Examining the Relationship Between Dimensions of Organizational Learning and Firms’ Financial and Knowledge Performance in the Korean Business Context

Many scholars and practitioners have emphasized the importance of learning within and by organizations to respond to changing conditions in the global marketplace and to sustain competitive advantage. As a result, organizational learning has become an important capability for many organizations to remain viable. Although the importance of organizational learning has been growing in response to the rapidly changing business context, limited empirical research on organizational learning has been conducted. In addition, research examining the linkage between firms’ financial performance has been limited. Therefore, more empirical research is needed to fill the literature gap on the relationship between organizational learning and firms’ financial performance in the business context. The purpose of this empirical study was to examine the relationship between Templeton, Lewis and Snyder’s (2002) organizational learning dimensions and firms’ perceptual financial and knowledge performance and firms’ objective financial performance such as return on investment (ROI) and return on asset (ROA) in the Korean business context. A survey research design was used for this study. Two research questions guided this study: (1) what is the relationship between Templeton et al.’s (2002) organizational learning dimensions and perceptual organizational outcome variables as defined by financial performance and knowledge performance in the Korean business context; (2) what is the relationship between Templeton et al.’s (2002) organizational learning dimensions and objective outcome variables as defined by two objective measures of financial performance, return on investment (ROI) and return on assets (ROA) in the Korean business context? The population for this study was 708 Korean companies which were listed on the Korean Stock Exchange market. Eight firms were removed because of small sizes. The remaining 700 firms represented the population for which a systematic sample process was used to select 350 companies for the study. Within these selected companies, two key respondents, an HR manager and Marketing manager were identified to serve as key respondents. The Organizational Learning Construct developed by Templeton et al. (2002) was used for this study. The original English instrument was translated into Korean using a rigorous forward-backward translation process. A total of 109 Korean companies of the 350 systematic sample participated in this study with a total of 218 respondents (109 HR managers and 109 Marketing managers). A confirmatory factor analysis technique was used to examine the validity and reliability of the Korean translated instrument. Canonical correlation was used to investigate the linkage between organizational learning dimensions and firms’ perceptual knowledge and financial performance and firms’ objective financial performance. The results of the confirmatory factor analyses suggest that the Korean translated instrument has some utility as an organizational learning measurement tool in the Korean context. The findings of this study support the limited existing empirical research which has suggested that there is a positive relationship between organizational learning and firms’ perceptual and objective financial performance. The findings revealed a significant relationship between seven organizational learning dimensions and perceptual measures of financial and knowledge performance. There was also a significant relationship between the seven organizational learning dimensions and firms’ two objective financial performance measures. The findings from the current study support the limited empirical research on the positive relationship between organizational learning and firms’ perceptual performance. Additionally, the findings from this study also expand the organizational learning literature by adding empirical research on the linkage between organizational learning dimensions and firms’ objective financial performance as measured by ROI and ROA. From a pragmatic perspective, promoting and developing certain learning activities by human resource professionals and business managers may improve organizational performance in the Korean business context. As a result, Korean companies may need to establish a strategic approach for developing knowledge, skills and other intellectual capital based upon long-term gains. From a research perspective, it is recognized that organizational performance is influenced by many factors in addition to organizational learning dimensions. Therefore, additional research is needed to investigate the impact of other factors on firms’ performance in the Korean context. Furthermore, future research may need to also consider other objective performance outcome variables. Lastly, while the current study reported that the Templeton et al. (2002) instrument has potential utility in the Korean context, additional revision may be necessary. It is also possible that indigenous organizational learning practices can be examined to build a more robust organizational learning instrument or to enhance the Templeton et al. (2002) organizational learning construct.