Organizational learning is increasingly being mentioned in the literature as a mechanism for assisting small firm survival. There exists, however, limited empirical evidence to validate the benefits claimed for the concept. A survey of small U.K. manufacturing firms was undertaken to ascertain whether entrepreneurial firms use higher-order (or double-loop) learning. Additional research aims included assessing whether organizational learning confers information management advantages and contributes to the upgrading of managerial competencies. The results suggest entrepreneurial firms do utilize higher-order learning and are able to manage information more effectively than non-entrepreneurial firms. Sonic evidence was found to support the view that higher-order learning influences certain managerial competencies. The implications of these findings are discussed and proposals presented on the needs for further research.
The U.K. Government has adopted the philosophy of organizational learning to persuade small firms that they should increase their commitment to employee and organizational development (Fryer 1997). The apparent justification for this policy is that organizational learning is the most effective and practical way through which to increase Small and Medium-Size Enterprise (SME) sector survival rates during the early years of the new millennium.
The U.K. Government has selected the concept of "Lifelong Learning" as the promotional platform through which to communicate the need for both individuals and firms to continuously acquire and apply new knowledge. Four new policy initiatives which have been implemented to specifically support the Lifelong Learning message are New Deal, the University for Industry, Individual Learning Accounts, and the National Grid for Learning. These schemes do appear intuitively to offer benefits. Nevertheless it seems advisable to add the caution that to-date, there is very limited empirical data in the academic literature to substantiate any claims about how and why organizational learning actually contributes towards enhancing organizational performance.
Organizational Learning: Origins of Theory
Learning how to build stronger relationships with customers is often recommended as a way of ensuring the survival of firms in the face of turbulent and/or highly competitive market conditions (Webster 1992). In commenting upon this scenario, de Gues (1988) has suggested that in situations where products and processes can be rapidly copied, the only real source of competitive advantage is to stimulate learning by employees. This may assist these individuals to identify new ways of working more closely with customers, which in turn permits the organization to differentiate itself from competition.
Similar views have been expressed by Slater and Narver (1995), who define competitive advantage in terms of the skills learned by employees which are difficult to imitate and thereby permit the organization to offer superior value by building closer relationships with customers. Woodruff (1977) has presented the concept of learning about the marketplace as an activity central to offering greater customer value. Earlier, Bell (1973) had proposed that the information and knowledge acquired by employees is now more important than the more traditional assumption that the technology contained within the firm's capital assets can provide the basis for delivering product superiority over competition.
In proposing employee-initiated strategic responses to changing market conditions, most authors have justified their opinions by drawing upon the organizational learning literature. The origins and theoretical foundations of organizational learning can be traced back to the work of Cyert and March (1963), Bateson (1972), March and Olsen (1976) and Argyris and Schon (1978). Over the last few years the literature on this topic has grown very rapidly, attracting interest from a diverse variety of academic perspectives. …