Organizational Learning & Performance in Smes

Despite the view in the literature on organizational learning that this will enhance firms’ competitive advantage and lead to superior organizational performance, empirical research exploring the relationships between organizational learning and business performance has not been particularly forthcoming. Without such research, the case for the significance of learning organizationally is limited. This is a particular issue with SMEs, as their mangers are likely to be suspicious of external initiatives that fail to provide evidence to support their assertions. Yet, such firms are collectively major employers, and represent a key source of economic growth. This study therefore seeks to address this need, and examines the relationship between organizational learning and both financial and non-financial performance, through a crosssectional questionnaire survey of a sample of 209 SMEs in the UK. It explores the learning orientation of these firms, which is characterized as a continuum from higher-order (active) and lower-order (passive) levels of learning, and employs a measure designed, specifically for SME research, to assess the way in which managers perceive their organizations’ orientation to learning along this dimension. Analysis supports the reliability and validity of the learning orientation instrument. Significant relations between organizational learning orientation and both financial and non-financial performance were observed for the overall sample, and a sub-sample of manufacturing SMEs. Service SMES showed a relationship between learning orientation and non-financial performance, but not between learning orientation and financial performance. The implications of these findings for organizational learning research and management practice are discussed.