Strategic leadership, organizational learning, organizational innovation, and performance: evidence from electronics businesses in Thailand.

Author:Ussahawanitchakit, Phapruke
Position:Report
 
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  1. INTRODUCTION

    In recent years, competitive markets and business environments have been volatile, turbulent, uncertain, complex, and heterogeneous. Thus, firms have implemented valuable competencies, capabilities and strategies for their business operations and activities in order to enhance business excellence, encourage competitive advantage, achieve firm performance, gain corporate survival, and promote organizational sustainability in these circumstances. Strategic leadership, organizational learning and organizational innovation become key determinants of driving and explaining firms' competitiveness, and profitability. Firms with greater strategic leadership, organizational learning and organizational innovation tend to achieve higher firm performance and enhance organizational success in the business operations. Accordingly, this study attempts to investigate the roles of strategic leadership, organizational learning and organizational innovation in establishing organizational performance.

    Strategic leadership is an ability of firms to anticipate, envision and maintain flexibility, and empower others to create a strategic chance and a viable future of the organization (Kjelin, 2009). It includes absorptive capacity, adaptive capacity and managerial wisdom. Absorptive capacity is an ability of firms to recognize, learn and value knowledge from new and external information and sources and acquire and assimilate it in their duties, functions, operations, and activities (Zahra et al., 2009); adaptive capacity is an ability to adapt to unknown environmental conditions and to cope with changes, uncertainty and unpredictability in the business conditions and markets (Stabel and Sydow, 2002); and managerial wisdom is an ability of firms to take the right action at a critical moment based on an understanding of the environment changes and an effective response (Phipps and Burbach, 2010).

    Also, organizational learning is the organization-wide activities of creating and using knowledge to enhance competitive advantage through obtaining and sharing information about customer needs, market changes, and competitor actions and the ingrained intra-organizational culture and values towards learning manifested (Panayides, 2007). It consists of commitment to learning, open-mindedness and shared vision. Commitment to learning is the organization values learning through knowing and understanding the causes and effects of its actions (Santos-Vijande et al., 2005); open-mindedness is the ability of firms to link to the proactively questioning of long-held routines, assumptions, and beliefs about the order of things and how events occur (Santos-Vijande et al., 2005); and shared vision is firms' interest in sharing the organization's view of goals, objectives, policies, priorities, and expectations (SantosVijande et al., 2005).

    Last, organizational innovation is an adoption of an internally generated or purchased device, system, policy, program, process, product, or service that is new to the adopting organization (Damanpour, 1991). It includes administrative innovation and technical innovation. Administrative innovation is a new management system, administrative process, and staff development program (Subramanian and Nilakanta, 1996); and technical innovation is an adoption of new ideas pertaining to new products or services, and an introduction of new elements in an organization's production process or service operations (Subramanian and Nilakanta, 1996).

    Here, strategic leadership, organizational learning and organizational innovation have become key determinants of performance. Hence, this study aims at examining the effects of strategic leadership, organizational learning and organizational innovation on performance of electronics businesses in Thailand. The key research questions are: (1) how strategic leadership (absorptive capacity, adaptive capacity and managerial wisdom) has an impact on performance; (2) how organizational learning (commitment to learning, open-mindedness and shared vision) has an influence on performance; (3) how organizational innovation (administration innovation and technical innovation) has an effect on performance; (4) whether all aforementioned relationships are positive; and (5) whether strategic leadership, organizational learning and organizational innovation are significant drivers of explaining performance.

    This study is organized as follows. First, existing significant literature in the areas and streams of strategic leadership, organizational learning, organizational innovation, and performance is reviewed. Also, the linkage between the concepts of the aforementioned variables is established, and the key research hypotheses of those relationships are developed. Second, the details of research methods are elaborated, including data collection, measurements, and statistics. Third, the analysis results of the current study are given and corresponding discussion with some of the reasons and explanations. Final, the findings of the study are summarized and both theoretical and managerial contributions are pointed out, and suggestions for further research and the limitations of the study are presented.

  2. RELEVANT LITERATURE REVIEW OF STRATEGIC LEADERSHIP, ORGANIZATIONAL LEARNING, ORGANIZATIONAL INNOVATION, AND PERFORMANCE

    [FIGURE 1 OMITTED]

    This study attempts to investigate the associations among strategic leadership, organizational learning, organizational innovation, and performance. Thus, the conceptual framework of the aforementioned relationships is as shown in Figure 1 on previous page.

    2.1 Strategic Leadership

    Strategic leadership is defined as an ability of firms to anticipate, envision and maintain flexibility, and empower others to create a strategic chance and a viable future of the organization (Kjelin, 2009). It includes absorptive capacity, adaptive capacity and managerial wisdom.

    Absorptive capacity. Absorptive capacity refers to an ability of firms to recognize, learn and value knowledge from new and external information and sources, acquire and assimilate it in their duties, functions, operations, and activities (Zahra et al., 2009). It explicitly enhances them to bring in externally generated knowledge that improves their ability to build those capabilities conductive to performance, survival, growth, and sustainability. Also, absorptive capacity is the ability of firms to use and exploit their experiences to identify new information and to integrate this information to establish practical knowledge for an ongoing business (Eriksson and Chetty, 2003). Firms definitely identify, assimilate and apply knowledge for commercial purposes in addition to using know-how generated outside them. They outstandingly utilize this knowledge to achieve business excellence, gain organizational competitiveness, encourage firm performance, and enhance corporate sustainability. Then, absorptive capacity is a major antecedent of establishing performance in an organization. Hence, it is likely to have a positive effect on organizational performance. Therefore, the illustrated relationship is hypothesized as shown below.

    Hypothesis 1a: Absorptive capacity is positively related to performance.

    Adaptive capacity. Adaptive capacity is defined as an ability to adapt to unknown environmental conditions and to cope with changes, uncertainty and unpredictability in the business conditions and markets (Stabel and Sydow, 2002). It helps firms achieve organizational effectiveness, survive and sustain in highly volatile and complex environments through indicating best practices with the creation of more choices, discretions, opportunities, and variable interpretations in their business operations. Firms with more adaptive capacity tend to reflect equilibrium-seeking behavior and maximize fitness to existing conditions. They seem to effectively learn, act, maintain, and transform their business duties, functions, practices, operations, activities, and strategies in order to enhance business excellence and again corporate sustainability. Likewise, adaptive is an...

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