Determining the Impact of Organizational Learning on Business Sustainable Competitive Advantage - Research Proposal Example

DETERMINING THE IMPACT OF ORGANIZATIONAL LEARNING ON BUSINESS SUSTAINABLE COMPETITIVE ADVANTAGE By Student’s Name Code + Name of Course Institution City/State Professor Date Table of Contents Abstract 3 1.Introduction 4 1.1 Background 4 1.2 History 6 1.3 Aims & Objectives of Research 7 2.0 Literature review 7 3.0 Research Methodology 12 4.0 Possible Conclusions 16 5.0 Action Plan 16 6.0 Reference List 16 Abstract Unstable market conditions resulting from increased diversity and intensity of competition and innovation have led to organizational capabilities instead of served markets becoming one of the major basis upon which organizations establish long-term strategies. Knowledge has becomes one of the most important resources from a strategic point of view and hence essential organizational capability of the organization should be on generating, integrating and institutionalizing knowledge through continuous learning processes. Organizational learning is extensively being regarded as an essential source of competitive advantage in the strategic management perspective. As a result, this study sought to explore the importance of organization learning in enabling organizations to attain sustainable competitive advantage. In particular, it focuses on how organization learning is employed to build up knowledge, capabilities, and resources, which bring about sustainable competitive advantage. First, the introduction provides enough background information on organizational learning and the aims of the study. The literature review describes how organizational learning is related to prior research. The degree to which organizational learning generates sustainable competitive advantage will be determined through a survey of 25 firms with more than 150 employees. A questionnaire testing the different study variables will be the main data collection instrument. In-depth interviews will also be held with top management personnel from different firms. The study results establish whether organizational learning leads to sustainable competitive advantage. 1. Introduction 1.1 Background In the current business environment, organizations are competing in a complex and demanding business context, which is undergoing transformation arising from factors such as globalization and uncertain and frequent changes to the increasing use of information technologies. As a result, attaining a competitive advantage is a key concern of the management of most organizations. The importance of distinctive competences and competitive advantage as determinants of organizational growth and success has increased immensely with time. Porter (1985) noted that the increase in importance of competitive advantage is founded on the belief that sustainable competitive advantage is the essential source of basis of performing well in the long range. According to Coplin (2002), academicians and practitioners have concentrated their research on organizational particular aspects, which are distinctive, add value to the customers, and can be applied in numerous industrial setting. Hence, it is acknowledged that across different sectors, it is recognized that achieving competitive advantage is one of the most testing issues in current business world. This issue has resulted to the development of knowledge-based as well as resource-based premise, which look at the connection between key capabilities and resources, above normal performance and long term competitive advantage. Organizations are considered to have sustainable competitive advantage after they implement a value-creating tactic that is not currently employed by their competitors and one that is not susceptible to duplication (Sanchez & Henne 2010). Hence, competitive advantage usually exists only after endeavors for replicating an advantage have failed. It is for this reasons that most firms are concentrating on strategies and methods, which are not easily replicated. One such strategy is organizational learning through which a firm is able to develop intellectual capital (social capital, human capital and firm capacities which are difficult and rate to copy. According to Dierkes, Antal and Child (2003, p. 491), “Knowledge accumulated through organizational learning is an important source of a firm's sustainable competitive advantage because it is non-tradable and difficult to imitate.” Gor (2003) noted that the pace at which a firm develops into a learning organization might become the only sustainable basis of competitive advantage. Gor further argued that to stay competitive, numerous firms are implementing a continuous learning tactic through encouraging workers to continuously gain innovative skills to be creative and to attempt work methods and new processes to facilitate realization of strategic organizational goals. Whilst numerous studies have emphasized that organization learning is a proficiency that every firm should implement in a competitive and fast-changing environment, most research studies have not evidently connected organization learning with a firm lasting competitive advantage. This is also evident in knowledge-based resources or intellectual capital using the resource-based perspective of an organization. Nonetheless, resource-based theory has greatly emphasized on the connection of capabilities as well as resources to sustainable competitive advantage as well as an organization performance than on the development of these capabilities and resources (Sanchez & Henne 2010). This study sought to integrate intellectual capital theory and organizational learning theory and connect them with sustainable competitive advantage. In order to obtain advantages and survive in the competitive environment, it is fundamental for the firms to invent and incorporate new knowledge that enables them to do things in a different manner. Numerous researchers have noted that organizational learning is a long-term practice and connects it to knowledge acquisition as well as performance improvement. However, there is need to overcome the scarcity of empirical support of theoretical argument by developing the field on solid research on the link between sustainable competitive advantage and organizational learning. As a result, the objective of this research is to analyze and establish the contribution of organizational learning in ensuring realization of sustainable competitive advantage. First, the organization learning concept is clarified further. After a comprehensive literature review on organizational learning, the research developed and validated a measurement scale, which enabled examination and evaluation of dynamics of organizational learning. Finally, an investigation of the link between business performance and organizational learning on a sample of 25 companies with over 150 workers carrying out their activities in the United Kingdom will be undertaken. 1.2 History According to Crossan and Guatto (1996), organizational learning has taken place for more than thirty years and had currently experienced significant growth. Nonetheless, there are diverse perspectives, which have been applied to study the organizational learning subject. Economics usually take learning as a form of vaguely defined and abstract positive upshot or simple quantifiable improvements in activities. The business and management content frequently associates learning with sustainable relative competence whereas innovation content presents it as supporting relative inventive competence. These diverse literatures usually focus on the learning outcomes instead of focusing on what learning actually entails and the way such upshots are realized. Nevertheless, in the business sense, learning encompasses firms and includes processes and outcomes. It is generally used in the context of attempt on the part of the organization to improve innovation, effectiveness and efficient during uncertain market conditions. The greater the need for uncertainty in the market, the greater the need for learning (Dierkes, Antal & Child 2003). This enables a more effective and quicker response to the challenges faced. Organizations that are unable to incorporate learning in their operations suffer from the slow adaptation to meet the changing environmental conditions. 1.3 Aims & Objectives of Research The key study objective is to determine the “impact of organizational learning on sustainable competitive advantage.” The study also seeks to determine the major aspects of organization learning which lead to competitive advantage as well as ultimately an improvement in performance. In addition, the study seeks to establish how organization learning contributes to employees and customer satisfaction and to financial or economic results. To facilitate the exploration of the connection between organization learning and sustainable competition, three research questions will help guide the study. 1. “Does organizational learning contribute to sustainable competitive advantage?” 2. “Does organizational learning affect the financial/economic results in a positive way?” 3. “Does organization learning contributes to employees and customer satisfaction” 2.0 Literature review Organizational learning refers to the dynamic process of creating, acquiring and integrating knowledge intended for expansion of capabilities and resources, which lead to improved organizational performance. It is the sum of collective as well individual learning via work interactions, experimentations’, experience, as well as training programs in an organization. According to Miller (1996), organizational learning is the practice of synchronized systems alteration, with means incorporated for groups and individuals to access use as well as build organization culture, structure, and memory for developing long-term business competence. Organizational learning aims to improve an organization development through new commercial, productive, and technological initiatives. Lopez, Peon and Ordas (2005) defined it as a process of creating, acquiring as well as integrating knowledge in order to develop resources and competence, which lead to superior organizational performance. Cavaleri (2004) argued that this necessitates a shift from only placing additional knowledge in databases to implementing the numerous approaches which information can move into a firm and positive effect the performance of an organization. DeNisi, Hitt, and Jackson (2003) asserted that whereas one case of organizational learning can be quite simple to copy, constant organizational learning usually have collective impacts which are more hard to copy. Organizational learning is associated with both the change in organizational behavior as well as a creation of a knowledge base for support it. It is a process not a routine and allows organizational members to create, acquire, and transfer knowledge. Nonetheless, this is usually limited to the internal capabilities that an organization develops, indentifying skills, and competencies, which are generated in line with the requirements that different environments present (Rojas & del Rio Cortina 2012). Mujtaba, Marschke and Nguyen (2012) claimed that in times of knowledge-based economy and technological changes, forms need to adapt quickly to changes and also come up with means which will assist them to stay ahead on non-traditional and traditional competitors. Organizations that are struggling should endeavor to have a learning organizational culture for creating, acquiring as well as transferring knowledge and changing the behavior of the management to reflect new insights and knowledge (Cavaleri 2004). The significance of individual knowledge or building personal knowledge has its own place in the learning organization concept. Hence, to develop individuals as well as cultivate a learning organizational culture, leaders and managers should facilitate the learning process in their firms. The learning organization process usually results in a culture, which achieves competitive advantage (Sanchez & Heene 2010). It enables organizations to develop and survive competitiveness in the current ever-changing business environment (Sanchez & Heene 2010). The need for organizational learning has been identified as a consequence of the need for organizations to continuously produce innovation in order to maintain a competitive edge. The capability to generate a continuous stream of ideas for improvement as well as implement them is seen as a competitive advantage for firms. Dale (1994) argued that organizational learning is a complex three-stage process, which consists of knowledge attainment, sharing, implementation as well as conversion of the knowledge into the company memory or resources, for instance systems, processes and databases which can be employed in leveraging the company. This means that when a company obtains human capital or knowledge resources at the individual level, through experience or training, selection as well as other learning activities, it has to come up with a way of leveraging the resources to level of the teams and in due course the organization level (DeNisi 2000). If not, the impacts of the knowledge-based resources on a firm competitiveness are restricted. Firms have to expand processes (organization capital), processes, and systems through which persons with important knowledge can pass on the information to other persons that can apply it (Sanchez & Heene, 2010). This means that for a firm to gain from the practice of organizational learning, it has to put some effort on knowledge management. Organizational learning is also an imperative basis of prolonged competitive advantage and hence necessary for success in the current unpredictable business world. It is important at the organizational, team, individual and inter-organizational levels. Researchers have shown that increasing number of firms are recognizing that becoming a learning organization is a means to innovation as well as for profitable ventures (Murray & Donegan 2003; Lopez, Peon & Ordas 2005). The pace at which organizations as well as individuals learn may turn out to be the only source of sustainable competition particularly in knowledge intensive sectors (Dierkes, Antal, & Child 2003). Competitive advantage occurs to organizations, which develop human resource policies, which support continuous learning, participation, flexibility, and teamwork. Ganapathy and Kumar (2000) suggested that organization learning usually occur at three levels: at individual level, at organization level and at organizational level. Learning mostly comprises growth of particular skills at the individual level. At organizational level, employees usually acquire guidance and learning context for potential learning through collective practices. The learning is more formal and leads to maintenance and development of procedures, which enhance learning outcomes at the organizational level. Gratton (2000) asserted that balancing the long-range with the short-range lies at the centre of recognizing that individual and the inspiration and knowledge they provide to organizations are the main basis of creating as well as sustaining a competitive advantage. As a result, significant management activities should concentrate on developing as well as utilizing the organization knowledge resources. Organizational learning is thus a dynamic method of creating, acquiring, as well as integrating knowledge, which is intended for the development of capabilities and resources, which allow a firm to perform better (Lopez, Peon & Ordas 2005). This shows that organizational learning is not only connected to the creation and acquisition of knowledge; however, it is also necessary to integrate it into the activities and routines of the company to develop new capabilities and resources. Organizational learning also necessitates behavioral change (Lopez, Peon & Ordas 2005)- this means that learning usually take place through all the activities that the company performs which means all organization levels are involved. It is a process that focuses on improving performance that will be effective if the process of developing organizational learning interacts synergistically with calculated organization policies, which are directed towards improving performance. Human capital encompasses the intellectual agility, skills and competence of the individual employee; relationship capital that represent every important relationship with suppliers, customers as well as other important stakeholders; organizational capital that includes brands, structure, systems, processes, intellectual property, reputation as well as other intangible that the firm owns however which are not on its balance sheet. DeNisi (2000) noted that intellectual capital reserves are obtained in the course of the organization learning and are very imperative for sustaining competitive advantage in the current competitive environment. In the current knowledge society, learning is an important keystone, which enables the organization to obtain sustainable competitive advantage. An organization strategic values lies in adaptation as well as learning and one way of confronting continuous environment change is via the learning organization. Organizational learning enable a firm to detect dysfunctions’ through studying existing relationships between actions and results, the organization and its environment, or the organization and memory, restructuring mental models and the theory of action and sharing the firm knowledge base. This facilitates new knowledge and abilities development, increasing the organizational ability to perform effective actions as well as improving organizational performance. Such organizational learning should be promoted, creating intelligent organizations or learning organizations that learn in which people continuously expand their ability to create their future (Easterby-Smith, Crossan & Nicolini 2000). 3.0 Research Methodology In order to test the study research questions, the researcher will conduct an empirical study on survey of 25 large UK firms with more than 150 employees as the learning process is usually more structured in large firms. The firms will be purposively sampled from the London Stock Exchange. The target population of the study will comprise of 250 individuals from 25 firms in different sectors. The information will be collected using questionnaires. The questionnaire will contain both open-ended and close-ended questions to determine “the impact of organizational learning on business sustainable competitive advantage.” The questionnaires will be prepared following the theme of the study. The close-ended questions will help to limit the responses when the information required will be more specific and thus need for verifying facts whereas the open-ended questions will enable the respondents’ suggestions, attitudes, and opinions to be drawn out. The questionnaire will have four sections; demographic information section; and three other sections, each testing the “impact of organizational learning on sustainable competitive advantage, financial/economic results and employees and customer satisfaction”. The reliability and validity of the questionnaires will be tested to enable that it will generate valid and reliable results. The questionnaire will be subjected to a pilot test using 10 respondents. Pilot tests help in discovering any misprints and ambiguities in the questions wording and helps to discover superfluous questions (Babbie 2012). The pilot study response will guide the researcher in making appropriate changes to the questionnaire. Various management experts specialized in knowledge management will also be consulted in order to make appropriate changes to the questionnaires. The researcher will also carry out in depth interviews with 20 top management personnel. In-depth interviewing will allow deep exploration of the respondents’ feelings and perspectives on the research topic resulting in rich background information, which will shape further questions relevant to the topic (Leech & Onwuegbuzie 2009). The researcher will develop a list of interview questions in order to keep on track and to avoid redundant departures from the research topics; nonetheless, the researcher might depart from the list when answers from a question lead to another topic, which is important for the study topic. During the data collection process, the researcher will adhere to various ethical principles, which include, free and voluntary participation, informed consent from the respondents and protection of the respondents’ rights and information. The respondents will be guaranteed the right to privacy and thus will be entitled to anonymity, confidentially and protection from research findings misuse. Informed consent will also be obtained from the respondents before commencement of the research project. In order to maintain integrity and to obtain reliable and valid results, the researcher will avoid bias in the analysis and presentation of data. To determine how organization learning contributed to employees and customer satisfaction, a 5-item Likert scale will be prepared to test the respondents’ level of satisfaction with regard to customer reliability, reputation, quality on the product, success in the new products development, innovation, adaptation to the environment and employee satisfaction. To determine its impact on financial performance, the respondents will be asked to grade their satisfaction level with respect to sales/profit margin, profit growth, sales growth, and financial profitability. The effect of organization learning on lasting competitiveness advantage will be determined using a scale that recognize organizational learning multidimensional character and which collected clear information on the different learning dimensions which are theoretically defined: organizational memory, organization-learning acquisition, integration, interpretation, distribution, as well as organizational memory. A 5-point Likert scale (5= completely disagree to 1=completely disagree) will be applied for every statement that correspond to the different elements. The value of every critical dimension for organization learning will be computed as an arithmetic mean of every item linked to each of them. Similarly, an arithmetic mean of the items associated with financial performance and customer and employee performance will be calculated. During the in-depth interviews with the respondents, a tape recorder will be used to capture information, which will later be transcribed during the analysis stage. The researcher will also take some brief notes during the interview. According to Patton (2002), qualitative interviews usually entail the use of various approaches such as using information from a questionnaire and from a conversation or another standardized format, which would provide responses for key questions. The data obtained from the questionnaires will be complimented by the information obtained from the in-depth interviews. The in-depth interviews will play an important role in eliciting information with the objective of obtaining a holistic comprehension of the interviewees’ perspective or situation regarding organizational learning. The interviewees will be asked open-ended questions and the researcher will probe for further details whenever necessary in order to acquire information that seem important. The researcher and the research assistants will have a basic checklist, which will ensure that all the important topics are covered. According to Ruane (2004), open-ended questions are questions for which the respondents or interviewees are asked to provide their own answers. All the interview questions will be crafted to encourage spontaneous and unstructured responses; this will be useful in drawing out the opinions, attitude, and suggestions on organizational learning. The integration of both quantitative and qualitative data will take place during the data collection, data analysis, as well as the interpretation stage. The researcher will mix the data during the data collection process, both open-ended and close-ended questions will be used in the questionnaires. At the analysis stage, data integration will entail transforming qualitative codes or themes into quantitative numbers as well as evaluating the information with quantitative information during the construal stage. After purposively sampling the 25 firms in the different sectors, the researcher will visit the firms and seek permission from the management to conduct the study in the company. The researcher will obtain an introductory letter from the University to help convince the management that the study is for academic purposes. After approval, the research will purposively sample the respondents in the different firms and establish rapport with them. 4.0 Possible Conclusions The study results might show that organizational learning contributes to sustainable competitive advantage; it affects the financial/economic results in a positive way and contributes to employees and customer satisfaction. 5.0 Action Plan Project Activities August September October Research proposal approval Firms and research participants selection Collection of Data Analysis of Data Report writing, presentation and submission of report 6.0 Reference List Barbie, E 2012, The Practice of Social Research, 13ed, Wadsworth Publishing, Belmont, CA. 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Easterby-Smith, M, Crossan, M & Nicolini, D 2000, ‘Organizational Learning: debates, past, present and future’, Journal of Management Studies, vol. 37, pp. 783-796 Ganapathy, S & Kumar, V2000, A flexible learning approach towards enduring organizational competence, in Sushil, M.K. and Sharma, O. (Eds), New Business Paradigm: Global, Vertial and Flexible, Thomson Press, Singapore Gratton, L2000, Living strategy: Putting people at the heart of corporate purpose, Prentice Hall, New York Goh, S 2003, ‘Improving Organizational Learning Capability: Lessons Form Two Case Studies’, The learning Organization, vol. 10, no. 4, pp. 216-227. Leech, N & Onwuegbuzie, A 2009, ‘A typology of mixed methods research designs’, Qual Quant, vol. 43, pp. 265-275 Lopez, S, Peon, J & Ordas, J 2005, ‘Organizational Learning as a Determining Factor in Business Performance’, The Learning Organization, vol. 12, no. 3, pp. 227-245. Miller, D 1996, A preliminary typology of Organizational learning: Synthesizing the Literature, Strategic Management Journal, vol. 22, pp. 484-505. Mujtaba, B, Marschke, E & Nguyen, L 2012, ‘Leadership Orientation and Stress Perceptions of American Business Students’, International Business and Management, vol. 4, no. 2, pp.7-15. Murray, P & Donegan, K 2003, ‘Empirical linkages between firm competencies and organizational Learning’, The Learning Organization, vol. 10, no. 3, pp. 51-62. Patton, M 2002, Qualitative research and evaluation methods, 3ed, Sage, London. Porter, M 1985, Competitive Advantage; Creating and Sustaining Superior Performance, The Free Press, New York Rojas, D & del Rio Cortina, J 2012, ‘Organizational Learning as Competitive Advantage’, Global Conference on Business & Finance Proceedings, vol. 7, no. 1, pp.135 Sanchez, R & Heene, A 2010, Enhancing Competences for Competitive Advantage, Emerald Group Publishing Limited, United Kingdom. Read More