Guest editorial

Citation

Rupčić, N. (2020), "Guest editorial", The Learning Organization, Vol. 27 No. 4, pp. 277-289. https://doi.org/10.1108/TLO-05-2020-254

Learning organizations and the value creation process: have we answered all the questions?

The idea of learning organizations in the mainstream literature started when Peter Senge published his book The Fifth Discipline: The Art and Practice of the Learning Organization in 1990, followed by The Fifth Discipline Fieldbook in 1994. The idea of learning organizations was welcomed as a new and appealing solution to problems of organizational sustainability, legitimacy and viability. However, to be accepted as a management concept, its benefits had to be proven with regard to various performance indicators. In other words, the final test of value of the learning organization philosophy in the business literature is derived from research providing evidence of its positive contribution to organizational performance. That is why, to maintain research and practical interest, the idea of learning organizations should be evaluated through the prism of the value creation process in both profit and nonprofit sectors. In general, value creation, though of central focus in management literature, is still “not well understood” (Lepak et al., 2007, p. 180). This special issue therefore represents a contribution in this regard.

Evaluation of value of the learning organization philosophy in the organizational value creation process requires evidence regarding many value creation constituents. First of all, the concept and its implementation should be measured empirically (Grieves, 2000; Lennon and Wollin, 2001; Phillips, 2003; Moilanen, 2005). For that process to be effective, it should be determined “who,” “what,” “how” and “why” learns (Santa, 2015), especially in conditions of risk, uncertainty, ambiguity and information asymmetry. Then the desired outcome should be defined. It was found that learning organizations could be a source of sustainable competitive advantages (Hatch and Dyer, 2004; Moingeon and Edmonson, 1996). Competitive advantage refers to the level of organizational effectiveness, which is the degree of market valorization of the organizational value-added. Kay (1995, p. 19) defined value added as “the difference between the (comprehensively accounted) value of a firm’s output and the (comprehensively accounted) cost of the firm’s inputs.” That is why it was expected that the value of the learning organization idea would be first tested along with the market orientation. However, when determining the usefulness of the learning organization philosophy in the value creation process, other concepts should be introduced as well. One of them is learning orientation as a business orientation, along with other business orientations that different streams of literature have suggested so far such as strategic, entrepreneurial, innovation, employee, competitor, customer and cost orientation. It was found that market and learning orientations have a synergistic effect on organizational performance, followed by the conclusion that higher order learning may be the key for creating corporate sustainable competitive advantage (Baker and Sinkula, 1999). In addition, upon closer inspection, it can be concluded that all previously identified business orientations share a common trait – they rely on the process of learning (Rupčić, 2016).

The relationship between learning and performance has generally been found to be positive (Zhao et al., 2011). That is why organizations are continuously looking for ways to increase their learning capacity. In this regard, Kim et al. (2017) found that an organization developed as a learning organization positively affects its knowledge performance, which in turn positively affects financial performance. Studies were also conducted in nonprofit sector. In this regard, Bhaskar and Mishra (2017) found that organizations in the Indian public sector that scored higher on the seven dimensions of The Dimensions of a Learning Organization Questionnaire had better knowledge performance and financial performance.

In highly volatile markets, effectiveness should be continuously maintained and improved, which could be accomplished through innovation of organizational value-added and by changing and improving organizational constituents such as culture, structure, leadership, information systems, processes, policies, standard operation procedures and rules which determine the nature of organizational routines. Even though the learning organization philosophy, as a framework that suggests how these organizational constituents should be developed, is a welcome contributor to organizational viability, it is necessary to identify the process which enables change and organizational development. Logically, that process should be based on the process of learning and established within the learning organization framework. That process is organizational learning as “the process of improving actions through better knowledge and understanding” (Fiol and Lyles, 1985, p. 803). Flores et al. (2012, p. 641) identified organizational learning as key to “an organization’s capability for continuous change and renewal”.

Organizational learning can best be institutionalized by implementing single-, double- and triple-loop organizational learning. The concept of single- and double-loop organizational learning was proposed by Argyris and Schön (1978, 1996). The essence of single-loop learning is error correction based on the closed feedback system. When discrepancies between the result and the planned outcome are identified, corrective actions are taken by considering previously tested routines from the organizational repository. Adaptive or single-loop organizational learning results in incremental change and serves as a stabilizing mechanism sustaining current structures. On the other hand, transformation can be achieved by using double-loop form of learning or challenging the appropriateness of current value creation system and mental models underlying the existing processes, structures and behaviors, leading to their redefinition according to the learning organization postulates. In triple-loop organizational learning, participants reconsider the values of the societal tradition system in which their actions are taking place (Foldy and Creed, 1999, p. 208), resulting in the redesign of mission and corresponding fundamentals of effectiveness. In that way, organizational learning is a key for sustainable and effective organizational value creation process, as it promotes changes in organizational behavior on the premises of the learning organization philosophy.

The question remains how the value of organizational learning could be estimated. The suggested route so far has been regarding its impact on the organizational value creation process or its constituents and on the measures of organizational performance, which has been more prevalent in the existing literature. In this vain, the study by Pérez López et al. (2005) provided support for the idea that organizational learning positively affects innovation and competitiveness expressed in financial results. Jiménez-Jiménez and Sanz-Valle (2011) also found that organizational learning positively affects innovation, leading to increased business performance. Organizational learning was also found to play a significant role in determining the outcomes of information technology (IT); in that, it mediates the effects of IT competency on firm performance (Tippins and Sohi, 2003).

It is especially challenging to determine the value of organizational learning in modern complex ecosystems which connect various stakeholders into a value creation network. Ecosystems have become service- and knowledge-based networks of co-creating value that has social, subjective, intangible and complex features. That is why, in essence, ecosystems are platforms that operate on continuous and open knowledge and competency exchange (Letaifa, 2014), which leads to the emergent value co-creation instead of more linear processes of value development. Supply chains could be regarded as relationship- and partnership-based value co-creating networks (Hoyt and Huq, 2000; Lusch et al., 2010; Kothandaraman and Wilson, 2001). In this regard, ecosystem supply chain inter-organizational relations serve as great mechanisms for learning, knowledge exchange and hence organizational learning and development. Li et al. (2012) found that collaborative relationships between supply chain partners facilitate knowledge sharing about products and markets and hence contribute to a faster response to changing customer requirements.

The value of organizational learning in supply chains regarding customer satisfaction and financial performance has been identified by Yu et al. (2013). This finding was explained by the fact that cooperative relationships with supply chain members facilitate knowledge sharing and hence organizational learning, leading to better organizational adjustments relative to the competitive environment and improved financial performance. Organizational learning, when performed within supply chains, could improve knowledge sharing and innovation (Mason and Leek, 2008). Hence, the process of sharing knowledge, information and resources in supply chains can be referred to as “collaborative learning” performed in a cooperative learning environment (Morrison and Mezentseff, 1997).

It is especially important to view learning ecosystems by using the service-dominant logic because its many aspects of value are co-created or, in other words, co-designed and co-produced, through information and knowledge exchange interactions. In its essence, service-dominant view is relational in nature and points to resource integration. In that way, learning ecosystems become self-adjusting and “spontaneously sensing and responding networks” (Vargo and Lusch, 2011, p. 176). Learning ecosystems thrive on co-dependent co-evolution with elements of both cooperation and competition (Kelly, 2016). The dominant feature of global economy today is coopetition or simultaneous competition and cooperation among global competitors (Walley, 2007; Luo, 2007). It means than competition and cooperation exist at the same time among partners that are competing in one area or areas of business and cooperating in the other or others. Collaboration enables partners to expand their infrastructure, share resources and risk, which can help achieve a wider array of goals. Cooperation and partnerships are important for sharing knowledge and best practice. Collaborations can therefore be credited as a great source of learning opportunities. A survey conducted in three European countries revealed that cooperative behavior positively affects organizational performance (Fink and Kessler, 2010).

While learning organization and organizational learning are considered from the collective perspective, the individual dimension is equally important for the value creation process. Kululanga et al. (2001, p. 23) called the process of double-loop organizational learning “forced organizational learning,” as it occurs through managerial intervention. However, a learning organization should be the result of a democratization process promoting dialogue by empowered individuals looking for integrative solutions that would benefit not only the individuals but also the system as a whole. As suggested by Watkins and Marsick (1998, p. 118), “learning organizations are characterized by total employee involvement in a process of collaboratively conducted, collectively accountable change directed toward shared values or principles.” For members of the learning adaptive system to maintain an effective relationship through the synergy of action, a shared vision is necessary, as suggested by Senge (1990), based on the ability of organizational members to identify organizational and inter-organizational relations and develop a joint picture of the desired reality. The importance of common purpose in supply chains has been identified by Peters et al. (2010). Members of a learning system should also actively and periodically, individually and collectively engage in mental model reassessments. Mental models act as perceptual filters which enable sense-making of new information. However, mental models could become outdated or flawed and “bias out” some information that do not fit within existing frameworks. Considering the complexity of interrelations, members of organizational and inter-organizational teams shift their thinking from the singularity of perspective to the plurality of perspectives in which the transformative perspective regarding the totality of the system could emerge. In this regard, it is especially suggested that organizational learning is performed in systems that support values of professionalism, integrity and teamwork (Cooper and Ellram, 1993).

Individual and organizational behavior is strongly affected by different contingency factors. Additional research regarding the effects of learning organization philosophy and the organizational learning on the value creation process should therefore be considered with regard to various context-related contingencies. It has been suggested that multiple models of the learning organization should be developed that are context-adapted (Örtenblad, 2015). For example, Somerville and McConnell‐Imbriotis (2004) have examined the learning organization concept in a resource-squeezed service organization. Parnaby and Towill (2012) have analyzed how the learning organization concept can contribute to improvements in core business processes, whereas Griggs and Hyland (2003) have questioned learning organizations from the aspect of strategic downsizing.

The context of scope of activities and organizational size also deserve special attention. So far, the concept of learning organizations along with organizational learning (Armstrong and Foley, 2003) has been examined in large and small enterprises (Wyer et al., 2000; Lee et al., 2000; Birdthistle and Fleming, 2005), in local governance (Sharma, 2005), nonprofit organizations such as charities (Bennett, 1998) and academic organizations and schools (Retna and Pak Tee, 2006). The learning organization concept has also been examined in various cultural contexts (Nyhan et al., 2004; Awasthy and Gupta, 2012; Retna and Jones, 2013). Special emphasis has been given to supporting aspects such as the learning climate (Lowe and Skitmore, 2007), human resource development (Raidén and Dainty, 2006) and leadership (Delić et al., 2017). López et al. (2004) found that a collaborative culture helps adjust organizational procedures resulting in an increase in performance when mediated by organizational learning. Implementing an effective co-learning culture throughout the supply network has been identified as challenging by Tennant and Fernie (2013), as they found the dominance of values such as self-interest, opportunism, conflict and blame in construction supply chains.

The purpose of this themed issue was therefore to increase the awareness about the importance of learning organizations and organizational learning by answering the following question: How does the learning organization concept and its constituents relate to elements of the value creation process from the systems perspective? The papers in this special issue provide some answers.

Even though organizational learning could be viewed as a key process in the organizational value creation ensuring organizational development and viability, learning organization should first be considered as its context. That is why this special issue commences with the paper titled “The learning organization as a context for value co-creation” in which Mastio et al. (2020) identify learning organizations as complex social constructs which can thrive in their ecosystem-wide opportunity identification, learning, value co-creation and final market realization or commercialization. Mastio et al. (2020) suggest that value co-creation within the learning organization context is a synergistic result of endeavors on three levels: individual (micro-level), team/collective (meso-level) and organizational (macro-level). However, the ecosystem perspective points to the importance of various value co-creation practices in terms of opportunity identification followed by co-design and co-creation of value among various stakeholders based on collaborative learning and evolvement. In that way, relational capital becomes key resource of eco-system value co-creation based on the combination of trust and commitment to both the purpose and further development of relational capital. Hence, the value co-creation process is achieved by continuously discovering new dimensions of meaning and purpose through the web of inter-personal collaborative practices.

The concept of a learning organization co-creating value in its ecosystem is further elaborated by examining data from a case study of an innovative Australian manufacturer of “green” ventilation products for the building industry referred to as GreenCo. Mastio et al. (2020) found that the key capability enabling innovation at GreenCo is its social capital developed as the interplay among its relevant stakeholders – employees, customers, suppliers and even competitors. In that process, common vision of producing sustainable and environmentally friendly value permeates the ecosystem resulting not only in superior performance indicators but also in the alignment of personal and organizational purpose. This fact strongly contributes to further strengthening of organizational values and relational capital reflected in the domination of the exploratory-oriented approach to value co-creation.

Knowledge, especially knowledge on the individual level, has been identified as a key factor in the value creation process (Felin and Hesterly, 2007). In addition, knowledge and learning can be identified as factors of direct influence on the value creation process, adding value to other resources through the process of transformation of inputs into outputs. In addition, special knowledge and skills affect the supply side of the value creation process, contributing to the creation of monopolistic conditions and hence profitability in terms of rents or profits above the economic costs. For that reason, in this special issue, Kiisk and Rungi (2020) attempted to identify which knowledge generation strategy is most beneficial for companies. They conducted a longitudinal analysis of the European ICT companies contrasting internal knowledge creation, in the form of patent accumulation and research and development, with external learning through merger-and-acquisition (M&A) activities, to uncover the best approach for performance maximization. Surprisingly, their results suggest that the two knowledge generation strategies are not complementary and even cannibalize each other, while demonstrating only marginal impact on organizational performance. However, it was found that patent accumulation improves learning achieved through M&A activities while also acting as protection against corporate takeover. At the same time, it was found that internal knowledge generation strategy has a negative impact on financial performance. These findings imply that companies should be very careful in choosing their knowledge generation strategies.

Value creation is also of importance in nonprofit organizations such as local government units, which are under strong influence of the New Public Management (NPM) paradigm. According to the postulates of this paradigm, the goals of local governance refer to increases in performance, especially productivity and efficiency, leading to sustained legitimacy. The idea is to make public organizations market driven with a strong customer/client focus, which could lead to service improvements. To achieve that goal, value creation should be considered from the multiple-perspective approach by including various stakeholders in the process of knowledge generation regarding various policy issues. Broader civic engagement is possible by implementing crowdsourcing platforms. In that way, in this special issue, Lenart-Gansiniec and Sułkowski (2020) examined value creation in local governance by focusing on organizational learning and the role of crowdsourcing. They attempted to answer the question how crowdsourcing affects the relationships between organizational learning and value creation. To test the hypothesis, they examined 205 local governance units in Poland. The results showed that organizational learning is related to crowdsourcing. However, it was found that organizational learning is not related to the value creation in local governance. In addition, it was found that crowdsourcing does not have a mediating role when explaining the relationship between organizational learning and value creation. In that way, this is the first study to address the role of crowdsourcing in the relation between organizational learning and value creation in local governance.

Next, Srirama et al. (2020) focused on the interplay between learning culture and social capital. They start from the paper by Chamorro-Premuzic and Bersin (2018) who identify learning culture as the important driver of organizational performance. Grossman (2015) found that only 10% of organizations manage to develop a learning culture, whereas only 20% of employees show effective learning behaviors at work. Organizational culture is very much related to organizational social capital which could be defined as “the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit” (Nahapiet and Ghoshal, 1998, p. 243). Networking and socialization in learning organizations are very important for sharing knowledge, especially its tacit component, further stimulating learning and innovations in the value creation process. By adopting the dimensions of social capital by Nahapiet and Ghoshal (1998) and conducting the survey-based research, Srirama et al. (2020) determined that aspects of the social capital such as shared vision and shared narratives in the cognitive dimension; trust and identification in the relational dimension; and mutual confiding in the structural dimension indeed have a positive effect on aspects of the learning culture. In that way, it is suggested that building a strong social capital leads to increased individual learning. It should be noted, though, that the results pertain to a single service company and hence do not allow generalization.

The importance of social capital has been examined further in the paper by Sumanarathna et al. (2020). They examined the value creation process in project-based firms through the development of social capital and organizational learning (both exploratory and exploitative). The relationship between social capital and exploratory and exploitative learning has been addressed previously. However, the authors have presented a conceptual model, in which they have suggested collaborative environment as a mediator between these constructs. For that reason, in this paper, the importance of collaborative environment as an important value creation factor has been raised. Future studies are necessary to empirically validate the suggested propositions.

In this special issue, attention has also been given to the value creation process in higher education institutions (HEIs). In this regard, Asiedu et al. (2020) have examined factors that influence innovation in HEIs. For that purpose, they have explored the relationship among transformational leadership, knowledge management capabilities, organizational learning and innovation performance. By analyzing data from two public and five private universities in Ghana, they found that transformational leadership significantly affects knowledge management capabilities and organizational learning in the examined HEIs, further positively contributing to innovations in the curricula, programs and services. In addition, organizational learning was found to mediate the relationship between transformational leadership and innovation performance. The results suggest that transformational leadership could be suggested as a leadership style of choice for HEIs struggling in the conditions of increased international competition, rapid advances in technology and growing diversity in demographics.

This special issue finishes with the review of the book written by Willie Pietersen titled Strategic Learning: How to be Smarter than Your Competition and Turn Key Insights into Competitive Advantage, published in 2010 and reviewed by Reese (2020). In his book, Pietersen (2010) addresses the problem of changing environments and the corresponding challenges in strategic planning and thinking. The key challenge facing managers today is to build agile and adaptive systems that implement necessary changes fast, which are then translated into strategic directions and strategic approaches. To thrive in modern turbulent conditions, strategic planning should be an organic process which results from a comprehensive learning. In that way, strategic planning should be considered a “learning exercise,” pointing to the quality of strategic learning as the only sustainable competitive advantage.

In this regard, Pietersen (2010) suggests the cycle of four steps, which he calls “killer competencies” – learn/insight, focus, align, execute and renewal. By continuously working on excelling in these competencies, organizations gain the habit of continuous learning and recalibration according to environmental changes. More precisely, learning results in insights about internal and external changes and trends; focus means that insights gained are translated into strategic choices in areas in which action would be taken; alignment ensures organizational fitness with strategic choices while execution calls for speed and accuracy of action. Renewal is a phase in which success is acknowledged, leading to a new cycle of learning and adaptation.

It would, therefore, not be a mistake to conclude that in this way successful organizations outlearn and outthink their competitors. However, Pietersen (2010) warns about the problem of resistance to alignment, which he rightfully identifies as crucial for translating insights into action. To overcome resistance to alignment, which is in essence resistance to change, Pietersen (2010) suggests implementation of the well-known mental model learning discipline or assumption reassessment, which could lead to individual and organizational transformation and alignment. For that purpose, Pietersen (2010) puts special emphasis on leadership, which he conceptualizes on three levels: strategic leaderships, interpersonal leadership and intrapersonal leadership. When all leadership dimensions are aligned, true and visible change can occur.

By instilling the habit of continuous learning, organizations build not only their change readiness but also resilience to withstand challenges and profit from new opportunities. Pietersen’s rich international experience contributes to this book’s dynamics, which is reflected in many useful tips on how to turn learning insights into value creation potential and competitive advantages, contributing to the book’s credibility.

By addressing many different value creation aspects within the learning organization framework, this special issue represents a continuous call for papers regarding the influence of the learning organization philosophy and its constituents on the value creation process. Based on the previous discussion, many questions with regard to numerous aspects still remain unanswered. Some of them are:

• Should superior performance of learning organizations be considered through the lens of ethics and social responsibility?

• Can learning organizations contribute to proactive social responsibility?

• Do startups and Small and medium-sized enterprises (SMEs) managed as learning organizations show greater growth potential?

• Does organizational learning foster SME growth?

• Do learning organizations exhibit greater entrepreneurial and innovation orientation?

• Do learning organizations excel more when taking deductive reasoning to innovation (problem-solution) or inductive reasoning (developing/procuring a concept-finding which problems it could solve)?

• Do learning organizations exhibit a greater level of behavioral variety relative to their counterparts?

• Is learning organization concept compatible with the stakeholder approach and to what extent?

• Do learning organizations exhibit a higher level of legitimacy as the ability to fulfill the claims of relevant stakeholders in the long run?

• Are learning organizations more viable relative to their competitors defined as the ability to maintain a separate existence regardless of their identity?

• Does organizational learning contribute to organizational viability and sustainability in general, in specific industries, and relative to the firm size?

• Are members of the triple, quadruple and quintuple innovation helix models more successful if they are developed as learning organizations?

• How do learning disciplines implemented on the individual level contribute to organizational viability?

• Are learning organizations better at partnership management?

• Are learning organizations superior in the economy of integration?

• Do learning organizations exhibit a greater level of coopetition relative to their counterparts?

• Do learning organizations show superior resource allocation abilities?

• In the modern economy of experience, do learning organizations have greater emotional capital and do they produce greater emotional value (price/meaning) for customers?

• How do learning organizations and their members behave in crisis situations?

• How can learning organization values be compatible with information and communications technology systems such as enterprise management systems (EMS) and decision management systems, especially with regard to big data?

• Would learning organization values be beneficial when developing service-oriented platforms and various business models ending with “everything as a service”?

• How would learning organization values fare in the fourth industrial revolution (Industry 4.0)?

• What is the relationship between learning organization and its constituents with the new public management principles? Does the emphasis on learning and implementation of knowledge outperform new public management tendencies regarding increases in efficiency?

• Does the concept of learning organization and its constituents contribute to improved organizational performance in developing countries?

• Do we have adequate research instruments? Do we measure complex phenomena with simple questionnaire questions? Are our measurement instruments designed to measure nuanced approaches to learning and change? Should we develop detailed measurement instruments that can serve organizations and individuals as benchmarks toward which they would continuously strive but never entirely reach because learning organizations are continuously in progress?

Despite many opened questions, the academic interest in learning organizations has somewhat diminished. That is why Pedler and Burgoyne (2017) came up with a controversial question – are learning organizations still alive? The question stems from the fact that many concepts are related to learning organizations such as learning, unlearning, knowledge management and continuous adaptation. Analysis has shown that learning organization ideas are still widely implemented, albeit sometimes partially and under different names such as “agile and adaptive systems,” “dynamic capability,” “knowledge networking,” “collaborative partnerships” and the like Pedler and Burgoyne (2017). Does that mean that the learning organization field has become too fragmented for coherent research and implementation? What is the relation of the learning organization concept to these ideas and how could the emphasis on any of them facilitate and improve the value creation process?

Finally, the question remains what should be the value created by learning organizations and for whom. It seems that previous and current research on learning organizations has deviated from the conceptualization offered by its founder. According to Senge (1990, p. 3), learning organizations are organizations:

[…] where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole (reality) together.

Later in Kofman and Senge (1993, pp. 19–20) the idea of meaning and purpose as both the drivers and the outcome of transformational learning are further emphasized:

The learning required in becoming a learning organization is ‘transformational learning’. Such learning is not ultimately about tools and techniques. It is about who we are […] (and) […] only with the support, insight and fellowship of a community can we face the dangers of learning meaningful things.

With this conceptualization, the focus is on organizational members that join forces to achieve self-actualization by working on projects led by their common vision and based on their joint systems thinking. That is why, to some, Senge’s conceptualization sounds utopian, naïve and somewhat romantic. However, the fact that it has been established that some spiritual and religious practices are very closely related to the learning organization philosophy (Elkin et al., 2009; Rupčić, 2017) further contributes to this view and to the fact that this is and could be an attainable reality. However, in light of current devastating reports regarding social and ecological decline, alienation fostered by destructive competition and wide-spread work-related disengagement because of which organizations lose their creative momentum, it should be questioned what the socially desired value should be and how the idea of learning organizations, supported by its spiritual dimension, could contribute in this regard. It should be noted that studies found that people value the sense of a meaningful life (Diener and Seligman, 2004) as well as the sense of belonging (De Cremer and Blader, 2005) and acceptance and respect by the community (Tyler, 2006). Collins and Porras (1996) found that employee motivation is higher in organizations that have a much broader purpose than profit maximization. That is why the concept of socially desired value should be further analyzed followed by the investigation of the role of the learning organization values with respect to these values. It is therefore expected that this special issue would further entice research in various directions with the ideas of the learning organization philosophy still in the forefront.