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a report on orgaizationl learning and innovativeness

a report on orgaizationl learning and innovativeness

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    Human Resources Human Resources Document Transcript

    • AD 320 HUMAN RESOURCES MANAGEMENT TERM PROJECT BY: Serdar Çalışkan Fulya Yüksel Ersoy Doruk Küçüksaraç Sevnur Malik Gülin Serpel 09.06.2009 1
    • TABLE OF CONTENTS I. LITERATURE REVIEW A. What is Organizational Learning? ……………………………………3 a. Individual Learning and Organizational Learning…………………...4 b. Learning Organizations………………………………………………5 c. Why do firms learn?.............................................................................5 d. Levels of Learning……………………………………………………6 e. Factors Facilitating Organizational Learning………………………...7 f. Four Contrasting Models of Organizational Learning………………..9 B. What is innovativeness in organizations?...............................................13 a. Why some organizations are more innovative than others?.................14 b. Types of Innovation…………………………………………………..17 c. Innovation Process in Organizations…………………………………18 d. How manageable is the innovation process?........................................20 C. Comparison of Organizational Learning & Organizational Innovativeness……………………………………………………………21 II. STATISTICAL ANALYSIS A. Analysis of General Characteristics of Our Companies........................25 B. Hypothesis about Sector’s Differences and Organizational Learning&Innovation...............................................................................27 C. Hypothesis I………………………………………………………………28 D. Hypothesis II……………………………………………………………...31 E. Hypothesis III……………………………………………………………..34 F. Hypothesis IV……………………………………………………………..37 III.CONCLUSIONS…………………………………………………………………42 IV. APPENDIX……………………………………………………………………….43 V. REFERENCES…………………………………………………………………..44 2
    • I. LITERATURE REVIEW What is Organizational Learning? The idea of organizational learning has been present in the management studies literature for decades but as it is said by Mark Easterby-Smith it has only become widely recognized in the past twenty years. It is argued in the book Organizational Learning and the Learning Organization that “Two developments have been highly significant in the growth of the field. First it has attracted the attention of scholars from disparate disciplines who had hitherto shown little interest in learning processes. For example, business strategies have realized that the ability of the organization to learn faster, or “better”, than its competitors may indeed be the key to long term business success (Collis, 1994; Grant, 1996). Some economists have taken a similar path, arguing that firms learn by doing, as well as through formal learning processes. Second development is that many consultants and companies have caught onto the commercial significance of organizational learning. Consultants and practicing managers have added to the theoretical literature on the learning organization with accounts of how their own interventions have worked out in practice.” Organizational learning approach is a very critical success factor for the companies today so they should give attention to this issue. Definitions of organizational learning found in the literature include: encoding and modifying routines, acquiring knowledge useful to the organization, increasing the organizational capacity to take productive action, interpretation and sense-making, developing knowledge about action-outcome relationships, and detection and correction of error. The important points to note about these definitions are that learning organizations: Are adaptive to their external environment Continually enhance their capability to change/adapt Develop collective as well as individual learning Use the results of learning to achieve better results 3
    • Individual Learning and Organizational Learning Some researchers contend that human capital by itself is of little value. For example, Edvinsson (1996) argued that without the supporting resources of a firm, people do not have the ability to do anything with their ideas. Nonaka & Takeuchi (1995) suggested that human capital alone may not benefit the organization if there are no mechanisms in place for employees to share knowledge with one another. Although learning is essentially based on individuals in the workforce, a firm can learn as well. Evolutionary economic theorists have suggested that firms effective at 'learning' develop routines that allow them to effectively develop, store and apply new knowledge on a systematic basis (Nelson & Winter, 1982). Organizational socialists suggest that a firm can be understood as a social community specializing in speed and efficiency in the creation and transfer of knowledge (Kogut & Zander, 1996). Thus, organizational learning is not simply an aggregation of the knowledge held by a set of individuals (Brown & Duguid, 1991). It emphasizes the interaction patterns of employees through which people acting together to achieve a meaningful purpose. According to the knowledge-based view of the firm, knowledge starts with the individual and firms are superior to markets in their ability to integrate knowledge across individuals (Kogut & Zander, 1996). An organization must try to encourage and provide various learning mechanisms so that knowledge can be easily shared and enhanced. Because researchers comment that no systematic effort has been devoted to developing valid measures for learning-related constructs (e.g. Sinkula, 1994; Slater & Narver, 1995), we explored the construct of learning orientation drawn from knowledge management theories. The learning orientation refers to an organization-wide commitment to promote knowledge creation and sharing so as to increase the firm's capability. Six components of organizational learning orientation were identified (ICT, culture, organizational structure, measurement system, resource and leadership support) by reviewing the major knowledge management literature. An organization that emphasizes these six factors is considered a learning-committed organization. 4
    • Learning Organizations Regarding learning, Mark Dodgson wrote in his article “It can be described as the ways firms build, supplement and organize knowledge and routines around their activities and within their cultures, and adapt and develop organizational efficiency by improving the use of the broad skills of their workforces. This broad definition incorporates a number of assumptions: -learning generally has positive consequences even though the outcomes of learning may be negative, i.e. firms learn by making mistakes. -although learning is based on individuals in the workforce, firms can learn in total. While emphasizing the role of human agency in learning, corporate and group culture is influenced by individual learning and can assist the direction and use that learning. -learning occurs throughout all the activities of the firm, and, as will be argued later it occurs at different speeds and levels. Encouraging and coordinating the variety of interactions in learning is a key organizational task.” Mark Dogson continues with the definition of learning organizations. “Firms that purposefully construct structures and strategies so as to enhance and maximize organizational learning have been designated „learning organizations‟. The characteristics of the learning company are described by Pedler et al. (1989) who define it as „an organization which facilitates the learning of all its members and continually transforms itself‟, and argue that it: -has a climate in which individual members are encouraged to learn and to develop their full potential. -extends this learning culture to include customers, suppliers and other significant stakeholders. -makes human resource development strategy central to business policy. -continually undergoes a process of organizational transformation.” Why do firms learn? Common explanations of the need to learn are the requirement for adaptation and improved efficiency in times of change. Learning is seen as a purposive quest to retain and improve competitiveness, productivity, and innovativeness in uncertain technological and market circumstances. The greater the uncertainties are, the greater the need for learning is. Learning is a key feature in the process by which firms accumulate technology in order to 5
    • compete. This is seen particularly in Japanese firms, whose industrial organization is increasingly observed as a model to be replicated (Marceau 1992). Japanese firms place particular emphasis on learning (Pucik 1988b). Bertrand Moingeon defines learning why as organizational members inquiring into causality using diagnostic skills. The objective is to develop these processes as a strategic capability, such that individual members develop the capacity to diagnose and identify underlying causes in a variety of new situations, including potentially difficult interpersonal situations. According to Dodgson, by building the metaphor of individual learning, conflict, and hence learning, can be seen as inevitable in organizations as it is in individuals. It is a natural state. Organizational learning is as natural as learning in individuals as they attempt to adjust and survive in an uncertain and competitive world. We simply agree with the idea that firms should continuously learn in not to lose their competitive advantage and better deal with the new situations. Learning improves the competitive advantages we say “core competence” of the companies. Levels of Learning John Farago and David J. Skyrme had stated that a learning organization is not about 'more training'. While training does help develop certain types of skill, a learning organization involves the development of higher levels of knowledge and skill. They have developed a 4- level model that we found the most useful: Level 1: Learning facts, knowledge, processes and procedures. Applies to known situations where changes are minor. We think that this is the easiest one and most of companies are involved in that level of learning. Level 2: Learning new job skills that are transferable to other situations. Applies to new situations where existing responses need to be changed. Bringing in outside expertise is a useful tool here. This is more difficult to achieve for many companies in Turkey. However, it is very important for today‟s business environment to survive. Level 3: Learning to adapt. Applies to more dynamic situations where the solutions need to be developed. Experimentation and deriving lessons from success and failure is the mode of learning here. Unfortunately very few companies can apply this level of learning in their organizations, but the ones who achieve are competitively advantageous to others. 6
    • Level 4: Learning to learn. It is about innovation and creativity; designing the future rather than merely adapting to it. This is where assumptions are challenged and knowledge is reframed. This is the highest level of learning. It is about being the leader of the market, leading the change. The innovative companies such as Apple, Google are the ones who make this successfully. They have the products that design the future. They create the trends and the future and others follow them. Factors Facilitating Organizational Learning Ricardo Chiva-Gómez comprehensively reviews the literature and represents his findings in the paper called “The facilitating factors for organizational learning: bringing ideas from complex adaptive systems”. According to Chiva-Gómez organizational learning literature was divided into two categories by Argyris and Schön (1996, p. 180). One is “more practically orientated and prescriptive” and the other is “more critical and descriptive” literature of organizational learning. The first one is focused on the development of normative models for the creation of a learning organization which has several facilitating factors. The latter is mostly related with nature and process of learning. Hence according to author two main categories of organizational learning arise (Easterby-Smith et al., 1998; Easterby-Smith and Araujo, 1999): cognitive perspective (based on individual learning) and social perspective (based on relational orientation). Both studies from cognitive approach and social approach suggest factors that are facilitating organizational learning. Chiva-Gómez includes in this article a great deal of important names and their findings (Table 1 summarizing review of Chiva-Gómez is included in the appendix). Here, we would like to mention findings of Hedberg and Ulrich as 2 brief examples. Chiva-Gómez indicates that Hedberg identifies 4 key factors as main facilitators of organizational learning. These are: “(1) promoting experimentation; (2) encouraging awareness in the organization, i.e. through discovering more about the organization; (3) redesigning and improving inner environments (rewards and punishments); (4) achieving dynamic balances, through diversity and heterogeneity. According the Hedberg, employees should be free to experiment and make failures. Cost of these failures should be shared through organization and employee selection should be based on applicants‟ ability to effectively structure problems. Chiva-Gómez indicates that Ulrich, in the learning organization literature, describes some important factors regarding learning ability. These are “(1) building a commitment to learning capability by making learning a visible and central element of the strategic intent, by 7
    • investing in learning and training, by measuring learning, etc.; (2) working to generate ideas with impact by experimenting, continuous improvement, competence acquisition and observing what others do; (3) working to generalize ideas with impact by a shared mind-set, capacity for change, or leadership.” We understand that researchers have a different understanding of organizational learning and factors smoothing the progress of organizational learning. However, from these examples and information given in the appendix we can conclude that despite these differences researchers identify similar points as factors facilitating organizational learning. After these analyses the author of the article proposes that the second perspective namely social approach has similarities with Complex Adaptive Systems (CAS). Before going into the details of this issue, we will have a look on what CAS is and what are its key characteristics. Sherman and Schultz (1998, p. 17) define CAS as a system: “. . . composed of interacting „agents‟ following rules, exchanging influence with their local and global environments and altering the very environment they are responding to by virtue of their simple actions.” According to Chiva-Gómez “CASs are the combination of three concepts: they have many autonomous parts, they are able to respond to external changes, and form self- maintaining systems with internal feedback paths. Their essential essence is that they self- organize.” Chiva-Gómez develops key factors by the help of CAS and its similarities with social approach of organizational learning. He proposes that when the characteristics presented in the table below exist in an organization, then organizational learning will take place. Figure 1 The facilitating factors for organizational learning according to CAS 8
    • Four Contrasting Models of Organizational Learning After analyzing the factors which help an organization through organizational learning process, we will continue with models of organizational learning. Alice Lam in “Tacit Knowledge, Organisational Learning and Innovation: A Societal Perspective” article identifies four contrasting models of organizational learning based on knowledge types. Before intensively exploring these four models of organizational learning, we would like to inform you about the viewpoint of authors of this article on knowledge type- organizational learning and innovation triangle: “What organisations can do, in particular, their capacity for learning and innovation are closely related to how their knowledge is constituted, utilised and generated. All organisations will potentially have a mixture of different knowledge types. However, their relative importance can differ. Organisations can be dominated by one knowledge type rather than another. There is a close correspondence between the dominant knowledge type and the structural configuration of the organisation, resulting in different dynamics of learning and innovation.” Article suggests 4 categories of knowledge, which are first suggested by Collins (1993) and then are adapted by Blacker (1995). These four categories are a. „Embrained Knowledge‟ (depends on conceptual skills and cognitive abilities of the individual); b. „Embodied Knowledge‟(action-oriented tacit knowledge ); „Encoded Knowledge‟(based on sign and signals) and „Embedded Knowledge‟ (based on organization routines, practices and shared norms). Given the information above, we will comprehend these four models precisely. The article, based on Mintzberg‟s (1979) classic typology of organizational forms and the work of Aoki (1988) and Nonaka and Takeuchi (1995) on the „Japanese model‟, identifies four ideal typical organizational forms in terms of organizational learning and its effects on innovation. According to the article, each organizational form is related with a dominant knowledge type. These models can be analyzed in terms of “the mechanisms for the coordination of operating tasks” and “the knowledge agents”. a. ‘Professional Bureaucracy’ : Definition: According to the article “an organisation which derives its capability from the formal „embrained knowledge‟ of its highly trained individual experts can be defined as a „professional bureaucracy‟”. In this type, coordination is achieved by the standardization of knowledge and skills. The formal knowledge creates a significant base for internal work rules, standards, job boundaries and job status, states Lam. 9
    • Approach to problem solving: Logical and consistent application of existing knowledge into problems. This approach results in deficiencies when dealing with uncertainties. Key agents: The individual professionals. Learning perspective: The learning focus is narrow and constrained within the boundary of formal specialist knowledge. Innovation Capacity: Model inhibits innovation. Classic examples: Universities, hospitals and craft production firms are the classic examples of professional bureaucracy according to article. Municipalities in Turkey can be classified in this model. b. ‘Machine Bureaucracy’ : Definition: As stated in the article “an organisation which depends heavily on „encoded knowledge‟ can be defined as a machine bureaucracy”. The most important factors of a machine bureaucracy are “specialization, standardization and control”. Machine bureaucracy is utilized to achieve efficiency and stability in the organizations. Work is divided to small routine tasks which require the minimal formal knowledge of workers. Key agents: Not the employees who directly engaged in operations, but the formal managerial hierarchy whose responsibility is to formulate rules, procedures and performance standards. Learning perspective: According to Lam machine bureaucracy learns by „correction‟ through performance monitoring. Accumulation of new knowledge is very slow. Innovation Capacity: Unable to deal with “novelty or change” due to the fact that the model is designed to deal with routine problems. (Little capacity to innovate) Classic examples: Lam states that mass production firms operating on the principles of Scientific Management are classic examples. Production processes of automotive firms in Turkey can be classified in this category. c. ‘Operating Adhocracy’ : Definition: “An organisation which relies not only on the formal knowledge of its members, but draws its capability from the diverse know-how competencies and practical problem solving skills embodied in the individual experts, can be described as an 'operating adhocracy'” based on the definition of article. In this organic model, standardization of knowledge and work are minimized. 10
    • Approach to problem solving: Experience and capacity to adapt to new situations is vital in this model according to author. Formal professional knowledge and standardized expertise has little effect on problem solving. The knowledge structure is individualistic but collaborative. Learning perspective: Learning is broad and rooted in different experiences and know- how of different experts (Not restricted with specialization). According the authors, learning occurs on multiple levels and employees have a strong incentive to engage in 'extended occupational learning', Innovation Capacity: Model activates innovation. We would like cite an important point from the article: “…learning and innovative capabilities [of operating adhocracy ] stem from: 1)the way its collaborative approach to problem-solving facilitates the distribution and dissemination of knowledge; 2) the high degree of autonomy given to individuals and entrepreneurial project teams leads to a diverse and varied knowledge base; and 3) its strong market-discipline exerts pressures on individuals to accumulate their knowledge and expertise in line with shifting market opportunities.” “The operating adhocracy is the most innovative and yet least stable form of organisation.” Classic examples: Organizations providing non-standard, creative and problem-solving services directly to the clients, such as professional partnerships, advertising agencies, software engineering firms and management consultancies can be typical examples as stated article. Mobilera, Alametifarika, Marka which are advertising companies founded in Turkey, are perfect examples of this model. d. ‘J-form’ Organization : Definition: According to article in consideration “An organisation which derives its capability from knowledge that is 'embedded' in its operating routines, team relationships and shared culture can be described as a 'J-form' organisation.” This model is a combination of bureaucracy model (stability and efficiency) and operating adhocracy model (flexibility and importance of teams). Key agents: Lam indicates that the semi-autonomous project team (members from different functions) has the utmost importance in this model. Both the autonomous individual expert and the controlling managerial hierarchy lose its vital role over the project team. 11
    • Learning perspective: In J-form organizations learning generally takes place through “shared work experiences and joint problem-solving in project teams” like in operating adhocracy according to the article. The difference is that in J-form organization learning perspective is broader due the cross-functional nature of teams. These cross-functional teams create a culture which encompasses diversity of knowledge. Innovation Capacity: Innovative and adaptive. Lam states: “It is marked by a tremendous capacity to generate, diffuse and accumulate tacit knowledge continuously through „learning-by-doing‟ and interaction. It has a unique capability to generate innovation continuously and incrementally. However, learning in the J- form organization is also potentially conservative. Its stable social structure and shared knowledge base can reduce the capabilities of the organization to learn from individual deviance and the discovery of contrary experience (Levinthal and March 1993: 108; Dodgson 1993: 383).” However, these characteristics of J-form organization can make radical innovation difficult. Classic examples: Japanese type of organization, knowledge creating factories. Turkish telecommunication companies eg. AVEA and Turkcell are the examples for this model. To conclude the article argues that “there are dominant societal patterns of learning and innovation. Two out of four models can be accepted as alternatives for innovational learning. These are operating adhocracy and the J-form organization. These two have a great deal of similarities: being organic, decentralized problem-solving, importance of cross functional teams, non-hierarchical structure. They both argue that learning and innovation cannot be thought apart social interaction and practical experience. The most important difference between two is their approach to learning: the former utilizes an external approach but the latter an internal and firm-centered one. What is innovativeness in organizations? If we take the narrower concept of innovation first, the main definitional issue which has occupied academic writers is how to distinguish it from the organizational change. Probably the most widely cited formulation of this distinction is developed by Michael West and colleagues (West and Farr,1990;King and West,1987). They characterize organizational innovation as follows: -“An innovation is a tangible product, process or procedure within an organization. A new idea may be the starting point for an innovation but cannot be called an innovation. -An innovation must be new to the social setting within which it is introduced. 12
    • -An innovation must be intentional rather than accidental. -An innovation must not be a routine change. The creation of an entirely new post would. -An innovation must be aimed to produce benefit to the organization. Intentionally destructive actions such as sabotage or purely whimsical changes are excluded from the definition. -An innovation must be public in its effects. If an individual introduces a change to his or her work which has no effect on other people in the organization, it wouldn‟t be considered an innovation.” There are some criticisms about the definition of organizational innovation which is done by Michael West and his colleagues. Nigel Nicholson(1990) has argued that they had the difficulty of defining what is meant by terms such as intentional, accidental, new or beneficial. Another criticism to West‟s definition is that it doesn‟t take into account the scale or scope of the products, processes or procedures to which it is applied. Writers such as Kimberly(1981)have argued that it only makes sense to define as innovations those changes which has a substantial impact on the organization. As a conceptual basis for theorizing innovation, definition of West has limitations but as a pragmatic point of view his definition remains valuable. Why some organizations are more innovative than others? Researchers have identified some factors that help them in their attempts to describe the characteristics of high or low innovative organizations. A vast number of different factors have been examined as possible facilitators or inhibitors of innovation. The major ones are listed below: 1) People 2) Structure 3) Climate and Culture 4) Environment People: When trying to explain why some organizations are more innovative than others, one of the first factors at which researchers looked at were the characteristics of people in the organization. Leaders and other top decision makers were the principal focus of early studies. Recent research has broadened its scope to consider other influential individuals, such as internal change agents and informal ideas champions. 13
    • Early research into the influence of leaders on organizational innovation has been based on individual characteristics: personality traits, values and beliefs, experience and knowledge. There has been some research about these issues however the biggest problem is that researchers have not been able to identify characteristics which predict innovation in all types of leaders. In many studies, leader characteristics are found to be associated with organizational innovation. Recent studies are based on the style required for innovative leadership. Drawing heavily on the work of organizational gurus like Tom Peters and Robert Waterman and Rosabeth Moss Kanter, writers in Europe and North America stressed the need for a participative, democratic style of leadership which encourages subordinates to be involved in innovation decisions and to feel able to suggest novel ideas without fear of censure. According to these writers, the second aspect of innovative leadership is the ability of the leader to provide a vision of where the organization is going to which organizational members can commit themselves. More recently, academic and managerial authors have argued that transformational leadership is facilitator of innovation. This concept was developed by Bass to refer to leaders who inspire followers to act together towards shared goals. It comprises components of charisma, inspiration, intellectual stimulation and individual consideration. Many critics argue for a contingency approach, whereby the type of the leadership depends on the nature of external demands on the organization and the attitudes of organizational members towards change (Dunny and Stace,1988). Where an organization faces a threatening, turbulent environment, leaders may need to be directive rather than participative in order to implement innovations. Research on the influence of individuals other than leaders on organizational innovativeness has concentrated on formal change agents and informal idea champions. A change agent may be defined as a person who has been given explicit responsibility for overseeing the introduction of a specific change within an organization. He or she may be a member of the organization or an outside consultant. However, the individuals responsible for the introduction of an innovation often are not appointed as change agents but idea champions. Idea champions feel a strong commitment to the idea and are able to transform it to others in the organization. According to a research done by Frost and Egri (1990a,1990b), two critical factors determine whether idea champions are successful or not. These are personal power in the organization and ability to access and utilize wide communication networks. According to Dougherty and Hardy; senior, long serving members of staff were often able to succeed in championing through their credibility and extensive personal networks where less experienced staff found their efforts frustrated. 14
    • Organizational Structure: John Child defines the organizational structure as follows: “The formal allocation of work roles and the administrative mechanisms to control and integrate work activities including those which cross organizational boundaries.” Burns and Stalker state that organizational structure should be related to the environment in which the organization operates. Where the organization is very stable and predictable, a mechanistic structure is suitable. People know what is expected of them and can concentrate on performing their tasks efficiently. Where the organizational environment is unpredictable and subject to change, mechanistic organizations lack the flexibility to cope with changes and an organic structure is required. This enables the organization to change direction rapidly in response to market demand and to take advantage of new technologies. The American researchers Lawrence and Lorsch took Burns and Stalker‟s approach a stage further. As well as saying that different types of overall structure were required according to environmental conditions, they claimed that in turbulent environments a greater degree of structural differentiation between departments is required than in predictable environments. Thus in a firm facing an unstable market, the production department would have a more mechanistic structure than the sales department, which needs to respond quickly to changing demand. According to Hill and Amabile, the psychological rationale for the effectiveness of such structures is in terms of job discretion and idea ownership through participation. High discretion is consistently found to predict innovation and creativity at work through the motivating effects of a sense of control over one‟s work and by removing hierarchical barriers to try new ideas. Idea ownership stems from the participation in idea generation and decision making in the context of team working, ownership associated with autonomy and participative leadership may encourage the development of an innovative group identity. Organizational Climate and Culture: The 1980s and 1990s saw a shift in emphasis in the search for antecedents of successful innovation away from characteristics of people and structures toward less tangible features of organizations in particular their climate and cultures. According to Nystorm, organizational culture is the values, norms, beliefs and assumptions embraced by participants and climate is the feelings, attitudes and behavioral tendencies, which characterize organizational life. According to a study done by Nystrom, Ekvall and West common 15
    • recommendations for climates supporting innovation emerging from such work include openness to change, risk taking, tolerance of debate and disagreement and playfulness. Approaches to culture may be categorized as either structural or interpretative. The structural focus is on the link between culture and organizational structure. One well known structural typology is proposed by Charles Handy, who identifies 4 types of culture. Role cultures are typical of the classic bureaucratic model of organization, where the structure is one of multiple layers of hierarchy, each reporting to the one above. Key values are adherence to and expertise within clearly defined roles. Ambiguity of any kind is highly threatening and as a result formal rules, regulations and procedures around. Role cultures are not effective innovators. They generally work in stable, predictable environments. Power cultures are often found in organizations which have grown up around one strong, authoritative individual. Status, obedience and control are highly valued but in contrast to role cultures the central authority functions through ad hoc decisions. This enables such cultures to respond and initiate change rapidly. If the organization is small and staff members largely share their vision, power cultures can be effective. Task cultures are associated with matrix structures. They stress flexibility, adaptability and egalitarianism within project teams, lateral rather than vertical communications. Person cultures emphasize individual autonomy and interpersonal relationships. They are associated with highly decentralized and informal structures, where control is exercised through mutual accountability. Environment: In seeking to identify factors which help or hinder innovation, it is not enough to look at features of the organization itself; its people, structure, climate and culture. It is also necessary to look at the environment within which the organization exists, and the way it interacts with that environment. In an economic analysis of organizational innovation, a wide range of factors in both the physical and commercial environment would need to be considered. Studies have shown innovativeness to be associated with the existence of boundary spanning roles within the organization and with the professionalization of organization members. According to Miles and Snow, the extent to which an organization engages in an active search of the environment for new ideas to adopt (environmental scanning) depends on its perceptions of its own relationship with its environment. Such perceptions have been used as the basis for classifying organizations into strategic types. There are four types: defenders, prospectors, analyzers and reactors. Defenders are the organizations which see their environment as essentially stable and concerned with the efficiency of existing operations in 16
    • order to dominate their market niche. Prospectors see their environment as uncertain and turbulent, therefore place high value on innovation. Types of Innovation Fariborz Damanpour and William Evan distinguished between technical innovation, which occurs within the primary work activity of the organization and administrative innovation, which occurs within the social system and is concerned with the organization of work and the relationships between organizational members. In a study of American public libraries, it is found that the adaption of administrative innovation triggered technical innovation. Damanpour has since added a third category, ancillary innovations. These are the innovations which span organizational-environmental boundaries and go beyond the primary work functions of the organization. In 2001, Damanpour and Gopalakrishnan distinguished the innovation into two groups; product and process innovation. They define the product innovation as new products or services introduced to meet an external user or market need and process innovation as new elements introduced into an organization‟s production or service operations. The characteristics of an innovation are classified under 3 terms according to Zaltman, Duncan and Holbek. These are programmed-non programmed, instrumental-ultimate and radicalness. Whether an innovation is scheduled in advance is related to programmed-non programmed. Non-programmed can also be divided into two as distress or slack. Whether an innovation is introduced to facilitate a further innovation or as an end in itself is related to instrumental and ultimate side. The extent to which the change is both novel and risky is related to radicalness. Innovation Process in Organizations Managing the introduction of innovations in an organization does not only consist of implementing the change and taking a single decision to adopt. It involves a range of activities prior to and following the adoption such as fact finding, political maneuvering, formal and informal discussion and so on. Writers have been proposing models describing the sequence of events in the innovation process since the field first emerged in the 1960s. All of these models have three common features. First, they are based largely and solely on theoretical speculation rather than observation. Secondly, they are normative; they seek to describe how innovation 17
    • “normally” occurs. Thirdly, they describe a process as a sequence of developmental stages, each of which must be passed through in turn. A model to study innovation processes is to approach retrospectively; in other words by constructing innovation histories. In this case, past events will be taken into account. However, there is a problematic side of this model. People usually tend to reconstruct events in their memories in a way which appears them more logical and orderly than it usually was. In order to prevent this and increase the reliability and validity, innovation histories can be enhanced by triangulation of methods – that is by using a combination of interviews, questionnaires and analysis of documents. The information should be collected from as many groups as possible. The concern in these circumstances is to have a sufficiently deep understanding of the case and its context to enable a credible interpretation to be produce Stage based Models: In this part a typical stage based model which has been developed by Zaltman et al.(1973) will be introduced. This model describes the process in two main stages. First one is initiation and second one is implementation. In this model (Zaltman et al.‟s) the division between two main stages is at the point of adoption of the innovation; that is, the point at which the organization makes a firm decision to implement the innovation. Initiation process consists of three sub-stages. First one is knowledge awareness which implies that the organization becomes aware of the existence of an innovation which it has the opportunity to utilize. Second sub-stage is formation of attitudes which means that the members of the organization form and exhibit their attitudes to the proposed innovation. Last sub-stage is called decision where the potential innovation is evaluated and the decision to proceed with it or abandon the idea is made. The following implementation process has two sub-stages. Firstly, initial implementation occurs in which first attempts to utilize the innovation are made, often on some sort of trial basis. Continued-sustained implementation is the second sub-stage where the innovation becomes routinized as part of organizational life. The start of the innovation process is ascribed conventionally to the detection of a “performance gap” which is defined as a mismatch between actual and potential performance. According to Zaltman, this may occur in two ways: either the organization realized that the performance is unsatisfactory and looks for new innovative solutions or it becomes aware of the potential innovation in its environment. It would be incorrect to state that all the 18
    • innovation process stems from “performance gap”. Some innovations are to be forced by law to the organizations. For example, the parental leave for 6 months is such an innovation. After the implementation process of innovation it becomes routinized. At the end, innovation becomes absorbed into the daily life of the organization. So, it will be accepted as a part of status quo. For the organization to accept the innovation successfully, any initial problem has to be clarified. Then, routinization occurs without any problem. The last process is called “exnovation” where the organization decides to get rid of the fully realized innovation when it becomes obsolete, allowing the life cycle to start again and continue this way. This process is also essential for organizations to keep up with the changing world. Criticisms of stage-based models: In the literature, conventional innovation models have been criticized a lot. Schroeder et al. put forward an alternative model based on longitudinal data from Minnesota Innovation Research Program which describes a series of innovations but does not place them into stages. The applicability of this model as a general approach was tested. However, some of the observations showed that the model could not be completely applicable. Schroeder et al.‟s model was compared with a conventional stage-based model and found out that the broadly defined model could not be applied by the raters independently and it was also shown that the stages did not progress in the order Zaltman et al. suggested. Other studies have also found limited support for developmental stages in innovation processes. Pelz (1983), found in a study of urban innovations in United States that there were some signs of progressing through stages but in a relatively simple, non-radical innovations but no evidence in more complex innovations. Another observed weakness was that people neglect the different perspectives and approaches within the organization towards an innovation. Top management could think that the innovation was implemented and routinized successfully whereas people on the ground are more likely to avoid implementing the innovation. Another possibility is that the innovation develops differently in different parts of the organization. It is the patterns of interaction between individuals and groups within the organization which determine how innovation progresses. 19
    • How manageable is the innovation process? We saw that we may distinguish broad phases in innovation development, however at a more detailed level of innovation, the progress is rarely in a clear and predictable sequence. It is found that innovations frequently show a lack of “fidelity”. In other words, a mismatch occurs between the outcome intended by those who initiated and the actual consequences once implemented. Nevertheless, in the literature innovation is presented as a controllable phase. Popular texts try to encourage managers about the positive outcomes of the innovation. When managers follow the given advice, they will reach the desired successful outcomes. More precisely, it is assumed that change can be directed from above and that, as its outcomes are more or less predictable, the final outcome of the process is largely due to the competence and skill of those directing the change. It is found that this general illusion of manageability is composed of three sets of second-order illusory beliefs. First one is the illusion of linearity. It implies that organization change proceeds through a neat set of stages and that change always proceeds through this order of stages. Second one is the illusion of predictability due to which change processes are predictable. This predictability provides an unerring template for action. It also underscores and therefore facilitates management of change. Third component is illusion of control. First and second believes lead managers to exert extensive control over change. There are some exceptional uncontrollable events in the change process. “Failed” change processes must be due to something beyond managerial control. To summarize, the illusion of manageability has remained unchallenged in the literature for too long. It is important for managers to recognize their own limits in change management. Realizing these restrictions early on during a major change will facilitate appropriate and balanced action later in the change process. In managing the innovation and change processes two characteristics have significant importance. First one is vigilance in detecting the unforeseen as early as possible, second one is flexibility in reacting to it. Comparison of Organizational Learning & Organizational Innovativeness After organizational learning and innovation are explained separately, it is required to compare them in order to make their difference clear and to determine their effects on each other. Their difference can begin with their definition. Although a review of the literature gives us diverse definitions of organizational learning, from each definition of them we can understand the difference of these concepts. By definition, organizational learning has a 20
    • cognitively driven orientation while organizational innovation has a practically driven orientation. According to Nitza Schwabsky‟s paper, a review of the literature on organizational learning emphasizes that its core concept is the collective access, acquisition, transfer, development and the memory collection of knowledge and insight that effect organizational behavior. Learning, by means of accumulating and storing collective knowledge and insight can be theoretical or experiential. While learning improves organizational capacity to transform its future in cognitive and theoretical means, the practical implementation of the idea or the new knowledge is not central to learning. Based on the explanation above, it is right to say that organizational learning has a cognitively-driven organizational orientation. Also, according to Nitza Schwabsky‟s paper, “innovativeness refers to the organization's openness to new ideas, as well as to its capacity to innovate, to implement and to adopt the new idea, process or product successfully. Innovativeness encompasses both the tendency to change as well as the practical capacity to innovate. While openness to new ideas and learning is part of innovativeness, the practical aspect of the organizational capacity to innovate is central. An organization that does not implement innovations cannot be perceived as innovative.‟‟ At that point from the preceding explanation, the definition of innovativeness can be drawn as an organizational tendency to support new and creative ideas towards their implementation, as a result innovativeness is perceived as a practically-driven organizational orientation. Although organizational learning and innovativeness are different terms, their effect on an organization should not be evaluated independently from each other. However it is also important to say that learning and innovativeness are not perceived as overlapping terms (Hurley and Hult, 1998). They are perceived as overlapping because their relationship with each other is very strong. Organizational innovation can take place while learning and learning can take place while innovating. If it is required to speak theoretically, there have been many studies and theories suggesting that learning is an antecedent of innovativeness (e.g. Cohen and Levinthal 1990, Hurley and Hult 1998), and of internal efficiency and organizational competitiveness. According to that view , innovativeness requires a firm to be able to turn their knowledge to their different kinds of development processes. The point is that innovations need knowledge and knowledge can be gained by organizational learning, however while translating knowledge into developments via innovations, these organizational innovations feed back organization with new learning processes. In short, although organizational innovativeness and learning are not same concepts, they are not evaluated seperately because their sustained effect on each other and organizations increase the efficiency of organization‟s value added processes. 21
    • Resource based view (RBV) of the firm can help us to explain the relationship of learning and innovativeness by providing some examples. The RBV defines strategic assets as rare, valuable, inimitable, and non-substitutable resources. Trafalgar War which contains lessons from resource based view is one of the most suitable example to clear the organizational learning and innovativeness. According to the article of Andy C. L. Yeung*, Kee-Hung Lai and Rachel W. Y. Yee , learning-oriented organizations consistently improve their existing abilities through experience. An RBV of strategic management involves examining the resources and capabilities of firms, as a result they gain above-normal rates of return and a sustainable competitive advantage. Learning-oriented organizations generate collective tacit knowledge that is difficult for competitors to imitate (Osterloh and Frey 2000). This knowledge thus becomes a strategic asset that is the source for creating sustainable competitive advantages. In Trafalgar also we can see that organizational learning as a navy is created a great knowledge which becomes a competitive advantage later. At the heart of the Royal Navy‟s competitive advantage lay the inescapable fact that Great Britain was an island. This natural setting, unique among European states, gave rise to a nation of seafarers through experience which resulted from organizational learning. As we have already explained that organizational learning results in experience and tacit knowledge which give the power of translating knowledge and experience into the innovativeness. Trafalgar is also one of the examples which shows the relationship how an organization that has a great learning capacity turns its knowledge into innovation. The Royal Navy implemented an innovative strategy that resulted from high experience provided by high organizational learning. Lord Nelson was effective because he was willing to depart from convention and employ innovative strategies to catch his opponents off guard. To sum up, we can compare organization learning and innovation with each other, innovativeness is perceived as a practically-driven organizational orientation, while organizational learning has a cognitively-driven organizational orientation. But also we should not forget that these two processes result in and affect each other very deeply. RBV can give us very suitable examples which show the difference of them and their strong relationship. 22
    • II. STATISTICAL ANALYSIS OF GROUP DATA AND INTERPRETATIONS 1. Analysis of general characteristics of our companies: 1. Our companies are service companies and they have exteremly internal financing in order to make new investment. Because the average of the their B4 variables are 98%. Mean 0,98 Standard Error 0,02 Standard Deviation 0,044721 Sample Variance 0,002 Confidence Level(95,0%) 0,055529 From the data above, it is obivious that the confidence level is very high. As a result, we can conclude that external financing is not preferred by our companies. 2. Our companies don‟t have much R&D investment. Their average R&D investment is 15,8% of their total sales but you can see that standartd deviation is very high because only two of our companies have a good R&D expenditure compare to others. Mean 0,158 Standard Error 0,097283 Standard Deviation 0,217532 Sample Variance 0,04732 Confidence Level(95,0%) 0,270101 3. A. In comparison with our competitors, our company has introduced more innovative products and services in during the past five years. B. The technology of our main machinery in use is very up-to-date. C. Our company changes production methods at a great speed in comparison with our competitors. D. We encourage people to think and behave in original and novel ways. E. When we cannot solve a problem using conventional methods, we improvise on new methods. F. New product development 23
    • SUMMARY TABLE frequency as percentage A B C D E F str.disagree 1 0 0 0 0 0 0 disagree 2 20% 0 0 0 0 20% indifferent 3 20% 40% 0 0 20% 20% agree 4 0 40% 80% 60% 40% 20% str. Agree 5 60% 20% 20% 40% 40% 40% The above listed factors as A,B,C,D,E,F are the indicators of the organizational innovativeness other than the R&D expenditures. Moreover the summary table shows that the frequencies are very high at above average rates of 4 and 5. Our companies deal with organizational innovativeness at the product development level especially because our indicators are selected to analyse the product development process. They agree or highly agree with the indicators. 4. A. We use networks and links to acquire knowledge. B. We jointly work with other organizations to acquire knowledge. C. We share information with employees. D. We continuously improve our personnel. E. We learn from market changes that enable us to successfully compete. F. We evaluate the cost of failures not as a loss but as an opportunity to learn. SUMMARY TABLE frequency as percentage A B C D E F str.disagree 1 0% 0% 0% 0% 0% 0% disagree 2 0% 0% 0% 0% 0% 0% indifferent 3 0% 0% 0% 20% 0% 20% agree 4 60% 60% 80% 40% 20% 60% str. Agree 5 40% 40% 20% 40% 80% 20% The above listed factors as A,B,C,D,E,F are the indicators of the organizational learning selected from the questionnaire. In the summary table, you see that about all of the companies agree or strangly agree with organizational learning indicators. Based on that summary table and accepting that these indicators are the most suitable for organizational learning, our companies have high degree organizational learning. As a conclusion, because there is a strong relationship between organizational learning and innovativeness, it is possible to say also our companies prove that strong relationship. According to our above short analysis, our companies have organizational learning and innovativeness . 24
    • HYPOTHESIS ABOUT SECTOR’S DIFFERENCES AND ORGANIZATIONAL LEARNING& INNOVATION: After we try to find general characteristics of our companies related to the literature review and our topic, now we want to continue our statictical analysis with finding some relationships between variables and organizational learning and innovation and making some differences deal with our reserch clearer between service and manufacturing companies. Below , we generate some hypothesis, now we try to evaluate these hypothesis statistically on our questionnaire. The processed data set is used to analyze hypotheses which have been either derived from the relevant literature review or been developed according to our considerations. In addition to that, some hypothesis will be established with aim of data mining in order to find a unknown pattern between variables. Four topics we developed are given as follows: 1. The higher organizational innovativeness applied or organizational learning generalized by the company, the greater total sales growth achieved in the company (positive correlation is expected). 2. The higher organizational innovativeness applied or organizational learning generalized by the company, the more market share obtained by the company (positive correlation is expected). 3. If a company has a target to decrease cost as much as possible or if a company engages in cost leadership strategy, that company provides it organizational learning or innovativeness. 4. If a company engages in differentiation strategy, that company take care of organizational learning or organizational innovativeness. Because there is no single indicator which asks respondents directly about organizational learning , organizational innovation and cost leadership strategy, we wanted some other subindicators listed below which represent highly the organizational learning , innovation and cost leadership and the points given by respondents to these subindicators are averaged and round the nearest intiger because Likert scale used in the questionnaire contains only integers as values. 25
    • For Organizational Learning: C30, C37, C44, C46, C50, D68 are the main subindicators of organizational learning in the questionnaire according to the literature review and we take average of the scores of these subindicators then round the mean to the nearest integer and then we get a score for the organizational learning for each company. For Organizational Innovation: A5, A11, A17, A27, A29, E12 are the main subindicators of organizational innovation in the questionnaire according to the literature review and we take average of the scores of these subindicators then round the mean of scores to the nearest integer and then we get a score for the organizational innovation for each company. For Cost Leadership Strategy: D53, D54, D59, D60, D61, D69 are the main subindicators of cost leadership strategy in the questionnaire according to the course AD320 that we take from Prof. Dr. Güven Alpay and we take average of the scores of these subindicators then round the mean of scores to the nearest integer and then we get a score for the cost leadership strategy for each company. For Differentiation Strategy: A6, A9, A18, D56, D57, D63, D74, are the main subindicators of differentiation strategy in the questionnaire according to the course AD320 that we take from Prof. Dr. Güven Alpay and we take average of the scores of these subindicators then round the mean of scores to the nearest integer and then we get a score for the differentiation strategy for each company. There are variables directly for market share (E2) , total sales growth (E1) in the questionnaire, that‟s why we use the scores of these variables directly as an indicator for market share and total sales growth. The chi-square test is used to determine whether there is a significant difference between the expected frequencies and the observed frequencies in one or more categories. Chi-Square Test Requirements 1. Quantitative data. 2. One or more categories. 3. Independent observations. 26
    • 4. Adequate sample size (at least 10). 5. Simple random sample. 6. Data in frequency form. 7. All observations must be used. If your chi-square value is equal to or greater than the table value, reject the nullhypothesis, it means that differences in your data are not due to chance or the Chi-square tests table will show the value of Pearson Chi- Square value, associated with the significance value. From the two-tailed significance value, we can make a statistical decision and accept or reject the null hypothesis. If the value of significance is less than the predetermined level of significance, we will reject the null hypothesis and conclude that relationship is significant. 1. The higher organizational innovativeness applied or organizational learning generalized by the company, the greater total sales growth achieved in the company. HYPOTHESIS 1A: Ho: Organizational learning is independent of total sales growth. Ha: Organizational learning is associated with total sales growth. ORGANIZATIONAL LEARNING* TOTAL SALES GROWTH CROSSTABULATION Q3 1 2 3 4 5 Total Q1 1 Count 1 0 0 0 0 1 % of Total ,8% ,0% ,0% ,0% ,0% ,8% 3 Count 0 1 2 5 1 9 % of Total ,0% ,8% 1,6% 4,1% ,8% 7,3% 4 Count 1 3 18 47 13 82 % of Total ,8% 2,4% 14,6% 38,2% 10,6% 66,7% 5 Count 0 0 9 11 11 31 % of Total ,0% ,0% 7,3% 8,9% 8,9% 25,2% Total Count 2 4 29 63 25 123 27
    • ORGANIZATIONAL LEARNING* TOTAL SALES GROWTH CROSSTABULATION Q3 1 2 3 4 5 Total Q1 1 Count 1 0 0 0 0 1 % of Total ,8% ,0% ,0% ,0% ,0% ,8% 3 Count 0 1 2 5 1 9 % of Total ,0% ,8% 1,6% 4,1% ,8% 7,3% 4 Count 1 3 18 47 13 82 % of Total ,8% 2,4% 14,6% 38,2% 10,6% 66,7% 5 Count 0 0 9 11 11 31 % of Total ,0% ,0% 7,3% 8,9% 8,9% 25,2% Total Count 2 4 29 63 25 123 % of Total 1,6% 3,3% 23,6% 51,2% 20,3% 100,0% About all the firms, you will see exact percentage as bold in the table, have a high total sales while their organizational learning scores are also high, in other words there is no firm which has a high total sales while their organizational learning score is very low. According to cross tabulation table, we can draw the conclusion that there is a positive relationship between organizational learning and total sales. But, it is also important to see a statistically significant result in the chi square table. From the chi square table below, we can reach a statistically significant result. As a result, we reject the null hypothesis in chi square test and we prove that organizational learning is associated with total sales growth, and cross tabulation also supports that relationship between variables. 28
    • Chi-Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 71,297a 12 ,000 Likelihood Ratio 19,665 12 ,074 Linear-by-Linear 13,254 1 ,000 Association N of Valid Cases 123 a. 14 cells (70,0%) have expected count less than 5. The minimum expected count is ,02. HYPOTHESIS 1B: Ho: Organizational innovation is independent of total sales growth. Ha: Organizational innovation of is associated with total sales growth. ORGANIZATIONAL INNOVATION* TOTAL SALES GROWTH CROSSTABULATION Q3 1 2 3 4 5 Total Q2 2 Count 1 0 0 0 1 2 % of Total ,8% ,0% ,0% ,0% ,8% 1,6% 3 Count 0 2 7 17 2 28 % of Total ,0% 1,6% 5,7% 13,8% 1,6% 22,8% 4 Count 1 2 16 39 13 71 % of Total ,8% 1,6% 13,0% 31,7% 10,6% 57,7% 5 Count 0 0 6 7 9 22 % of Total ,0% ,0% 4,9% 5,7% 7,3% 17,9% Total Count 2 4 29 63 25 123 29
    • ORGANIZATIONAL INNOVATION* TOTAL SALES GROWTH CROSSTABULATION Q3 1 2 3 4 5 Total Q2 2 Count 1 0 0 0 1 2 % of Total ,8% ,0% ,0% ,0% ,8% 1,6% 3 Count 0 2 7 17 2 28 % of Total ,0% 1,6% 5,7% 13,8% 1,6% 22,8% 4 Count 1 2 16 39 13 71 % of Total ,8% 1,6% 13,0% 31,7% 10,6% 57,7% 5 Count 0 0 6 7 9 22 % of Total ,0% ,0% 4,9% 5,7% 7,3% 17,9% Total Count 2 4 29 63 25 123 % of Total 1,6% 3,3% 23,6% 51,2% 20,3% 100,0% About all the firms, you will see exact percentage as bold in the table, have a total sales growth, while their organizational innovation scores are also high, but for the organizational innovation, it is very easy to say that there are some firms which have lower total sales growth while their organizational learning score is very high, moreover also there are some firms which have very low innovation scores although their total sales growth scores are very high. According to cross tabulation table, we can draw the conclusion that there is no strong relationship between organizational innovation and total sales compared to organizational learning, although it is important to see a statistical result in the chi square table. In the chi square table below, we see that there is statistically important relationship between variables. We can conclude that organizational learning is much more related with the total sales growth than the organizational innovation but it can not be concluded that organizational innovation is not associated with the total sales growth. 30
    • Chi-Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 43,710a 12 ,000 Likelihood Ratio 22,323 12 ,034 Linear-by-Linear 5,792 1 ,016 Association N of Valid Cases 123 a. 12 cells (60,0%) have expected count less than 5. The minimum expected count is ,03. 2. The higher organizational innovativeness applied or organizational learning generalized by the company, the more market share obtained by the company. HYPOTHESIS 2A: Ho: Organizational learning is independent of market share. Ha: Organizational learning of is associated with market share. ORGANIZATIONAL LEARNING*MARKET SHARE CROSSTABULATION Q4 1 2 3 4 5 Total Q1 1 Count 1 0 0 0 0 1 % of Total ,8% ,0% ,0% ,0% ,0% ,8% 3 Count 0 0 7 2 0 9 % of Total ,0% ,0% 5,7% 1,6% ,0% 7,3% 4 Count 2 7 17 38 18 82 % of Total 1,6% 5,7% 13,8% 30,9% 14,6% 66,7% 5 Count 0 3 4 11 13 31 % of Total ,0% 2,4% 3,3% 8,9% 10,6% 25,2% Total Count 3 10 28 51 31 123 31
    • ORGANIZATIONAL LEARNING*MARKET SHARE CROSSTABULATION Q4 1 2 3 4 5 Total Q1 1 Count 1 0 0 0 0 1 % of Total ,8% ,0% ,0% ,0% ,0% ,8% 3 Count 0 0 7 2 0 9 % of Total ,0% ,0% 5,7% 1,6% ,0% 7,3% 4 Count 2 7 17 38 18 82 % of Total 1,6% 5,7% 13,8% 30,9% 14,6% 66,7% 5 Count 0 3 4 11 13 31 % of Total ,0% 2,4% 3,3% 8,9% 10,6% 25,2% Total Count 3 10 28 51 31 123 % of Total 2,4% 8,1% 22,8% 41,5% 25,2% 100,0% About all the firms, you can see exact percentage as bold in the table, have a high market share while their organizational learning scores are also high, in other words there is nearly no firm which has a high market share while their organizational learning score is very low, it is also required that there is one exception. According to cross tabulation table, we can draw the conclusion that there is a positive relationship between organizational learning and market share. But also it is important to see a statistically significant result in the chi square table. In the chi square table below we can reach a statistically significant result. Because if the value of significance is less than the predetermined level of significance, we will reject the null hypothesis and conclude that relationship is significant. As a result, we reject the null hypothesis in chi square test and we prove that organizational learning of is associated with market share, and cross tabulation also supports that relationship between variables. 32
    • Chi-Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 83,601a 15 ,000 Likelihood Ratio 30,479 15 ,010 Linear-by-Linear 15,498 1 ,000 Association N of Valid Cases 123 a. 17 cells (70,8%) have expected count less than 5. The minimum expected count is ,01. HYPOTHESIS 2B: Ho: Organizational innovation is independent of market share. Ha: Organizational innovation of is associated with market share. ORGANIZATIONAL INNOVATION*MARKET SHARE Crosstab Q4 1 2 3 4 5 Total Q2 2 Count 1 0 1 0 0 2 % of Total ,8% ,0% ,8% ,0% ,0% 1,6% 3 Count 1 4 9 9 5 28 % of Total ,8% 3,3% 7,3% 7,3% 4,1% 22,8% 4 Count 1 4 14 34 18 71 % of Total ,8% 3,3% 11,4% 27,6% 14,6% 57,7% 5 Count 0 2 4 8 8 22 % of Total ,0% 1,6% 3,3% 6,5% 6,5% 17,9% Total Count 3 10 28 51 31 123 % of Total 2,4% 8,1% 22,8% 41,5% 25,2% 100,0% 33
    • About all the firms, we may see exact percentage as bold in the table, they have a high market share, while their organizational innovation scores are also high, but for the organizational innovation, it is very easy to say that there are some firms which have a low market share score while their organizational innovation score is very high, moreover also there are some firms which have very low innovation scores although their total market share scores are very high. According to cross tabulation table, we can draw the conclusion that there is no strong relationship between organizational and total sales compared to the relationship between organizational learning and total market share, although it is important to see a statistical result in the chi square table. In the chi square table below, we see that there is statistically important relationship between variables because we reject the null hypothesis. We can conclude that organizational learning is much more related with market share than the organizational innovation but it can not be concluded that organizational innovation is not associated with the market share. Chi-Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 41,724a 15 ,000 Likelihood Ratio 19,253 15 ,202 Linear-by-Linear 8,244 1 ,004 Association N of Valid Cases 123 a. 14 cells (58,3%) have expected count less than 5. The minimum expected count is ,02. 3. If a company has a target to decrease cost as much as possible or if a company engages in cost leadership strategy, that company provides it with organizational learning or innovativeness. HYPOTHESIS 3A: Ho: Organizational learning is independent of cost leadership strategy. Ha: Organizational learning of is associated with cost leadership strategy.. 34
    • ORGANIZATIONAL LEARNING*COST LEADERSHIP CROSSTABULATION Q5 1 2 3 4 5 Total Q1 1 Count 1 0 0 0 0 1 % of Total ,8% ,0% ,0% ,0% ,0% ,8% 3 Count 0 0 5 4 0 9 % of Total ,0% ,0% 4,1% 3,3% ,0% 7,3% 4 Count 0 1 26 48 7 82 % of Total ,0% ,8% 21,1% 39,0% 5,7% 66,7% 5 Count 0 1 8 16 6 31 % of Total ,0% ,8% 6,5% 13,0% 4,9% 25,2% Total Count 1 2 39 68 13 123 % of Total ,8% 1,6% 31,7% 55,3% 10,6% 100,0% Taking all the companies into the account, the chi square test draws a conclusion that there is an association between organizational learning and cost leadership because we reject the null hypothesis. In addition to that, it is more important to emphasize that according to cross tabulation there is a positive relationship between organizational learning and cost leadership because companies have high organizational learning scores while paying attention on the cost leadership strategy. That conclusion is significant because cutting costs does not mean cutting learning, in literature review we have already reached that organizational learning has a great support to that strategy. 35
    • Chi-Square Tests: Asymp. Sig. Value Df (2-sided) Pearson Chi-Square 1,296E2a 12 ,000 Likelihood Ratio 18,545 12 ,100 Linear-by-Linear 16,577 1 ,000 Association N of Valid Cases 123 a. 15 cells (75,0%) have expected count less than 5. The minimum expected count is ,01. HYPOTHESIS 3B: Ho: Organizational innovation is independent of cost leadership strategy. Ha: Organizational innovation of is associated with cost leadership strategy. ORGANIZATIONAL INNOVATION*COST LEADERSHIP CROSS TABULATION Q5 1 2 3 4 5 Total Q2 2 Count 1 0 0 1 0 2 % of Total ,8% ,0% ,0% ,8% ,0% 1,6% 3 Count 0 0 13 14 1 28 % of Total ,0% ,0% 10,6% 11,4% ,8% 22,8% 4 Count 0 2 22 40 7 71 % of Total ,0% 1,6% 17,9% 32,5% 5,7% 57,7% 5 Count 0 0 4 13 5 22 % of Total ,0% ,0% 3,3% 10,6% 4,1% 17,9% Total Count 1 2 39 68 13 123 % of Total ,8% 1,6% 31,7% 55,3% 10,6% 100,0% 36
    • Taking all the companies into the account, the chi square test draws a conclusion that there is an association between organizational innovation and cost leadership because we reject the null hypothesis in which the value of significance is less than the predetermined level of significance that is equal to 0,005. In addition to that, it is more important to emphasize at that point, that according to cross tabulation there is a positive relationship between organizational innovation and cost leadership because companies have high organizational innovation scores at the same time they pay attention on the cost leadership strategy. That conclusion is very important because cutting cost does not mean decreasing innovations because in literature review we see that organizational innovation has a great support to that strategy by process innovation. Organizational innovation is as important as organizational learning for cost leadership strategy. It is a different conclusion compared to first two assumptions because the importance degree of organizational innovation increases and becomes equal to organizational learning when we begin to talk about strategies unlike in first two cases in which the main issues were total sales and market shares respectively. Chi-Square Tests Asymp. Sig. Value Df (2-sided) Pearson Chi-Square 70,637a 12 ,000 Likelihood Ratio 19,630 12 ,074 Linear-by-Linear 10,652 1 ,001 Association N of Valid Cases 123 a. 13 cells (65,0%) have expected count less than 5. The minimum expected count is ,02. 4. If a company engages in differentiation strategy, that company takes care of organizational learning or innovativeness. HYPOTHESIS 4A: Ho: Organizational innovation is independent of differentiation strategy. Ha: Organizational innovation is associated with differentiation strategy. 37
    • ORGANIZATIONAL INNOVATION* DIFFERENTIATION Crosstab V7 2 3 4 5 Total Q2 2 Count 2 0 0 0 2 % of Total 1,6% ,0% ,0% ,0% 1,6% 3 Count 2 20 6 0 28 % of Total 1,6% 16,3% 4,9% ,0% 22,8% 4 Count 0 15 53 3 71 % of Total ,0% 12,2% 43,1% 2,4% 57,7% 5 Count 0 0 12 10 22 % of Total ,0% ,0% 9,8% 8,1% 17,9% Total Count 4 35 71 13 123 % of Total 3,3% 28,5% 57,7% 10,6% 100,0% Taking all the companies into the account, the chi square test draw a conclusion again that there is an association between organizational innovation and differentiation strategy because we reject the null hypothesis. In addition to that, it is more important to attract your attention to the point that cross tabulation says that a positive relationship between organizational innovation and differentiation strategy, has a high diversity mainly at the center of the table because it reflects that companies don‟t pay attention on the organizational innovation and differentiation strategy together at a high degree. Maybe it is a major characteristic of our samples because they are operated mostly in domestic market, in Turkey the differentiation strategy is not as significant as cost leadership because Turkey is a developing country. That conclusion is very important because our data has a power to reflect some differences and to give some indicators about domestic characteristic. 38
    • Chi-Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1,305E2a 9 ,000 Likelihood Ratio 82,410 9 ,000 Linear-by-Linear 58,904 1 ,000 Association N of Valid Cases 123 a. 9 cells (56,3%) have expected count less than 5. The minimum expected count is ,07. HYPOTHESIS 4B: Ho: Organizational learning is independent of differentiation strategy. Ha: Organizational learning of is associated with differentiation strategy. ORGANIZATIONAL LEARNING * DIFFERENTIATION CROSSTABULATION V7 2 3 4 5 Total Q1 1 Count 1 0 0 0 1 % of Total ,8% ,0% ,0% ,0% ,8% 3 Count 1 6 2 0 9 % of Total ,8% 4,9% 1,6% ,0% 7,3% 4 Count 2 26 51 3 82 % of Total 1,6% 21,1% 41,5% 2,4% 66,7% 5 Count 0 3 18 10 31 % of Total ,0% 2,4% 14,6% 8,1% 25,2% Total Count 4 35 71 13 123 39
    • ORGANIZATIONAL LEARNING * DIFFERENTIATION CROSSTABULATION V7 2 3 4 5 Total Q1 1 Count 1 0 0 0 1 % of Total ,8% ,0% ,0% ,0% ,8% 3 Count 1 6 2 0 9 % of Total ,8% 4,9% 1,6% ,0% 7,3% 4 Count 2 26 51 3 82 % of Total 1,6% 21,1% 41,5% 2,4% 66,7% 5 Count 0 3 18 10 31 % of Total ,0% 2,4% 14,6% 8,1% 25,2% Total Count 4 35 71 13 123 % of Total 3,3% 28,5% 57,7% 10,6% 100,0% Taking all the companies into the account, the chi square test draws a conclusion that there is an association between organizational learning and differentiation strategy because we reject the null hypothesis in which the value of significance is less than the predetermined level of significance that is equal to 0,005. In addition to that, it is more important to emphasize at that point, cross tabulation says that the positive relationship between organizational learning and differentiation has a high diversity mainly at the center of the table because it reflects that companies don‟t pay attention on the organizational learning and differentiation strategy together at a high degree. Again, it can be a characteristic of our samples because they are operated mostly in domestic market in Turkey, the differentiation strategy is not as significant as cost leadership because Turkey is a developing country. That conclusion is very important because our data has a power to reflect some differences and to give some indicators about domestic characteristic. It is a different conclusion compared to first two topics because the importance degree of organizational innovation increases and becomes equal to organizational learning when we begin to talk about strategies like in third case in which we talked about cost leadership strategy and unlike in first two cases in which the main issues were total sales and market shares respectively anD 40
    • the organizational learning had stronger effect on variables than organizational innovation. Chi-Square Tests Value Df Asymp. Sig. (2-sided) Pearson Chi- 62,102 Square a 9 ,000 Likelihood 37,486 9 ,000 Ratio Linear-by- Linear 30,258 1 ,000 Association N of Valid 123 Cases 41
    • CONCLUSIONS: After we concluded to analyse the data, we want to draw some conclusions about our work. First of all, we reached to the solution that organizational learning is associated with total sales growth and cross tabulation. We have also seen that cross tabulation supports that relationship between variables. Another conclusion was that organizational learning is much more related with the total sales growth than organizational innovation. However, we have not concluded that organizational innovation is not associated with total sales growth. Organizational learning is found to be associated with market share. According to our analysis, organizational learning is much more related with market share compared to organizational innovativeness however, we can not conclude that organizational innovation is not related to market share. We also found that a positive relationship between organizational learning and cost leadership because companies had high organizational learning scores while they were paying attention on the cost leadership strategy. According to the data analysis, cutting costs did not mean decreasing innovations in the company because in literature review we saw that organizational innovation was as important as organizational learning for cost leadership strategy. This was a distinct conclusion compared to our first two assumptions because the degree of organizational innovation increases and becomes equal to the organizational learning when we begin to talk about strategies unlike in first two cases in which the main issues are total sales and market shares respectively. We have reached to the positive relationship between organizational innovation and differentiation strategy, which had a high diversity mainly at the center of the table because it reflected that companies didn‟t pay attention on the organizational innovation and differentiation strategy together at a high degree. Finally we concluded our analysis by stating, that this was a different conclusion again compared to first two topics because the degree of importance in organizational innovation increases and becomes equal to organizational learning when we begin to talk about strategies like in third case in which we talked about cost leadership strategy and unlike in first two cases in which the main issues were total sales and market shares respectively and the organizational learning had stronger effect on variables than organizational innovations. 42
    • APPENDIX 43
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