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  1. 1. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011 Effects of Self-leadership, Knowledge Management and Culture on Creativity Kalyar Masood (Corresponding Author) College of Management & Administrative Sciences, GC University Faisalabad (38000), Pakistan. Tel: 92-344-7933814 E-mail: crony_mnk@yahoo.com Chaudhry Shahzad National University of Modern Languages Lahore (54000), Pakistan. E-Mail: m.shahzadch@yahoo.com Rafi Nosheen National University of Modern Languages Lahore (54000), Pakistan. E-Mail: m4maina@gmail.com Kalyar Awais Institute of Social & Cultural Studies, University of the Punjab Lahore (54000), Pakistan. E-Mail: a_kalyar@yahoo.comReceived: October 22, 2011Accepted: October 29, 2011Published:November 4, 2011AbstractCreativity and innovation are two important factors that organizations adopt to make themselves successfulor to adapt change. The area of creativity and innovation has been attracting the attention of managers andentrepreneurs since last decade. This area is still unexplored in Pakistan and needs research efforts todevelop better understanding on both individual and firm level creativity and innovation. This is anempirical study analyzing the effects of self-leadership, knowledge management (KM) and organizationalculture on creativity. Data were collected from 227 manufacturing organizations in Pakistan. Multipleregression analysis was used to test the hypotheses. Results indicated that creativity is predicted outcome ofself-leadership and knowledge management (KM). Moreover, self-leadership fully mediated the effect ofculture on creativity.Keywords: Knowledge Management, Creativity, Self-leadership, Pakistan, Culture1. IntroductionCreativity and innovation are two important factors that organizations adopt to make themselves successfulor to adapt change (Amabile, 1988; Woodman, Sawyer, and Griffin 1993). The concept of organizational1|Pagewww.iiste.org
  2. 2. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011creativity identifies a relatively unexplored area in organizational change and innovation (Woodman, et al.1993). Although organizational change can include innovation but much of organizational change is notinnovation (DiLiello and Houghton 2008). Similarly, even though creativity may produce the new product,service, idea, or process that is implemented through innovation (Amabile 1988), innovation can alsoinclude the adaptation of pre-existing products or processes, or those created outside of the organization.Creativity for individuals and organizations exemplifies a dramatic aspect of organizational change thatmay provide a key to understanding change phenomena and, ultimately, organizational effectiveness andlong-term survival (Woodman et al. 1993). Research by Amabile and her associates (Amabile, Goldfarb,and Brackfleld 1990) documented the value of examining the creativity of individuals and groups withintheir relevant social settings. Understanding the concept of creativity is significant for the organizations thatare willing to bring change in processes and procedures, and to ensure innovation. Creativity andinnovation help an organization to improve its performance and to provide basis for sustainable competitiveadvantage (Carmeli, Meitar, and Weisberg 2006; Schilling 2008). Creative theorists (Amabile, Barsade,Mueller, and Staw, 2005; Heye 2006) suggested that creativity is an important predictor of innovation.Creativity is an individual and cultural phenomenon that allows us to transform possibilities into reality(Tan 2007). Creativity is also defined as the individual’s ability and capacity to create and develop new,novel and useful ideas about firm’s products, practices, services or procedure (Mumford, 2003; Shalley andGilson 2004). When the ideas generated in creativity are successfully implemented, it becomes innovation.An individual having higher ability to generate new, novel and useful ideas is more likely to createinnovation (Woodman, Sawyer, and Griffin 1993), which in turn contributes to group and organizationalinnovation. On theoretical grounds, it is inferred that ability to create new and useful ideas increases thelikelihood of creating innovation.Employee innovations enable an organization to choose from a broader array of products or procedures fordevelopment and later implementation (Cummings and Oldham 1997). This innovation helps theorganization to achieve sustainable competitive advantage and long-term improved and successfulperformance. Creativity requires absolute novelty of the idea whereas innovation only requires relativenovelty of the idea to the unit of adoption (Woodman, et al. 1993). Therefore, adopting a new policy fromanother organization to the current organization would be innovative but not creative. The definition ofcreativity also includes an essential requirement for the idea or product to be useful. When employeesproduce novel and useful products or procedures, they are basically providing the organization with options.Creativity is a complex process and often comes from several sources (Schilling 2008). Amabile (2000)argued that creativity is something that does not come from external pressure rather from inner motivation,enjoyment and satisfaction. Intrinsic motivation, fueling passion and self-determination are the elementsthat do not only define the creativity but also paly vital role in developing and boosting the creativity.Intrinsic motivation, self-determination, encouraging positive behavior and developments of constructivethoughts come from self-leadership (Shalley and Gilson 2004). Pearce & Manz (2005) argued thatself-leadership is necessary in those organizations that need continuous innovation. According to Houghton& Yoho (2005), self-leadership may mediate the influence of an organization’s leadership style on thecreativity of its members.Creativity has been measured in a number of different ways, ranging from the assessment of thecharacteristics and personality traits of highly creative individuals to the measurement of creative productsand achievements (DiLiello and Houghton 2008). Review of previous literature suggests that creativity ismore likely to occur when an individual has certain characteristics or distinctive skills (Simonton, 1992;Tierney and Farmer 2002). This includes having specific knowledge embedded within social networks(Kijkuit and Ende, 2007; Weisberg 1999), intrinsic motivation and self-leadership (Houghton and Yoho,2005), and perceives a work environment that supports creativity (Amabile, Conti, Coon, Lazenby, andHerron 1996). In short, creativity is a complex construct with various dimensions that must be carefullyassessed in order to create a true and accurate composite of an individual’s creative capacity (Feldhusen andGoh 1995). This study is an effort to assess creativity based on three dimensions; self-leadership,knowledge management and organizational constructive culture.2|Pagewww.iiste.org
  3. 3. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 20112. Conceptual Framework and Hypotheses2.1 Self-leadershipSelf-leadership is defined as a process of influencing or leading oneself through the use of specific sets ofbehavioral and cognitive strategies (Neck and Manz 2004). Self-leadership theorists have proposed thatcreativity is anticipated outcome of individuals’ self-leadership (DiLiello and Houghton 2006; Neck andHoughton 2006). However, research on the relationship between self-leadership and creativity is still at thenascent stage. An additional research is needed to further clarify the relationship between self-leadershipand creativity (Neck and Houghton 2006; Pratoom and Savatsomboon 2010). Shalley & Gilson (2004)advocated that individuals must have a definite level of internal force that pushes them to proceed in facingthe challenges in creative work. Self-leadership is necessary in those organizations that need continuousinnovation (Pearce and Manz 2005). According to Houghton and Yoho (2005), self-leadership may mediatethe influence of an organization’s leadership style on the creativity of its members. When employees areencouraged to lead themselves in defining problems, solving problems, making decision, and identifyingopportunities and challenges both now and in the future, their creativity is encouraged. On the other hand, ifemployees are not encouraged to lead themselves in critical situations, then creativity is not encouraged(Pearce and Manz 2005). On the basis of discussion above it can be concluded that self-leadership is animportant predictor of creativity in an organization. It enables the workers and individuals to thinkpositively, enhancing self-determination and developing constructive thoughts. This leads the individuals tohandle stress and work environment pressure by enabling them to develop creative behavior that opens thedoors for creativity (Pearce and Manz 2005). Hence, self-leadership is expected to affect creativity,significantly and positively.H1: Self-leadership has a positive direct relationship with creativity.2.2 Knowledge ManagementKnowledge Management (KM) is the formal process that concerns access to experience, knowledge, andexpertise that creates new capabilities, enables superior performance, encourages innovation, and enhancescustomer value (Beckman 1999). Knowledge management practices involve acquiring, capturing, sharingand using knowledge and wisdom to enhance firm and individual’s performance, creativity and innovation.Greater breadth of knowledge helps employees to explore and understand processes and procedures, and todevelop understanding about new products and phenomena. Knowledge management assists the conversionof tacit knowledge into explicit knowledge, facilitating creative process and helping to identify gap in theknowledge base (Pratoom and Savatsomboon 2010). A key outcome of managing knowledge effectively isto have the right knowledge at the right time, so that proper values can be added, and workers can enactcreative actions (Muhammed et al. 2008). Organizational knowledge management affects individual’screativity by developing constructive controversy among organizational members to facilitate them intaking risk, doing experiments and applying new techniques towards generating new products, proceduresor services. Teigland & Wasko’s (2003) study proposed a positive effect of knowledge management oncreativity.H2: Knowledge management has a positive relationship with creativity.2.3 Organizational cultureOrganizational culture is defined as the way in which members in an organization are expected to think andbehave in relation both to their tasks and to other people (Cook and Rousseau 1988). Organizational culturemight boost creativity in employees through norms. Norms provide social information that individuals useto understand and interpret what they experience at work. Norms that exist in an organization not onlyshape specific behavior, but also influence much more general type of activities in which organizationalmembers engage (Caldwell and OReilly 2003; OReilly & Caldwell 1985). Evidences suggest that the3|Pagewww.iiste.org
  4. 4. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011culture that values creativity, innovation, active risk taking, and open debate might motivate and directindividuals toward creative ideas, which in turn increases the likelihood of an innovation being generated(Hurley 1995; Tesluk 1997). Managers can directly affect employee’s creativity by the way they constructteams, assignments and work environment (Amabile 2000). The valuing of innovation and active risktaking by constructive culture encourages individuals towards creativity and thus fosters innovation. Theculture that encourages risk taking and experimentations increases the likelihood of generation of new andnovel ideas, thus fostering the creativity.H3: Organizational culture positively affects creativity.Self-leadership theorists stated that contextual factors can boost self-leadership (Houghton and Yoho, 2005;Manz 1986; Pearce and Manz 2005). Organizational reward, training and culture are the factors that shapeand encourage self-leadership (Manz 1986; Pearce and Manz 2005) and enable the employees to behavepositively, bear external pressure, develop constructive thoughts, promote self-determination and mayincrease intrinsic motivation. Intrinsic motivation is central part of self-leadership (Neck and Manz 2004)and it can be increased depending on contextual factors (Shalley, Zhou, and Oldham 2004). Contextualfactors have vital importance to encourage and promote self-leadership at workplace environment enablingthe individuals to lead themselves in predicting creativity and innovation. The mediating role ofself-leadership is expected for constructive culture to boost, promote and encourage creativity.H4: Organizational culture positively affects creativity through self-leadership.3. Methodology3.1 Data Collection and SampleThe research study involved the analysis of a survey questionnaire consisting of statements relating to theself-leadership, organizational culture, knowledge management and creativity. All the survey items weremeasured on five-point likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). Data werecollected from two hundred and twenty seven (227) participants from thirty five randomly selectedmanufacturing organizations in Pakistan. Response rate was 68.7%. Initially, the names of producer grouporganizations were drawn from the list of KSE 100-index listed companies and thirty five (14%)organizations were selected using simple random sampling. Questionnaires were distributed postally andelectronically to the employees of these organizations. A total three hundred and thirty questionnaires weredistributed among the participants; eight to ten questionnaires per organization. Participants were assuredregarding privacy, confidentiality and independence of the researcher from their organization.Overall, two hundred and twelve participants (93.4%) were men and only fifteen participants (6.6%) werewomen. The age of the participant respondents ranged from 22 to 58 years (mean=33.4). Eighty six (37.9%)had an education of graduation level, one hundred and thirty eight participants (60.8%) had an education atmaster level or higher, however, only three participants had an education below graduation level . Theparticipants had experience ranging from 1 to 30 years (mean=8.25).3.2 Research Measures3.2.1 Creativity. A five-point likert scale survey instrument was used to measure groups’ knowledgemanagement ranging from 1 (strongly disagree) to 5 (strongly agree) and was adapted from the employeecreative behavior scale developed and validated by Rice (2006). All the dimensions were explored by usingexploratory factor analysis (EFA). Factor loading of the items ranged from 0.67 to 0.78. Alpha value for theconstruct was 0.82; higher score indicated higher level of creativity. The KMO value was 0.793, chi-squarewas 450 with degree of freedom 15, significant at p<0,001. These statistics showed goodness of fit for EFA.3.2.2 Self-leadership. A five-point likert scale survey instrument was used to measure groups’ knowledgemanagement ranging from 1 (strongly disagree) to 5 (strongly agree) and was adapted from theself-leadership questionnaire developed and validated by Houghton and Neck (2002). All the dimensionswere explored by using exploratory factor analysis. Factor loading of the items ranged from 0.37 to 0.83.4|Pagewww.iiste.org
  5. 5. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011Alpha value for the construct was 0.86; higher score on this construct indicated greater self-leadership. TheKMO value was 0.878, chi-square was 595 with degree of freedom 21, significant at p<0,001. Thesestatistics showed goodness of fit for EFA.3.2.3 Constructive culture. A five-point likert scale survey instrument was used to measure groups’constructive culture ranging from 1 (strongly disagree) to 5 (strongly agree). This seven items scale wasadapted from the constructive culture scale developed and validated by Cook and Rousseau (1988). All thedimensions were explored by using exploratory factor analysis. Factor loading of the items ranged from0.64 to 0.81. Alpha value for the construct was 0.79, higher score showed more constructive culture. TheKMO value was 0.75, chi-square was 431 with degree of freedom 21, significant at p<0,001. Thesestatistics showed goodness of fit for EFA.3.2.4 Knowledge management. A five-point likert scale survey instrument was used to measure groups’knowledge management ranging from 1 (strongly disagree) to 5 (strongly agree). This eight items scale wasadopted from operationalization of the variable and knowledge management scale of Darroch andMcNaughton (2002). All the dimensions were explored by using exploratory factor analysis. Factor loadingof the items ranged from 0.55 to 0.81. Alpha value for the construct was 0.81; higher score showed higherlevel of knowledge management practices. The KMO value was 0.784, chi-square was 467 with degree offreedom 28, significant at p<0,001. These statistics showed goodness of fit for EFA.4. Data AnalysisThe primary analysis was correlation and multiple regression statistics. Quantitative data analysis wasdivided into two phases: Preliminary data analysis and hypothesis testing. In the preliminary phase raw datawas cleaned up and inputted to generate Descriptive statistics, which included central tendencies, frequencydistributions, correlations, mean, standard deviation, range and variance. For hypothesis testing Pearson’sCorrelation and multiple regressions were used to establish the degree of linear relationship betweencreativity, knowledge management, self-leadership and culture. In order to test indirect effect oforganizational culture on creativity, Baron & Kenny’s (1986) preconditions for mediation were met.According to Baron & Kenny (1986), a variable functions as a mediator when it meets the followingconditions: (a) variations in levels of the independent variable significantly account for variations in thepresumed mediator, (b) variations in the mediator significantly account for variations in the dependentvariable, and (c) when Paths “a” and “b” are controlled, a previously significant relation between theindependent and dependent variables is no longer significant.To test the relationships between self-leadership, knowledge management, culture and creativityCorrelation and multiple regressions statistical analysis was done using IBM SPSS Statistics 19. Thestatements regarding creativity was used as the dependent variable and self-leadership, knowledgemanagement and culture were used as the independent variables. Table 1 presents descriptive statistics:means, standard deviations and Pearson’s Correlations. There were not too many correlations observedwithin demographic variables except for creativity and education (r = 0.181, p< 0.01) and culture andeducation (r = 0.181, p <0.01). Age had negative correlations with creativity (r = -0.350, p<0.01), Culture (r= -0.144, p<0.05), knowledge management and (r = -0.389, p<0.01) self-leadership (r = -0.323, p<0.01).For the correlation between dependent and independent variables, results indicate positive associationsbetween creativity, self-leadership, knowledge management and organizational culture. Organizationalculture was positively correlated with creativity (r = 0.529, p<0.01), knowledge management (r = 0.633,p<0.01) and self-leadership (r = 0.618, p<0.01). Self-leadership had a strong positive Pearson’s correlationcoefficient with creativity (r = 0.712, p<0.01) and knowledge management (r = 0.779, p<0.01). Knowledgemanagement was also found having positive correlation with creativity (r = 0.722, p<0.01). INSERT TABLE 1 HEREIn order to run multiple regressions, creativity was taken as dependent variable and self-leadership,knowledge management and organizational culture were taken as independent variables. The results fromthe analysis showed the coefficients for paths from independent variables to dependent variables. Following5|Pagewww.iiste.org
  6. 6. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011tables were generated from regression analysis using “Enter” method. Table 2 presents model summary,ANOVA and coefficients of the variables. In model summary, R is the square root of R-Squared andshowing 76.1% correlation between the observed and predicted values of dependent variable. R-Squareindicates the proportion of variance in the dependent variable (creativity) which can be explained by theindependent variables (self-leadership, knowledge management and culture). This is an overall measureof the strength of association. The value of R-Square shows that 57.4% variation in creativity is beingexplained by the predicting variables. Remaining 42.6% variation in creativity would be because of someother factors.The ANOVA table reports a significant F statistic (F (2,223) = 102.305, p<0.001), indicating that using themodel is better than guessing the mean. Now considering the standardized regression coefficients, all ofindependent variables have strong significant and positive path coefficients towards creativity except fromorganizational culture. Standardized total effect of self-leadership for creativity is 0.368, p<0.001 whichmeans the increase in self-leadership by 1 is responsible for increase in creativity by 0.368 and vice versa.This has proved the first hypothesis true that self-leadership has a positive relationship with creativity.Results from regression analysis suggest that self-leadership skills enable organizational members to facework stress and challenges and leading them towards creativity. Second hypothesis also has been supportedby data as standardized effect on creativity by knowledge management (KM) is 0.406, p<0.001. This showsthat knowledge management (KM) is responsible for 40.6% change in creativity. So far as hypothesis 3(direct positive effect of culture on creativity) is concerned that data did not support the hypothesis. Thestandardized path coefficient of culture for creativity is 0.045 at p = 0.439, which is a small andinsignificant positive relationship between the both. The proposition that work environment characterizedby risk taking, open debates and supporting culture encourages motivation has not been significantlysupported by the data. INSERT TABLE 2 HEREIn order to test the indirect effect of organization culture on creativity another regression analysis was run.According to Baron & Kenny (1986), one should estimate the three following regressionequations in order to test the mediation: first, regressing the mediator on the independentvariable; second, regressing the dependent variable on the independent variable; and third,regressing the dependent variable on both the independent variable and on the mediator. Separatecoefficients for each equation should be estimated and tested. Moreover, a perfect mediation holds ifindependent variable has no effect on dependent variable when mediator is controlled. Self-leadership hasbeen taken as dependent variable and organization culture as independent variable. “Enter” method ofregression has been used to get the analysis results. According to Wuensch (2008), the indirect effect is theproduct of standardized coefficient of path “a” (path from independent variable to the proposed mediator)with that of path “b” (path from the mediator to the dependent variable). The resultant value will be thestandardized mediated (indirect) effect. Sobel (1982) technique was used to measure significance ofindirect effect and t-statistics. Table 3 presents significant F statistics (F (1,225) = 138.845, p<0.001)suggests goodness of fit model. R-Square indicates that the culture is 38.2% responsible for variation inself-leadership. Standardized path coefficient of organizational culture is strong (0.618) and significant(p<0.001). INSERT TABLE 3 HEREStandardized indirect effect of organizational culture of creativity is (0.368*0.618 = 0.227). Indirect effectof culture was significant at the level of p<0.001 (t = 4.719, std. error = 0.0481).Hence, data fully supportedthe hypothesis 4 providing the evidence that organizational culture is an important predictor ofself-leadership (R2 = 0.382, F (1,225) = 138.845, p<0.001) and has positive indirect effect on creativity.Data of the present study fully supported the direct positive relationship between self-leadership andcreativity, and suggested that people with higher level of constructive thoughts and self-determination aremore likely to generate new and creative ideas. Similarly, knowledge management (KM) was also foundpositively correlated with creativity. On the other hand, organizational culture had no significant positivedirect effect on creativity rather it had an indirect relationship with the creativity. In short, three hypotheses6|Pagewww.iiste.org
  7. 7. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011(H1, H2 and H3) were met and supported by the data whereas only one hypothesis (H3) was not supportedby the data.5. Discussions and ConclusionIn order to respond quickly to dynamic customer needs, increased complexity of market mechanism andrapidly changing technologies, the selection of the right technologies, products, services and procedures iscritical to a company’s long-term success. Review of previous research indicates that knowledgemanagement (KM), self-leadership and creativity are critical elements that help an individual andorganization to make innovation. Innovation, therefore, provides foundation to adapt change and acquirenew technologies to respond dynamic customer needs and market demand. In this research, creativity hasbeen analyzed as a joint function and outcome of self-leadership, knowledge management (KM) andorganizational culture. Creative theorists (e.g. Amabile, et al. 1996; Heye 2006) have argued thatindividual’s creativity is important in itself and can be conceptualized as a necessary first step orprecondition required for innovation. An organizational member with high ability to generate new anduseful ideas is more likely to create their own innovation, which in turn contributes to organizationalinnovation (Woodman et al. 1993). This area is still in darkness in Pakistan and previously no or limitedresearch efforts were made to explore this area. In the present study creativity has tested as predictedoutcome of self-leadership, knowledge management and culture. After conducting correlation andregression analysis, self-leadership and knowledge management were found strong predictors of creativityin Pakistani manufacturing organizations. A strong positive and significant direct effect of self-leadershipsuggested that individuals with higher level of self-leadership skills such as positive self-talk, constructivethoughts, intrinsic motivation and self-determination are more likely to make creativity. Similarly,knowledge management also had a strong positive and significant direct influence on creativity supportingthe hypothesis that organizations emphasizing on creation, retention and dissemination of knowledge areencouraging its individuals to do creative work. The knowledge on up-to-date processes and procedure,products and services, and technologies helps organizations to deploy this knowledge in selection andadaptation of new and useful procedures, products and/or services. Furthermore, managers having latestknowledge on business and global market practices make themselves enable to lead towards defining andresponding customer and dynamic market needs.On the other hand, data did not support the positive effect of organizational culture on creativity. It wasfound that culture had a small positive relationship with creativity but the effect was not statisticallysignificant. In contrast, organizational culture had a positive indirect effect on creativity throughself-leadership. The results suggested that self-leadership skills can be improved when there is a supportiveculture that encourages organizational members to take risks, accept challenges and actively availopportunities. Mangers can uplift the level of creativity when they develop and maintain proper knowledgemanagement (KM) system and assisting employees to improve and make their self-leadership skills strong.Contextual factors such as culture should also be made supportive and positive as it plays a significant rolein explaining self-leadership, which in turn leads towards creativity. As creative theorists have argued thatinnovation is outcome of creativity, thus fostering the level of creativity enhances the likelihood ofextended innovation which ultimately helps an organization to develop and achieve sustainable competitiveadvantage, better company performance and long-term profitability.ReferencesAmabile, Conti, R., Coon, H., Lazenby, J., & Herron, M. (1996), "Assessing the work environment forcreativity", Academy of Management Journal, 39, 1154-1184.Amabile, T. (2000), "Stimulate creativity by fueling passion", The Blackwell handbook of principles oforganizational behavior, 331-341.Amabile, T., Barsade, S., Mueller, J., & Staw, B. (2005), "Affect and creativity at work", AdministrativeScience Quarterly, 50, 367-403.7|Pagewww.iiste.org
  8. 8. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011Amabile, T. M. (1988), "A model of creativity and innovation in organizations", Research in organizationalbehavior, 10, 123-167.Amabile, T. M., Goldfarb, P., & Brackfleld, S. C. (1990), "Social influences on creativity: Evaluation,coaction, and surveillance", Creativity Research Journal, 3, 6-21.Baron, R., & Kenny, D. (1986), "The moderator-mediator variable distinction in social psychologicalresearch: Conceptual, strategic, and statistical considerations", Journal of personality and social psychology,51, 1173-1182.Beckman, T. (1999), "The current state of knowledge management", Knowledge management handbook,11-21.Caldwell, D., & Oreilly, C. (2003), "The determinants of team-based innovation in organizations", Smallgroup research, 34, 497-512.Carmeli, A., Meitar, R., & Weisberg, J. (2006), "Self-leadership skills and innovative behavior at work",International Journal of Manpower, 27, 75-90.Cook, R., & Rousseau, D. (1988), "Behavioral norms and expectations: A quantitative approach to theassessment of organizational culture ", Group and Organization Studies, 13, 245-273.Cummings, A., & Oldham, G. (1997), "Enhancing creativity: managing work contexts for the high potentialemployee", California Management Review, 40, 22-38.Diliello, T., & Houghton, J. (2006), "Maximizing organizational leadership capacity for the future: Towarda model of self-leadership, innovation and creativity", Journal of Managerial Psychology, 21, 319-337.Diliello, T., & Houghton, J. (2008), "Creative Potential and Practised Creativity: Identifying UntappedCreativity in Organizations", Creativity and Innovation Management, 17, 37-46.Feldhusen, J. F., & Goh, B. E. (1995), "Assessing and accessing creativity: An integrative review of theory,research, and development", Creativity Research Journal, 8, 231-247.Heye, D. (2006), "Creativity and innovation: Two key characteristics of the successful 21st centuryinformation professional", Business information review, 23, 252-257.Houghton, J., & Yoho, S. (2005), "Toward a contingency model of leadership and psychologicalempowerment: when should self-leadership be encouraged?", Journal of Leadership & OrganizationalStudies, 11, 65-73.Hurley, R. (1995), "Group culture and its effect on innovative productivity", Journal of Engineering andTechnology Management, 12, 57-75.Kijkuit, B., & Van Den Ende, J. (2007), "The Organizational Life of an Idea: Integrating Social Network,Creativity and Decision Making Perspectives*", Journal of Management Studies, 44, 863-882.Manz, C. (1986), "Self-leadership: Toward an expanded theory of self-influence processes in organizations",Academy of Management Review, 11, 585-600.Mumford, M. D. (2003), "Where have we been, where are we going? Taking stock in creativity research",Creativity Research Journal, 15, 107-120.Neck, & Houghton, J. D. (2006), "Two decades of self-leadership theory and research: Past developments,present trends, and future possibilities", Journal of Managerial Psychology, 21, 270-295.Neck, & Manz, C. C. (2004), "Mastering self-Leadership: Empowering yourself for personal excellence".NJ: Pearson Printice-Hall.Oreilly, C., & Caldwell, D. (1985), "The impact of normative social influence and cohesiveness on taskperceptions and attitudes: A social information processing approach", Journal of Occupational Psychology,58, 193-206.Pearce, C., & Manz, C. (2005), "The new silver bullets of leadership: the importance of self and sharedleadership in knowledge work", Organizational Dynamics, 34, 130–140.8|Pagewww.iiste.org
  9. 9. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011Pratoom, K., & Savatsomboon, G. (2010), "Explaining factors affecting individual innovation: The case ofproducer group members in Thailand", Asia Pacific Journal of Management.Schilling, M. (2008), "Strategic management of technological innovation", Boston: Tata McGraw-Hill.Shalley, C., & Gilson, L. (2004a), "What leaders need to know: A review of social and contextual factorsthat can foster or hinder creativity", The Leadership Quarterly, 15, 33-53.Shalley, C., Zhou, J., & Oldham, G. (2004), "The effects of personal and contextual characteristics oncreativity: Where should we go from here?", Journal of management, 30, 933-945.Shalley, C. E., & Gilson, L. L. (2004b), "What leaders need to know: A review of social and contextualfactors that can foster or hinder creativity", The Leadership Quarterly, 15, 33-53.Simonton, D. (1992), "Creativity and leadership: Causal convergence and divergence", Readings ininnovation, 29-43.Sobel, M. E. (1982), "Asymptotic confidence intervals for indirect effects in structural equation models",Sociological methodology, 13, 290-312.Tan, A. G. (2007), "Creativity: a handbook for teachers”, Danvers, USA: World Scientific PublishingCo.Ptc. Ltd.Teigland, R., & Wasko, M. (2003), "Integrating Knowledge through Information Trading: Examining theRelationship between Boundary Spanning Communication and Individual Performance", Decision Sciences,34, 261-286.Tesluk, P. (1997), "Influences of organizational culture and climate on individual creativity", Journal ofCreative Behavior, 4, 167-179.Tierney, P., & Farmer, S. M. (2002), "Creative Self-Efficacy: Its Potential Antecedents and Relationship toCreative Performance", The Academy of Management Journal, 45, 1137-1148.Weisberg, R. W. (1999), "Creativity and knowledge: A challenge to theories", New York: CambridgeUniversity Press.Woodman, R., Sawyer, J., & Griffin, R. (1993a), "Toward a theory of organizational creativity", Academyof Management Review, 18, 293-321.Woodman, R. W., Sawyer, J. E., & Griffin, R. W. (1993b), "Toward a theory of organizational creativity",The Academy of Management Review, 18, 293-321.Wuensch, K. L. 2008. “Conducting Path Analysis using SPSS/AMOS”. Greenville, NC: East CarolinaUniversity Press.9|Pagewww.iiste.org
  10. 10. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 3, No.8, 2011 Table 1 Means, standard deviations, and correlations Mean S.D. 1 2 3 4 5 6 71- Gender 0.93 0.2492- Age 33.40 6.44 .240**3- Education level 1.59 0.518 -.071 .0894- Experience 8.25 5.601 .209** .807** .1215- Org. Culture 4.11 0.649 -.104 -.144* .181** .0086- Knowledge Management 3.86 0.689 -.140* -.389** .095 -.207** .633**7- Creativity 3.96 0.777 -.117 -.350** .181** -.178** .529** .722**8- Self-Leadership 3.92 0.832 -.134* -.323** .141* -.118 .618** .779** .712** N= 227, *p<0.05, **p<0.01 Table 2 Regression analysis Standardized Unstandardized Coefficients Coefficients Model B Std. Error Beta t Sig. 1 (Constant) .621 .227 2.732 .007 Self-Leadership .343 .067 .368 5.130 .000 Knowledge Management .458 .082 .406 5.583 .000 Culture .054 .069 .045 .776 .439 Model Summary Model R R Square Adjusted R Std. Error of the Square Estimate 1 0.761 0.579 0.574 0.50757 ANOVA Table Sum of Model Squares Df Mean Square F Sig. 1 Regression 79.069 3 26.356 102.305 0.000a Residual 57.450 223 0.258 Total 136.519 226 a) Dependent Variable: Creativity b) Independent Variable: Self-leadership, Culture and KM 10 | P a g e www.iiste.org
  11. 11. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011Table 3 Regression analysis Standardized Unstandardized Coefficients CoefficientsModel B Std. Error Beta t Sig.1 (Constant) .673 .279 2.409 .017 Culture .791 .067 .618 11.783 .000 Model SummaryModel R R Square Adjusted R Std. Error of the Square Estimate 1 0.618 0.382 0.379 0.65618 ANOVA Table Sum ofModel df Mean Square F Sig. Squares1 Regression 59.783 1 59.783 138.845 0.000a Residual 96.879 225 0.431 Total 156.662 226a. Dependent Variable: Self-Leadershipb. Independent variables: Organizational Culture11 | P a g ewww.iiste.org
  12. 12. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011Learning Organization and Intellectual Capital: An Empirical Study of Jordanian Banks Marwan M. Al-Nsour Management Department, Faculty of Planning and Management Al-Balqa Applied University, Assalt- Jordan E-mail: marwan_alnsour@yahoo.com. Ghazi A. Al-Weshah Management Department, Faculty of Planning and Management Al-Balqa Applied University, Assalt- Jordan E-mail: weshah120@yahoo.com.Received: October 22, 2011Accepted: October 29, 2011Published:November 4, 2011AbstractThe purpose of this paper is to investigate empirically the relation between the learning organization andintellectual capita Jordanian banking industry. The intellectual capital is measured by three dimensions,namely, human capital, structural capital, and customer capital. 86 Questionnaires are sent to managers andexecutives in Jordanian banks headquarters using convenience sample, however, 66 questionnaires werereturned and the response rate is 77%. Quantitative approach is employed to test the proposed researchhypotheses; correlation analysis and regression analysis are conducted. The results support the hypothesisthat learning organization has a positive impact on banks intellectual capital. The results extend theunderstanding of the role of organizational learning in creating intellectual capital and building sustainableadvantages for banks in emerging economies.Keywords: Banking Industry, Intellectual Capital, Learning Organizations, Hypotheses Testing, Jordan.1. IntroductionThe increase of knowledge and its relationship with the learning process is a very important for all centuries(Blumentritt and Johnston, 1999). Organizational learning occurs through a process of acquiring, sharing,and integrating new knowledge from outside the firm as well as inside the firm (Crossan, Lane, & White,1999; Argote & Ingram, 2000). Some investigators found that a focus on organizational learning has greatpotential to build the collaboration and continuous improvement programs that promote organizationalperformance (Levine, 2001, Holland, 2010).Organizational intellectual capital represents technologies and other mechanisms that assist employees in12 | P a g ewww.iiste.org
  13. 13. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011creating revenues for organizations such as communication systems, data bases, policies, procedures,technical systems, and other devices (Boisot, 2002; Ordo´n˜ez de Pablos, 2003). Recently, Intellectualcapital can include the skills and knowledge that a company has developed about how to make its goods orservices (Hernández & Noruzi, 2010). However, there is no clear direction as to how intellectual capitaldevelops or how to institute management planning and control processes to ensure that intellectual capitalinventories grow or are at least maintained (Issac et al. 2010). Nowadays, it is important to understand whata learning organization is, what its characteristics are and how it relates to the emerging topic of intellectualcapital.There is much evidence for active learning by banks. Retail banks were the outcome of much learning(through crisis, failure, error, fraud, etc.) over at least 300 years. Banks have not historically been good atlearning and at exploiting prior lessons during periods of stability. Much learning has arisen during bankcrises and subsequent regulation based on best practice (Holland, 2010). Harris (2002) provides evidencethat learning from past mistakes, or even building upon past successes, continues to be the exception ratherthan the rule. Banks had to learn about these problems and their solutions via direct actions and transactionsand via a strategy of active bank development. Learning arose via an iterative feedback process duringactive internal change and external transacting and associated errors, failures and successes, rather thanthrough a rational ordered decision process (Holland, 2010).In Jordan, the banking industry has been undergoing a tremendous change in the past few years. There aremany changes in the number and variety of products offered because of the branching or mergers andacquisitions of banks. The intensity of competition and information technology growth within a harshenvironment has led to restructuring of some retail banks (Al-Weshah and Deacon, 2009). Banks which aremain player in the Jordanian business environment have a deal with intellectual capital and have all basicsof the learning organization which can support the intellectual capital. Therefore, banking industry has toadopt the concept of learning organization as a solution to cope with this a problematic situation based onits intellectual capital.This highlights the importance of the creation of intellectual capital as a critical component of anorganizations ability to learn and adapt. This will be developed further in this paper as a focal point foranalysis of the synergies between the learning organization and intellectual capital. Therefore, this paperprovides an explanation of the relationship between the learning organization (LO) as an entity andintellectual capital (IC) on the organizational level.2. Learning organizationsSenge (1990) was one of those who early defined the learning organization as an entity within which peoplecontinually expand their capacity to create the results they desire. Senge (1990) defined the LearningOrganization (LO) as the strategies and initiatives for improving organizational effectiveness throughemphases on developing the capabilities, capacities and qualities of the staff, and on approaches based onbehavioral and attitudinal, as well as skills enhancement.The concept of organizational learning has taken its prominence in the past several decades as a way to13 | P a g ewww.iiste.org
  14. 14. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011achieve competitive advantage. That’s why companies are urged to become “learning organizations” todevelop their learning capability for survival and maintaining competitiveness (Hong, 1999).Organizational learning occurs through a process of acquiring, sharing, and integrating new knowledgefrom outside the firm as well as inside the firm (Crossan, Lane, & White, 1999; Argote & Ingram, 2000).Al-Weshah et al (2011) confirmed that electronic networks can assist an organisation to discover and shareknowledge and learning within the organisation and from entities outside organisation.Thurbin (1994) defined learning organization as one, which improves its knowledge and understanding ofitself and its environment over time, by facilitating and making use of the learning of its individualmembers. The ‘‘learning organization’’ is the generic term given to strategies and initiatives for improvingorganizational effectiveness through emphases on developing the capabilities, capacities and qualities of thestaff, and on approaches based on behavioural and attitudinal, as well as skills, enhancement (Pettinger,2002). Chetley and Vincent (2003) defined the development of a learning organisation as an ongoing,systematic process requiring trust and a recognition of the subtlety and complexity of human relations anddescribe three stages in this process; firstly, individuals and teams are encouraged and supported to learn;Secondly, these processes are socialised or institutionalised; and thirdly, learning is at the heart of anorganization, meaning that learning is used to transform and develop the organization. Revans (1998)proposed a model of how learning should occur in organisations. He argued that learning should be greaterthan or equal to the rate of change in the environment. If not, then the firm would be unable to achieve asustainable competitive advantage (SCA). This idea is clearly relevant to the core learning errors made byfailing banks during the 2007-2009 Crisis and to bank specific mistakes in previous periods (Holland,2010). Uzzi and Lancaster (2003) investigated learning in (bank lending and debt) markets between banksand firms. Bank-firm relationships formed networks and these shaped knowledge transfer and learningprocesses by creating the opportunities for knowledge trade and reducing the learning risks.Mansor (2010) investigated the extensiveness of Bank Islam Malaysia Limited (BIMB) in Terengganu andKelantan states in Malaysia as to the practice of OL. As been displayed by result on correlation analysis itseems that the awareness of OL had continuously shaped the Islamic Banking activities. But still there arerooms needed to be improved if the institutions are to be considered as one of the anchor bank in the future.There are some mistakes and errors individual bank learning and knowledge use. Learning in individualbanks was not as systematic as the above multi case patterns suggested and arose via an iterative feedbackprocess during errors, failures and successes (Holland, 2010). Therefore, this study investigates the learningand its relationship with intellectual capital in Jordanian banks3. Intellectual capitalHistorically, financial and built capitals have been critical assets in the wealth creating process fororganizations. More recently, these assets, which are recognized on the balance sheet, have taken a secondplace to more intangible forms of capital, which are generally not found on the balance sheet (Issac et al.2010). Financial statements are insufficient to measure progress toward competitive advantage. Instead,intellectual capital assets, such as workforce knowledge and mechanisms, relationships, and organizational14 | P a g ewww.iiste.org
  15. 15. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011structures, often not recognized on the balance sheet are critical to developing competitive advantage(Boulton et al., 2000; Lev, 2001; Low, 2000). Intellectual capital management processes must, therefore,endeavour to get employees to share knowledge, to question why they perform certain procedures, and tomonitor the role that knowledge plays within the success of the organization (Issac et al. 2010).Intangible assets have become more important to business success than the traditional factors of production- land, labor and financial capital (Edvinson & Malone, 1997; Stewart, 1998). Furthermore, organizationalknowledge assets are a major component of these intangible assets. Intellectual capital is defined as the sumof intangible assets related to knowledge of a company that have been formalized, captured, and leveragedto produce a higher-valued asset and to create competitive advantage (Berry, 2004; Stewart, 1997;Subramaniam & Youndt, 2005). The most widely used definition of intellectual capital is “knowledge thatis of value to an organization.” Its main elements are human capital, structural capital, and customer capital.That definition suggests that the management of knowledge (the sum of what is known) creates intellectualcapital (Bassi, 1997). Most of literatures insure that components of intellectual capital consist of humancapital, structural capital and external (customer) capital. This problem was identified even earlier byNonaka and Takeuchi (1995) who stated that "organizational learning theories basically lack the view thatknowledge development constitutes learning and most OL theories concentrate on individual learning andhave not developed a comprehensive view of learning at an organizational level". According to Sandelands(1999), organizations that are not able to embrace shared learning and knowledge generation at theorganizational level simply disappear. Brown and Woodland (1999) added further insight into thelearning/knowledge synergy by claiming that "it is impossible for an organization to sustain competitiveadvantage without constantly learning and developing new knowledge". Intellectual capital includes manyissues such as data, information, intellectual property and experiences, which can be utilized to gain wealth(Rivette, 2000)Organizational intellectual capital captures knowledge that exists within the organization, and we suspectthat it arises from the human intellectual capital. Thus, its birth and evolution is highly dependent upon theworkforce (Isaac et al. 2010). The theory of intellectual capital has emerged in the past decade in responseto these advances within an organization. Although the theory is new and research is in the early formativestages, theoretical foundations have been identified as anchors of intellectual capital.Some studies classified intellectual capital into human capital, structural capital, and relational capital(Johnson, 1999; Bontis, 1999; Bozbura, 2004). Ismail (2008) Classified intellectual capital into humancapital, customer capital, and structural capital. Moreover, Kiran (2008) classified intellectual capital intohuman capital, customer capital, and social capital. However, the literature on intellectual capital hasdeployed a variety of different classification schemes (i.e. Petrash 1996, Walsh et al, 2008, Hernández &Noruzi, 2010). There are widely accepted, three-category classification, which divides intellectual capitalinto codified knowledge about an organization’s systems and operations (systems capital); knowledgeabout customers, markets, and distribution (customer capital); and knowledge acquired from people skillsand expertise (human capital) (Stewart 1997, Bontis and Fitz-enz 2002; Walsh et al, 2008).15 | P a g ewww.iiste.org
  16. 16. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011Regarding research on intellectual capital, early research brought awareness to the existence of intellectualcapital inventories within organizations and the need to manage, monitor, and measure them, but fewresearchers have empirically studied what internal conditions lead to the development of these importantassets (Isaac et al, 2010). In developing countries, Seleim et al. (2007) test empirically a variety ofhypotheses related to human capital and organizational performance within software companies in Egypt.The results provide evidence that certain types of human capital indicators show a positive statisticallysignificant relationship with company performance. Specifically In banking industries, El-Bannany (2008)investigated the determinants of intellectual capital performance in the UK banks over the period1999-2005. The results indicated that investment in information technology (IT) systems; bank efficiency,barriers to entry and efficiency of investment in intellectual capital variables have a significant impact onintellectual capital performance. Cabrita and Bontis (2008) examined the inter-relationships andinteractions among intellectual capital components and business performance in the Portuguese bankingindustry. The findings confirmed that intellectual capital has a significant and substantive impact onperformance.Goh (2005) measured the intellectual capital performance of commercial banks in Malaysia for the period2001 to 2003, using efficiency coefficient called VAIC™ developed by Ante Pulic. The findings indicatethat all banks have relatively higher human capital efficiency than structural and capital efficiencies. InJordan, Bataineh & Al-Zoabi (2011) investigated the effect of intellectual capital on organizationalcompetitive advantage in Jordanian commercial banks. The findings indicated that there are strongsignificant and positive influences between human and structural capital on competitive advantage, andmoderate significant and positive influences with relational capital.Therefore, there is a growing awareness that intellectual capital is a key asset for development in today’senvironment. Intellectual capital is not only includes data or information in files and databases but It is alsocomprises all useful knowledge in its all forms in the organization. Therefore, this study investigates therelationships between and learning organization in Jordanian banks.4. Learning organization and intellectual capitalMost literatures addressing IC have focused on the correlation between IC and organizational performances(Chong and Lin, 2008; Ho, 2009). There are relatively few discussions on the relationship between LO andIC, and even fewer studies on such a relationship in the banking industry. The core competitiveness of thebanking industry is highly reliant on the ability of management teams to systematically being a learningorganization Few studies were conducted to discover the relationship between the learning organization andthe intellectual capital in the banking industry.todays organizations should try to use learning organizations paradigm to be competitive. Also because ourcontemporary organizations may differ from the traditional organizations and so we should implement newskills to be learning organization so that our staff can adjust themselves with new technologies (Hernández& Noruzi, 2010). Learning enables a company to transfer information to valued knowledge, which in turn,16 | P a g ewww.iiste.org
  17. 17. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011enriches organizational capability of adapting to environmental changes and demand (Yang 2003).The literature addressing the learning organization is largely descriptive and conceptual in nature. Althoughmany authors have described why a learning organization should work, there are few specific descriptionsabout the mechanics of how the learning organization as a strategy works to improve performance (Kaiser,2000; Bates & khasawneh, 2005). Artie (2006) adopted case studies of wireless technology companiesbased in Canada to examine the interrelationship between intellectual capital components with aresource-based view. The findings confirmed the interrelationship between components of intellectualcapital and business growth performance among the selected cases of wireless technology companies.Building a learning organization is an important challenge for Jordanian banks. Learning organizations andthe Intellectual capital became one of the most important issues that affect all kind of business includingbanking industry which faces a demand for better products and services has a triggered growing in the inthe managerial development, this development can be reach by enhancing in the intellectual capital that thesame organization can achieve it by the nature of being a learning organization. Al-Weshah et al (2010)stated that banks in Jordan are one of the largest investors in the fields of knowledge and informationsystems (IS). Therefore, this paper examines LO and IC empirically to generalize important factorsconcerning LO and IC of banks. The major purpose of this study is to explore the relationship between LOand IC through the construction of the correlation patterns between these two elements.5. The study aim and objectivesThe aim of this study is to measure how learning organization supports the intellectual capital. Morespecifically, the intellectual capital is measure by three dimensions (human capital, structural capital, andcustomer capital, therefore, the current study attempts to test some research hypotheses. the research mainhypothesis is, learning organization has positive impact on intellectual capital. In order to test thishypothesis, three other sub- hypotheses:  Learning organization has positive impact on human capital.  Learning organization has positive impact on structural capital.  Learning organization has positive impact on customer capital.6. The study methodologyThe current study employs the quantitative approach of research. More specifically, hypotheses testingapproach are used to achieve the study aim and objectives. A self-administrated questionnaire has beendeveloped as data collection methods from managers and executives who work in headquarters ofJordanian banks using convenience sample. 86 questionnaires were sent managers and executives inJordanian banks. A follow up procedure was employed by telephone or personally after two to three weeks.17 | P a g ewww.iiste.org
  18. 18. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011Only 66 questionnaires were returned with response rate is 77%. Table 1 show the respondents positions intheir banks.Table 1: Respondents’ positions in their banks Respondents’ position Respondents number Respondents percentages Information systems managers 12 18% Strategic planning managers 11 17% Marketing mangers 13 19% Financial managers 11 17% Human resources managers 10 15% Research and development managers 9 14% Total 66 100%For the questionnaire validity, the questionnaire was “pilot-examined” by interviewing 10 managers andexperts in the banking industry who agreed to fill in the questionnaire and also to comment on the scalesemployed. Then, their suggestions were collected and considered to improve validity of questionnaire.Moreover, the questionnaire was pretested by sending three questionnaires to different managers inJordanian banks to get their comments and feedback. Although the executives’ comments are considered inthe final version of the questionnaire, they are not selected later to fill the latter questionnaire.For the questionnaire reliability, Cronbach’s alpha was used as a measure of internal consistency reliability.A widely cited minimum threshold for the Crobanch Alpha is 0.70 (Malhotra, 2004). However, thecalculated Cronbachs Alpha for the questionnaire as whole was 0.89 percent. 89% indicates to highinternal consistency among the questions in the questionnaire instrument.7. Hypotheses test and analysisIn order to test research hypotheses, SPSS software (Statistical Package for Social Sciences) has been used.The results of the analysis have been discussed below.Table 2: The first hypothesis: Learning organization has positive impact on human capital: Dependent Independent R Standard T test Result variable Variable square β Hypothesis 1 Intellectual Learning 99200 0.280 .90.9 Confirmed Capital OrganizationAccording to the results, Beta Standard ratio is calculated 0.280 which is significant. The slope of line(0.280) indicates the expected change in intellectual capital (human capital) when learning in a bank is18 | P a g ewww.iiste.org
  19. 19. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011 2changed by one unit. R ratio is the proportion of variation (change) in intellectual capital (human capital)that can be explained by learning organization. Therefore, this ratio (0.299) indicates to the relativecontribution of learning in supporting intellectual capital (human capital) in the Jordanian banks. Thus, thishypothesis is confirmed and learning organization has positive impact on human capital.Table 3: The second hypothesis: Learning organization has positive impact on structural capital: Dependent Independent R Standard T test Result Variable Variable square β Hypothesis 2 Intellectual Learning 992.. 991.0 2960. Confirmed Capital OrganizationAccording to the results, Beta Standard ratio is calculated 991.0 which is significant. The slope of line(0.184) indicates the expected change in intellectual capital (structural capital) when learning in a bank is 2changed by one unit. R ratio is the proportion of variation (change) in intellectual capital (structuralcapital) that can be explained by learning organization. Therefore, this ratio (0.253) indicates to the relativecontribution of learning in supporting intellectual capital (structural capital) in the Jordanian banks. Thus,this hypothesis is confirmed and learning organization has positive impact on structural capital.Table 4: The third hypothesis 3: Learning organization has positive impact on customer capital Dependent Independent R Standard T test Result variable Variable square β Hypothesis 3 Intellectual Learning 99290 9922. .9..0 Confirmed Capital OrganizationAccording to the results, Beta Standard ratio is calculated 9922.which is significant. The slope of line(0.255) indicates the expected change in intellectual capital (customer capital) when learning in a bank is 2changed by one unit. R ratio is the proportion of variation (change) in intellectual capital (customer capital)that can be explained by learning organization. Therefore, this ratio (0.225) indicates to the relativecontribution of learning in supporting intellectual capital (customer capital) in the Jordanian banks. Thus,this hypothesis is confirmed and learning organization has positive impact on customer capital.19 | P a g ewww.iiste.org
  20. 20. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 20118. Results and conclusionsThe aim of this study is to measure how learning organization support the intellectual capital in Jordanianbanks. More specifically, the intellectual capital is measured by three dimensions (human capital, structuralcapital, and customer capital). The concepts of the LO and IC have been shown to be closely related andmutually supporting. The hypotheses testing approach show that learning in Jordanian banks has positiveimpact on supporting intellectual capital by its three dimensions (human capital, structural capital, andcustomer capital). The results support the hypothesis that learning organization has a positive impact onbanks intellectual capital. The results extend the understanding of the role of organizational learning increating intellectual capital and building sustainable advantages for banks in emerging economies.Therefore, it is not sufficient that organizations learn something new, but the new knowledge needs to beapplied to a strategic context and needs to be relevant in that context (Bontis et al., 2001). Intellectualcapital is recognized as one of the most critical factors for the success of banks in a knowledge-basedeconomy. By ensuring better bank learning, knowledge creation and use, the banks policy makers can helpsupport intellectual capital components and reduce banks risks of future crisis.The banking industry must invest to transform to the learning organization which in then will increase theintellectual capital, consequently it will go forward in the competitive globalized environment. The studycan consider that skills of human resources in Jordanian banks are appropriate to transform their banks intolearning organizations. Building a learning organization is an important challenge for Jordanian banks.Learning organizations and the Intellectual capital became one of the most important issues that affect allkind of business including banking industry which faces a demand for better products and services has atriggered growing in the in the managerial development, this development can be reach by enhancingintellectual capital issues in Jordanian banks.9. The study recommendations for practiceIn the light of the study findings, the current study proposes some recommendation for banks managers andexecutives. More specifically, LO and the IC are inextricably linked to the extent that they should taken inmind of the banking industry planners and decision makers. Moreover, banks should focus on the totalinter-organization learning process (i.e. the creation of new corporate knowledge from the totalenvironment within which the bank operates) and the nurturing of the cultural environment that supportsand ensures its continuing development. In Jordanian banks, training approach can be employed to enhancelearning organization concepts in their staff minds. On the other hand, intellectual capital is not just data orinformation in files and databases. It comprises all useful and available knowledge in several forms forbanks managements. Therefore, it is critically important that intellectual assets be well understood andproperly managed if banks are to compete successfully in today’s world environment.10. The study recommendations for further researchIn the light of the study limitations, the current study proposes some recommendation for future research.More specifically, future studies can consider more variables concerned with learning organizations and20 | P a g ewww.iiste.org
  21. 21. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011intellectual capital such as knowledge management and information technologies. Management ofintellectual capital is in its infancy, but interest is growing. Therefore, models and measurements can bedeveloped by different research areas. Moreover, future studies can extend this analysis to differentindustries such as insurance companies and manufacturing. Methodologically, future studies can employthe qualitative approach of research to gain deep understanding for issues of learning organizations andintellectual capital.ReferencesAl-Weshah, G., Al-Hyari, K., Abu Elsamen, A .& Al-Nsour, M. (2011), “Electronic networks and gainingmarket share: opportunities and challenges (cases from the Jordanian handicrafts sector)”, InternationalJournal of Information Communication Technologies and Human Development (IJICTHD) 3(3), 1-15.Al-Weshah, G., Deacon, J., & Thomas, A. (2009), “The current status of marketing information systems inJordanian banking industry: qualitative evidence”, Proceedings of the Symposium models, methods, andengineering of competitive intelligences. 25-26 November 2009. Côte d’Azur – France.Al-Weshah, G. and Deacon, J. (2009), “The role of marketing information systems in responding to externalenvironmental factors: an empirical study of the Jordanian banking industry”. Proceedings of the 9th GlobalConference on Business and Economics, 15-16 October 2009. Cambridge University-UKArgote, L., & Ingram, P. (2000), “Knowledge transfer: A basis for competitive advantage in firms”,Organizational Behavior and Human Decision Processes, 82, 150-169.Artie, W. (2006), “Reporting intellectual capital flow in technology-based companies: case studies ofCanadian wireless technology companies”, Journal of Intellectual Capital 7(4), 492-510.Bataineh, M. & Al-Zoabi, M. (2011), “The Effect of Intellectual Capital on Organizational CompetitiveAdvantage: Jordanian Commercial Banks (Irbid District): An Empirical Study”, International Bulletin ofBusiness Administration 10, 15-24.Bates, R. & Khasawneh, S. (2005), “Organizational learning culture, learning transfer climate andperceived innovation in Jordanian organizations”, International Journal of Training and Development 9(2),96-109.Berry, J. (2005), “Tangible strategies for intangible assets: how to manage and measure your companysbrand, patents, intellectual property, and other sources of value, New York: McGraw-Hill.Blumentritt, R., & Johnston, R., (1999), "Towards a strategy for knowledge management", TechnologyAnalysis & Strategic Management 11(3), 287-301.Boisot, M. (2002), “The Creation and Sharing of Knowledge”, in C. W. Choo & N. Bontis (eds.), TheStrategic Management of Intellectual Capital and Organizational Learning, Oxford: Oxford UniversityPress.Bontis, N. (1999), “Managing Organizational Knowledge by Diagnosing Intellectual Capital: Framing andAdvancing the State of the Field”, International Journal of Technology Management 18 (5-8), 433-462.Bontis, N & Fitz-enz, J. (2002). “Intellectual Capital ROI: A Causal Map of Human Capital Antecedentsand Consequences”, Journal of Intellectual Capital 3, 223-247.Boulton, R., Libert, B., & Samek, S. (2000), “A Business Model for the New Economy”, Journal of21 | P a g ewww.iiste.org
  22. 22. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011Business Strategy 21(4), 29–35.Bozbura, F. T. (2004), “Measurement and Application of Intellectual Capital in Turkey”, LearningOrganization 11(4/5), 357–367.Brown, R.B. & Woodland, M.J. (1999), “Managing knowledge wisely: a case study in organizationalbehaviour”, Journal of Applied Management Studies 8(2), 175-198.Chong, S.C. & Lin, B. (2008), “Exploring knowledge management (KM) issues and KM performanceoutcomes: empirical evidence from Malaysian multimedia super corridor companies”, InternationalJournal of Technology Management 43(4), 285-303.Crossan, M. M., Lane, H. W., & White, R. E. (1999), “An organizational learning framework: Fromintuition to institution”, Academy of Management Review 24, 522-537.Cabrita, M. & Bontis, N. (2008), “Intellectual capital and business performance in the Portuguese bankingindustry”, International Journal of Technology Management, 43 (1-3), 212-237.Edvinson, L., & Malone, M. (1997), “Intellectual Capital: Realizing Your Companys True Value byFinding its Hidden Brainpower”, New York: Harper Business Press.El-Bannany, M. (2008), “A study of determinants of intellectual capital performance in banks: the UKcase”, Journal of Intellectual Capital 9(3), 487-498.Gourlay, M.J. (1999) "Foundationalism: the problem of knowledge",www.xs4all.nl/-nexus/gourlay/found_prob.html [accessed 21 March 2011].Goh, P. (2005), "Intellectual capital performance of commercial banks in Malaysia", Journal of IntellectualCapital, 6(3), 385 – 396.Harris, L. (2002), “The learning organisation – myth or reality? Examples from the UK retail bankingindustry”, The Learning Organisation Journal 9 (2), 78-88.Hernández, J. & Noruzi, M. (2010), “How Intellectual Capital and Learning Organization Can FosterOrganizational Competitiveness?”, International Journal of Business and Management 5 (4), 183-193.Holland, J. (2010),”Banks, knowledge and crisis: a case of knowledge and learning failure”, Journal ofFinancial Regulation and Compliance 18 (2), PP. 87-105.Hong, J. (1999), “Structuring for Organizational Learning”, The Learning Organization Journal 6(4),173-185.Isaac, R.; Herremans, I.; & Kline, T. (2010), “Intellectual Capital Management Enablers: A StructuralEquation Modeling Analysis”, Journal of Business Ethics 93 373–391.Ismail, T. (2008), “Intellectual Capital Reporting in Knowledge Economy: Evidence from Egypt”, Paperpresented at the International Conference on "Economic Directions III:Economic Policy in a RapidlyChanging World", the College of Business Administration, Kuwait: University-Kuwait, December 16-17,2008.Johnson, W.H.A. (1999), “An Integrative Taxonomy of Intellectual Capital: Measuring the Stock and Flowof Intellectual Capital Components in the Firm” International Journal of Technology Management, 18(5–8), 562–575.Kaiser, S. (2000), “Mapping the learning organization: Exploring a model of organizational learning”,unpublished doctoral dissertation, Louisiana State University.Kiran, S. (2008), “Intellectual Capital: Acquisition and Maintenance: The Case of New Zealand Banks”,22 | P a g ewww.iiste.org
  23. 23. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011Journal of Internet Banking & Commerce 13 (1), 1-32.Lev, B. (2001), Intangibles: Management, Measurement, and Reporting, Washington DC: BrookingsInstitution Press.Levine, L. (2001), "Integrating Knowledge and Process in a Learning Organization", Information SystemsManagement, 21-33.Low, J. (2000),”The Value Creation Index”, Journal of Intellectual Capital, 1(3), 252–262.Mansor, N. (2010), “Enculturation of Organizational Learning for Developing Competency: a Case ofMalaysian Islamic Banking Institution”, E-Journal of Organizational Learning and Leadership 8(1), 62-75.Nonaka, I. (1998), "The knowledge-creating company", Harvard Business Review on KnowledgeManagement, Boston: Harvard Business School Press.Nonaka, I. & Takeuchi, H. (1995) “The Knowledge Creating Company”, New York: Oxford UniversityPress.Ordo´n˜ez de Pablos, P. (2003), “Intellectual Capital Reporting in Spain: A Comparative Review”, Journalof Intellectual Capital 4(1), 61–81.Pettinger, R. (2002), The learning organization, Oxford: Capstone PubPetrash, Gordon. (1996), “Dow’s Journey to a Knowledge Value Management Culture”, EuropeanManagement Journal 4, 365-373.Revans, R. (1998), The ABC of Action Learning, London: Lemos & Crane.Rivette, K. (2000), “Discovering New Value in Intellectual Capital”, Harvard Business Review, Jan-Feb’00.Sandelands, E. (1999), “Learning organizations: a review of the literature relating to strategies,building blocks and barriers”, Management Literature in Review, 1.Seleim, A., Ashour, A., & Bontis, N. (2007), “Human capital and organizational performance: a study ofEgyptian software companies”, Management Decisions 45(4), 789-801.Senge, P.M. (1990), The Fifth Discipline. New York: Doubleday.Stewart, T.A. (1998), Intellectual Capital: The New Wealth of Organizations, London: Nicholas BrealeyPublishing, 6 (12), 66-7.Stewart, T.A. (1997), Intellectual Capital: The New Wealth of Organizations. New York: Doubleday.Schein, E.H. (1997) Organizational Learning: What is New? Society for Organizational Learning,Cambridge: MIT Sloan School of Management.Thurbin, P.J. (1994). Implementing the Learning Organization: The 17th Days Programme. London:Pitman Publishing.Uzzi, B. & Lancaster, R. (2003), “Relational embeddedness and learning: the case of bank loan managersand their clients”, Management Science 49 (4), 383-99.Walsh, K., Cathy, E. & Canina, L. (2008), “The Impact of Strategic Orientation on Intellectual CapitalInvestments in Customer Service Firms”, 2008; 10; 300 originally published online Mar 5, 2008; Journal ofService Research, 300-317.Yang, J.T. (2003), Qualitative Knowledge Capturing and Organizational Learning: Cases in Taiwan Hotels.Taiwan: National Kaohsiung Hospitality College.23 | P a g ewww.iiste.org
  24. 24. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011 Application of Queueing theory to port congestion problem in Nigeria Oyatoye E.O. Department of Business Administration, University of Lagos. Nigeria Tel: +234 805 281 1824 E-mail: eoyatoye@unilag.edu.ng Adebiyi, Sulaimon Olanrewaju (Corresponding author) Department of Economics and Financial studies Fountain University Osogbo, Nigeria. Tel: +234 803 368 2722 E-mail: lanre18april@gmail.com Okoye John Chinweze Torcelik International Company Ltd, Apapa, Lagos. Nigeria Tel: +234 803 323 2666 E-mail:chijono006@yahoo.com Amole Bilqis Bolanle Department of Management and Accounting, Obafemi Awolowo University, Ile-Ife, Nigeria Tel: +234 803 472 1305 E-mail:amolebb@gmail.comReceived: October 19, 2011Accepted: October 29, 2011Published:November 4, 2011AbstractThis paper stresses the importance of queueing theory to the problem of port congestion in order to enhancesustainable development of Nigeria ports. Nigeria Ports are characterized with incessant congestionproblem in the recent past. This has resulted in diversion of ships scheduled for Nigeria Ports to otherneighbouring country ports which has caused the country to lose a lot of revenue. The effectiveness of aPort is contingent upon loading and unloading of ships. The traffic movement through a port is a complexphenomenon because of the random nature of the arrival and service time of the ships. This requires asystematic approach in port planning and management. Queuing model was applied to the arrival andservices pattern which causes the problems of congestion and proffer solutions to the problem areas. It isalso used to predict the average arrival rate of ships to Tin Can Island Port and the average service rate pership in a month. The study to found out the number of berth in Nigeria port is adequate for the trafficintensity of vessels but other factors leading to port congestion were identified through the content analysisof the interview conducted with stakeholders at the port. Policy recommendations that could make Nigerianports to be cost effective, more attractive and enhance quick turnaround of vessels at the ports were made.Key words: Queue theory, port congestion, berth, arrival time, service time.24 | P a g ewww.iiste.org
  25. 25. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011 1. IntroductionThe Nigerian Ports Authority (NPA) was established in 1955 and was saddled with the responsibility tooversee the activities and operations of the Ports in Nigeria. Over the years, Tin Can Island Port hasexperienced series of congestion which has resulted in the diversion of ships scheduled for Nigeria ports toother neighbouring country ports. The first ports congestion was experienced in Nigeria during theeconomy booming years of early 1970s. During that period, there were a lot of incoming goods into Nigeriabecause of the discovery of crude oil and the reconstruction of the devastated effect of the civil war. Theperiod witnessed a lot of importation of cement into the country, so much that hundreds of vessels had toqueue for berthing space for months, (The Cement Armada). So much money was wasted on payment ofdemurrage for these vessels, a development that created unpleasant consequences for the Nigeria economy. The second Port congestion was witnessed in early 2000, when the Federal Government introduced apolicy requiring 100% physical examination of all containers that were imported into the country and thecontents unstuffed for the government agencies at the port to ascertain and establish that what was declaredwas actually what the container contained. This resulted in many consignees abandoning their containersthus creating backlog of un-cleared containers occupying the terminals and limiting the available space forin-coming containers. The most recent port congestion was between October 2008 and March 2009. This was as a result of twofactors. Firstly, the Cargo traffic in Nigeria tends to have a certain cycle. The peak period occurs betweenOctober and March. This period records more volume of goods coming into the ports. The second factor isthat the Nigeria Customs Services (NCS) in an effort to fulfill its responsibility and ensure that its integrityis maintained, introduced a circular known as “Circular – 02”. The circular stated that any importer whomakes a false declaration will have his goods seized and the importer persecuted in the law court. Thisresulted in many of the consignees abandoning their cargos in the port and vicious cycle was created.Meanwhile, the shipping companies and the terminal operators continued to charge demurrage, whilecontainers continue to come into the port without the owners clearing them out. This created a lot ofproblems and it got to a stage when there was no space in the terminal to discharge incoming containers,hence the ships has to queue for weeks, months before getting access to berthing space. The situation got toa stage where the Nigerian Customs Service had to put aside the circular – 02 and even gave some waiverto enable the importer clear out their goods, still the importers were not forthcoming because by then thegoods had accumulated so much demurrage. However, the random arrival of the ships makes the predictability of the system and managerial decisiondifficult. Queuing theory model could provide Managers/Port operators with a useful set of decisionmaking formulas and algorithms for designing Port systems and services (Kalavaty, 2007). An example ofthis is the Classical Erlang blocking formula that was developed in 1917. This formula gives the probabilitythat “berths are busy” given the fixed number of ships that can berth at the same period of time. This modelwill help the port managers decide what should be optimal Port size needed to effectively and efficientlyserve customers` need profitably. The measure used in the model is the arrival rate and service rate of thesystem. In order to respond adequately to this challenge, queueing theory was applied to arrival and servicepattern in Nigeria port in order to access the business behaviour and proffer a relief for problem ofcongestion that seem to be reoccurring in the port even after the concessioning of the port to private sector1.1 Statement of the ProblemSince 1977 Tin Can Island Port Nigeria, one of the Nigerians main Ports with shore facilities has beenplaying a vital role in the economic development of Nigeria. It handles some general purpose Ships besideshaving a few additional jetties to handle oil tankers and food grains etc. the Ports all over the world havechanged significantly with the advent of containerization and Tin Island Port is not an exception. Tin CanIsland Port despite many constraints has continued to cope with the changing mode of Maritime Trade.However, it has been suffering from the problem of poor operational efficiency. The traffic through the Port is increasing along with the economic development of Nigeria. It has been25 | P a g ewww.iiste.org
  26. 26. European Journal of Business and Management www.iiste.orgISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)Vol 3, No.8, 2011observed frequently that arriving ships has to form queue and sometimes ships has to wait longer thannecessary before berthing. In addition to that lack of adequate inland infrastructure to handle incomingcontainers give rise to the instance of congestion in both Cargo and Ship and delays in final delivery ofgoods to the importer’s premises with consequent increase in transportation and other costs. Port congestion is inimical to economic growth and has become a regular occurrence at Nigeria ports.This has been a source of concern to the Federal Government, who at various times had set up committeesto find solution to the persistence occurrence of congestion at the ports. The effectiveness of a port iscontingent upon the efficient loading and unloading of ship. When the traffic movement is hampered, itcreates delays in the system. This waiting line delays cause ships to queue for berthing space thus creatingcongestion. This waiting time is calculated with the service time at the berths to form the turn-around timeof ships which is one of the ways of measuring the efficiency of a port. The ever growing international trade has made demand on quick turnaround time of ships a paramountproblem in today’s shipping business. These ships waiting for berth space incurs extra cost of operation,thus increasing cost of doing business for the importers. This study seeks to find ways to enhance quickerturnaround time of ships and make the Nigeria Ports attractive and cost efficient. Consequently, the following research questions are addressed by this study i) Is the number of berths at Tin Can Island Port adequate for its traffic volume? ii) What are the factors responsible for port congestion in Nigeria? iii) How can queue theory be applied to port congestion? iv) What are the possible solutions to port congestion using queuing models?1.2 Objective of the studyThe broad objective of this study is to gain an understanding of the application of queueing theory to theproblem of port congestion in Nigeria Tin Can Island Port. To achieve this however, the research willlook at the following specific objectives: i) To assess the adequacy of berths at the port ii) To examine the use queueing model for analyzing the queue behaviour of ships in Nigeria port. iii) To determine through the use of queue model the optimal number berth required for efficient port operation in Nigeria. iv) To proffer solution to the problem of Port Congestion through the use of queueing model. 2. Literature Review2.1 The Concept of Port CongestionOver the years the traffic through the Nigeria Ports are increasing along with the economic development ofthe country. It is frequently observed that a queue of arriving ships is formed and sometimes ships have towait for a longer time before berthing. This can be attributed firstly, to the mobility of the existing portfacilities to match the ever increasing global trade and secondly, some obnoxious government policies andregulations. This incessant congestion in our ports has resulted in diversion of ships meant for Nigeria Portsto other neighboring country ports. In the reforms and concessioning of 2006, Tin Can Island Port wasconcessioned to four different private organizations to manage. See Table 1 Maduka (2004) defined Port Congestion as massive un-cleared Cargo in the Port, resulting indelay of ships in the seaport. According to him, this occurs when ships spend longer time at berth thanusual before being worked on or before berth. Onwumere (2008) refers to port congestion as a situationwhere in a port; ships on arrival spend more time waiting to berth. In this context, more ships will queue atthe channels and the outside bar waiting to get space at the terminal for berth age. According to him, thiswaiting time is calculated using the service time of vessels which is one of the ways of measuring portefficiency. In his view, this is a situation where cargoes coming into the port are more than the storage26 | P a g ewww.iiste.org