement, you should choose 7 strongly disagree

Statements

(In) the organization where I am now working: .... employees are encouraged to think from a global perspective employees are encouraged to bring customers’ views into their decision-making processes makes its learned lessons available to all employees employees are stimulated to openly discuss mistakes in order to learn from them. rewards employees who show initiative. supports employees who take calculated risks. employees help each other to learn employees spend time building trust with each other employees are rewarded for learning employees are given time to support their learning Source: Developed from the literature review I am free to initiate changes as needed I am free to adapt operational goals as needed the owner-manager builds an alignment of vision across different structural levels all organizational members share similar visions and missions enables employees to get necessary information quickly and easily maintains an up-to-date database of employee skills

1

2 3

strongly agree

4

5

6

7

P a g e | 349

Please click on the relevant in the following tables based on your level of agreement or disagreement with the statements. For example, if you disagree strongly, you should choose 1 and if you agree strongly with the statement, you should choose 7 strongly disagree

Statements

(In) the organization where I am now working: ... all decision-making is made through a rational process considers the impact of decisions on employee morale creates systems to measure gaps between current and expected performance all organizational members share a common sense of mission that most think is worth striving to achieve co-operation amongst departments is important innovation is the most important goal is open to receiving new ideas from organizational customers the structure supports its strategic direction the organizational culture is innovative the organizational structure allows employees to work Source: Developed from the literature review effectively the organization has built a culture of trust amongst employees the organization has developed operational procedures to help employees to work efficiently the organization has developed systems to nurture knowledge management my manager communicates her/his vision to employees at every possible opportunity helps employees to balance their work and family the owner/manager sincerely wants good relations with his/her employees

1

2 3

strongly agree

4

5

6

7

P a g e | 350

Please click on the relevant in the following tables based on your level of agreement or disagreement with the statements. For example, if you disagree strongly, you should choose 1 and if you agree strongly with the statement, you should choose 7 strongly disagree

Statements

(In) the organization where I am now working: my manager helps me if I have difficulty in doing my job. my manager is willing to solve problems that occur. is well managed. my manager does not hold back promotion for good performers I meet my supervisor/team leader at least once a day. my supervisor usually tells me things before I hear them on the grapevine my manager supports requests for learning opportunities my manager shares relevant up-to-date information with employees my manager continually looks for opportunities to learn Developed Source: my work is important to from me the literature review I am enthusiastic about working toward the organization’s objectives I am eager for the organization to care for all of its employees I am keen on doing my job well I feel confident in being able to do my work well I am able to focus precisely on what is to be done to execute my work effectively I know I can perform better than the pre-determined performance standard I have high levels of energy at work

1

2 3

strongly agree

4

5

6

7

P a g e | 351

Please click on the relevant in the following tables based on your level of agreement or disagreement with the statements. For example, if you disagree strongly, you should choose 1 and if you agree strongly with the statement, you should choose 7 strongly disagree

Statements

(In) the organization where I am now working: .... I feel I can influence my work unit to meet a pre-determined performance standard. I can influence the way work is done in my department I feel my co-workers respect my ideas in relation to completing our jobs I am aware of critical issues that affect my work I am capable of analyzing the causes of problems I have the ability to plan and to implement solutions more employees are working in this organization than did last year my organization has a greater market share than it had last year my organization has sold more than it did last year the literature review Source: Developed my organization meets itsfrom performance targets I am happy working here I believe the organization’s future is secure the customers are happy with the products that they buy my organization has a strategy that positions it well for the future there is continuous improvement in my organization my organization is successful

1

2 3

strongly agree

4

5

6

7

P a g e | 352

For the following statements, please indicate you response with a [√] in the relevant position.

1. Gender:

male

[ ]

Female

[ ]

2. Number of employees in your enterprise Fewer than 10 employees [ ] 10 to 19 employees 20 to 99 employees [ ] More than 100 employees 3. The highest formal education Elementary-Junior High School [ ] Diploma [ ] Master degree (S2) [ ]

[ ] [ ]

Senior high school/vocational study [ ] Bachelor (S1) [ ] Doctoral degree (S3) [ ]

4. How long have you been working in the organization? Up to 3 years [ ] 4 to 7 years 8 to 11 years [ ] More than 12 years 5. How long has your organization been in operation? Up to 3 years [ ] 4 to 7 years 8 to 11 years [ ] More than 12 years 6. What is your main business type? Service [ ] Trading [ ] Manufacturing

[ ] [ ]

[ ] [ ] [

]

Thank for your participation in this research, if you would like to have a copy of the research results, please write your address or e-mail address in space provided below: Name

: ___________________________________________

Address : ___________________________________________ E-mail : ___________________________________________ Thank you.

P a g e | 353

Responden yang terhormat, Saya seorang mahasiswa dari School of Commerce and Management, Southern Cross University, sedang mengikuti program Philosophy Doktor dengan konsentrasi pembelajarn organisasi. Saya sekarang melakukan survey sebagai bagian dari desertasi saya. Tujuan penelitian ini adalah mengembangkan dan menguji model lengkap tentang hubungan pemebelajaran organisasi, kepemimpinan, budaya organisasi pemberdayaan pegawai dan kinerja organisasi. Sebagai tambahan, hasil survey ini diharapkan menemukan hubungan aktual antara aspek-aspek tersebut di atas. Keuntungan yang Ibu/Bapak/Saudari-a bisa dapat dari keikutsertaannya adalah meningkatkan pemahaman terhadap pembelajaran organisasi. Suatu study yang menyeluruh terhadap interaksi antara pembelajaran organisasi, budaya organisasi, kepemimpinan, pemberdayaan pegawai untuk peningkatan kinerja organisasi akan sangat berguna dalam lingkungan usaha yang penuh persaingan ketat. Keikutsertaan Ibu/Bapak/Saudari-a berupa melengkapi survey berbasis-internet dan butuh waktu sekitar 15 menit untuk melengkapinya. Keikutsertaan dalam survey ini bersifat sukarela dan Southern Cross University menjamin bahwa tanggapan Anda benar-benar dirahasiakan. Terima kasih atas keikutsertaannya dan tanggapan yang cepat benar-benar dihargai. Jika Ibu/Bapak/Saudari-a butuh informasi, jangan sunkan untuk menghubungi saya atau pembimbing utama saya dengan alamat: Ferdinandus Sampe, 162 Ballina Rd, Lismore, NSW 2480 Phone +61421509208 +6281241812459 E-mail [email protected] [email protected]

Emeritus Prof. Don Scott School of Commerce and Management Telephone +61 2 66819267 Email: [email protected]

P a g e | 354

Mohon beri tanda dibawah salah satu angka yang tersedia, jika Ibu/Bapak/Saudari-a benardi bawah 1 dan sebaliknya jika benar-benar setuju dengan benar tidak setuju, maka tanda pernyataan, maka beri tanda di bawah angka 7 dan pada angka yang sesuai dengan tingkat (intensitas) kesetujuan atau ketidaksetujuan Ibu-Bapak/Saudari-a. Benar-benar tidak setuju

PERNYATAAN-PERNYATAAN (Dalam) Organisasi tempat aku bekerja sekarang: .... Pegawai didukung untuk berpikir dari sudut pandang global Pegawai didorong mempertimbangkan pandangan konsumen dalam proses pembuatan keputusan mereka Membuat hal-hal yang telah diketahui dalam perusahaan (seperti prosedur dan teknik) tersedia bagi semua pegawai Pegawai didukung berdiskusi terbuka tentang kesalahankesalahan yang terjadi untuk belajar dari kesalahan-kesalahan tersebut. Memberi penghargaan pada pegawai yg memperlihatkan inisiatif Mendukung pegawai yang mengambil resiko yang diperhitungkan pegawai saling membantu belajar untuk mengembangkan diri. pegawai disediakan waktu membangun saling percaya satu sama lain. pegawai dihargai untuk terus Source: Developed from belajar the literature review Pegawai diberi waktu untuk mendukung proses belajar mereka Aku bebas melakukan perubahan seperti yang dibutuhkan Aku bebas menyesuaikan tujuan operasional sesuai kebutuhan Pemilik-manajer membangun kesatuan visi pada semua level struktural berbeda semua anggota organisasi mengemban visi dan misi yang sama Memungkinkan pegawai memperoleh informasi yang dibutuhkan secara cepat dan mudah. Memiliki database yang terbaru dari setiap keterampilan pegawai Semua keputusan dibuat melalui suatu proses yang rasional

1

2 3

Benar-benar setuju

4

5

6

7

P a g e | 355

PERNYATAAN-PERNYATAAN (Dalam) Organisasi tempat aku bekerja sekarang: Mempertimbangkan akibat keputusan terhadap moral pegawai Menciptakan system untuk mengukur kesenjangan antara kinerja yang sekarang dan yang diharapkan Semua anggota organisasi berjuang untuk mencapai misi yang memiliki arti untuk dicapai seperti yang telah ditetapkan kerja sama antar-departemen atau bagian dianggap penting innovasi merupakan tujuan terpenting dalam organisasi. terbuka terhadap gagasan-gagasan baru dari pelanggan Struktur organisasi mendukung arah strategi perusahaan Budaya organisasi adalah inovatif Struktur organisasi memungkinkan pegawai bekerja dengan efektif Telah membangun suatu budaya saling percaya di antara pegawai Source: Developed from the literature review Telah mengembangkan prosedur operational untuk membantu pegawai bekerja dengan efisien Telah mengembangkan system untuk mengelola data base informasi/pengetahuan yang terus bertambah Pimpinanku mengkomunikasikan visinya setiap ada kesempatan Pimpinanku membantu pegawai menyeimbangkan urusan kerja dan keluarga Pemilik/manajer secara tulus membina hubungan baik dengan pegawai pimpinan membantu jika ada kesulitan penyelesaian tugas pimpinan mau menyelesaikan masalah-masalah yang muncul. Organisasi dikelola dengan baik manajer tidak menghambat peningkatan karir pegawai berprestasi baik.

Benar-benar tidak setuju

1

2 3

4

Benar-benar setuju

5

6

7

P a g e | 356

Benar-benar tidak setuju

PERNYATAAN-PERNYATAAN (Dalam) Organisasi tempat aku bekerja sekarang: Aku bertemu dengan atasan saya paling kurang sekali dalam sehari. pimpinanku memberitahuku sebelum saya mendengar dari pihak lain jika ada masalah Pimpinananku mendukung permintaan untuk mengambil kesempatan belajar Pimpinanku membagi informasi relevan terbaru dengan pegawai Pimpinanku secara terus menerus mencari peluang untuk belajar Pekerjaanku adalah penting buatku Aku antusias bekerja untuk mencapai tujuan-tujuan organisasi Aku ingin organisasi memperhatikan semua pegawainya Aku ingin melakukan pekerjaanku dengan baik Aku merasa percaya diri melakukan pekerjaan dengan baik Aku dapat focus pada apa yang benar-benar harus dibuat untuk melaksanakan pekerjaanku dengan efektif. Aku tahu dapat berprestasi melebihi standard yang ditentukan Aku punya tingkat energy yang tinggi di tempat kerja aku merasa dapat mempengaruhi prestasi unit kerjaku sesuai standard yang telah ditetapkan. Aku dapat mempengaruhi cara kerja yang dilakukan departemenku aku merasa rekan-rekan kerjaku mendengarkan gagasangagasanku dalam menyelesaikan tugas-tugas kami Aku menyadari isu-isu penting yang mempengaruhi kerjaku Aku mampu menganalisis untuk memahami sebab masalah dalam kerja Aku memiliki kemampuan merencanakan dan melaksanakan rencana tersebut

1

2 3

Benar-benar setuju

4

5

6

7

P a g e | 357

Benar-benar tidak setuju

PERNYATAAN-PERNYATAAN (Dalam) Organisasi tempat aku bekerja sekarang: lebih banyak pegawai kerja dalam organisasi dibanding tahun lalu memiliki pangsa pasar yang lebih besar dibanding tahun lalu tahun ini menjual lebih banyak dibanding tahun lalu. mencapai target kinerja yang telah ditetapkan. aku bahagia bekerja dalam organisasi tempatku bekerja aku yakin organisasi memiliki masa depan yang aman Pelanggan senang dengan produk yang mereka beli Memiliki strategi yang membuat organisasi aman di masa depan Ada peningkatan terus menerus dari organisasiku Organisasiku berhasil

1

2 3

Benar-benar setuju

4

5

6

7

P a g e | 358

Untuk setiap pernyataan berikut, mohon Ibu/Bapak/Saudara-i memberikan tanda cek (√) untuk pernyataan yang paling sesuai dengan keadaan Ibu-Bapak atau perusahaan Ibu Bapak!

1. Jenis kelamin:

male

[ ]

Female

[ ]

2. Jumlah pegawai tetap dalam perusahaan Kurang dari 10 orang [ ] 10 s/d 19 orang 20 s/d 99 orang [ ] Lebih dari 100 orang

[ ] [ ]

3. Pendidikan tertinggi yang ditamatkan SD-SMP [ ] SMU-SMK [ ] Sarjana Lengkap (S1) [ ] S2 [ ]

Diploma I-III [ ] S3 [ ]

4. Sudah berapa lama Ibu/Bapak/Saudari-a bekerja dalam organisasi ini?: Kurang dari 3 tahun [ ] 4 sampai 7 tahun [ ] 8 sampai 11 tahun [ ] Lebih dari 12 tahun [ ] 5. Sudah berapa lama organisasi Ibu-Bapak/Saudari-a beroperasi? Kurang dari 3 tahun [ ] 4 sampai 7 tahun [ ] 8 sampai 11 tahun [ ] Lebih dari 12 tahun [ ] 6. Usaha utama perusahaan Ibu-Bapak/Saudari-a Jasa [ ] Dagang [ ] Pabrikasi

[

]

Terima kasih atas partisipasi Ibu-Bapak/Saudari-a dalam penelitian ini, jika IbuBapak/Saudari-a ingin mendapatkan copy hasil penelitian ini, mohon IbuBapak/Saudari-a cantumkan alamat atau e-mail di bawah ini: Nama : ___________________________________________ Alamat: ___________________________________________ Email : ___________________________________________ Terima kasih

P a g e | 359

Appendix 2

Overseas Research for SCU Students application

P a g e | 360

Human Research Ethics Committee (HREC) Human Research Ethics Sub-Committee (HRESC)

RESEARCH CONDUCTED OVERSEAS BY SCU STUDENTS AND STAFF The National Statement on Ethical Conduct in Human Research, Chapter 4.8: People in Other Countries. Researchers should be aware of Chapter 4.8 and have an understanding of its content before conducting research in other countries. This form should be completed and attached to ethics applications (except the NEAF) involving research to be carried out in countries outside Australia. Applicants are advised to seek clarification from the HREC, the HRESC or the Ethics Secretary if they are unsure how to answer any question. 1.

Identify the country or countries in which the proposed research activity will be undertaken. Identify any specific groups with an interest in the research topic. Identify the native language (and where relevant your own language fluency or the research participants’ English fluency). Country:

Indonesia

Language(s): Bahasa Indonesia (Indonesian language) Yustina Wa Niara, SSi, MPd (+6281354660775) Where possible, please provide the name of an independent person or organisation and a local contact number for people to contact in relation to ethical concerns about your research. This information should also be included on your information to participants. Students and supervisors please note that overseas travel may require approvals other than ethics approval. In particular, it is a University requirement that Department of Foreign Affairs and Trade travel warnings are

P a g e | 361

considered and you should review information available at the DFAT web site (www.dfat.gov.au). 2.

Do you foresee any personal safety or other risk or danger to yourself, coresearchers, fellow researchers or research participants in this research? NO

YES

NA

If you answered YES, discuss the risks involved and your strategies to minimise them. If you answered NO, give reasons. Indonesia is a peaceful place to visit If you answered NA, please explain why the question is not applicable to your project.

3.

Is it necessary for you to obtain specific authorisations (eg. National or provincial government permit, research visa, local ethics review approval, other relevant authorisation) to undertake the proposed research activity?

NO

YES

NA

If you answered YES, list the authorisation(s) required and the granting body. Provincial government permit If you answered NO, give reasons. If you answered NA, please explain why the question is not applicable to your project

4.

Are there any local organisations or other bodies with a ‘gate-keeping’ role relevant to the proposed research activity? NO

YES

NA

If you answered YES, list the groups involved and explain how they will be informed about the proposed research activities and your relationship with them. If you answered NO, give reasons. Once a letter of permission has been obtained from the provincial government, the research will be able to be conducted If you answered NA, please explain why the question is not applicable to your project

P a g e | 362

5.

If the proposed research activity involves participation of members of a specific group or groups (eg church group, non-government organisation, corporation, commercial organisation, government department etc) has approval of that organisation been obtained? NO

YES

NA

If you answered YES, attach copies of relevant correspondence. If you answered NO, give reasons. If you answered NA, please explain why the question is not applicable to your project The HRD-POWER group is a group with a main objective of developing Indonesian business through human resource development and the group welcomes research in relation to human or organizational development 6.

Does the proposed research activity involve an intermediary in any facilitation or brokering role (eg in recruiting research participants, advocating your activity to authorities etc)? NO

YES

NA

If you answered YES, explain the role of the intermediary and attach copies of relevant correspondence. The HRD –POWER group will facilitate the research by e-mailing randomly selected members and requesting their participation in the research by completing the on-line questionnaire If you answered NO, give reasons. If you answered NA, please explain why the question is not applicable to your project 7.

Does the proposed research activity involve the participation of people who are not formally organised (eg people living in a community or locality, members of an occupational or social category etc)? NO

YES

NA

If you answered YES, indicate the context of the research, how you will obtain access and any ethical issues that you can foresee. The coordinator of HRD-POWER group will be contacted by means of e-mail, to gain access to all suitable members If you answered NO, give reasons.

P a g e | 363

If you answered NA, please explain why the question is not applicable to your project 8.

Is it appropriate for individual consent to be obtained from people participating in the proposed research activity? NO

YES

NA

If you answered YES, indicate whether written consent is appropriate. Attach a copy of the consent form to your ethics application. If you propose to obtain verbal consent, explain how you will record this consent. Please note that even in circumstances involving verbal consent, researchers will be expected to provide a written project information sheet (translated into local language where necessary) and to consider ethical issues involving verbal consent. Discuss these matters here if appropriate. If you answered NO, give reasons. Agreement to participate in the research will be signalled by a respondent completing the questionnaire If you answered NA, please explain why the question is not applicable to your project 9.

Does the proposed research activity involve any coercion, deception or misrepresentation in obtaining information? NO

YES

If you answered YES, give details and explain how you will address ethical concerns arising from this approach to obtaining information. If you answered NO, explain how you will record information provided by research participants. The respondents will be able to decide not to participate or to cease to participate during the process of answering the questionnaire 10. Does the proposed research activity involve secretive use of any photography, video recording, audio recording or other recording method? NO

YES

If you answered YES, give details and a justification for the secrecy. 11.

Will the proposed research activity necessarily involve the acquisition of material objects or information that is regarded by participants as valuable cultural property (eg material artefacts, works of art, cultural information, traditional ecological knowledge including knowledge of medicinal plants)? NO

YES

P a g e | 364

If you answered YES, discuss how the intellectual property rights of the owners or creators of this valuable cultural property will be protected, and how the collective interests of those affected by its acquisition will be protected.

Where specific permits to use, acquire, export or publish images of or information about such cultural property are required, you will have completed Question 3 of this Appendix B. 12.

Will the proposed research activity require discovery and/or disclosure of information from records or participants of a personal, private or sensitive nature? NO

YES

If you answered YES, identify the sort of information involved and what provisions you have made to protect the interests and privacy of the individuals affected. In the case of overseas research, the HREC/HRESC is also concerned to ensure that disclosure of personal information to foreign governments and agencies does not place research participants or researchers at risk. If you answered NO, and your research involves acquiring information about individuals, discuss any privacy or confidentiality issues not addressed elsewhere in the application. The respondents will be anonymous and will not be able to be identified. No personal, private or sensitive information will be collected If you answered NA, please explain why the question is not applicable to your project. 13.

Will the proposed research activity involve any activities that are seen as inappropriate or in conflict with local practices or government requirements regarding religious or cultural practices, customary law or good research practices? NO

YES

NA

If you answered YES, give details and justify. If you answered NO, you may wish to discuss any concerns you have about possible conflicts. Issues in this research are general and no potentially conflictual activities will be embarked upon. If you answered NA, please explain why the question is not applicable to your project 14.

Have you made provision in your research budget for appropriate payments to be made to local research assistants, interpreters and others carrying out duties on your behalf in the field?

P a g e | 365

NO

YES

NA

If you answered YES, give details of the provisions that have been made and how they were arrived at. If you answered NO, give details. There will be no research assistants, interpreters or field workers. The questionnaire will be an on-line one. If you answered NA, please explain why the question is not applicable to your project. 15.

Have you received written permission from the Deputy Vice-Chancellor (Research) to undertake research in an area to which official travel is not advised? NO

YES

NA

If YES, attach documentation. If not, please explain the reasons for not seeking permission. The researcher will be researching in his home country. NOTE: Researchers should ensure that they have the appropriate visas for conducting research in overseas countries. 16.

Are there any other ethical concerns arising from the overseas location of the proposed research activity? NO

YES

If you answered YES, give details. Include this form with your Ethics application. NOTE: This form does not need to be included if you have used the National Ethics Application Form (NEAF). www.neaf.gov.au

P a g e | 366

Appendix 3

Human Research Ethics Committee (HREC) Approval

P a g e | 367

HUMAN RESEARCH ETHICS COMMITTEE (HREC) NOTIFICATION To:

Emeritus Prof Don Scott/Ferdinandus Sampe School of Commerce and Management [email protected],[email protected]

From:

Secretary, Human Research Ethics Committee Division of Research, R. Block

Date:

13 October 2010

Project:

The influence of organizational learning on performance in Indonesian SMEs. Approval Number

ECN-10-176

The Southern Cross University Human Research Ethics Committee has established, in accordance with the National Statement on Ethical Conduct in Human Research – Section 5/Processes of Research Governance and Ethical Review, a procedure for expedited review by a delegated authority. Thank you for your responses to the HREC queries in the letter dated the 7 October. The Chair has now approved this research. The approval is subject to the usual standard conditions of approval. Standard Conditions in accordance with the National Statement on Ethical Conduct in Human Research (National Statement) (NS). 1.

Monitoring NS 5.5.1 – 5.5.10 Responsibility for ensuring that research is reliably monitored lies with the institution under which the research is conducted. Mechanisms for monitoring can include: (a) reports from researchers; (b) reports from independent agencies (such as a data and safety monitoring board); (c) review of adverse event reports; (d) random inspections of research sites, data, or consent documentation; and (e) interviews with research participants or other forms of feedback from them.

The following should be noted (a)

All ethics approvals are valid for 12 months unless specified otherwise. If research is continuing after 12 months, then the ethics approval MUST be renewed. Complete the

P a g e | 368

Annual Report/Renewal form and send to the Secretary of the HREC. (b)

NS 5.5.5 Generally, the researcher/s provide a report every 12 months on the progress to date or outcome in the case of completed research specifically including: • The maintenance and security of the records. • Compliance with the approved proposal • Compliance with any conditions of approval. • Any changes of protocol to the research. Note: Compliance to the reporting is mandatory to the approval of this research.

(c)

Specifically, that the researchers report immediately and notify the HREC, in writing, for approval of any change in protocol. NS 5.5.3

(d)

That a report is sent to HREC when the project has been completed.

(e)

That the researchers report immediately any circumstance that might affect ethical acceptance of the research protocol. NS 5.5.3

(f)

That the researchers report immediately any serious adverse events/effects on participants. NS 5.5.3

2.

Research conducted overseas NS 4.8.1 – 4.8.21 That, if research is conducted in a country other than Australia, all research protocols for that country are followed ethically and with appropriate cultural sensitivity.

3.

Complaints NS 5.6.1 – 5.6.7 Institutions may receive complaints about researchers or the conduct of research, or about the conduct of a Human Research Ethics Committee (HREC) or other review body. Complaints may be made by participants, researchers, staff of institutions, or others. All complaints should be handled promptly and sensitively. Complaints about the ethical conduct of this research should be addressed in writing to the following: Ethics Complaints Officer HREC Southern Cross University PO Box 157 Lismore, NSW, 2480 Email: [email protected] All complaints are investigated fully and according to due process under the National Statement on Ethical Conduct in Human Research and this University. Any complaint you make will be treated in confidence and you will be informed of the outcome. All participants in research conducted by Southern Cross University should be advised of the above procedure and be given a copy of the contact details for the Complaints Officer. They should also be aware of the ethics approval number issued by the Human Research Ethics Committee.

Sue Kelly

Prof Bill Boyd

P a g e | 369

HREC Administration

Chair, HREC

Ph: (02) 6626 9139

Ph: 02 6620 3650

E. [email protected]

E. [email protected]

Appendix 4

Normal P-P Plot

P a g e | 370

P a g e | 371

P a g e | 372

P a g e | 373

P a g e | 374

P a g e | 375

P a g e | 376

Loading...

The influence of organizational learning on performance in Indonesian

Southern Cross University [email protected] Theses 2012 The influence of organizational learning on performance in Indonesian SMEs Ferdinandus Samp...

2MB Sizes 0 Downloads 0 Views

Recommend Documents

Diversity and its Impact on Organizational Performance: The Influence
Diversity and its Impact on Organizational Performance: The Influence of Diversity Constructions on Expectations and Out

The Influence of Organizational Systems on Information Exchange in
explored the organizational systems that influence resident care attendants' (RCAs) access to care information in long-

How does organizational culture influence the performance of luxury
Organizational culture has been growing significantly in importance for the tourism industry over the last few years and

The Influence of Mathematics Ability on Performance in Principles of
Although most accounting educators readily acknowledge that mathematical ability has a .... not be used, but scratch wor

The influence of the transformational leadership in the organizational
Abstract. The aim of this paper is to analyze the influence of transformational leadership on organizational trust. For

Influence of Organizational Climate on Job Satisfaction in Bosnia and
The aim of this paper is to analyze the importance and impact intensity of different dimensions of organizational climat

The effect of performance management on the organizational results
Performance data of the branch, before and after introducing a new performance management system, were collected and the

The Influence of Job Satisfaction and Organizational Commitment on
International Journal of Applied Business and Economic Research. The Influence of ... 1 Assistant Professor, Amity Busin

The Influence of the Organizational Culture in Public Relations
Abstract. Modern society, defined by the large number and complexity of organizational members, could not function witho

Influence of Organizational Culture and Communication on the
culture, communication, and the level of success in the implementation and ... which organizational culture and characte