What drives learning orientation in fast growth SMEs?

Abstract

Purpose – The purpose of this paper is to investigate drivers of learning orientation (LO) in 253 Australian fast-growth small-to-medium enterprises (SMEs) through an examination of the interrelationships between transformational leadership (TL), human resource (HR) practices, and organizational climate. Design/methodology/approach – CEOs/managers of fast growth SMEs completed either an online or mailout survey. Statistical analyses involved tests for confounding and mediational effects, the use of exploratory factor analytic techniques and structural equation modelling. Findings – Findings reveal that TL is a significant antecedent of supportive and open organizational climates, and reward and job-related HR practices. Job-related HR practices and organizational climate fully mediate relationships between TL and LO. However, providing monetary incentives linked to performance does not motivate staff to learn. Instead, leaders need to act as role models, stimulate employees intellectually, provide a road map for staff, and focus on creating a supportive, open, and friendly environment. Research limitations/implications – Sample size is modest, reducing statistical power. The use of a cross-sectional, non-experimental design limits causal inferences. This study relied on the views of only entrepreneurs. Practical implications – These findings have important implications for management practice in terms of leadership, HR practices, and organizational learning in entrepreneurial ventures. Businesses who provide benefits and bonuses linked to performance do not necessarily engage employees to commit to learning, subscribe to a shared vision, or think innovatively. LO is enhanced only when employees are motivated, empowered, and treated as valuable resources. The establishment of personal relationships and open communication between owner-managers and employees, fosters firm LO. Originality/value – The present research contributes to the theoretical debate on the central role of leadership in fostering HRM practices, organizational climate and LO in fast-growth entrepreneurial companies. This study is the first to empirically test drivers of LO in FGSMEs. A simple linear model is insufficient to explain the influence of TL on LO.

Organizational Learning and Corporate Social Responsibility Drivers of Performance in SMEs in Northwestern Mexico

“…On the other hand, other scholars on the subject have concluded that when SMEs adopt and develop a learning model based on dynamic capabilities and manage to turn it into a fluid process of knowledge management, the financial performance of the business grows exponentially and is sustained [59,60]. Generally, SMEs can improve their learning systems and financial performance because they are closer to their employees, which makes it easier to capture, transfer and better apply the knowledge learned [50,61]. Therefore, organizational learning is visualized as a capacity that helps to achieve better organizational practices, such as the adoption of social responsibility, and an increase of financial performance in SMEs [62,63].…”

A Review of Critical Success Factors Which Drives the Performance of Micro, Small and Medium Enterprises

“…Two or more MSMEs may have the same set of tangible resources and operate under the same external environment but produce different business performance (Ratnatunga, et al, 2004). The importance of resources varies among MSMEs and depends on the enterprise's goals (Tan, et al, 2014). Researchers should therefore be interested in knowing which resources have the greatest impact on the performance of an enterprise and how they have an influence on the performance.…”

“…A number of research studies highlight the positive effect of a learning culture on enterprise performance (Wang, 2008;Tan, et al, 2014). It can be argued that an enterprise which pays particular attention to knowledge based resources conforms to Kaplan and Norton (1992)'s learning and growth perspective.…”

“…The resource-based theory suggests that the performance and growth of an enterprise is driven by the resources possessed by that enterprise (Atristain & Rajagopa, 2010;Barney, Ketchen & Wright, 2011;Hsu, Tan, Laosirihongthong & Leong, 2011;Tan, Smyrnios & Xiong, 2014;Yazdanfar & Öhman, 2015). A company's capability depends to a greater extent on its pool of tangible and intangible assets (Ratnatunga, Gray & Balachandran, 2004).…”

Innovation and Leadership in Public Sector Organizations

“…Tan, Smyrnios, and Xiong (2014) claimed that whenever employees 'feel good' about their organization's climate, they perform their tasks better and leaders can anticipate innovative behavior and creativity from them. As a caveat, when the organizational climate emphasizes reliability and efficiency and is not concerned with creativity and innovation, individuals may feel reluctant to take initiative even when they are offered some autonomy (Yukl, 2010).…”