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Measuring organizational wisdom applying an innovative model of analysis

Paulo Pinheiro (Management and Economics Department, Beira Interior University, Covilhã, Portugal & Research Unit in Business Sciences (NECE), Covilhã, Portugal)
Mário Raposo (Management and Economics Department, Beira Interior University, Covilhã, Portugal & Research Unit in Business Sciences (NECE), Covilhã, Portugal)
Ricardo Hernández (University of Extremadura, Cáceres, Spain)

Management Decision

ISSN: 0025-1747

Article publication date: 31 August 2012

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Abstract

Purpose

The objective of this paper is to measure the level of organizational wisdom of firms and verify its influence on the value they produce.

Design/methodology/approach

This study seeks to establish linkage between organizational wisdom and value creation with the development of a new model based on the contributions of North's wisdom matrix and the Jordan and Jones model. The proposed model, using primary data from the Portuguese textile sector, is tested through recourse to a structural equation model.

Findings

The results point to the conclusion that companies with high organizational wisdom do manage to improve their efficiency and effectiveness but this proves insufficient for actually increasing the level of value created when taking into account the industry's prevailing environment.

Practical implications

Firms may apply this model to ascertain their level of organizational wisdom. This model may also be deployed to determine this organizational wisdom level for a set of companies (a company cluster) or even a sector.

Originality/value

The main contribution of this paper stems from the explanatory value of the proposed model as it enables the measurement of a firm's organizational wisdom and its influence on the final value produced.

Keywords

Citation

Pinheiro, P., Raposo, M. and Hernández, R. (2012), "Measuring organizational wisdom applying an innovative model of analysis", Management Decision, Vol. 50 No. 8, pp. 1465-1487. https://doi.org/10.1108/00251741211262033

Publisher

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Emerald Group Publishing Limited

Copyright © 2012, Emerald Group Publishing Limited

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