Learning organization, knowledge management, employee outcomes and performance of large manufacturing firms in Kenya

Abstract

The concept of learning organization has generated a lot of debate among scholars in recent years. Learning organizations have developed as a result of pressures facing modern organizations to adapt and remain competitive in modern business environment. However, few empirical studies have examined the relationship between learning organization and organizational performance. This study sought to contribute to this growing body of knowledge by determining the influence of learning organization on performance of large manufacturing firms in Kenya. Specific objectives focused on examining the mediation of employee outcomes in the relationship between learning organization and firm performance, assessing the moderating effect of knowledge management and establishing the joint effect of the three variables on performance. The study was guided by the positivist approach. Review of literature and identification of knowledge gaps formed the basis of the conceptual model and hypotheses. The study was anchored on four theories: resource based view, knowledge based view, dynamic capabilities theory and human capital theory. The descriptive survey design was used. Data was collected from a cross section of study units. The target population consisted of 108 large manufacturing firms. A structured questionnaire, based on a five-point likert type scale, was used to collect primary data. The key respondents included the human resource manager, finance manager and production manager. Results of tests for normality confirmed that data employed in analysis was normally distributed. The reliability test showed that all the study variables were reliable thus suitable for further analysis. Descriptive statistics and regression analyses were used to analyze data. Results of the study indicated that learning organization has a positive influence on firm performance. The relationship between learning organization and both financial and non-financial performance was positive and significant. Findings of the study did not provide sufficient evidence to support the mediation of employee outcomes in the relationship between learning organization and firm performance. Similarly, the study also established that knowledge management does not moderate the relationship between learning organization and firm performance. However, based on the structure of the research model which included learning organization, employee outcomes and knowledge management, the results seemed reasonable. The combined effect of learning organization, employee outcomes and knowledge management on financial performance was not statistically significant. Results of the study revealed that the joint effect of learning organization, employee outcomes and knowledge management on non-financial performance was greater than the individual effect of the predictor variables. The results of further analysis revealed that learning organization mediates the relationship between knowledge management and nonfinancial performance. The study also confirmed the mediation of learning organization in the relationship between employee outcomes and non-financial performance. The results present diverse implications for policy, practice and research. The study confirmed that learning organization has a significant influence on employee outcomes such as organizational commitment and job satisfaction. Human resource development practitioners can use the findings of this study to support the case for implementation of learning organization initiatives. This will lead to high levels of organizational commitment and job satisfaction which translate to increased productivity. Policy makers will use the findings of this study to evaluate how well the manufacturing sector can be leveraged through learning organization practices in order to contribute to increased economic growth. The study provided support for the basic proposition of resource based view that superior performance can be achieved from a combination of firm specific resources. The study confirmed that human resource practices combined into an overall system can be valuable and difficult to imitate thus leading to superior performance. Future studies could use longitudinal study to provide a better understanding of the influence of learning organization on firm performance. Organizational factors such as strategy, structure, innovation technology and leadership could be considered as possible influencers in the relationship.