Procedia – Social and Behavioral Sciences 130 ( 2014 ) 299 – 304
Available online at www.sciencedirect.com
1877-0428 © 2014 The Authors. Published by Elsevier Ltd.
Selection and peer-review under responsibility of the Organizing Committee of INCOMaR 2013.
Learning Organization and its Effect on Organizational Performance
and Organizational Innovativeness: A Proposed Framework for
Malaysian Public Institutions of Higher Education
Amnah Mohamadb, Fauziah Noordina, Noormala Amir Ishakb
aFaculty of Business Management, Universiti Teknologi MARA, 40450 Shah Alam, Malaysia
bArshad Ayub Graduate Business School, Universiti Teknologi MARA, 40450 Shah Alam, Malaysia
The survival of today’s public institutions of higher education (PIHE) depends on how these institutions accept changes, improve
practices and competitiveness. Defined as an organization that facilitates learning of all its members, learning organization
possesses certain characteristics to meet the ever-changing needs of the environment. With Malaysian PIHEs being major
contributors in providing educational opportunities for students in the country, it is equally vital for PIHEs to adapt the learning
orientation. Accordingly, this paper proposes that learning organization culture have direct effects on organizational performance
and organizational innovativeness, potentially leading to long-term organizational success.
Keywords: learning organization; organizational performance; organizational effectiveness; public institutions of higher education (PIHE)
Learning organization is defined as organization where people continually develop their capacity to achieve
results they desire, whereby new patterns of thinking are nurtured, collective aspirations are freed and people learn
to learn together (Senge, 1990). A more recent definition highlighted organizational learning, which is related to
learning organization (Robelo & Gomes, 2011) as a process or capacity within organization which enables it to
acquire, access and revise organizational memory thus providing directions for organizational action (Lin, 2008). In
* Norashikin Hussein. Tel.: +603-3258-5031
E-mail address: [email protected]
Open access under CC BY-NC-ND license.
300 Norashikin Hussein et al. / Procedia – Social and Behavioral Sciences 130 ( 2014 ) 299 – 304
the Malaysian context, there are various perspectives as to what learning organizations truly are. While a study
noted that learning organization always seek ways to capture learned concepts to function continuously (Alipour,
Khairuddin, & Karimi, 2011), another suggested that a vital component of building a learning organization is team
learning (Norliya & Azizah, 2007). Additionally, Norashikin and Noormala (2006) also suggested that
organizational learning helps to improve organization’s competitive advantage and responsiveness to change,
subsequently sparking interest to develop organizations that promote and foster learning.
The concept of learning organization has been linked to innovation and performance in organizations (Power &
Waddell, 2004; Watkins & Marsick, 1993; 1999). The capacity for change and continuous improvement to meet the
challenges in the environment in which organizations operate has been associated with the capability of these
organizations to learn (Armstrong & Foley, 2003; Senge, 1990). Thus, organizations that learn will be able to keep
abreast with developments and improvements in the business environment to operate successfully. Accordingly,
Kalsom and Ching (2011) highlighted that for public institutions of higher education (PIHEs) to strive for academic
excellence, it is vital for the institutions to become learning organizations. As one of the main purposes of PIHEs is
to achieve academic excellence among its students, it appears that PIHEs may need to transform into learning
organizations (used interchangeably with organizational learning in this study) and subsequently improve overall
organizational performance and innovativeness. The need for PIHEs to become learning organizations is
substantiated because learning creates opportunities for educators to access the right knowledge at the right time and
in the right location to stay competitive (Kumar, 2005). However, it should be highlighted that a review of literature
discovered lack of studies on PIHE in the Malaysian context as well as lack of measurement for PIHE organizational
performance. The Ministry of Higher Education (MOHE) (2013) merely stated that “… PIHE’s ability to carry out
their functions and responsibilities in a more transparent and effective manner will be conducted in order to create
an excellent higher education system” with no specific mentions of how the performance of PIHEs are measured.
In an attempt to further understand the subject matter, the three concepts, which are learning organization,
organizational performance and organizational innovativeness will be defined in general organizational terms.
Watkins and Marsick (1996) noted that learning organizations are where learning and work are integrated in an
ongoing, systematic manner in order to support continuous individual, group and organizational improvements. A
more recent definition noted that learning organizations are organizations looking for transformation and excellence
through interrupted and continuous organizational renewal and gradually mastering the subject matter (Griego,
Geroy, & Wright, 2000).
Organizational performance, meanwhile, has not been frequently defined and has been used differently
according to the context, as well as being difficult to define and measure (Erbisch, 2004; Stainer, 1999). A general
definition of organizational performance by Stankard (2002) noted that it is the product of interactions of different
parts or units in the organization. In the context of this study, organizational performance refers to the outcomes of
various organizational processes which occur in the course of its daily operations. For PIHE, it is proposed that
organizational performance is represented by various dimensions such as school reputation, quality of students,
research results and social responsibility (Chen, Wang, & Yang, 2009).
Organizational innovativeness is defined as organization’s capability to embrace an organization-wide
atmosphere that is willing to accept diverse ideas and is open to newness, and that encourages its individual
members to think in novel ways (Lin, 2006). The context in which organizational innovativeness is used in this
study is defined as organization’s willingness to encourage and support employees’ innovation whereby the
development of new knowledge and insights are promoted (Hult, Hurley, & Knight, 2004; Hurley & Hult, 1998;
Liu, Luo, & Shi, 2002). In a study of innovation management, M Nordin, Fauziah, Rohana and Norlina (2013)
identified that besides research agencies, PIHEs are also responsible in “manufacturing” innovations. Although the
study identified that innovations can be categorized into technology, product and service as per suggested by
Burgelman, Christensen and Wheelwright (2009), it seems to be lacking the definition of innovativeness in PIHEs.
Looking at PIHEs as entrepreneurs who promote economic development (Li-Hua, Wilson, Aouad, & Xiang,
2011), Etzkowitz and Zhou (2007) identified three characteristics of entrepreneurial universities: a) entrepreneurial
activities are accepted and systematically supported; b) interface mechanisms exist, for example a technology
transfer office and corresponding achievements; and c) significant numbers of staff members who can generate
income to support university research and other activities. Additionally, a study emphasizing on PIHE in Libya by
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Mohammed and Bardai (2012) adopted a definition of innovation by Singh (2011) whereby it is noted as use of new
technical and administrative knowledge to offer a new product or service to customers. Considering the importance
of PIHEs as the avenue to continuously provide dynamic and competitive academic services to the Malaysian
public, this study is imperative with the aim to identify the relationship between PIHEs as learning organizations and
its impact on organizational performance and organizational innovativeness. The ability as well as the need for
PIHEs to become learning organizations is relatively dependent on whether it has the ability to enhance both
organizational performance and innovativeness.
Review of existing literature indicates that there exist several emphases on certain area of studies. Firstly, most
studies in the area of learning organization, organizational performance and organizational innovativeness focuses
on private organizations other than emphasizing on various types of organizations such as manufacturing, service
and SMEs (Tohidi, Seyedaliakbar, & Mandegari, 2012; Mohanty & Kar, 2012; Nzuve & Omolo, 2012; Ramírez,
Morales, & Rojas, 2011, Wanto & Suryasaputra, 2012). Thus, there is a fairly significant absence of studies on
public organizations, specifically PIHEs. As public organizations have significantly different operational condition
that private ones, the outcome of this study will help determine as to whether it is equally vital that PIHEs focus its
resources to transform into learning organizations. Besides that, there is also lack of literature on the effect of
learning organization on both organizational performance and organizational innovativeness specifically focusing on
Malaysian PIHEs. Therefore, this paper proposes potential links between learning organization, organizational
performance and organizational innovativeness in the context of PIHEs.
2. Literature Review
2.1. The Relationship between Learning Organization and Organizational Performance.
Various studies indicated that learning organization have strong relationship with organizational performance
(Dunphy & Griffths, 1998; Khandekar & Sharma, 2006; Robinson, Clemson, & Keating, 1997; Ho, 2011; Akhtar et
al., 2012) whereby learning organization is represented by seven dimensions developed by Watkins and Marsick
(1993). The dimensions are continuous learning, dialogue and inquiry, team learning, embedded system, system
connections, empowerment and leadership. This was attributed to the parallel improvement of performance of
organization and change, subsequently leading to improved organizational performance. Furthermore, organizations
that learn also experience improvement in performance because the trade of helpful knowledge occurs. This is
because in a learning organization, there is a continuous and harmonious learning environment (Akhtar, Arif, Rubi,
& Naveed, 2012). However, the same study noted that there was mixed results among the seven dimensions of
organizational learning. Specifically, a study by Akhtar et al. (2012) noted that only two dimensions of
organizational learning had positive impact on organizational performance, namely inquiry and dialogue and
systems connection. Supported by Jyothibabu, Farooq and Pradhan (2010), inquiry and dialogue promotes thinking
collectively and communication which contributes positively to organizational performance. Additionally, systems
connection had a similar impact on organizational performance as employees were found to be well-versed
internally and externally with their surrounding environments and were able to establish link between the two
(Akhtar et al., 2012). Accordingly, the remaining dimensions of organizational learning do not have positive effect
on organizational performance. Continuous learning has greater impact on individual, rather than organizational
performance. While team learning mediates organizational performance, it does not directly influence it.
Furthermore, Akhtar et al. (2012) also elaborated that the employees in studied PIHEs rely on leadership to execute
decisions as opposed to being empowered to make their own decisions, potentially due to the lack of experience and
knowledge to do so.
Proposition 1: The culture of learning organization will positively influence organizational performance among
2.2 The Relationship Between Learning Organization and Organizational Innovativeness
Notably, there is a substantial lack in the existing literature in relation to the impact of learning organization on
organizational innovativeness in the context of Malaysian PIHEs. However, in general the culture of learning
302 Norashikin Hussein et al. / Procedia – Social and Behavioral Sciences 130 ( 2014 ) 299 – 304
organization has been found to have positive impact on organizational innovation (Tohidi et al., 2012; Liao,
2006; Calantone, Cavusgil, & Zhao, 2002; Ussahawanitchakit, 2008. In reference to context other than PIHEs,
one study which highlighted the conceptual framework developed by Akhtar et al. (2012) noted that innovation
forms part of the dimension of organizational performance. Tohidi et al. (2012) conducted a study on the Iranian
ceramic tile industry emphasizing on organizational learning capability and found that it does in fact impact firm
innovation. Similarly, a Fortune 500 multinational corporation based in Bangalore was also found to have a high
mean score for the Potential for Organizational Learning Index (POLI), implying that the organization is committed
to its innovation, implementation and stabilization (Mohanty & Kar, 2012). The results of these studies are further
supported in a study by Islam and Mohamed (2011) whereby organizational learning was found to be critical for
innovation in small and medium enterprises (SMEs) operating in the Malaysian ICT industry. Similarly,
organizational learning was also found to be significantly correlated with innovation for SMEs in Uganda (Stella,
2012), somewhat indicating that geographic location may not have influenced the relationship between the two
Proposition 2: The culture of learning organization will positively influence organizational innovativeness among
Based on the literatures reviewed the theoretical framework shown in Figure 1 is proposed.
Fig. 1: Proposed conceptual framework for predicting relationship between learning organization and organizational performance and
It is becoming increasingly important for organizations to adopt the learning orientation as it could help contribute
to organizational success. However, as the capability to learn does not naturally and readily occur within
organizations, it is imperative that organizations ensure that resources allocated and efforts made to instill learning
within organizations. Accordingly, it is vital that public institutions of higher education (PIHEs), parallel to other
organizations, become learning organizations to ensure that organizational objectives are attained. As discussed
above, although numerous studies have shown that learning organizations have significant impact on organizational
performance and organizational innovativeness, there have yet been studies which emphasize the effects of learning
organizations on organizational performance and organizational innovativeness in PIHEs. Thus, PIHEs shall be the
focus on this study, other than looking at it from the perspective of Malaysian PIHEs.
Independent Variable Dependent Variables
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