i

THE IMPACT OF ORGANIZATIONAL LEARNING ON

FIRM’S PERCEIVED FINANCIAL PERFORMANCE:

TAKING THE ROLE OF LEADERSHIP AS MODERATOR

By

Raja Yasir Ali

&

Muhammad Saad Ameer

A THESIS SUBMITTED IN PARTIAL FULFILMENT OF

THE REQUIREMENTS FOR THE DEGREE OF

MASTER OF SCIENCE

In BUSINESS ADMINISTRATION

To

FACULTY OF MANAGEMENT SCIENCES

NATIONAL UNIVERSITY OF MODERN LANGUAGES, ISLAMABAD

March 2016

Raja Yasir Ali, 2016

ii

Degree Name in Full

Business Administration

Name of Research Supervisor Signature of Research Supervisor

Name of Dean (FMS) Signature of Dean (FMS)

Name of Rector Signature of Rector

NATIONAL UNIVERSITY OF MODERN LANGUAGES FACULTY OF MANAGEMENT SCIENCES

THESIS AND DEFENSE APPROVAL FORM

The undersigned certify that they have read the following thesis, examined the defense, are satisfied

with the overall exam performance, and recommend the thesis to the Faculty of Management

Sciences.

Thesis/ Dissertation Title: The Impact of Organizational Learning on Firm’s Perceived Financial

Performance: Taking the Role of Leadership as Moderator

.

Submitted By: Raja Yasir Ali Registration #: 07MSBA/Fsd/S13

Master of Science Degree name in full

Business Administration

Ms. Aisha Arbab Khan Brig(R) Dr. Maqsud-ul-Hassan Brig(R) Azam Jamal

Date

iii

CANDIDATE DECLARATION FORM

I Raja Yasir Ali

Son of Saeed Akhtar

Registration # 07MSBA/Fsd/S13

Discipline Business Administration

Candidate of MS at the National University of

Modern Languages do hereby declare that the thesis (Title): The Impact of

Organizational Learning on Firm’s Perceived Financial Performance: Taking the

Role of Leadership as Moderator

Submitted by me in partial fulfillment of MS degree, is my original work, and has not

been submitted or published earlier. I also solemnly declare that it shall not, in future, be

submitted by me for obtaining any other degree from this or any other university or

institution.

I also understand that if evidence of plagiarism is found in my thesis/dissertation at any

stage, even after the award of degree, the work may be cancelled and the degree revoked.

07th March, 2016 ______________ Date Signature of Candidate

RAJA YASIR ALI Name of Candidate

iv

ABSTRACT

Thesis Title: The Impact of Organizational Learning on Firm’s Perceived Financial

Performance: Taking the Role of Leadership as Moderator.

This research thesis investigates the impact of organizational learning on firm’s financial

performance and also figure out the moderating effect of leadership on their relationship.

The primary purpose of the study is to perform an exploratory research. Survey is

conducted among the six telecommunication companies working in the Faisalabad. Data

of 251 respondents from these six selected companies were collected for analysis. The

data is primary in nature. The study is quantitative in nature. A structured close ended

questionnaire is used and results are analyzed through regression with the help of SPSS.

The financial performance used in this thesis is based on the perceptions of the

employees under study. The results of the study show organizational learning has a

positive impact on firm’s financial performance while organizational learning has more

effect on financial performance in presence of leadership, where leadership acts as

moderator. It is suggested that these companies must deploy their efforts in enhancing on

organizational learning capabilities to get the better financial results.

In study, quantitative research design is used. Instrument is integrated 65 items.

Instrument contains three parts, (1) Organizational Learning ( Devmoski 1994), (2)

financial Performance (Li & Lu, 2007) and (3) Leadership (Zagorsek et al. 2009).

Correlation Analysis of each items of major variable confirms the moderate relationships

v

between them. Data is collected from population of 600 employees of telecommunication

companies in Faisalabad, Pakistan. 251 valid responses are entered in statistical program

tool (SPSS 20) to perform data analysis. Results and discussion of the study discuss that

research fulfill the objectives of the study. Companies can use these findings in future to

analyze themselves from wider perspectives. This research can help R&D departments to

work on these areas for better performance of companies.

Due to some limitations of study, this research suggests some future recommendations.

Due to limited time and other resources, research was limited to small population and

sample size. In future, research can be conducted for large population. In future, other

companies can use this research for their better performance.

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vii

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LIST OF TABLES

Tables

Page

Table (3.1) Conceptual Frame Work 66

Table (3.2) Organizational Learning Definition 70

Table (3.2) Organizational Learning Variables 71

Table (4.1.1) Descriptive Analysis by Age 81

Table (4.1.2) Education 82

Table (4.1.3) Firm Type 84

Table (4.1.4) Employee Level 85

Table (4.3) Reliability Analysis 88

Table (4.3.1) Reliability of Organizational Learning 89

Table (4.3.2) Reliability of Financial Performance 89

Table (4.3.3) Reliability of Leadership 90

Table (4.3.4) Overall Reliability 90

Table (4.4) Descriptive Statistics 91

Table (4.5) Skewness and Kurtosis 95

Table (4.6) Durbin Watson Test 96

Table (4.7) Stepwise Regression 99

Table (4.8) ANOVA 102

Table (4.9) Correlation 103

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List of Figures

Figure (4.1) Gender Wise Descriptive Analysis …….…………………………………

82

Figure (4.2) Education wise Descriptive Analysis ………………………………….

83

Figure (4.3) Firm Wise Descriptive Analysis ……………………………………….

85

Figure (4.4) Employee level Wise Descriptive Analysis …………………………….

86

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ACKNOWLEDGEMENTS

All gratitude is due to Almighty ALLAH, most Gracious and Merciful, who

capacitate me to complete my educational journey up till now. All respect for last Holy

Prophet Muhammad (S.A.W.W) and Eehl-Baith & Companions, who enabled us to

recognize our Creator.

First of all, I whole heartedly thank Allah the supreme power for enabling me to

complete my thesis in the given time.

I am deeply indebted and wish my utmost appreciation and gratitude to my

supervisor, Ms. Aaisha Arbab Khan, Assistant Registrar (Establishment branch) GC

University Faisalabad & Lecturer University of Central Punjab Faisalabad Campus for

her valuable suggestions, encouragements and guidance. Her proficient counselling and

knock of flaming valuable suggestions, boundless forbearance and indefatigable help

with anything, anywhere, anytime consummate advice and stimulating instructions made

it all possible for me to undertake the work.

It would not been possible without the kind support and help of some individuals

and organizations. I would like to extend my sincere thanks to all of them. Great

appreciation goes to my friends and employees of textile industry who helped me from

time to time to collect the data during the completion of my thesis.

The hand behind my success is of my parents, in the form of million prayers,

good wishes, moral support and financial support which paved the path of my success.

No vocabulary of any language can express the feelings of thanks for those prayers.

Raja Yasir Ali

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DEDICATION

I dedicate this thesis to my parents, spouse and sweet daughters. Without their

patience, understanding, support and most of all love, the completion of this work would

have not been possible.

1

CHAPTER NO.1

INTRODUCTION

1.1 Introduction

Continuous changes in recent times are constantly escalating the complexity of the

world. Economic activities, population and technology are the factors that might alter

our world from realistic to profound. Some changes are productive, while other

changes are undesirable, these might be ruined the world and become a threat for the

corporate world. In this scenario, only those companies can survive that continuously

learn and change their business pattern with the need of time. Schein, (Senge, 1997;

Argyris, 1996; Garvin and Edmondson et al., 2008), (Sterman, 2001) and his peers are

early constructors of concepts of learning organizations. Individual and team learning

both lead an organization towards improved performance which ultimately results in

profitability of these organizations.

In the current era of continuous change, the organizations find it a necessary for their

growth and long term survival, to look for a new condition/aspect that will help them

in coping with the current environment. And eventually the search of such condition

leads organizations towards the learning either through internal or external source

(Crossan & Bedrow, 2003). Many researchers prove Organizational learning as a

2

source of achieving and sustaining in the current complex environment (Avlonitis &

Salavou, 2007; Bierly & Daly, 2007; Austin & Harkins, 2008).

By learning, foolish become wise and without learning, wise become foolish. The

above mentioned quote clearly describes the importance of learning for the human

beings. Similar to humans, learning is also necessary for the organizations. It actually

decides about the survival of any organization in long run. In current complex

business environment every organization needs to have up to date knowledge about

their customers, customer preferences, product range, suppliers, competitors,

technology, capabilities and resources of the competitors.

Many learning organization researchers proved through various researches that how a

learning organization is better than an old, autocratic type organization. Learning

become even more crucial for huge telecom/IT related organizations just like PTCL

which consists of different versatile departments like Technical, Finance, HR, and

Revenue and expands over a wide geographical area. In this research paper I will try

to find that the level of learning is the function of job done by a particular employee or

it should be same for all. For that purpose, I have divided employees of PTCL in two

broader categories; one is technical people and other in the non-technical.

Chang and Lee (2007) stated that in order to achieve and sustain the competitive edge

in the market organizations need to focus on acquiring, disseminating, interpreting and

adopt behavioral changes quickly. In other words, these two researchers have linked

the organizational learning capabilities with sustainable competitive edge.

3

Learning has no limits. At almost every phase of life individual and societies learn.

Likewise is the case with organizations. With varying environment, and demands

every organization wants to be a competitive player in the respective industry. To be

the leader in the respective industry, organizations are compelling hard to get the

sustainable competitive advantage. Learning is the only source of sustainable

competitive advantage that can’t be imitated and copied (Barney, 1991). Knowledge

oriented economies have acknowledged the importance of learning. Whereas, least

knowledge oriented economies feel difficulties in recognizing the importance of

learning. Pakistan’s economy is still in the transit phase. Due to the reason different

sectors of Pakistan’s corporate world realized the importance of learning. The telecom

sector is one of them. In 2008 Pakistan’s telecommunication market ranked at third

position among emerging telecommunications markets as per report of the Pakistan

Telecommunication Authority (Authority, 2008). There are less empirical researches

in the telecommunication industry of Pakistan with respected to organizational

learning construct. If research regarding the learning constructs will be available, the

sector might be groomed. The purpose of this research is to measure the level of

organizational learning of these organizations and how the learning impacts the

financial performance. In Pakistan, PTCL, Ufone, Telenor and Mobilink are the major

market players in telecommunication industry.

The revolutionary changes in the technology & information, in last three decades, has

tremendously altered the face of business. This change in business patterns and

processes clearly explain how much the importance of organizational learning in the

modern era. Companies need to be at their toe if they want to survive with this

4

continually changing environment. Organizational leaning should be the part of

company strategy. Quite a few researchers in last decade, made corporate world

accustomed with the idea of Organizational Learning and its exploitation as one of the

imperative mode of gaining and retaining competitive edge. Many writers in the field

of business threw lights on the capability of organizations to learn, as a crucial

prerequisite of success & innovation (Nemeth, 1997). By virtue of learning,

organization can adapt to constraints of environment, it makes organizations familiar

about their earlier inaccuracies and wrong choices, and help in avoiding the revision of

same mistakes. The pace at which, an organization can learn, become the decisive

element in acquiring competitive edge. The organization’s ability to implement a

change in strategy and to respond their competitors challenge, are all linked with the

organization’s ability to learn (Dixon, 1993).

The adoption of policy for future, is solely depends on the leadership of the

organization. The organizational learning capabilities in an organization can only be

developed if the leadership has a clear strategy about it. In other words, Organizational

learning has relationship with the leadership of an organization. Schein (2004)

described the importance of culture that needs to be developed within the organization

in order to enhance the organizational learning capabilities. Yanow (2000) stated that

organizational learning is largely based on the organizational culture.

The development of such culture is based on the leadership that promotes a certain

culture in an organization (Yanow, 2000).

5

Vera and Crossan (2004) stated that permanent and quick focus on acquisition and

dissemination of information by an organization largely depends on the leadership of

the organization. They further claimed that the most vital factor in creating an

organizational learning environment is undoubtedly the leadership of the organization.

This is done because learning is the antonym of status quo. Leadership of an

organization is the one who challenges the status quo and promotes share vision and

share interpretations of the information.

Austin and Harkins (2008) stated that it is important for organizational learning that

leadership of the organization is strong enough. Because only the strong leadership

resists status quo and create an environment that promotes learning within and outside

organization. This similar concept is also given by Popper (2004) by saying that

organizational learning occurs only when the leaders of the organization has the

courage to make changes and influence the employees of the organization to adopt

changes quickly and challenges the status quo mind set.

This research thesis is supposed to fill out the research gaps in the organizational

leaning perspective. There is no argument against the consistently mounting

significance of the concept of organizational learning. But there are less empirical

evidences specifically in the research results with respect to the relationships between

organizational learning and financial performance of the organizations and the

moderating role of transformational leadership. Consistent changes in the current

complex business environment, internationalization of businesses and lack of

resources are few of the challenges faced by many organization of current epoch. So

6

there is a serious need to dig out the solution to sustain and grow in this kind of

complex business environment. This solution is so important for the survival of the

organizations.

When the survival is the matter of concern, organizations need to find a solution that

proved to be a success for longer period of time. The quest to find a permanent

solution of this problem leads towards the concept of organizational learning. Survival

in the long run is only possible by having the sustainable competitive advantage. This

hunt emphasizes the organization to learn continually from its internal and external

environment. As suggested by many researchers this need to learning leads towards

the concept of organizational learning. Elkjaer (2004) suggested that organizational

learning is the only source of achieving sustainable competitive advantage. She further

claimed that all other resources are either be copied by other organizations, or can be

demolished with time but the learning capability of the organization can neither be

copied nor be ruined with passage of time. So it is the perfect and permanent source of

getting sustainable competitive advantage.

Undoubtedly, the concept of organizational learning has proved to be the most

important source of attaining competitive advantage and to survive in the recent

complex competitive environment, but still there is much empirical research that needs

to be done to further explore the effect of organization learning concept. In order to

gain more clarity of the concept of organizational learning and to explore more

dimensions and constructs of this variable more and more empirical work in to b

encouraged.

7

As the concept of organizational learning is a procedure of acquisition of knowledge,

dissemination of that knowledge which is to be carried out on daily basis in the routine

course of business of an organization, so its utilization should also be carried out in

daily processes of an organization to be more fruitful, the process prerequisites

particular organizational conditions that permit the process. Yanow (2000)

emphasized on the need of a culture within the organization that is supposed to

support and help the existence of organizational learning. This same concept was also

given by few other authors who relate the organizational learning with the

organizational culture (Cook and Yanow, 1993). The importance of organizational

culture is because it helps organization develops a set of rule, systems and procedure

within an organization which ultimately leads towards the organization learning

concept. Schein (2004) described the importance of organizational culture as it

promotes the working environment that enables the employees of the organization to

work more effectively and efficiently. He further suggested that understanding

organizational culture is critical in getting the concept of the organizational learning

processes in its true sense (Yanow, 2000; Schein, 2004).

Organizational culture is not the only thing that needs to be considered while

understanding the concept of organizational learning. There is another very important

and critical side that directly affects the organizational learning capacity of any

organization. This is the leadership of the organization. It is a proven fact that the

concept of organization learning is all about continuous and permanent process of

acquiring information, dissemination of that information and according change is the

behaviors and processes of the organization needs continuous support from the

8

leadership of the organization. When we talk about the organizational learning

capabilities of any organization, leadership is the most important factor that needs to

be considered (Jover, 2008). Leaders are the one who challenges the status-quo

regarding working environment, so change and learning is associated with the

leadership very closely. As organizational level learning is a mutual goal, it is different

from the concept of individual learning so creation of a shared vision for

organizational level learning is directly linked with the leadership of an organization.

Strong leadership is required to embed change into the organizations. Popper (2004)

linked organizational learning with the role of leadership. He claimed that learning can

only be occurring at organizational level if leaders of that organization encourage

change, challenges status-quo, and help employees in creating a shared vision within

the organization. To make organizational learning the priority is only possible if

leaders have the clear vision about it.

Undoubtedly, leadership has a strong connection with the concept of organizational

learning, but still enough gap is there in research field to find out the relationship

between the organizational learning and leadership. Sarros (2008) stated that

leadership is the center point through which an ordinary autocratic type organization

can be converted into a learning organization; it is the leadership through which the

process of acquisition, dissemination and resultant behaviorally change can be

improved dramatically.

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1.2 Problem Statement

The concept of organizational learning is emerging since 80. Most of the researchers

suggest that an organization should be at the appropriate level of learning, to acquire,

sustainable competitive advantage over other existing firms in the market. Learning is

not only about the survival of any organization but firms can also produce new

product, groom their employees and ultimately generating maximized revenue. In 21st

century it becomes essential for organizations because the business in today’s global

world become more complex. Now-a-days firms had to face a rapidly varying

environment, vibrant structures, and globalization. Today, only firms are sustained

who actually strive for learning.

The telecom sector of Pakistan is facing intense competition. To survive in the

industry, companies need to have knowledge regarding their learning capabilities and

the impact of these leanings on the financial performance of their organization. This

research thesis will try to dig out the impact of organizational learning on firm’s

financial performance and the role of leadership in this relationship. The common and

the most important question raised in the mind is to understand whether the

organizational learning has any connection with the financial performance of the

organization and what are the other factor(s), like Leadership, that affect this

relationship. This research thesis will try to conduct an empirical investigation in order

to get an answer to these two questions.

This research thesis not only, comprehensively reviews the previous literature of the

field of OL, FP & leadership but also extends beyond the theoretical boundaries and

10

applied different instruments to empirically test the relationship between different

variables under study. The information gathered from these instruments can be

analyzed in order to determine the exact relationship between these variables and their

impact on each other which further strengthen the Organizational Learning concepts in

Pakistani environment.

1.3 Research Objectives

➢ To find out the relationship between organizational learning and firm’s perceived

financial performance.

➢ To identify the impact of leadership in creating learning environment.

➢ To evaluate the impact of learning on perceived financial performance.

➢ To justify the role of leadership in the process of learning.

➢ Role of leadership in connection with the relationship between learning and its impact

on perceived financial performance.

1.4 Significance of the Study

There is abundant theoretical literature available on the concept of Organizational

Learning. But the empirical evidence regarding Learning organization’s impact on

financial performance with moderating effect of leadership is very less . When we talk

about this relationship specific to the Pakistan’s telecom industry no major empirical

research found on the topic. This shortage of empirical research has encouraged working

on this topic.

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This research will find the impact of organizational learning on firm’s financial

performance in the telecom sector of Pakistan influenced by leadership. This study has

not yet been conducted in Pakistan. It will add value to literature. This research will

bring fruitful results for the organizations and helps them in giving the right

importance to Organizational learning concepts while strategizing for the future.

In current business environment of Pakistan, many organizations don’t have the

familiarity with the concept of organizational learning and its importance for growth.

This under gone study may get the attention of organizations towards the concepts of

organizational learning, leadership and their impact on the financial performance of

their business. Another significance of this study will be the exploration of Leadership

and how much does it impact on the financial performance of any organization.

Moderating effect of Leadership variable was analyzed on dependent and independent

variable.

1.5 Summary of Chapter

First chapter explains the introduction of the topic in brief manner. This chapter also

explains the reason why this study is conducted in “Problem Statement” section. It

also discusses the main motives and objectives of ongoing study. This thesis tried to

dig out the impact of Organizational Learning on financial performance and

considering the moderating role of Leadership on organizational learning and financial

performance. Significance of study explains how this study will answer how to fulfill

objectives of study. Limitation of study explains some limitations of the study.

Detailed limitation is discussed in the last chapter and arrangement of study forecasts

the arrangement of study and content of chapters of the study.

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1.6 Arrangement of Study

There are over all five detailed and comprehensive chapters in this study. As already

discussed above, the first chapter names as Chapter one, threw light on the

introduction of the topic. It also explains the importance of the study and the major

problems faced by the selected industry in current business environment. It also briefly

explains the background of the study, which is why this study in conducted and what

are the factors that needs to be studied. In a summarized manner, chapter one is all

about the introduction, the background of the study, the research objectives, the

problem statement and off course the research questions and hypothesis. The second

chapter of the study is about reviewing the literature on selected topic and variables.

This chapter also discusses the inclusive theoretical & contextual background of the

selected hypothesis of the undergone study. Second chapter is all about supporting the

under study variables and major topic from the previous work and researchers made

by earlier scholars in the same field. The third chapter of this study is about the

methodology adopted for this study and the reason why such methodology is adopted.

This chapter further explains the research instrument i.e. research, the composition of

the questionnaire and the data analysis techniques that are used to complete this study.

The results and outcomes of the study will be discussed in chapter four. This chapter

describes the results come after applying the selected techniques at the under studies

data. Final chapter of the study is chapter five; it presents the whole study in

summarized form. This chapter also includes the discussion section and conclusion

and recommendation about the study as well.

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CHAPTER NO.2

1 LITERATURE REVIEW

2.1 Literature Review

The earlier literature of the concept of organizational learning has not shown enough

significance of the concept in a business environment. In order to easily understand

the topic from literature review, the concept is divided in different parts based on the

variables used in the study. Chapter two of the study will try to explain the diverse

sides of the study. Different aspects of the undergone study will also be discussed in

this chapter. Organizational learning, financial performance and leadership are the

basic dimensions of the study. Organizational learning is the independent variable of

the study while financial performance is the dependent variable. The role of leadership

is analyzed as a moderator. Garvin (1985) stated that those organizations fail in the

long run which fail to give proper focus on organizational learning. The complex

business environment is changing very rapidly, so to gain the sustainable competitive

edge organization must have due focus on organizational learning. Organizational

Learning concept has been defined by various scholars in the literature.

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2.2 Organizational Learning

Quite a few definitions of the concept organizational learning exist. The majority of

scholars define organizational learning as a process of acquiring, and transferring

knowledge, focus on individual as well as team learning, and incorporation of these

learning into the processes and behaviors of its individual members and the

organization as a whole (Appelbaum & Reichart, 1998). Elkjaer (2004) Learning is

not just to know the available knowledge and resolve problems on set patterns. It is a

process to, a way, a technique to move forward from things you know to the

something that are unknown to you. Learning means developing, creating, discovering

new paths of doing things rather than just focusing and moving on the older ones.

Learning became an activity that is carried out by the whole society if it is done

through participation. Learning is treated as a social activity. On the other hand,

organizational learning is about the ways an organization learns and adapts the

changes.

Organizational Learning can be roughly defines as a process through which employees

of an organization can detect errors & mistakes and taking measures to correct it i.e.

restructuring the theory of organization’ action etc (Argyris, 1977). Many academics

and practitioners have proposed that organizational learning as a process of continuous

knowledge acquisition, dissemination and exploitation may improve the

competitiveness of an organization. Thus, Chang & Lee (2007) have stated that

companies with a learning capability can gain a competitive advantage. Fiol and Lyles

(1985) explained Organizational Learning as a process of refining actions by virtue of

enhanced understanding and knowledge.

15

A very famous concept of Organizational Learning was given by Levitt is that

Organizations are considered as learning when they learn from their past/history and

implant that learning into their routines that eventually results in behaviors change

(Levitt & March, 1988). Organizational Learning is all about development of

relationship between organization & the environment in which it exists (Daft &

Weick, 1984).

Huber (1991) wrote in-depth analysis in order to give complete understanding of the

concept of organizational learning. His finding also divides organizational learning

into four constructs. These construct are knowledge acquisition, distribution of

knowledge, interpretation of the acquired information and organizational memory. He

stressed on the need of further research and implementation of this concept in future.

A learning organization is an organization where all its employees continually learn

and transform its learning into their routine matter, into their performance, into their

practices and into the organization as a whole. Learning organizations are proactive to

the changes in their surroundings. These organizations are less vulnerable to the

external factors that affect the company’s survival in long run. These organizations are

more open to new ideas, new practices and are better able to opt change quickly.

For the growth and success of any organization learning has an important role.

Members of the organization must learn the ability to solve problems efficiently.

Learning is necessary not only to continually improve current process adopted by an

organization but also very important to adopt changes happening in the market that is

16

necessary for survival (Khaliq Ur Rehman Cheema, 2012; Ketelhohn, 1994; Levitt &

March, 1995; Wheatley, 1992).

The pioneer concept of learning organizations is based on learning individuals. For

organizations, in order to continually learn and change their individual members must

learn individually & collectively to make their parent organizations learn (Cyert &

March, 1963; March &Simon, 1958).

Initially quite a few earlier authors in the field of learning organization argued that

learning occurs through individuals and that organizations themselves do not learn

(Dodgson, 1993).

Elkjaer (2004) Learning is not just to know the available knowledge and resolve

problems on set patrons. But it’s a process to, a way, a technique to move forward

from things you know to the something that are unknown to you. Learning means

developing, creating, discovering new paths of doing things rather than just focusing

and moving on the older ones. When learning is done through participation it actually

becomes an activity that is carried out by whole society. Learning is treated as a social

activity.

Organization that aims to learn from a development project needs to create a social

world in which everyone is will and participate to learn at its level (Elkader, 2003).

Later on many Learning Organizations scholars claimed that organizational learning is

different from individual learning. The learning required by an organization cannot be

determined by its individual members (Tsoukas, 1996).

Gilbert (1992) explains the prerequisites for survival in a telecommunication

company. According to him organization that have informational tools and suitable

17

telecommunication facilities in accordance with the current market scenario along

with learning employees are having better chances for survival.

To have sustainable competitive advantage, organizations must learn continually and

rapidly as compared to other firms in the industry (Senge, 2006). David A Garvin the

pioneer researcher in the field of learning organization describes LO as: “A learning

organization is the one where its employees first create new knowledge, obtain already

available knowledge and then finally distribute and transfer that knowledge and then

change the behavior of its people on continuous basis” (Garvin, 1993).

To measure the level of learning in an organization different authors provide different

measurement tools. There is a possibility that the results measured from one tool may

be different from the other tool. According to David Garvin learning in any

organization can be done first through meaning, second through better management

and lastly through measurement tools (Garvin, 1993).

Mahmood and Amir (2013) in their article used the same tool in order to measure the

level of learning in leading Telecom Company of Pakistan. Significant and major

improvements are needed badly in telecom sector as the learning level assessed in this

organization is at bottom level when compared to benchmark scores. Quite a few

comparative studies were also conducted using Garvin’s toolkit. Similar kind of

comparison were made in Service & manufacturing industry of Pakistan. The learning

environment at service sector is more supportive in service sector as compared to

manufacturing sector (Majeed, Naveed et al. 2013).

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2.3 Organizational Learning Definitions

The review of literature reveals that many authors have given different definitions of

the concept of organizational learning. Few of them are described below:

Learning is basically of two types, individual learning & organizational learning; the

later one is more important and has lasting impact. Lawrence and Dyer (1983) and

Martin (1980) suggest that organizational learning is more important than individual

learning, because it is not only the cumulative sum of individual learning but it also

help in developing a learning system, a system in which not only its existing members

can learn but it also make organization history and culture. Unlike its individual

members learning organizations do not have brains but it does have systems and

history. If the focus is on the individual learning then these members may come & go

from one organization to others but organization history and memory maintain

behaviors, norms, practices it learns during its routine business. Learning is quite

different from adoption. Learning refers to the understanding and developing

mechanism to dig out the reasons behind a certain event while adoption simple means

adjusting to the change (Hedberg, 1979).

Fiol and Lyles (1985) Suggest some major factors that directly affect the chances of

learning in any organization, Culture that is suitable for learning, flexibility in the

strategic choice of the organization, the structure of the organization and environment

within the organization. They further explores that these factors are very crucial and

they create a circle relationship with learning if any one of these is missing, learning

will not occur at organizational level.

19

Identification of components of learning is not an easy task. Consensus on how to

define & measure the learning orientation construct is lacking. To measure the

Learning orientation four components are used learning commitment, presence of a

shared vision at all stages of organization, a culture that promotes openness to new

ideas and sharing of knowledge throughout the organization at all hierarchal levels

(Cavusgil et al., 2002).According to Watkins and Marsick (1993) seven actions that

needs to be taken by any organization to be a learning organization. These seven

actions are:

(1) Creation of continuous opportunities for learning.

(2) Encourage dialogue and discussion in the organization.

(3) Focus must be on collective work and on team learning.

(4) There must be a predefined system to share learning within organization.

(5) Individual members must be empowered towards a collective vision.

(6) Organization must be connected with its environment.

(7) The presence of such leadership that encourages learning at all levels of the

organization, i.e. individual, collective & organizational level.

Huber (1991) defines Organization learning in some constructs: the acquisition of

information, distribution of information, interpretation of that information and finally

the organizational memory. Argyris and Schön (1996) Define organizational learning

as a process of acquiring information by any mean. Dimovski (1994) defines

organizational learning as a procedure by which organizations acquire and interpret

the information and finally the resulting change in the behavior and processes that will

impact on the organizational performance in the end.

20

Therin (2010) gave his own definition of organizational learning. He stated in his

paper that Organizational learning is based on some qualities which are built in the

organization in order to attain knowledge from internal and external environments and

then using this information/knowledge in the optimal way, in the best interest of the

organization. Therin (2010) divided organizational learning in four different

constructs. (1) Acquisition, (2) Assimilation, (3) Transformation & (4) Exploitation.

He defined acquisition construct as a capability upon which an organization can

manage to adopt knowledge from the environment and update its processes on the

bases of this attained knowledge. While the construct assimilation involves the process

of analyzing, understanding and further processing this acquired information.

Construct of transformation explained by him, as a process, through which acquired

information is merged with already available knowledge. While the fourth construct,

exploitation, is defined as a technique of transferring this acquired knowledge, into the

routine processes of the organization.

Nevis et al. (1995) also inked the learning and experience together. They claimed that

organizations with more experience are more in a position to learn, as compare to those

which have lesser experience.

Argote (2011) defined organizational learning as a link between the organization and

its individual member. Chen (2005) stated that organizational learning is a continuous

process, a process through which an organization continually scan the internal and

external environments in which it is operating, and adopt changes accordingly to

ensure its competitive edge.

The concept of organizational learning given by Hoe and McShane’s (2010) is used as

a base of this study. He defined organizational learning as an ability of an organization

21

through which it acquire information, disseminate that information throughout the

organization at all level and in brisk manner and to quickly adopt the changes in

behavior and processes as a result of this acquired information (Hoe & McShane’s,

2010). This definition describes organizational learning as social activity. As

acquiring, disseminating and integrating knowledge is a continuous process so it

becomes more a social activity performed by any organizational level. And this social

activity is not possible without the direction & commitment of transformational

leadership.

On the basis of detailed literature review the Organizational learning has been divied

into following four constructs for this thesis.

2.3.1 Information Acquisition

The information acquisition stage is the starting pint of information process. It is the

beginning where information is converted into knowledge. The members of the

organization receive information both through internal sources and external sources. It

is worth mentioning here that in the current organizational leaning, the training of the

employees is the best source of information acquisition. So based on this view,

information acquisition has basically three sub-dimensions i.e. information acquisition

through internal source, information acquisition through external environment and

information acquisition through employee training.

2.3.2 Information Distribution

Huber (1991) stated that the information acquired by an organization through various

sources is of no use for the organization until it is distributed amongst its members that

22

require it. To distribute this information throughout the organization, several

channels/ways can be adopted. The review of literature reveals that few authors are

more focused towards the people who acquire information (Brown & Duguid, 1991).

While few are more concentrated on, improving the system and processes for

distribution of information (Koffman & Senge,1993).

2.3.3 Information Interpretation

The information acquired and distributed by an organization is in bulk. Not all the

information is useful for the organizations. Here comes into play the interpretation of

information. Its main purpose is to reduce the level of vagueness with the information.

Daft and Lengel (1986) stated that organization use personal contacts, letters, memos,

telephonic conversation etc. to interpret the information in its own way. Skerlavaj et

al. (2006) added some modern communication techniques like emails, video

conferencing, and intranet etc.

2.3.4 Behavioral and cognitive changes

Garvin (1993) stated that learning is basically about change. He further clarified if an

organization declared itself as learning organization but no cognitive and behavioral

change happened in the organization then there is no organizational learning in reality.

2.4 Organizational Learning and Learning Organizations Differential

Better understanding of the concepts of Organizational learning and learning

organizations is very crucial before going further research. Örtenblad ( 2004) has

explained three major differences between these two concepts. He stated that

organizational learning is basically the process and set of activities performed by an

23

organization, while learning organization can be viewed as just simply a form of

organization. On the other hand, Westover (2006) said that apperantly quite

insignificant difference is there between organizational learning and learning

organizations but studyies showed vital differences between the two concepts. In

learning organizations, there are communities of commitments not only the individuals

who learn and these commitments leads to continuous learning (Kofman & Senge,

1993). Learning organization have continuous learning to compete with future

challenges, which is also recognized as double-loop learning (Argyris & Schön, 1978)

while organizational learning is like one time sponsored company which deals only

with current activities. Learning organization applies outside the class room, which

they have learnt in classrooms while in organizational learning, organizations only

focus on internal operations (Westover, 2006). Literature suggests different elements

that should be the part of learning organization and every element have its own

importance (Kontoghiorghes, Awbre, & Feurig, 2005). In his studies Westover (2006)

concluded that Learning organization is that organization that create a environment

that provide employees an opportunity to take risk, learn new thing that go beyond

only problem solving, they promote single and double loop learning to address crisis

and solution for future problems.

Örtenblad (2001) identified three differences between learning organization and

organizational learning from the literature. The first is that learning organization has

been seen as a form of organization while organizational learning is set of processes or

activities (Tsang, 1997).

24

Second, some researcher have a point of view that in organizational learning, learning

takes place naturally, while effort is required to develop learning organization

(Dodgson, 1993).

Third, organizational learning literature is emerged from academic inquiry, in contrast

literature of learning organization is mainly from practice (Easterby-Smith, 1997).

Comparing organizational learning and learning organization Tsang (1997) said that

organizational learning involves analysis and collection of processes that concentrated

in individual and collective learning inside the company, while learning organization

involves evaluative and diagnostics tools that promotes quality of learning processes

inside the organization. McHugh, Groves and Alker (1998) explained that

organizational learning focus on training, HRM, skills and knowledge whereas

learning organization focus on tacit and experiments based learning which remains

unnoticed in the organizations. Reynolds and Ablett (1998) argued that learning

organizations response and brings modification by practical implementation of

organizational learning and learning organizations modify their ability to learn on

organizational level and it creates a supportive learning environment. In contrast

Ikehara (1999) explained that learning is the process run by individuals but not

compulsory it will automatically leads to learning organization. It needs individuals to

continuously learn not only to understand need of efficiency in work but also to

develop individuals who are creative and supportive to enhance the capacity. Gorelick

(2005) explaining the relationship between concepts said: learning organization and

organizational learning can coexist. To be more learners, continuous learning is

required and any company can claim it practices organizational learning.

25

To understand theoretical background of learning organization, building blocks of

learning organizations can help to understand the dimensions.

2.5 Perceived Financial Performance

Business performance can be measured through different perspectives. These

perspectives can be (i) accounting perspective like financial measures i.e. net profits,

(ii) marketing perspectives and off course (iii) the operation perspectives that include

effectiveness & efficiency. Historically, accounting perspective of measuring business

performance is used to assess the business performance in quantitative studies (A. D.

Neely, 2002). Every firm is in the business in order to perform better and earn high

profits, there is a strong need for measuring the business performance. Measurement

of business performance is very essential because of the following seven reason (A.

Neely, 1999).

(1) Intense & increasing competition between firms, (2) to take the improvement

initiatives, (3) in a quality conscious society business needs to meet the local &

international quality standards, (4) to adopt the changes in organizational environment,

(5) coping with the continually changing demands of external customers, (6)

importance of IT and (7) the changes occurring in the work practices.

How to measure the business performance that best and truly depict the performance is

always one of the main agenda of management & board meetings. In the current

complex and rapidly changing business environment, a firm can only achieve and

maintain sustainable success, it must adopt practical performance measure tools (A.

Neely, 1999).

26

Continuous and non-stop performance is the basic objective of any organization,

because by performing in a continuous and constant way organizations can grow and

progress. According to the basic definition of business, a business is one that is started

with aim of earning profit and to be in the market for infinite time period (Tangen,

2004). To further emphasize on this concept Tangen (2004) threw light on the

importance of organizational performance he further said that most important research

tool in managerial research is the organizational performance.

Kaplan and Norton (1998) presented the balance score card approach for measuring

the organizatioanl performance. The balance score card developed by these two

researchers have four major items i.e. (financial performance, customer service,

internal process and innovation). The same balanced score card approach was given a

new dimension by Hernaus, Škerlavaj and Dimovski (2008) by providing four

different perspectives of organizational performance, these four dimensions are

financial measure, customer measures, employees measures and vendors (suppliers)

measures. Weerakoon (1996) given multi-model performance framework, this

framework has four dimensions for measuring performance i.e. market performance,

employee motivation, productivity performance and societal impact.

Jiang and Li (2008) Suggest that Organizational Learning is the key factor for

attaining competitive edge which ultimately results in better financial performance.

Financial performance of a firm is the key indicator of its success or failure. To be

profitable and to be a going concern is the basic foundation at which any business is

built. Financial performance of the firm can be examined by its net profits, return on

27

equity (ROE) & return on assets (ROA) (Jiang & Li, 2008). The construct of firm

performance is Return on investment, Return on assets, return on sales and net profits.

These four factors clearly indicate the financial performance of the firm. The higher

the values are the more financially strong the firm is supposed to be (Calantone,

Cavusgil et al., 2002). The presence of different views regarding one indicator that

purely and completely define the overall finical performance is forcing researchers to

measure different financial aspects to properly examine the financial performance of

an organization. Return on equity, return on assets, tobin’s Q and MVA can be used

for this purpose (Ellinger et al., 2002).

Different authors have used different financial measures like Net profits, Net growth,

Return on assets etc. to depict the financial health of the organization (Haber &

Reichel, 2005). However, relying only on one measure will most likely not give the

true picture of firm’s financial performance especially in the long run. It is therefore,

suggested that more than one financial measure should be used to truly assess the

exact financial performance of any organization. (Haber & Reichel, 2005) claimed that

financial performance can be measured either through Goal approach or by using the

resource approach. Both these approaches are based on single dimension that is the

achievement of maximum resources or set goal. However, the Goal approach is the

one that is widely used because of its simplicity in measurement. Another benefit for

adopting goal approach is that it is suitable for small enterprises as well. But if

performance measurement is just based on a single dimension it might ignore other

aspects of measuring firm’s performance like employee’s growth or market share of

the firm. It has been proved by many researches that the growth of the firm in revenue

28

term or in term of number of employees working for the firm has the influential effect

on the firm’s activities in marginal level and the development of the business or firm

in future either in short run or long run course of the business. Haber and Reichel

(2005) suggest that performance can be measured either through subjective measure or

objective measure. Both these aspects of measuring firm’s performance have their

own criterion, objectives & importance. Subjective aspect of measuring performance

is based on the perception of employee, customer or manager’s perception about

firm’s financial health, i.e. perceived growth, perceived sale & perceived profits etc.

On the other side, objective measures are in term of figures and numbers. It is about

measuring performance on the bases of actual sales figure, net profits earned and net

growth etc (Haber & Reichel, 2005).

Studies published by Murphy, Hill and Taylor after going through fifty one studies on

entrepreneurship conclude that, for measuring the performance of any firm, as a

dependent variable, mostly only few dimensions are used. These dimensions are net

growth, net profits and the efficiency. When the study is based on measuring the

financial performance of any firm, the accuracy in selecting the right dimensions are

very crucial. Similarly, not only the selection of dimensions is an important issue in

conducting the research, its accurate measurement or calculation is also very

necessary. No doubt financial performance aspect is the focal point for analyzing the

business effectiveness yet financial performance aspect is not the only dimension that

truly describe and completely represents the overall performance of any business.

How effective & efficient firm use its resources, the size of the firm, the nature of the

business, the share a firm has in the market all these factors help in truly representing

29

& understanding the performance of the firm. When someone is analyzing the firm

performance in a larger perspective all these factors needs to considered and keep in

mind for accurately depicting the true picture about the performance of the firm. This

is truer especially in the long run of a business course.

Performance of any business is mostly determined by its market share, efficiency, net

profit earned during a specific period, the growth rate of the firm, and its liquidity

ratio. An important point that needs to be considered in measuring the actual

performance of the firms is that one should not analyze only single dimension. Actual

picture about the performance of the firm should be based on multiple dimensions as

suggested by various scholars time to time. It is also suggested/recommended that in

multi dimensions one variable for measuring performance should be a control

variable. A control variable may be the firm size, risk associated with the firm or

industry or the age of the firm or industry etc. It is a proven fact that the relation

between the firm performance and the variable selected largely depends upon the

selection of the measure. Murphy (1996) stated that relying on single dimension while

measuring the performance of the firm is quite ambiguous that is why it is strongly

recommended to use more than one dimension in order to ascertain the true picture.

Using multi dimensions in measuring the performance of the firms somewhat

represents the tradeoff encounter by the firm. The only benefit associated with

measuring performance using single dimension is that if the result of this indicators in

negative firm might boost up its efficiency and efforts to make this dimension

positive. But there is also the threat that by focusing only at one dimension it may put

negative effects of other dimensions of measuring performance that were not

30

considered at first. For accurate and true picture that study should observe as much

dimension as possible. The use of controlled variable is also a must in measuring the

exact performance. The dimension selected and used in the study must have a logic &

solid reason and justification as why these dimensions are selected. Due to the lack of

construct validity, research should base on the relationship between independent

variable (i.e. organizational learning in this thesis) and dependent variable like

performance dimensions (i.e. net profits) to analyze the performance of any firm

(Murphy, Trailer, & Hill, 1996).

Undoubtedly, financials measure are far more important aspects or variables to

measure the performance of any firm, but these are not the only measures that can be

used to analyze the overall performance of the firm. Both financial & non-financial

measures are important in order to correctly depict the performance of any firm. In

recent times, many strategist and business analysts start giving important to both

financial and non-financial measures in order to see the true picture. But still financial

measures are widely used and are important to rely on. Financial measures tells about

the performance of the firm in relative quantitative term as compare to non-financial

measure that are most likely based on qualitative data. So, to reach at the point how

much bonus to be distributed among shareholders, rewards to be given to employees

and other such important decisions solely based on the financial measures (Aggarwal

& Gupta, 2006). Many researchers have used both financial & non-financial measures

in order to ascertain the performance of the firms, but it is worth mentioning here that

importance and more focus is given to financial measures. These fanatical measures

are more or less net profits, volume of sales and net growth of the firm On the other

31

hand, non-financial measures the variables are not yet established as in case of

financial measures. Different researchers and analysts used different variable as non-

financial measure these includes, marketing performance, customer satisfaction,

customer loyalty, brand loyalty and market share. Non-financial measure can also be

based on Human resources aspect these may include employee turnover, employee

satisfaction etc. As these non-financial measure cant truly and completely represent

the performance of any firm that is why these are given less importance and are yet

used as secondary measures (Aggarwal & Gupta, 2006).

The selection of dimension i.e. financial measures of non-financial measures is based

on the study undertaken. The focus on single dimension i.e. financial measures is

important in most studies. Similarly there are few studies which needs to be based on

the non-financial aspect of measuring performance, Yet there are we studies that

involved both financial and non-financial measure to be analyzed in order to reach at

the exact point (Haber & Reichel, 2005). The use of the combination of both financial

and nonfinancial measures is important as when we talk about the financial

performance, the non-financial aspect i.e marketing aspect is an important driver of

the future profits, growth, sales volume etc. Along with the financial measures now

different business analysts specially the prospect investors have shown keen interest

over the marketing efforts made by a firm. This is now well established fact that the

efforts made is the marketing aspect by a firm will soon affect the financial

performance of the firm. So before the final financial statements be published the

future investors and analyst can depict it by analyzing the marketing position and

strategies adopted by the firm. The single dimension measures focused by previous

32

researches are net profits, cash flows, sales volumes etc. While the non-financial

measure included market share, customer satisfaction and loyalty (Clark, 1999).

Dess and Robinson (1984) stated that when review the literature there is no commonly

recognized measures of financial performance, he further stated that Return on Asset,

Profitability and Return on Investment are the major measures for analysis the

financial performance of the firm.

It is worth mentioning here that both these measure are important in order to reach at a

true picture regarding performance of the firm, but only those variables are choose

from these two measures regarding which data is easily available. These variables are

usually the net profits, market share, growth rate etc. If the researcher is going to

choose only a single measure to analyze the growth of the firm then it is suggested to

use Sales growth. As this is the widely accepted and relied measure in order to

measure the form performance by many researchers. Similar to this, the increase in

assets and fewer turnovers of employees are also used by some researchers as an

indicator to fir performance. By far, the most widely used measure is Net Profits.

Profitability is the ultimate determinant of success or failure of nay business. So to

analyze the performance of any firm its profits tells the true story in real sense. The

measurements to depict the profitability or growth in profits are net profit margins and

return on assets (Fitzsimmons, Steffens, & Douglas, 2005) .

Financial performance of any firm can be measured by asking questions about (1)

Efficiency, (2) growth & (3) profits (Li et al., 2008). Murphy et al, (1996) stated that

the firm performance is based on the following important factors, (1) efficiency, (2)

33

growth, (3) profit, (4) size, (5) leverage & (6) market share along with few other

important factors.

2.6 Leadership

Leaders are the one who influence others and having the managerial authority.

Leadership on the other hand provides the environment that promotes learning.

Leadership is the one that reinforce learning. Leadership has the strong impact on all

the major constructs of learning organizations (Zagoršek, Dimovski et al., 2009). Most

scholars have accepted the significance of organizational learning for firm financial

performance. It is now the issue of the current era to be aware of the ways in which

leaders can influence and control the environment and processes in organizations for

learning. Slocum et al., (2000) and Peter (1990) accentuate the extent of leadership for

organizational learning.

Leadership contributes in creating the environment that helps organizations in

enhancing the organizational learning capacity. It helps in organizations by providing

openness, trust between the employees as well as between the employees and

management, dialogue and by inspirational motivation (Mansoor Dehghan Manshadi,

2014). The basic characteristics of transformational leadership are to build a culture in

the organization that promotes discussions and cooperation between the employees of

organization and by doing so it alternatively adds value to the organizational learning

((Mansoor Dehghan Manshadi, 2014).

34

2.6 Transformational & Transactional Leadership

Transformational leadership promotes openness within the organization stated

Zagoršek. It encourages dialogue and trust between employees at all levels. Zagorsek

(2009) connected the Organizational learning with style of leadership adopted by an

organization. He claimed that the transformation leadership creates a cooperative

culture among employees and helps in acquiring, disseminating and creating

knowledge at all levels of the organization. In this way it directly affects the learning

within the organization. He further elaborate that the behavior and cognitive change in

the employees of an organization positively and directly relates with the

transformational leadership.

There are usually two type of leadership exist in broader spectrum. Simple leadership

is the one that is available at all levels of an organization in contrast to this; strategic

leadership is the one who is at the top most layer of any organization and is

responsible for strategic decision making of the organization (Hambrick & Pettigrew,

2001). Bass (1985) introduced new way of studying leadership he divides leadership

into two different forms, transactional leadership & transformational leadership. The

framework developed by Bass is based on the organizational context given by (Burns,

1978), which is quite successful in studying the to-level leadership. Lowe, Kroeck, &

Sivasubramaniam, (1996) have studied the leadership using this framework in their

research. By analyzing both transformational leadership theory and visionary

leadership theories, researchers are in a better position to have more logical and

realistic view regarding top management of the company (Cannella & Monroe 1997).

Indepth analyses of Transactional leadership theory reveals that it was much inspired

35

by the earlier theory named as path-goal theory given by (Mitchell's, 1974). On the

other hand, transformational leadership is much inspired from the theories of

inspirational & visionary leadership given by Mintzberg (1989) & (House & Shamir,

1993).

Egri and Herman, (2000) stated that transformational leadership is more important and

value. They claimed that for the success of any organization its CEO must have few

very important qualities. These qualities include self-confidence and empathy. They

stated that transformational leadership style involves all these qualities; in this way

have direct impact of firm’s performance.

The two theories are opposite in direction to each other said (Burns, 1978). He stated

that transactional and transformational leadership are two different ends of a

continuum. Vera and Crossan (2004) define transactional leaders as a way through

which organizations strengthen their culture, their structure and strategies.

Avolio et al., (1999) divides transformational leadership into different constructs.

These constructs include individual consideration, inspirational motivation &

intellectual stimulating. The leaders with these traits help their followers to give

preference to the organizational interests over their own self interests.

Transformational leaders are source of inspiration for their followers. They inspire

them by virtue of their vision, personality and actions (Bass & Avolio, 1990).

A shift from the old autocratic type organization into a learning organization demands

a total shift in the systems adopted by an organization said (Kavita Sinhg, 2005). She

further explained that this type of major shift in the system is not possible without the

transformational leadership. In this way she directly connects the organizational

36

learning with leadership style. Mansoor Dehghan Manshadi (2014).divides

transformational learning into two broader categories he stated that it includes the

creation of visionary and intellectual stimulation and promotes the creative thinking,

which ultimately leads towards the organizational learning.

Leaders who know the importance of learning and promote learning in an organization

is only way to make an ordinary organization as a Learning Organization (Prewitt,

2003). Whether an organization is a leanring organization or is of old autocratice type

organization is only judged by people known as “leaders”. Leaders whether

transformational or transactional, can only motivate their employees either through

their vision or action to develop, maintain and implement learning in their routine

processes, which is ultimate and inimitable competitive edge (Mahmood & Amir,

2013). Melhem (2010) stated that leaders are basically the drivers of any organization,

so they can actually increase the pace of learning by empowering and encouraging

their employees and by promoting the culture that is truly based on the concepts of

Organizational Learning. Same thing was also reiterated by another great of learning

organization concept by saying that leadership is vital in identifying the problems and

by implementing the learning processes into the routine working of organizations

(Garvin et al., 2008). Leaders are the ones that have the capacity and ability to

dissolve and defuse complex problems and are the motivators for the employees

(Marquardt, 1996). Leaders are designer of learning process and teacher of

organization as they forecast throughout the organization (Mohr, 2005).

37

Leadership style has the direct impact on the performance of any organization. The

transformation leadership involves the traits of top management that motivate its

followers. It involves the intellectual stimulation, individual consideration &

inspiration. All these help in improving the organizational learning (Bierly et al.,

2000). Therin (2010) has linked the leadership with the organizational learning

capabilities.

In Spain, a study was conducted to support a positive and strong relation of leadership

on the organization’s learning capabilities (Ruiz Moreno et al., 2005). Recently

another research was conducted in Israeli schools and was proved empirically that the

transformational leadership affects the organizational learning in a positive and

significant way (Kurland, Peretz et al., 2010). On the other hand, the effect of

transactional style leadership is also positive but a bit weaker as compared to

transformational leadership (Kurland, Peretz et al., 2010). The impact of

transformation leadership style & transactional leadership style is analyzed in selected

constructs of organizational learning process. These constructs are the acquisition of

information, dissemination of acquired information in a quick manner, interpretation

of the received information of the concern receiver and the change in behavior and

processes as a result of this acquired information. Multifactor Leadership

Questionnaire also known as (MLO) is one of the most famous questionnaire for

measuring leadership style’s impact on organizations was used (Zagoršek, Dimovski

et al. 2009).

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2.7 Organizational learning and leadership

Quite a large number of Western researchers have developed a relationship between

the organizational learning and the style of leadership. The research works of Aragon,

Correa et al (2007), Garcia-Morales et al. (2007) is a true example, who described the

relationship between the two above mentioned concepts. It is observed through

various researches that transformational style of leadership impacts the organizational

learning capabilities positively and hence improve the organizational performance as

well. Hannah and Lester (2009) stated that as leadership role is supposed to provide

the culture, system, processes for the individuals, groups and departments that

promote learning that is why the relationship between the organizational learning and

leadership is positive. When we talk specifically about organizational learning context,

undoubtedly transformational leadership style is proved to be the superlative

leadership style (Bass, 1990).

Barkai and Samuel (2005) proved that there is a strong relationship exists between the

organizational learning and the style of leadership adopted by an organization. The

same point was reiterated by Cavaleri, Seivert et al. (2005) as the level of learning in

the employees of any organization can be strengthen through transformational

leadership style. By virtue of this it speedup up the acquisition dissemination of

information throughout the organization. Transformational style of leadership helps in

developing a culture that promotes openness which eventually results in enhancement

of organizational learning capabilities (Field, 2011).

39

Hannah and Lester (2009) & Chang and Lee (2007) has studied the financial impact of

organization learning and transformational leadership style, they found a strong and

positive relationship between the two, which ultimately leads towards better financial

performance.

Manshadi et al. (2014) has established the relationship by applying a correlational

study between the organizational learning and leadership. He proved that significant

relationship exist between the constructs of organizational learning and constructs of

leadership.

2.8 Organizational Learning & Perceived Financial Performance

One of the major and most reliable sources of competitive edge in the log-run of any

business is undoubtedly its organizational learning capability (Stata, 1989). The same

linkage of organizational learning with financial performance is also been established

by (Hedlund, 1994).

Literature emphasizes to build learning organization due to their vital impact on

organizations profit and some of studies focus to clarify how learning organization

concept helps to promote performance (Wah, Loh, Menkhoff, & Evers, 2005).

Literature shows it very difficult to measure overall organizational performance

however it can be measure along with different dimensions of learning of

organizations. In changing environment, organizations demand multi-dimensional

tools and profit theory is not valid to measure organizational performance (Hernaus et

al., 2008b).

Concept of learning organization has been evolved worldwide and many researchers

suggest that implementing the concept of learning organization should help individual

40

and team learning and such increased learning should acquiesce performance gains

(Wah et al., 2005). To develop a relationship between learning organization and

organizational performance have been a big challenge in literature (Wah et al., 2005).

Many authors suggest learning as an important aspect for organizational performance

although link between learning organization and business performance in term of

transitional economics have little evidence (Laycock, 2005). Laycock (2005)

empirically proved positive relationship between learning organization and

organization performance. Performance of an organization can be enhanced by

increasing learning capacity of organizations (Laycock, 2005). Learning organization

are more capable in handling customers and competitors that leads to profitability and

sale growth can also increase by learning (Hernaus, Škerlavaj, & Dimovski, 2008a). In

his studies Kaplan and Norton (1998) explained organizations that learn more about

marketplace and customers, have better chance of profit maximization. (Dimovski &

Škerlavaj, 2005) proposed model for linkage between learning organization and

organizational performance.

Further explaining the model Davis and Daley (2008) stated that learning

organizations are important source to facilitate learning and strategy to improve

organizational performance. It put stress to take actions that support learning which

helps to improve performance (Freeman, 1994).

Dimensions of Learning Organization Questionnaire (DLOQ) are a tool to measure

learning of organization along with part of organization performance (Marsick &

Watkins, 2003). Four indicators can be assumed to measure organization performance

which are: maintain stability, identifying and satisfying customer needs, acquire inputs

41

and transform into outputs and profit maximization (Robbins, 1998). More the

organizations are effective more will be the performance and organization

effectiveness is based on consistencies models, system resources, internal process and

goal achievements (Robbins & Coulter, 2005). Organizational performance helps to

sort out available recourses for growth of organization and condition of financial

health of an organization. We developed The Dimension of Learning Organization

Questionnaire (DLOQ) which helps to measure organization performance which is

developed on basis of traditional performance like return on investment (Marsick &

Watkins, 2003). More than 200 companies have used DLOQ in different aspects. It is

the one of most valid tool for measuring different dimensions of learning of an

organization that might be individual as well as organizational level and to know the

performance of organization is basic need of organizations to improve their operations

and strategies as well. One of the most popular tools used by many researchers for

measuring organization performance is Balance scorecard which makes a balance

between operational and traditional financial measures related to employees,

customers and market (Kaplan & Norton, 1992). In the study, four major areas of

balance scorecard were focused: customer service, financial performance, internal

process and innovation (Harrim, 2010). This model can help to analyze a firm’s

financial condition and have gained much attention in many firms (Daft, 2004). In

their studies Laycock (2005) validate questionnair for dimensions of organizational

performance from the studies of Kaplan and Norton. Examining relationship between

organizational learning and organizational performance (Dimovski & Škerlavaj, 2005)

proved strong impact of organizational learning on performance.

42

Jones (2000) stated that organizational learning capabilities are very important for the

firms in order to survive in the complex and changing environment. He further

emphasized that only these capabilities enable the managers to get the increased

productivity from their employees and can make them understand how to survive and

cope with the external environment as well. By doing so it alternately helps

organizations in improving performance.

Susana et al. (2005) stated that despite the established linkage between the

organizational learning and the business performance of the firm, very little empirical

work has been done in the field.

Literature emphasizes to build learning organization due to their vital impact on

organizations profit and some of studies focus to clarify how learning organization

concept helps to promote performance (Wah, Loh, Menkhoff & Evers, 2005).

Literature shows it very difficult to measure overall organizational performance

however it can be measure along with different dimensions of learning of

organizations. In changing environment, organizations demand multi-dimensional

tools and profit theory is not valid to measure organizational performance (Hernaus et

al., 2008).

Concept of learning organization has been evolved worldwide and many researchers

suggest that implementing the concept of learning organization should help individual

and team learning and such increased learning should acquiesce performance gains

(Wah et al., 2005). To develop a relationship between learning organization and

organizational performance have been a big challenge in literature (Wah et al., 2005).

Many authors suggest learning as an important aspect for organizational performance

43

although link between learning organization and business performance in term of

transitional economics have little evidence (Laycock, 2005). Laycock (2005)

empirically proved positive relationship between learning organization and

organization performance. Performance of an organization can be enhanced by

increasing learning capacity of organizations (Laycock, 2005). Learning organization

are more capable in handling customers and competitors that leads to profitability and

sale growth can also increase by learning (Hernaus, Škerlavaj, & Dimovski, 2008a). In

his studies Kaplan and Norton (1998) explained organizations that learn more about

marketplace and customers, have better chance of profit maximization. (Dimovski &

Škerlavaj, 2005) proposed model for linkage between learning organization and

organizational performance.

Further explaining the model Davis and Daley (2008) stated that learning

organizations are important source to facilitate learning and strategy to improve

organizational performance. It put stress to take actions that support learning which

helps to improve performance (Freeman, 1994).

Dimensions of Learning Organization Questionnaire (DLOQ) are a tool to measure

learning of organization along with part of organization performance (Marsick &

Watkins, 2003). Four indicators can be assumed to measure organization performance

which are: maintain stability, identifying and satisfying customer needs, acquire inputs

and transform into outputs and profit maximization (Robbins, 1998). More the

organizations are effective more will be the performance and organization

effectiveness is based on consistencies models, system resources, internal process and

goal achievements (Robbins & Coulter, 2005). Organizational performance helps to

44

sort out available recourses for growth of organization and condition of financial

health of an organization. We developed The Dimension of Learning Organization

Questionnaire (DLOQ) which helps to measure organization performance which is

developed on basis of traditional performance like return on investment (Marsick &

Watkins, 2003). More than 200 companies have used DLOQ in different aspects. It is

the one of most valid tool for measuring different dimensions of learning of an

organization that might be individual as well as organizational level and to know the

performance of organization is basic need of organizations to improve their operations

and strategies as well. One of the most popular tools used by many researchers for

measuring organization performance is Balance scorecard which makes a balance

between operational and traditional financial measures related to employees,

customers and market (Kaplan & Norton, 1992). In the study, four major areas of

balance scorecard were focused: customer service, financial performance, internal

process and innovation (Harrim, 2010). This model can help to analyze a firm’s

financial condition and have gained much attention in many firms (Daft, 2004). In

their studies Laycock (2005) validate questionnair for dimensions of organizational

performance from the studies of Kaplan and Norton. Examining relationship between

organizational learning and organizational performance (Dimovski & Škerlavaj, 2005)

proved strong impact of organizational learning on performance.

Each and every organization working in this world, later or sooner have to go through

the change. This change may be because of the internal or external factors. It may be

because of the changing customer demands and preferences, change in the technology

or change in the skills required to perform certain jobs. This continuous change

45

demands organizations to adopt new products, processes and ways in order to maintain

or increase their business performance (Williams, 1992).

In order to have sustainable competitive edge for a longer period of time, is should be

perfectly inimitable, non-transferable or it should be difficult to be copied by your

competitor. When we talk about the sustainable competitive edge with these qualities

only one capability comes into mind and that is the organizational learning capability

of the firm (Slater, 1997).

Organizational learning capabilities of any organization help it in better understanding

and knowledge about internal and external environment of the organization. This

better and timely understanding leads in the change of behavior which ultimately leads

towards the better financial performance (Garvin, 1993).

Tippins and Sohi (2003) described that only those organizations are able to capture big

market share, those are quick in learning about changing trends, customers,

competitors and can alter their behavior accordingly.

Slater and Narver (1995) linked profitability and better business performance with the

organizational learning capabilities of the firm. They stated that the learning

capabilities enable the organizations to produce better products, using resources in

best optimal way, better need identification of customers and provide better quality

products in a timely manner as compare to their competitors and hence result in

increased profitability and market share.

When going through the literature, it is found that many researchers had proved

positive effect of organizational learning on the firm performance, but they why earlier

research perceive firm performance remain a question in every body’s mind. Lei et al.

46

(1999) considered financial results as business performance. Linking the business

performance with the financial results is also unjustified in view of many researchers.

Dimovski (1994) in his study stated that the improved organizational learning

capabilities will enhance and improve both financial and non-financial performance of

the firm. Later one, after almost a decade, the same perceptive of business

performance were considered by (Skerlavaj, 2003).

Snege (1990) stated that an organization who focus on organizational learning

capabilities, will find a positive change in its behavior and processes. This change will

alter its behavior from being reactive to proactive. This positive and proactive change

in processes of an organization will eventually leads towards better financial

performance. Organizational learning will enable an organization to serve its customer

in a better way as compare to its competitors; it helps organization to provide more up-

to-date products to its customers which ultimately leads towards rapid growth and

increasing profits (Hurley & Hult 1998).

Slater and Narver (1995) has linked the business performance of the firm with the

organizational learning capabilities of the firm. Panayides (2007) proved through his

empirical findings, that organizational learning capability of the firm is directly

improve the performance of the firm. This performance may include financial and

non-financial aspects as well.

The only persistent thing is change. Change is continuously adapting new processes to

compete in competitive world and change comes from learning (Senge, 1990).

Learning is helps organizations to survive and to be effective in a changing

environment. Learning is the only tool due to which organizations can get competitive

47

advantage. Learning is a construct and it means processes which can be used to

improve, transfer and improvement of skills. Also new training programs, problem

solving techniques, quality improvement activities and understanding of strategic,

structural or interpersonal problems of the organization (Edmondson, 1996).

In past, main purpose of the organization was to generate profit and product now the

basic purpose of any business is to become a learning organization. For any successful

organization, it is very necessary to become learning organization which is

continuously changing with the changing needs and demands of the environment and

improving with time to time. If organization is slow in learning or adapting to change

it will become obsolete (Marquardt, 1996).

Learning organization is that which develop, obtains and transfer that knowledge and

changes its behavior according to that knowledge. Five activities are the base of a

learning organization (1) solving problem in a systematic way (2) Performing new

experiments (3) Learning from History (4) Learn from others (5) sharing of

knowledge (Garvin, 1985).

There are three main factors of learning (1) Environment that supports learning (2)

concrete learning procedure and system (3) Leadership which supports learning.

Environment that supports learning includes how much employees feel psychological

safe at work place, acknowledgement of differences, regard new thoughts, continuous

improvement. Concrete learning procedure and system includes continuous

involvement in new experiments, gathering information, analysis, train and educate

employees, transfer of knowledge. Leadership which supports learning includes leader

48

behaviour. They are used to estimate the learning in organizations (Garvin,

Edmondson & Gino, 2008).

Telecommunication industry is very dynamic industry. Due to the changing

environment and increasing competition learning has become a very important asset of

telecommunication organizations (Wei, Choy & Yeow, 2006).Importance of telecom

sector is increasing in western countries and also in Pakistan, telecom sector is rapidly

growing. The telecom sector has generated Rs 411 billion revenue last year and

showed 11 percent growth as compared to 2011(Pakistan Telecommunication

Authority, 2013).

In Pakistan, PTCL, Warid, Ufone, Telenor, Mobilink and Zong are telecommunication

companies. But Zong is not included in the study so that data can be collected easily

due to time constraint. Therefore there is a need of continuous improvement and

innovation in this industry (Bourreau & Doğan, 2001). And this can’t be done without

learning in organization. This study is conducted to analyze whether telecom

organizations in Faisalabad following learning practices or not. And to which extent

they are using learning practices in their organizations. Faisalabad area is studied only

so that the data can be collected and managed easily. David Garvin’s questionnaire for

measuring learning practices in the article "Is yours a learning organization?" is used

to collect data from telecommunication industry of Faisalabad. Questionnaire is given

to different employees of these telecom companies to get primary data for analysis.

Organizations should act in a way so that learning process can be increase in their

organizations and they can reap its benefit (Argyris, 1977). Senge defines set of

principles of learning organizations. He gave five disciplines of a learning

49

organization and believes that without these disciplines an organization can’t become

a learning organization. These disciplines include system thinking, personal mastery,

and mental models, developing a shared vision and working in a team (Senge, 1990).

In past organizations were based on the approach of rewards and penalty but now the

trend has been changed and organizations are becoming learning organizations. To

become a learning organization author gave a four step model in which first step is to

discover the new ways to gain competitive advantage and to take opinion of experts,

published knowledge and also information of competitors. Second step is to provide

them the environment in which they can freely talk and can take jointly decisions to

solve problems. This step basically enforces to create team skills in employees. Third

step is to explain how the work will be done and fourth step is to understand what is

right and wrong and take preventive measures to stop failure. This step basically

focuses on the consequences of the work and practices done (Edmondson, 2008;

Cheema KR, 2012).

Organizational Learning occurs through eleven areas which are a learning approach to

strategy, participation of employees in policymaking, dissemination of information,

developmental accounting and control, internal exchange, reward flexibility, enabling

structures, boundary workers as environmental scanners, learning by the actions of

other companies, learning culture, and personal development of everyone in

organization (Pedler, Burgoyne, and Boydell, 1991).

Double loop learning generates new knowledge in organization (Argyris, 1977). In

service organization, quality strongly depends upon employee’s behaviour. How much

employees are devoted to provide superior and quality services to the customers (Irfan,

50

Mohsin, & Yousaf, 2009). Some problems occurring in organizations especially in

service organizations can’t be managed by only a single individual so team working is

necessary to control these issues. And it can give competitive advantage to other firms

(Oakland, 1995). The organizations who want to become a learning organization

should create an environment of knowledge management and develop a culture of

learning. Organizations should develop a system so that employees can share their

ideas and can bring innovative change in organization (Yang, Watkins, & Marsick,

2004).

Acquisition of knowledge, sharing, analyzing and implementation of that knowledge

is very necessary for any organization to learn and compete in dynamic market

(Huber, 1991).

There are specific factors that help organizations to become a learning organization

which is advancement in technology, foster change in environment, globalization and

customer orientations. In learning Organizations people have the capacity to respond

better in dynamic and complex environment than competitors (Garvin and Edmondson

et al., 2008).

It is concluded that performance of an organization is related with the learning ability

and collaboration among teams working in the organization. The role of new ideas is

undeniable to gain competitive advantage and teams have a vital role to get new ideas

(Edmondson, 2002).

As the economy has moved from industrial to information age, it has become

necessary for telecommunication organizations to continuously manage and increase

knowledge to compete in modern era (Yusof, 1998). To gain success, it is necessary

51

for the telecommunication organizations to use their knowledge assets in their best

way and also implement Knowledge assets properly. While there is no perfect answer

that how knowledge management should be implemented, it is need for the

telecommunication organizations to think of what the critical factors are necessary to

stay on top. The results of their research showed that the organizations know what

factors are contributing in success but the shortcoming is that they are not

implemented properly (Wei, Choy, & Yeow, 2006). In today’s environment

organizations can’t gain competitive advantage without knowledge, because only

knowledge assets are difficult to duplicate. The real worth of organizations can be

determined by the ideas, cognition and information having their employees (Beijerse,

2000). So knowledge is the basic factor to gain competitive advantage in market (Lei

et al., 1996).

Knowledge management strategies include culture, leadership, technology, and

measurement they are used to increase flow and transfer of information among

individuals and groups of the organization (Dove, 1998; O’Dell & Grayson, 1999). In

his research Schein examined that culture, shared values and norms have a strong

influence on the learning process of organizations (Schein, 1996). An organization

can’t become a learning organization within a night to become a learning organization

continuous improvement and change is very necessary.

Some things like behavioural change, developing a culture needs more time while

some changes should be taken immediately. Organizations that want to become a

learning organization should follow some steps. These steps include free environment

that supports learning, to foster the training and sharing of knowledge, and a

52

competent and supportive leader for them. And the learning will become double if

employees properly understand and utilize the learning practices (Garvin, 1985). To

become a learning organization, proper planning and to implement best practices is

very necessary (Rauf et al., 1991).

This study focused the relationship among exploration of new possibilities which are

derived from individual learning and exploitation of old certainties which are majorly

concerned with team learning. Games laid emphasized on two situations of learning in

the organization. The first was leaning among members for the overall goal of the

learning organization. The second was learning in individuals for competition in

primacy. Learning is concerned with cost and benefits of the organization the time and

space which are given to its individuals and groups.

A large number of factors affect the learning in the learning organization. It was a

qualitative study and concluded that the adaptive processes are effective in short run

but harmful in long run periods of learning. However allocation of resources in the

organization is a major issue. Usually organizations fail to appropriately segregate the

resources among all functional areas. (Tanyaovalaksna, 2011) the learning oriented

organizations focused on highly their goals and tend to be more innovative. The

learning will be high if employees are well-skilled and resources are also provided to

them.

Brian (1995) provided a theoretical framework in his study of individual learning

process in the organization. According to him changes, adaptations and learning are

made under the shelf of organization. The author developed a framework in which

organizations worked as knowledge system. Kasvi (2002) Marquardt (1996)

53

“organizations depend on specialized Knowledge of their employees”. This study

based on this model which is concerned with sociology knowledge. The focus of this

study is on theoretical framework on small engineering company. This company used

a new information system to enhance their communication capabilities. Conventional

theories of organizational learning indicated that information systems reduce the costs

and save the capital of an organization. However, knowledge systems have influence

in individual as well as group learning. The information systems affect the knowledge

systems in an organization.

Edmondson (2002) conducted study on the significance of team learning in the

organization. According to him team learning created potential and enthusiasm among

members of the learning organization. Senge (1996) organizations which pay attention

on system thinking tend to be grown more rapidly. Organizational learning is nothing

even if its teams and individuals have not thrill of learning. For the analysis a sample

of 12 organizational teams was selected and data is collected through observations and

their records. It was a qualitative study used to analyze two main parts of collective

learning. The first is their actions to bring change and second is willingness of teams

how they permit organizations to learn. How the changing environment respond to

them. He concluded that team member thoughts and ideas have impact on efficiency

of teams. This ability will stimulate to learn them and new changes will be emerged at

organizational level. This study has significant contribution in the literature and will

also helpful for this study.

Ellis et al. (2003) conducted a study on individual and team learning which was

related to their psychology. This studied tested a scenario that how much influence of

54

individual and interpersonal variables on the knowledge. The authors examined the

effects of cognitive ability, willingness of doing work and workload pressure on team

members. A sample of 109 four-project group was taken. It was concluded that

individuals in teams learn more by their cognitive ability and when workload is

equally distributed among them. On the contrary, when the members of team are

extremely agreeable then team learning is badly affected. This study contributed much

in the literature of learning of individuals. They further concluded that teams should

use paired structures for better learning.

Mahwah and NJ (2006) discussed learning is required in organizations due to dynamic

environments, information technology, high competition and globalization. The

learning organizations primarily focused on suitable environments for their

employees. Garvin and Edmondson (1993) described Building Block “supportive

learning environment” focused here. On the other side, members of an organization

are primarily responsible to adopt and execute changes through learning. These factors

enforce individuals and teams to learn better for their job safety and stimulate them for

learning for long term organizational survival. His study was qualitative and

contributed much in previous research. This study focused on “knowing about” rather

than “how knowing”. The basic purpose of this study is to communicate the meanings

of individual, group, and organizational learning. The continuous learning is a key of

success of an organization. The organizations are dependent on their teams and groups

efforts and learning.

Kirschner et al. (2009) conducted a study on the comparison of individual learning

with the collaborative learning environment. Their study discussed individual learning

55

do not much effective and useful where achievement of the goals is necessary. While

as groups learning is beneficial for an organization. Especially when complex tasks

and projects have to fulfil then division of workload is worthwhile. Division of tasks

reduce workload and cognitive pressure from the group members. Through

segregation of groups, costs of projects are reduced. In the cases of more complex

conditions, information gathered and proceeds for better results by groups. However,

in less complex conditions the individuals learning is more appreciated. Findings and

results of this study are worthwhile and contribute much in literature.

Catharines (2010) conducted a quantitative study on the relationship of individual and

group learning. This study demonstrated these learning concepts on the basis of

organizational learning. March and Sutton (1997) Organizational researchers take

organizational learning as a dependent variable because it measures performance. The

surveys were conducted for collection of the information on individual, group and

organizational data. The primary data was collected from medical sector. The

regression analysis and canonical correlation were used to find the relationship among

individual learning, group learning and organizational learning. The results indicated

there was moderate relationship among individual learning and group learning. There

was weak relationship among individual, group learning and organizational learning.

However, all the results were significant. This study is helpful of future researchers in

finding new facts and figures. It is also supportive literature for this study.

Senge (1990) described “Mental Model” ability of an individual how he understand

the situations at workplace. How he is managed the resources and recombine the

information in an efficient manner. Beers et al (2006), kirschner et al. (2008)

56

described group learning required conversation and transformation of ideas and

thoughts. This study focused on these two different approaches and suggested

distinguishes scenarios for different conditions in the organizations. It contributed

much in the learning literature of the organization. Ann (2007) Literature on

Organizational learning is mainly categorized into two types’ corrective learning and

transformational learning.

Moradi (2011) has conducted his research on the relationship of organizational

learning culture and job satisfaction in private universities academic staff. Data was

collected through two questioners. One questionnaire was related to job satisfaction

analysis and second was organizational learning survey (DLOQ). Total 323

questionnaires were circulated through simple random sampling method. Correlation

analysis was applied on the data. Results showed the positive high correlation between

organizational learning and job satisfaction.

Extensive effort has been made to find the research articles which are directly related

to the supportive learning environment facilitate learning in universities but could not

find even a single article in this regard.

Garvin et al. (2008) in his article “Is yours a learning organizational?” has developed

the tool kit for assessing organizational learning in different perspective. It includes

supportive learning environment, learning processes and reinforcing learning through

leadership. In this article main focus is on supportive learning environment for

organizational learning and rest of the building blocks will not be used.

57

According to Peter Senge (1990) learning organizations are those organizations where

people continually expand their capacity to create the results they truly desire, where

new and expansive patterns of thinking are nurtured, where collective aspiration is set

free, and where people are continually learning to see the whole together.

According to Daft and Weik, (1984) Organizational learning is a process of getting

knowledge of doing actions in an external environment. Tsang (1997) explains that the

organizational learning is a process which is comprised on certain types of activities

that happen in an organization. Organizations learn through past history by making

improvements in the previously taken actions (Fioland Lyles, 1985). According to

Hult et al., (2001) organizational learning is the knowledge and the capacity to

develop knowledge within the organization.

Learning organization is an organization skilled at creating, acquiring, and transferring

knowledge, and at modifying its behavior to reflect new knowledge and insights

(Garvin, 1993).

According to Garvin (1993) Learning organizations have to achieve five main

activities: systematic problem solving, experimentation with new approaches, learning

from their own experience and past history, learning from the experiences and best

practices of others, and transferring knowledge quickly and efficiently throughout the

organization.

Garvin (2008) has also described the three building blocks for being a learning

organization which is supportive learning environment; concrete learning processes

and reinforces learning through leadership.

58

Garvin et al. (2008) in his article “Is yours learning organizational?” has developed the

tool kit for assessing organizational learning in different perspective. It includes

supportive learning environment, learning processes and reinforcing learning through

leadership. In this article main focus is on supportive learning environment for

organizational learning and rest of the building blocks will not be used.

The basic idea about learning organization was delivered by Peter M. Senge in the

book of fifth discipline published in 1992. Different scholars define the learning

organization in different ways. “Learning organization is an organization where

individuals constantly expand their abilities to generate the results which they actually

desired, where new and expensive model of thinking is cultivated, where combined

aspirations are set free, and where people continually learn how to learn from other or

how to learn together”(Senge, 1997) .

There are five building blocks for learning organization (1) Team learning is a

component which combine all the individual of the organization (2) There should be

constantly clarifying the personal mission; concentrate on energy, developing

tolerance and observing certainty and objectivity through personal mastery (3) one’s

should come out of his mental model and encourage the change (4) Company vision

should be shared among the individual of the organization (5) System thinking is a

frame work which provide us a pattern that how to make a change effectively (Senge,

1997).

One of the major author David A. Garvin have a key contribution in the field of

learning organization, in this study we are going to use the questioner designed by the

David A. Garvin he define learning organization as “A learning organization is an

59

organization which is capable to create, acquire and transfer knowledge, and then

organization behavior reflect the new understanding and insight” (Garvin, 1985).There

are five component for learning organization (1) systematic problem solving (2) learn

from experiments (3) learning from own history (4) learning from others, and (5)

Transferring information all over organization. (Garvin et al., 2008).

This study aims to measure the learning organization practices in banking sector

specifically in Pakistan. It is the era of technology so banking sector across the world

making the number of quick changes to survive in the business environment

installation of ATM (automated teller machine) CDM (cash deposit machine), credit

card, debit card, online transfer system, latest methods of KYC (know your

customers), use the latest model to manage the risk and ALPM (advance ledger

posting machine), all these innovation changes the ways of organization operations.

Now banks needed skilled labor to perform its operations. Now banks moving towards

innovation and improving their processes and introducing new products and services.

Every bank try to build distinct strategies via introducing new product and services

and make itself differentiate in the market.

The major objective of this study is to explore the learning organization practices in

banking sector in Pakistan. It will helpful for decision makers in banking industry of

Pakistan because this study is going to explain some important aspect which may be

used as a competitive advantage for banking industry and this paper will contribute in

literature for future researches.

60

The target population for this study is the banking sectors in Faisalabad. To achieve

the study objective four banks select as a sample size in the area of Faisalabad. These

banks are choosing on the basis of convenient sampling. The model (questioner)

designed by David A. Garvin et al (Harvard Business Review, 2008) used in their

article titled “Is Yours a Learning Organization?” is being used to collect data from

respondent in banking sector, (shaker and Habiba (2013) and Qamar Ali (2011) also

used this toolkit to collect the data.

Peter M. Senge is considered as the father of learning organization. The idea of

learning organization becomes more popular after the publication of the Peter M.

Seng.

Senge (1997) discussed the values of learning organization in his book The Fifth

Discipline, and develops competitive advantage from. Senge proposed (five

disciplines) that how their organization actually works (systems thinking), be open

with others for learning (personal mastery), individual set aside their older ways of

thinking (mental models), formulate such plans and policies every person can agree on

(shared vision), and then perform jointly to attain that vision (team learning).

Argyris (1994) conducted a study on the topic "Good communication that blocks

learning," and found that the new common organizational communication method, like

surveys, management-by-walking around and focus groups can blockage

organizational learning no doubt these techniques helps to solve certain kinds of

problems.

61

Cavaleri and Fearon, (2000) suggested that learning is not a separate entity it didn’t

mean to make an attempt that take place only in classrooms or training centre;

somewhat it is concomitant with work. Marquardt (1996) suggested that the concept of

learning not only applies for managerial level of organization members or lower

ranked members. It takes “a new shape of labour”.

Cummings and Huse, (1996); Harung et al., (1999); Roth well et al., (1995) examined

One of the basic types of change involves the growth of individual’s values and ideas

about what is achievable and how things work. When the entire changes are observe

collectively as a whole, its lead toward change. Denton (1998) investigated that

learning organization is the capability to acquire and use knowledge as a basis of

competitive knowledge. Learning must change the action pattern of the organization

and change the behavior of the organization. Stewart (2001) suggested that learning

organization is a form of joint cognition where members of the organization develop

environments to share their experience and learn from others experiences. In such

environment the members of organization accept the change constantly. Yang et al.

(2004) found there is significant relationship between organizational learning

environments and motivation, turnover intention and job satisfaction.

In an international context, (Zhang et al., 2004) examined the learning organization

applicability in the Chinese environment via using (DLOQ) model.

Abbas, Murad et al. (2011) conducted a study to examine the learning organization

practices in Pakistani public sector organization. The questioner designed by the

Marsick & Watkins, (DLOQ) was used an instrument to collect data. Data collected

from 44 respondent and SPSS factor analysis technique was used to analyze the data.

62

The independent variables were the learning climate, systematic employee

development, reward for learning, employee participation and leadership and learning

organization was used as dependent variable. The result showed that learning climate,

systematic employee development, reward for learning, employee participation and

leadership having positive relationship with learning organization the limitation of this

study was they didn’t use check the cultural difference effect on learning organization.

Shakir and Saleem (2013) (Khaliq Ur Rehman Cheema, 2012) conducted a research to

evaluate either learning organization practices are implemented in manufacturing

sector or not specifically in Pakistan. Questioner designed by the David A. Garvin was

used to collect the data. The result showed that learning organization practice is

implemented in manufacturing sector but not in a proper way (Dirani, 2009) examined

the concept of learning organization and its impact on work related activities in

banking sector of Lebanese and result showed that there is direct and significant

relationship among learning organization culture, organizational commitment and

employee job satisfaction.

Ejaz et al. (2009) conducted a research to examine the effect of leadership qualities in

routine working environment of banking sector in Pakistan. Data collected from 93

respondents through questioner and interviews ANNOVA and t-test was used to

analyse the data. The result showed that leadership is one of the important factors in

producing revenues, motivating and retaining the employees and gratifying the

customer via high quality services values and developing effective day to day business

environment in banking sector. Relationship between organizational learning,

63

innovation capacity and organizational performance examined by (Zahid & Ali, 2011)

in the banking industry of Pakistan. It was an exploratory study and result suggested

that there was a significant correlation between learning organization capacity and

organizational performance in banking sector of Pakistan. SEM (structural equation

modeling) approach was used to analyze the data.

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2

3

4 CHAPTER NO. 3

5

6 METHODOLOGY

This research thesis was carried out on the telecommunication sector of Pakistan. In

order to measure the organizational learning in different telecom companies of the

country, their offices situated in Faisalabad region will be selected. The target

respondents will be the front end staff and the middle level management of the

companies. The telecom sector is being selected for this study because the need of

learning is far more crucial for their survival in the long run due to products they

offered.

Organizational learning will be the independent variable of the study. The questioners

developed by (Devmoski, 1991) will be used to obtain information on different

constructs of this variable, the data collected will be entered in SPSS for further

analysis. Financial performance is the dependent variable of the study. Its difference

constructs will be measured by adopting the questionnaire already developed by (Li et

al., 2008).Different questions will be asked from the employees of different

65

organizations regarding their perception on the financial health of their organization.

To see the moderation effect of leadership the MLQ (Multi factor Leadership

Questionnaire) already used by (Zagorsek et al., 2009) will be used to seek

information from the respondents.

3.1 CONCEPTUAL FRAMEWORK:

This is a correlational study in which researcher checked the relationship

between the independent and dependent variable with the role of moderator.

Following is the theoretical framework for the research (Figure 3.1).

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3.2 Type of research:

There are two types of research theories exits in the literature, qualitative research &

quantitative research. The selection of appropriate type is based on the nature of data.

In this thesis, quantitative research method was used. Quantitative method of research

has further bifurcation according to the data and the theoretical model of the study.

Quantitative research can be either casual, relation or descriptive. As per the model of

thesis Quantitative method of research to identify the relationship was used.

3.3 Research Question

This research thesis will try to conduct an empirical investigation in order to get an

answer to the following question. What is the impact of organizational learning on

firm’s financial performance in the presence of leadership in the telecom sector of

Pakistan?

3.4 Research Hypothesis

3.4.1 H1:

Organizational learning has significant impact on Firm’s perceived financial

performance.

3.4.2 H2:

Leadership has significant relationship with Organizational Learning.

3.4.3 H3:

Leadership has significant relationship with firm’s perceived financial performance.

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3.4.4 H4:

Leadership moderates the relationship between Organizational Learning and perceived

Financial Performance.

3.5 Research Design

After the establishment of the hypothesis of the research, an empirical study was

initiated from the six largest telecom companies situated in Faisalabad. Regression test

was run in order to check the impact of organizational learning on financial

performance and to check the impact of leadership as moderator of the organizational

learning and financial performance relationship. Correlation analysis was also run to

check the relationship between the moderator and the dependent and independent

variables of the study.

3.6 Research Instrument

Research instrument is the source through which data can be collected. The survey

technique used in the thesis can be done either through interview or by getting the

questioners filled. For this specific study, the data was collected by virtue of

questionnaires. This specific method is used because the research is quantitative in

nature. Interviews are more suitable where the research is qualitative. That is why this

thesis used the questionnaires instead of interviews. The study is based on the

quantitative research method and a questionnaire was used in the thesis in order to

check the impact of organizational learning on financial performance of the firm and

to check the moderating effect of leadership on their relationship. In this thesis, three

questionnaires that were already developed were used.

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As already mentioned, the main purpose of this thesis is to determine the impact of

organizational learning on the financial performance of the firm and off-course the

moderating effect of leadership on this relationship. To answer these questions, a

questionnaire needs to be developed/used that provide exact data in true letter & spirit

with least biasness. The data collected for this study is of primary nature.

The selected questionnaire has three different sections. The first section relates to the

constructs of Organizational learning. This section is same as developed by Devmoski

(1994) and many a times attested and implemented successfully by many researcher.

The second section relates to financial performance variable of the thesis. The

questionnaire developed by (Li et al., 2008) was used in measuring the financial

performance variable of the study. The last section is relating to the Leadership

variable. This section of questionnaire was used in previous studies many a times. This

was developed by (Zagorsek et al., 2009).

3.7 Description of the Instrument

The instrument used in a study must have adequate properties. These properties must

be fulfilled, in order to accurately get the results or data. For this purpose reliability

and validity test was run to determine the instrument effectiveness. Reliability is

checked because it tells the researcher that same result will be obtained again & again

by using the same instrument, it gives the confidence that the instrument is

dependable. Similarly, validity test is necessary because it helps researcher in

determining that the result is close to the general world.

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3.7.1 Organizational Learning

The dimension of learning organization has been selected from the literature. The

constructs used in this study has already been developed in the literature. The major

work on this dimension is of Hurber (1991), Divmoski (1994) & Wall (1998). The

questions from the 1 to 15 relates to the “information Acquisition” construct of the

thesis. Questions from 16 to 21 related to the “Information Distribution” construct of

the study. Similarly question from 22 to 32 and 33 to 46 relating to the “Information

Interpretation” & Behavioral & Cognitive change” construct of the study.

3.2 Table OL Definitions

Argyris &

Schon,(1978)

The detection of errors & then its correction.

Shrivastava (1983) It’s a process through which an organization develops its

knowledge data base.

Fiol & Llyles (1985) Organizational Learning is the process of improving

actions by virtue of knowledge.

Levitt & March (1988) The transformation of different inferences from the

history into the routines of an organization that

eventually alter behaviors.

Senge (1990) The sharing of a common vision of the members of an

organization for the achievement of a common goal.

Huber (1991) The change in the behaviors through processing of

information.

Dodgson (1993) OL is the result of individual learning of members of an

organization.

Lipshitz, Popper, and The development of shared vision on the basis of past

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Oz (1996) experience of individual members of the organization.

Lahteenmaki,Toivonen,

Mattila (2001)

Its all about the adoption of changes happening across the

organizations and development of new ways of doing

things.

Vera & Crossan (2003) Organizational learning can be defines as collective

learning of all members by virtue of shared thoughts.

An & Reigeluth (2005) All the learning that is beyond the individual or group

learning is called organizational learning.

Panayides (2007) Sharing of knowledge &a common shared vision

across the organization.

3.3 Table OL Variables

Latent

variables(constructs) Measurement

variables (indicators) Sources

Organizational

learning (OL)

Information acquisition Dimovski (1994), Nonaka

and Takeuchi (1996),

Senge (1990) and Wall

(1998)

Information interpretation

Behavioral and cognitive changes

3.7.2 Perceived Financial Performance

The review of literature showed that financial performance is considered as the most

reliable variable regarding the performance of the firm. Financial performance of any

firm can be measured by asking questions about (1) Efficiency, (2) growth & (3)

profits (Li et al., 2008). (Murphy et al 1996) stated that the firm performance is based

on the following important factors, (1) efficiency, (2) growth, (3) profit, (4) size, (5)

leverage & (6) market share along with few other important factors. Based on the

literature this thesis has identified financial performance with three constructs i.e.

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efficiency, growths and profits. Perception of the employees and managers were taken

regarding the data of this variable. The questions from the serial number 47 to 49

relates to the “Efficiency” construct of the study. While questions from serial number

50 to 52 and 53 to 54 related to the “growth” and “profit” constructs.

3.7.3 Leadership

Leadership contributes in creating the environment that helps organizations in

enhancing the organizational learning capacity. Leadership has the strong impact on

all the major constructs of learning organizations (Zagoršek, Dimovski et al., 2009).

Avolio et al. (1999) divides leadership into different constructs. These constructs

include individual consideration, inspirational motivation & intellectual stimulating.

3.8 Population

Population is considered as the large group that is focused in a research or study.

Researches are usually carried out for the benefit of the population. The target

population of this study is the employees of different telecommunication companies

situated in Faisalabad city. The population is from six major telecom companies of the

country. These companies include ptcl, Mobilink, Telenor, Ufone, Zong and Warid.

As all these companies are widely spread throughout the country, so for ease of data

collection their staff from offices situated in Faisalabad city is chosen as population of

the thesis. The country wide spread offices and employees were not chosen as target

population due to time & money constrains and because of travelling issues associated

with it. The selection of telecommunication industry to carry out this study is due the

importance of industry in Pakistan. It is also been selected as, the need of

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organizational learning for IT/telecom based company is much more important when

compared to any other industry due the rapid changes in the technology with every

passing day. As already mentioned above, telecom sector is one of the organized

sector in Pakistan. So the data regarding exact population of the thesis is collected

from the local HR offices of all these five companies. The number of front line

officers and middle managers were the target of population of the thesis. The

population of each company is 377, 173, 220, 185, 210 & 105 of Ptcl, Mobilink,

Telenor, Ufone, Zong and Warid. The overall population of the thesis was 1270.

Many of these companies have offices situated in different areas of Faisalabad. As

telecom industry is one of the largest industries of Pakistan in current era, many

people are attached / employed by this industry. So it is relatively easy to approach the

target population and gathered the require data in a considerable time limit with

maximum accuracy. For considerable size sample fifty employees of each company

has been selected with a total sample size of 251 employees for this study.

3.9 Sampling technique

As already described above, the exact population size is known to us so for the

selection of sample, convenience sampling technique is being used in this thesis.

Kelloway (1998) stated that minimum sample size in a study should not be less than

200. So to meet this requirement the sample selected of the thesis is 251 respondents.

After meeting the criteria of minimum sample size, the said sampling method is quite

appropriate and is also fulfilling the requirement of the study. The regional Human

Resource offices of these selected companies along with my personal references

helped me a lot in approaching and collecting the data in true letter and spirit. There

73

was full support provided in some companies regarding getting the questionnaire filled

by the employees in its true sense. The objective of this thesis is to study the

telecommunication companies to find out the impact of learning in these companies on

the financial performance of the companies.

3.10 Sample size

While starting any research, question about how much the sample size is adequate, is

raised in the mind of researchers. Same is the case with this thesis as well. As

described by Kelloway (1998) convince sampling technique was used in the thesis. A

total of 650 questionnaires were distributed among all the selected telecommunication

companies. From the 650 questionnaires that were distributed among these firms, only

254 questionnaires were filled properly and can be used for the thesis further.. Upon

further scrutinizing of questionnaire 03 more were excluded which apparently seem

incorrect. So the final sample size of the study was 251 front line staff and managers

of six telecommunication companies with situated offices in Faisalabad.

3.11 Sampling Unit

Employees from front line staff to middle level managers situated in Faisalabad in

selected telecom companies were the Unit of analysis for this thesis.

3.12 Data Collection Technique

Survey method through questioners’ was the data collection technique of this specific

thesis.

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3.13 Data Collection Procedure

The survey technique used in the thesis can be done either through interview or by

getting the questioners filled. For this specific study, the data was collected from the

sample by virtue of questionnaires. This specific method is used because the research

is quantitative in nature. Interviews are more suitable where the research is qualitative.

That is why this thesis used the questionnaires instead of interviews. For the collection

of data personal reference was used initially. In order to brief the things regarding

questionnaire and to guide about the purpose of this research, I have personally visited

the offices of these selected companies. It took one and half month to get these

questionnaires filled from all of these selected companies. Respondents were guided to

keep in mind the performance and policies of last 03 fiscal years while filling the

questionnaires. Almost all of the selected employees have some knowledge of English

language, so just a brief guidance helped them in filling the questionnaires in its true

letter & spirit. Because of this selected approach in getting these questionnaires filled,

it did not affect the reliability of the data collected during the research.

The selection of Survey method for data collection is because its capability to

represent a large population. When we compare this method with other methods used

for the data collection, one advantage with survey is that it helps in extracting exact

data that truly represents the attributes of whole population. As this research is based

on collection of data from five companies, survey method is the cheapest among all

others. The data collected from survey method has very minimal biasness in it and

therefore provide high reliability of the data.

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3.14 Data Analysis

First of all, in order to determine the reliability of the instrument i.e. questionnaire,

Cronbach Alpha test is used. Cronbach Alpha is a statistical tool that helps researchers

in determining the reliability of the instrument to be used in the research. The

reliability coefficient of Cronbach’s alpha lies between 0 and 1. The more closer the

result of this statistic measure is to 1.0, the more reliable the items of the scale are

considered. The thumb rule for this test is given by George and Mallery (2003) in their

study. The rule is as under:

> .9 is Excellent, > .8 is Good, > .7 is Acceptable, > .6 – Questionable, _ > .5 – Poor,

To go further with the thesis and the data analysis, correlation and multiple regression

analyses were conducted. Both these statistical tools are widely used by the

researchers in order to determine the relationship between the dependent and

independent variables of the study. Regression analysis provides the average change

one variable cause to another variable of the study.

To explain participant’s responses against questions of variable, mean and standard

deviation descriptive are used. It will help to analyze average value of response and

deviations from the average value. To observe the effect and relationship between all

variable Multiple Regressing Analysis in 20th version of SPSS is used. To check

relationships among dimensions of variable, correlation analysis is performed that

ensure validity of instrument. To measure learning level Transform (compute variable)

technique is used which help to measure average learning level of organizations which

is compared with Garvin Tool kit to know the actual learning level of different

companies. To find the individual effect and moderating of variable linear and

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multiple regressions is applied. For meeting the condition of moderation effect,

interaction of (independent*moderator) variables should be significant (Baron and

Kenny 1986). Instrument is attached in the end of document.

Regression test was applied using the 20th version of SPSS, in order to determine the

impact of independent variable on the dependent variable of the study. First of all,

relation between OL and FP will be analyzed than the moderating effect of leadership

on both dependent and independent variables will be observed. Followings are the

statistical techniques used in the thesis:

3.15 Descriptive Statistics

Frequencies, maximum and minimum, means, standard deviation and variance were

used to present the main characteristics of the sample. Mean provide us with the

information that in which direction average responses lies. Standard deviation enables

us to view the variations in answers.

3.16 Reliability Analysis

Cronbach’s Alpha is used to check internal consistency reliability. Previous research

shows that reliability estimates Cronbach’s Alpha of 0.7 – 0.8 are acceptable. The

value of Cronbach’s Alpha is partially depends upon the number of items used in the

scale (Gliem & Gliem, 2003).

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3.17 Correlation Analysis

Correlation analysis is used to measure the degree of association between different

variables. The p-value is the probability of results as extreme as the one observed. A

significance of p ≤ 0.05 is generally acceptable level in social sciences.

3.18 Regression Analysis

Regression analysis is used to calculate how much variation in dependent variable

occurs when independent variables influence it.

3.19 Conclusion

The research methodology utilized in the present study was addressed in this chapter.

More specifically, the selection of the sample, the measuring instruments used and the

rationale for their inclusion, as well as the statistical methods employed in testing the

research hypotheses were discussed. In the next chapter researcher will elaborate on

the various statistical tests and the interpretation of the results of the analysis.

3.20 Response rate

A total of 650 questionnaires were distributed among the employees of all six selected

telecommunication companies. Out of these 650 questionnaires that were distributed

earlier for data collection purpose, only 255 were received back from the employees.

Which make the response rate around 39%. Upon further scrutiny of the filled

questionnaires, 04 questionnaires were apparently seemed incorrect. So these were

also excluded for the further analysis of the data. Exclusion of these questionnaires

makes 251 ready to use questionnaires to go further with the study. This made the

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final response rate to 38.61%. This low response rate might be because of the busy

schedule of the employees working in these companies. It is also observed during my

visits to these companies, that quite a large number of employees in these companies

are hesitant in filling these questionnaires, despite my repeated assurance that this data

will only be used in my MS thesis and will never disclose the identities of the

individual employees. Only the collective response of all the employees will be used

and no individual data will be disclosed. The percentage of response rate is as under:

Overall Response rate: Questionnaire Received Back * 100

Total questionnaires Distributed

= 255 *100

650

= 39% (response rate)

Workable questionnaires (Response Rate)

= Questionnaire Received Back – Incorrect filling * 100

Total questionnaires Distributed

= 255-4 * 100

650

= 38.60% (response rate)

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CHAPTER NO.4

DATA ANALYSIS AND RESULTS

In this section of the thesis, all the analyses and relationships between the variables under

study were discussed. The hypothesis of the thesis were tested by using the SPSS 20,

after running the regression, correlation and other reliability and normality test, results of

the empirical study are discussed in this chapter. This section also describes that how

much the independent variable of the study affects the dependent variable. Correlation

was also performed on the data in order to determine the relationship between the under

study variables, this was done in order to test the H2 & H3 of the theoretical model of the

thesis. Regression analysis was also performed to test the H1 & H4 of the theoretical

model of the study.

4.1 Descriptive Analysis

Descriptive Analysis of the data gives the information about the group of data under

study. This analysis helps the researcher to describe the data in a meaningful way. It does

not give a conclusive view of the data but it can summarize it in a meaningful way. In

this thesis, demographic view was used to descriptively analyze the data. This descriptive

analysis on the basis of demographics is quite useful in comparing the results and

findings of the study. The figures and tables are displayed as a result of descriptive

80

analysis to present the demographic information. While filling the questionnaire

following demographic qualitative variables were obtained from the respondents of the

study.

• Gender

• Educational level

• Company Name

• Experience in the industry

Data regarding each demographic is tabulated one by one using the SPSS. The data

regarding age of respondents is tabulated in Table 4.1 and demonstrated in Figure 4.1

below.

4.1.1 Table Age

Distribution by Age

Gender Frequency Percent

Valid

Percent

Cumulative

Percent

Male 206 82.1 82.1 82.1

Female 45 17.9 17.9 100.0

Total 251 100.0 100.0

Table 4.1.1 divided the respondent with respect to the percentage of male and female

respondents. As shown clearly from the table, the total respondents were 251 out of

which 82.1% that is 206 respondents belongs to male category while the remaining

17.9 % belongs to the female gender. The exact figure of female respondents was 45.

The accumulation of both male and female respondents is exactly 251 which is the

total sample size of the thesis.

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4.1 Figure Gender Wise Descriptive Analysis

The figure 4.1 above showed in the form of a pie chart that the major portion of the

respondents belong the male category. The blue color shows the percentage of male

respondents of the study while the red color shows the respondents belong to female

category.

4.1.2 Table Education

Distribution by Education

Frequency Percent Valid Percent Cumulative Percent

Graduation 95 37.8 37.8 37.8

Master 144 57.4 57.4 95.2

Other 12 4.8 4.8 100.0

Total 251 100.0 100.0

Table 4.1.2 above divides the respondents with respect to their educational

background. As shown three categories of education were developed in the thesis

questionnaire and respondents were asked to select the appropriate category according

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to their education level. From the above table, it can be viewed that maximum

respondents of the thesis belongs to the Master level education. 57.4 % respondents

have their educational level as aster Degree holders. This high percentage of Master

degree holders may come because of the industry selected for the study and

specifically the sample selected from this population. Telecommunication is the most

organized industry of the country and workforce they possess is usually the highly

qualified workforce, this fact can be viewed in the above mentioned table. The second

highest percentage of the respondents with respect to education belongs to the

graduation level which is 37.8 %. The master and graduation level of education of the

respondents has a cumulative percentage of 95.2%. While the 4.8% of the respondents

belonged to the “Others” category of education. It includes having lower education

from graduation and master’s level. Usually a considerable number of employees of

telecommunication industry are diploma holders.

4.2 Figure Education wise Descriptive Analysis

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The results shown in the table above is described in shape of a figure in figure 4.1.4. It

describes the same percentage of education in graphical way. “Master” degree level is

depict in red color and is showing the largest portion of the figure. “Graducation” level

is the second highest portion and portray in blue color in the above chart. “Other” is

displayed in green and is having the smallest number of respondents of the study.

4.1.3 Table Firm Type

Distribution By Firm Type (Telecom Companies)

Frequency Percent Valid Percent

Cumulative

Percent

PTCL 66 26.3 26.3 26.3

Mobilink 43 17.1 17.1 43.4

Warid 36 14.3 14.3 57.8

Telenor 43 17.1 17.1 74.9

Zong 25 10.0 10.0 84.9

Ufone 38 15.1 15.1 100.0

Total 251 100.0 100.0

The table 4.1.3 shows the division of data with respect to the firm type. The table shows

that total six companies were the target population of the thesis, from which the data is

collected from the respondents. These six companies include ptcl, mobilink, warid,

Telenor, zong and warid. It can be viewed from the table, the largest number of

respondents belongs to the “ptcl” . Out of total of 251 respondents of the study, 66

respondents belong to ptcl which is 26.3%. Mobilink and Telenor has the second and

third highest respondents which is 43 in number and 17.1% in term of percentage. At 4th

level is ufone with 15% respondents of the thesis. While warid has 14.3% and zong have

10% respondents. When we look into the percentage of respondents it gives a rough idea

about the actual size of the firm with respect to its market share and number of

employees.

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4.3 Figure Firm Wise Descriptive Analysis

The figure 4.3 desribed the demograpihics of data with respect to firm type in shap of a

diagram. The above diagram show the same percentage of repsondent belongs to each

company as tabluated above. PTCL with the highest protion of respondents showed in

blue color and zong with the most lesser respondents shown in purple color.

4.1.4 Table Employee Level

Distribution By Employee Level

Frequency Percent Valid Percent

Cumulative

Percent

Managers 28 11.2 11.2 11.2

Officers 69 27.5 27.5 38.6

Front

Line

Staff

154 61.4 61.4 100.0

Total 251 100.0 100.0

The above mentioned table 4.1.7 demographically distributes the respondents’ data with

respect to level of the employee i.e. Designations. While getting the questionnaire filled,

respondents were asked to select their employee level based on their experience in the

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industry. Table above elaborate that the highest percentage of respondents belongs to the

“Front Line Staff”. Total number of respondents in this category is 154 which is 61.4% of

the total. The “Officer” level employees as respondents of the study are 27.5 % which is

69 employees in total from all six companies. The manager level employees are the

lowest percentage in term of percentage that is 11.2% of the total respondents. From the

above respondents percentage it can also be judged that front line staff in these

companies are in higher number that is why their response rate is at higher side. While

there are few Manager level employees available in most of the selected companies in

their Faisalabad offices so their percentage depict that fact quite clearly in the above

mentioned table.

4.4 Figure Employee level Wise Descriptive Analysis

The figure 4.4 portray the respondents data with repsect to their level in the company in

shape of a diagram. “Frontline staff” is depcited in green color and shows the largest

portion of the figure. The red color of the figure belongs to “Officer” and has the second

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highest protion. While the blue color represents the “Managers” and has the smallest

protion of respondents as shown in the figure 4.1.8.

4.2 Quantitative Analysis

The relationship between the independent variable that is Organizational Learning and

dependent variable that is Financial Performance and the moderator that is Leadership is

this thesis were examined in the data analysis part of the thesis. In order to find out the

relationship between the variables and to discuss the results following data analysis

techniques were used in the study.

1. Reliability Analysis

2. Regression Analysis

3. Correlation Analysis

4.3 Reliability Analysis

Reliability test is the first step to move further with the analyses. Chronbach Alpha is the

widely used test that is run by many researchers to check the reliability of the

instruments. Its value ranges from 0 to 1. The closer the value is with 1.0 the more

reliable the research instrument is considered. In this section the overall reliability of the

instrument was discussed and individual variable was reliability was also been explained.

The overall reliability of whole questionnaire was calculated through SPSS. The results

are shown as under:

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4.3 Table Reliability

Reliability of complete survey

Cronbach’s Alpha No of Items

Overall Reliability .865 65

From the above mentioned table, it can be viewed that over all reliability of the whole

questionnaire is 86.5%. Total number of questions included in the questionnaires can

also be seen. Total items in the questionnaire are 65. As per rule given by George and

Mallery (2003) regarding the cronbach’s alpha score the overall score of this study lies

in “good” category. Because as per the rule defined by them, if Cronbach’s Alpha

score lies between 0.8 to 0.9 then the instrument can be treated as good.

After checking the overall reliability of the instrument, variable wise reliability was

also check through SPSS to have more clear idea about the each variable’s reliability

score.

Organizational learning is the independent variable of this thesis. Its reliability score is

as under:

4.3.1 Table Reliability of Organizational Learning

Reliability of Organizational Learning

Cronbach’s Alpha No of Items

Organizational Learning .843 46

The table 4.3.1 above showed the cronbach’s Alpha score of organizational learning

variable. As per above table, total items of organizational learning variable in the

questionnaire is 46 and the reliability of this individual variable is 84.3%. When we

88

compare the score of organizational learning variable with the overall instrument’s

reliability there is a slight difference in the score. The individual score of this variable

is a bit less than the original score. But still this result comes under “good” category as

per bench mark score of George and Mallery (2003).

Financial Performance is the dependent variable of this study. Its reliability score is

mentioned as under:

4.3.2 Table Reliability of Financial Performance

Reliability of Financial Performance

Cronbach’s Alpha No of Items

Financial Performance .795 8

Table mentioned above shows the reliability score of financial performance variable of

the study. As shown above, the individual score of this variable if 79.5%. The total

items of questionnaires related to this variable are 08. When compare this score to the

overall cronbach’s alpha score of the complete instruments it has a slight less value.

But when we compare it with the bench mark score of George and Mallery (2003) is

also come under “good” category.

Leadership is the moderator variable of this study. Its reliability score is mentioned as

under:

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4.3.3 Table

Reliability of Leadership

Leadership Cronbach’s Alpha

.729

No of Items

11

Similarly to the earlier tables of reliability section, table 4.3.3 tells about the reliability

score of “Leadership”. From the above mentioned table, it can be viewed that total

items of this variable are 11 and the cronbach’s alpha score is 72.9%. When we

compare the score of leadership with the overall score of the whole instrument there is

a noticeable drop in the value of cronbach’s alpha score. When we compare this score

with the dependent and independent variables individually, we can also observe a little

fall in the cronbach alpha score. But when we compare it with the bench mark score it

come under category “Acceptable”.

4.3.4 Table Overall Reliability

Reliability Statistics

Cronbach’s Alpha No of Items

Organizational Learning .843 46

Financial Performance .795 08

Leadership .729 11

Overall Reliability .865 65

90

Table 4.3.4 summarized the overall variable wise summary of cronbach’s alpha score

of the instrument. From the table, it can be analyzed that none of the variable of the

study has the reliability scores less that acceptable range. This table alos shows the

number of items include in each of the variables.

So after measuring the individual and overall reliability and find the results as

supported by literature, we process further with our analysis and testing of hypothesis

of the thesis. The data collected through the questionnaire is proved reliable, it is

therefore considered ready to use for further statistical analysis by using SPSS.

4.3 Validity Test

Validity refers to the degree to which a test or other measure assesses the underlying

theoretical construct it is supposed to measure (i.e., the test is measuring what it is

purported to measure). As an example, think about a general knowledge test of basic

algebra.

Content validity is most often measured by relying on the knowledge of people who

are familiar with the construct being measured. These subject-matter experts are

usually provided with access to the measurement tool and are asked to provide

feedback on how well each question measures the construct in question. Their

feedback is then analyzed, and informed decisions can be made about the effectiveness

of each question.

Validity is defined as the extent to which an assessment accurately measures what it is

intended to measure. Let me explain this concept through a real-world example. If you

weigh yourself on a scale, the scale should give you an accurate measurement of your

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weight. If the scale tells you you weigh 150 pounds and you actually weigh 135

pounds, then the scale is not valid.

The same can be said for assessments used in the classroom. If an assessment intends

to measure achievement and ability in a particular subject area but then measures

concepts that are completely unrelated, the assessment is not valid.

Before discussing how validity is measured and differentiating between the different

types of validity, it is important to understand how external and internal factors impact

validity.

A student's reading ability can have an impact on the validity of an assessment. For

example, if a student has a hard time comprehending what a question is asking, a test

will not be an accurate assessment of what the student truly knows about a subject.

Educators should ensure that an assessment is at the correct reading level of the

student.

Student self-efficacy can also impact validity of an assessment. If students have low

self-efficacy, or beliefs about their abilities in the particular area they are being tested

in, they will typically perform lower. Their own doubts hinder their ability to

accurately demonstrate knowledge and comprehension.

Student test anxiety level is also a factor to be aware of. Students with high test

anxiety will underperform due to emotional and physiological factors, such as upset

stomach, sweating, and increased heart rate, which leads to a misrepresentation of

student knowledge.

92

4.4 Descriptive Statistics

The next step in the analysis of data is to check the descriptive analysis of the data.

This section tells about the descriptive statistic of the data.

4.4 Table Descriptive Statistics

Descriptive Statistics

N

Minimu

m

Maximu

m Mean

Std.

Deviatio

n

Statisti

c Statistic Statistic

Statisti

c Statistic

Information

Acquisition

251 1.13 5.00 3.3604 .76698

Information

Dissemination

251 1.00 4.83 3.4294 .64905

Information

interpretation

251 1.00 5.00 3.4081 .83510

Behavioral

Change

251 2.14 3.79 2.9661 .49038

Organizationa

l Learning

251 2.26 4.14 3.2918 .42808

Financial

Performance

251 1.25 5.00 3.5389 .85454

Leadership 251 1.00 5.00 3.3982 .84532

Valid N

(listwise)

251

Table 4.4 shows the descriptive statistics results of the data. The mean value in the

table showed the average response of the respondents. The descriptive statistics of

independent variables are calculated by observing the each construct of the

organizational learning variable.

From the above mentioned table, it can be viewed that the mean score of the

“Information Acquisition” construct is 3.3 which tells that average response of the

respondents with respect to this construct only. This mean value above 3.0 shows that

asserting response from the respondents. In other words it can be analyzed as

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respondents are more tending towards agreeing things. The value of standard

deviation shows the deviation of values from the average. This value also fall in the

acceptable range as per above table.

Similar to this, the mean value of “Information Interpretation”, “Information

Dissemination” and “Behavioral Change” is at 3.42, 3.40 & 2.91 respectively. The

mean value of “Behavioral Change” construct is at lesser side while compare to other

contracts of the Organizational Learning. However, the overall mean value of

independent variable of the study i.e. “Organizational Learning” is 3.29. This value is

tending towards neutral to agree.

The mean value of “Financial Performance” is 3.5, which shows that respondents have

given responses which are more towards the agreement. While its deviation from the

mean value can be seen by analyzing the SD value. Table shows that SD value of

“Financial Performance” is within the acceptable range.

The mean value of moderator variable of the study i.e. “Leadership” is 3.5, which

shows that respondents have given responses which are more towards the agreement.

While its deviation from the mean value can be seen by analyzing the SD value. Table

shows that SD value of of moderator variable is also within the acceptable range.

The “N” value against each of the variable and construct shows the number of

respondents which is 251 for all the variables.

4.5 Regression Analysis

When we talk in statistical perceptive, regression analysis is most widely used to

measure the relationship between depend variable and the independent variable of the

94

study. The dependent variable is denoted by term “y” while the independent variable

is denoted by “x” in a liner regression equation.

The regression test is selected for this thesis because of the nature of the data and the

theoretical model of the study. Upon review of literature relating to the thesis, similar

regression analysis was conducted for this nature of study. Hernaus and Dimovski

(2006) have conducted the same kind of research to find out the relationship between

the “Organizational Learning” and the “Organizational Performance”. Regression test

was applied by them during their study as well.

Before moving forward with the regression analysis, the test of assumption was

carried out on the data, to further strengthen the results hereafter.

4.5.1 Test of Assumption

Before move further with the regression analysis, few assumptions of regression must be

tested. These assumptions include, normality test, finding the outliers in the data, test of

auto correlation between the observations and to check the multicolinarity of the data.

Before performing regression analysis, some underlying assumptions of regression

models are tested. Normality is assumed when data is normally distributed. Normal

and symmetrical distribution of residuals show the normality of data. According to

Darlington (1968) multiple regression assumes that variables have normal distribution.

It means errors have normal distribution and values of skewness and kurtosis between

+1/-1 (Keith, 2006). Descriptive analysis was done by knowing Min, Max, skewness

and kurtosis values. Values found between +1 / -1 confirms normal distribution.

Different researchers discussed that with moderately high sample size residuals should

have standard normal distribution (Akhtar, 2009). Therefore, Normality is assumed as

95

sample size greater than 100 and it will not affect regression model (Migdadi, 2005).

For linearity, correlation between dependent and independent variables should be

positively significant (Keith, 2006).

To ensure assumption of independence, Durbin-Watson test which is a statistical test

of independence (Johnson & Wichern, 2006) was performed. According to Johnson

and Wichern (2006), the range of Durbin-Watson Coefficient is from 1.5 to 2.5.

Another assumption is multicollinearity. According to Kennedy (2003) value of VIF

should not exceed 10 as a rule of thumb that is test for multicolinearity. If the

intercorrelations among all variables are < 0.80, and are significant at 0.01, depict that

multicollinearity would not exist (Gupta, 2000).

4.5.2 Skewness and Kurtosis

Finding out the location and the variability in the data set is the basic step in most of

the analysis in statistics. To find out the locations of data and how much spread it is

kurtosis and skewness test was applied.

Skewness tells about the symmetry of the data. In other words this data set is treated as

symmetrical if the values of the data lie between left and right in similar way from the

center point of the data. Its normal range lies between -1 to +1.

On the other hand, kurtosis test tells about peak of the data. Its normal values range

between -3 to +3.

96

4.5 Table Skewness and Kurtosis

Skewness and Kurtosis

Skewness Kurtosis

Statistic Std. Error Statistic Std. Error

Information

Acquisition

.338 .154 .305 .306

Information

Dissemination

-.665 .154 .606 .306

Information

interpretation

.193 .154 -.529 .306

Behavrioul Change .449 .154 0.491 .306

Organizational

Learning

-.255 .154 .643 .306

Financial Performance .764 .153 .030 .306

Leadership .501 .153 -.204 .306

For the skewness and kurtosis test, the errors term should have the same variance. This

can be viewed from then above mentioned table. All the individual variables and the

contracts has the similar standard error score for both skewness and kurtosis test i.e.

.154 and .306 respectively. As explained earlier the normal range of Skewness test

lies between -1 to +1. The results indicate that all the variables under study have the

skewness value within the required range. The results of kurtosis test are also between

the specified ranges. So form the above mentioned table it can be concluded that data

set meet the first assumption of regression test.

4.5.3 Durbin Watson Test

Durbin Watson test is used to check the autocorrelation. The value of the Durbin

Watson test should be in the acceptable range to make data suitable for regression

analysis. Autocorrelation test is very important because if autocorrelation exists in a

data set, the regression test may give the significant result whereas as in actual it may

97

not be significant. Johnson and Wichern (2006) suggested to check the Durbin Watson

value as statistical test in order to check the independence of the. According to these

researchers, the value of Durbin Watson test should be ranged between 1.50 to 2.50.

4.6 Table Durbin Watson Test

Durbin Watson Test

Model Durbin-Watson

1 1.502

2

a. Predictors: (Constant), Behavrioul Change , Information Acquisition, Information

Dissemenation, Information interptation

b. Predictors: (Constant), Behavrioul Change , Information Acquisition, Information

Dissemenation, Information interptation, (OL*LD)

The above mentioned table shows that for both the regression models run in the study,

has the Durbin Watson value of 1.502. In the first model the independent variables are

information acquisition, information dissemination, information interpretation and

behavioral change while the dependent variable is financial performance. The 2nd

include the effect of moderator as well. Durbin Watson value of this data is within the

acceptable range so it is concluded that data has acceptable or no autocorrelation. So,

from the above mentioned test, it is concluded that data is independent.

4.5.4 Normality Test

Another important assumption of regression analysis is to check the normality in the data.

Normality test tells that the variables in the data are normally distributed. However, the

normality of the data does not affect the regression results if the sample size of the data

exceeds 100 observations (Naveed, 2009). As for this thesis, the sample size of the study

is 251 so the data is considered as normal.

98

4.5.5 Muliticollinearity Test

According to Kennedy (2003) value of VIF should not exceed 10 as a rule of thumb

that is test for multicolinearity. Table 24 shows VIF values are within acceptable

ranges (1.05, 1.04, and 1.09). Linearity defines the dependent variable as linear

function of independent variable (variables) (Darlington, 1968). Multiple regression

estimates the relationship between dependent and independent variable when

relationship is linear in nature (Osborne & Waters, 2002). Researcher argues that it is

most important assumption because it is directly related to results of whole analysis

and correlation between dependent and independent variables should be positively

significant (Keith, 2006).

4.6 Testing of Hypothesis

After fulfilling the assumptions of Regression analysis, the data is deemed fit for the

regression test. Two hypothesis of the study was tested using the regression analysis in

SPSS. These two hypotheses are H1 & H4.

H1:

Organizational learning has significant impact on Firm’s financial performance.

H4:

Leadership significantly effects on the relationship of Organizational learning and firm’s

financial performance

Chatterjee and Hadi (2006) stated that regression line is the most important part of the

regression analysis. This line summarized the results of the regression analysis in form of an

equation. In order to measure the change in dependent variable of the study caused by the

99

independent variable, regression test is conducted. So to test the first hypothesis, Regression

analysis is used using the SPSS, to measure the change in financial performance of the firms,

caused by the Organizational learning capabilities of the firms. The independent variable was

further divided into 04 constructs after thorough review of literature. So to test the first

hypothesis the independent variables include all 04 constructs of learning organization, while

the dependent variable is the financial performance. The four constructs of organizational

learning are information acquisition, information interpretation, information dissemination

and behavioral change.

To analyze moderation effect stepwise regression is run. In first model interaction

between learning organization and financial performance is observed while second

model explains interactive relationship of learning organization and leadership

(learning organization * leadership). Table below explains the summary of the model.

Durbin-Watson value of the model is within acceptable ranges.

Table 4.7: Stepwise Regression

Model Summary

Mo

del

R R

Squ

are

Adjust

ed R

Square

Std.

Error

of the

Estima

te

Change Statistics Durbin

-

Watso

n

R

Square

Chang

e

F

Cha

nge

df1 df2 Sig. F

Chang

e

1

.6

94a

.481

.479

.34645

.481

219.

048

1

236

.000

1.502

2

.7

18 b

.516 .512 .33532 .035 16.9

24 1 235 .000

100

Cumulative variance explained by model 1 is .481(48%) means organizational learning

have 48% effect on dependent variable (financial performance). In second model

interactive variable (organizational learning * leadership) have increased the cumulative

variance (.481 to .516) means 3.5 % change in cumulative variance that concludes

moderation effect of leadership. Hsu and Pereira (2008) analyzed moderation effect

following studies of (Sharma et al., 1981). According to the condition of moderation

effect, we find that changes in R2 are significant in table 26 (.481 to .516) when we add

interaction terms. (Sharma et al., 1981) defined centric term for such interactive variable

as “pure moderating variable”. Further explaining Sharma et al. (1981) argued that it

interacts with independent variable and modify the relationship between dependent and

independent variable by interactive variable. Thus a moderator variable should be enter

into interaction with independent variable to moderate the effect between dependent and

independent variable and called as pure moderator variable.

The table 4.7 above, showed the two models for the two hypothesis. Model 1 indicates

the simple one on one relationship between the dependent variable and independent

variable of the study. From the above table it can be viewed that the independent

variables which are tested in model 1 are information acquisition, information

interpretation, information dissemination and behavioral change while the dependent variable

if financial performance. The value of R Square in the table, suggested the change cause by

independent variables in the dependent variable. It suggested that 48.1 % change in the

a. Predictors: (Constant), Behavrioul Change , Information Acquisition, Information

Dissemenation, Information interptation

b. Predictors: (Constant), Behavrioul Change , Information Acquisition, Information

Dissemenation, Information interptation, (OL*LD)

c. Dependent Variable: Financial Performance

101

financial performance is due to the organizational learning. R Square change in the table

indicates the change cause by the independent variables. The sig value of the first model is

.000 which is less than the p value of .05. So from the above table the first hypothesis is

accepted. Though the R square value is not much high, but when we look at the dependent

variable of the study i.e. financial performance, we can say that the financial performance of

any organization can not only be effected completely or largely by one factor. So the 48.1%

change in financial performance in quite reasonable based on this fact.

Hernaus and Dimovski (2006) have conducted the similar kind of research in which he

analyzed the impact of Organizational learning on the financial performance of the firm.

Their study showed just 11.6% change in financial performance due to organizational

learning.

The table 4.7 also explained the model 2 of the study. This model shows the impact of

organizational learning on financial performance in the presence of Leadership as

moderator. The moderation effect in the model 2 of the study was checked according to

the study of (Hsu & Pereira, 2006). According to this paper the moderation effect was

checked. The model 2, shows the R square value as 51.6%. It indicates that in the

presence of leadership the impact of independent variable on the dependent variable has a

positive effect. The sig value of second model is also .000 which is less than the p value,

So, the H4 of the study was also accepted based on the above results.

So from the above results, it can be analyzed that a positive 3.5% change is R Square

concludes that OL has more effect on FP in presence of Leadership, where leadership

affects as moderator.

102

4.8 Table AOVA

ANOVAa

Model

Sum of

Squares df

Mean

Square F Sig.

1 Regression 51.023 4 12.756 23.815 .000b

Residual 131.763 246 .536

Total 182.787 250

2 Regression 61.282 5 12.256 24.713 .000c

Residual 121.505 245 .496

Total 182.787 250

Table 4.8 above show the result of ANOVA test. It tells about the model fitness. From

the above table it can be viewed that both models have sig value less than the p value.

It suggested that data is model fit and is good for analysis.

4.7 Correlation Analysis

The remaining two hypothesis of the study were tested by calculating the correlation

between the variables. The correlation test is conducted in SPSS in order to analyze

the relationship and the degree of association between the variables under

consideration. The high the value is of the correlation between the two variables the

strong the relationship exists between them. Similarly, the low correlation value

suggests week relationship between the variables. The correlation value as 1 depicts

the perfect relationship between the variables. In order to fulfill the requirement

multicollinearity and autocorrelation, its value should be less than .80. It is worth

mentioning here that if the value of correlation is ‘0’, it means there is no correlation

exists between the variables.

103

4.9 Table Correlations

Correlations

Organizational

Learning

Financial

Performance Leadership

Organizational

Learning

Pearson

Correlation

1 .469** .485**

Sig. (2-

tailed)

.000 .000

N 251 251 251

Financial

Performance

Pearson

Correlation

.469** 1 .496**

Sig. (2-

tailed)

.000 .000

N 251 251 251

Leadership Pearson

Correlation

.485** .496** 1

Sig. (2-

tailed)

.000 .000

N 251 251 251

**. Correlation is significant at the 0.01 level (2-tailed).

The above table shows that an adequate relationship exists between the organizational

learning and the financial performance and Leadership. Organization learning has a

slightly strong relationship with Financial performance when compare to other

variables of the study i.e. leadership. The correlation was tested with p value 0.01. The

N value in the table showed the number of observations. From the above table, it can

be viewed that no negative relationship found between the variables. All three

variables are positively correlated with each other and the sig value of all the three

`under studies variables has a sig value .000.

104

H2 & H3 of the thesis were tested using the Correlation analysis.

H2:

Leadership has significant relationship with Organization Learning.

H3:

Leadership has significant relationship with firm’s financial performance.

In order to conclude and make decision about the rejections or acceptance of the above

two hypothesis of the study, the above test was run in SPSS. From the table, it can be

viewed that Leadership and financial performance has a correlation value .496 and sig

value .000. This indicates a moderate relationship exists between both these variables.

The sig value is less that the p value which was set at .001. So from these results the H2

of the study is accepted and concluded that Leadership has a significant relationship with

financial performance.

The H4 of the study was to check the relationship of Leadership (the moderator variable

of the study) with Organizational learning (the independent variable of the study). The

score of their relationship is .485 which is again moderate positive relationship between

both the variables. The sig value is .000 which indicates the acceptance of our 3rd

hypothesis as H3 stated that leadership has significant relationship with the

organizational learning.

105

CHAPTER NO.5

7 CONCLUSION AND RECOMENDATIONS

Descriptive and inferential statistics are being interpreted in this chapter of the thesis. Final

conclusion was also drawn in this section based on the findings of the study. At the end of

the chapter future research areas were also suggested.

5.1 Conclusion

Descriptive statistics of the variables under study was discussed and presented in

tabulated as well as in form of figures, in section 4.1. It showed the overall percentage of

employees with respect to their gender, education, experience and level of their job. It

concludes that the percentage of male employees in the telecom offices situated in

Faisalabad is quite higher than female employees. It also indicates that being the most

organized and updated sector of the country, the majority of the employees of these

organizations are having Master qualification. The number of respondents in these

companies has a larger number of front line staff as compare to officers and Manager

level employees.

The regression analysis was discussed in section 4.5 of the thesis. The regression test was

applied in order to check the acceptance or rejection of two hypothesis of the study, H1 &

H4. Both these hypothesis were accepted based on the regression results. H1 indicates

106

that Organizational learning has a moderate impact on financial performance. The R

square value of first model was 48.1%. Which indicate the percentage change cause in

the financial performance due to organizational learning. The H4 was about the impact of

moderator (Leadership) on the relationship of Independent and dependent variables of the

study. Model 2, suggested that a positive 3.5% change is R Square concludes that

Organizational learning has more effect on Financial Performance in the presence of

Leadership, where leadership affects as moderator.

Section 4.6, of the thesis is about the correlation analysis of the study. Correlation was

calculated in order to make the decision about acceptance or rejection of H2 and H4

hypothesis of the thesis. H2 is about the relationship between Leadership and the

organizational learning. Its correlation score was shown in table 4.6.1. The correlation

value between the leadership and organization learning is .485, which indicates a positive

but moderate relationship between the two. The sig value of these two variables is .000,

which results in acceptance of the H2 hypothesis. It concludes that Leadership has a

significant relationship with Organizational learning. The H3 of the study is about the

relationship between leadership and the financial performance. Its correlation value as

shown in table 4.6.1, is .496 which is again indicates a positive and moderate relationship

between the two variables. The sig value was .000 which results in acceptance of this

hypothesis as well.

5.2 Discussion

The center point of this thesis was to find out the linkage between the organizational

learning financial performances of telecommunication companies with situated offices in

Faisalabad and to further analyze the relationship in presence of Leadership, whereas

107

leadership works as moderator in the study. This research thesis was conducted in order

to check the impact of organizational learning and financial performance in the presence

of leadership as moderator. This thesis first explores the relationship of moderator

variable (Leadership) with independent variable (Organizational Learning) and dependent

variable (Financial Performance). So four hypotheses were test in total. The entire four

hypotheses were accepted based on the results of regression and correlation analysis. The

data was collected from 251 employees of six major telecommunication companies with

their situated offices in Faisalabad city. The in-depth analysis on the data leads to

different fruitful conclusions.

The real and important outcome of this study was the empirical findings that indicates a

strong, positive and more importantly statistically significant relationship between the

under studies variables. The study suggested that a statistically significant relationship

exists between the organizational learning and the financial performance. It also revealed

that this relationship even improved noticeably in the presence of leadership (moderator).

It should be viewed as, those organizations who focus on their learning capabilities will

have improved financial performance. This study also suggested that if leadership has a

clear vision about the organizational learning their financial performance will have even

better results.

5.3 Directions for Future Research

Despite the above mentioned discussions and conclusion, I am well aware of the

limitations to my research work as well. As described earlier, the data is selected from the

companies with situated office in Faisalabad city only and the sample size is also limit.

So on the basis on one city sample, it become impractical to draw conclusion for

108

nationwide companies. So the first limitation, as with many other researches, is the

sample size and the context of the study. The second limitation of this thesis is the nature

of the study. As this is across sectional data, so by enhancing its scope to longitudinality

and time series data better and more rational results could be obtained in future. In this

cross sectional study, the data is collected form sample based on their perception, this

could lead to major measurement errors.

In future the, the same kind research may also be carried out in some other context. It

would be really interesting and fruitful to find the results of this model in some different

contexts. New variables and constructs may also be added in the model for future

research purposes.

109

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9 APPENDIX

I am a student of MS (BA) from NUML. The questionnaire is to collect some

general information about you and your organization. All this is for academic purpose.

All the information collected from you will be kept confidential and is only for

academic purpose and your firms name will not be showed anywhere in my thesis.

Kindly fill the questionnaire with the following points in concentration.

1- Tick mark the option in the box which you thing is right according to you.

2- Strongly agree means that you highly agree with the asked question/ statement and

vice versa with strongly disagree.

3- Neutral option is about having a neutral opinion about the question / statement.

4- Agree option is showing of agreement with the statement/ question and vice versa with

the disagree option.

Regards.

Personal details:-

Name: __________________________________

Gender: __________________________________

Education: _______________________________

Company Name: ___________________________

Experience in industry: _____________________

Location: _________________________________

116

Q.

#

Question 1.Strongly

disagree

(SD)

2.Disagree

(D)

3.Neutral

(N)

4.Agree

(A) 5.Strongly

agree

(SA)

INFORMATION

ACQUISITION

1 Employees in our

organization are an

extremely important

source of information

2 Previous decisions are a

very useful source of

information for current

decisions..

3 New business methods and

services are always worth

trying even if they may

prove risky.

.

4 Reports prepared by

external experts are an

extremely important

source of information

5 Our organization uses a

clipping service – the

regular collection of

papers and articles of

interest to us.

6 Our competitors are an

extremely important

source for learning new

methods and services.

7 Expertise on the industry,

products, and services is

an extremely important

criterion for hiring a new

employee..

8 Joint tasks and mergers

contribute a great deal of

knowledge about industry

and economic

environment, new methods

and services/products.

117

9 Top managers in any

important decision seek

information or advice from

the board of directors or

owners (in general).

10 Top managers in any

important decision seek

information or advice from

sources outside the

company (hiring experts,

contacting top managers of

other companies, etc).

11 Our organization has

employees whose job is

related to searching for

external information.

12 External sources (reports,

consultants, newsletters,

etc.) are extremely

important for the

operations of our

organization..

13 In our organization we

explicitly reward

employees that are a

source of quality

information.

14 In our organization we

often organize internal

training of our employees.

15 We frequently send our

employees to various

seminars, workshops,

conferences with intention

to acquire

information..

INFORMATION

DISTRIBUTION

16 Our information system

allows for efficient and

effective exchange of

information within the

118

organization.

17 All members of our

organization are aware

what the goals of the

organization are.

18 We frequently hold

meetings with the purpose

to inform employees

19 We have formal

mechanisms and systems

that ensure transfer of best

practices among various

areas of work

(e.g. reward systems based

on group performance).

20 In our organization we

have individuals that work

in more than one team or

project groups together

with

individuals from other

organizational units.

21 We have individuals

dedicated to collecting and

internal dissemination of

improvement propositions

from

employees.

INFORMATION

INTERPRETATION

22 Personal contacts are

important in our

organization.

23 Team meetings are

encouraged in our

organization.

24 Committees as decision-

makers are promoted in

our organization.

25 Telephone contacts are

important in our

organization.

26 Seminars, conferences,

workshops are arranged

regularly in our

119

organization.

27 Written memos, notes,

letters are distributed in

our organization.

28 Special expert reports are

encouraged in our

organization.

29 Formal chain of command

reporting (in sense of

reporting to superiors) s

present in our

organization.

30 Company’s intranet as a

mean of information

interpretation is available

in our organization.

31 Forums (e-chat, e-debates)

are used in our

organization.

32 Electronic e-mails are used

in our organization.

BEHAVIOURAL AND

COGNITIVE

CHANGES

33 Adaptability to

environmental pressures

34 Quality of products /

services

35 Number of products /

services offered

36 Technology of operation

37 Speed of operations

38 Introduction of new

marketing approaches

39 Average productivity of

employees

40 Satisfaction of employees

41 Overall atmosphere

42 Personal communication

between top managers and

employees

43 Team meetings’ efficiency

44 Employees’ level of

understanding of

120

company’s strategic

orientation

45

Employee’s level of

understanding of major

problems in the company

46 Efficiency of information

systems within the

company

Financial performance

Efficiency

47 My firm is satisfied with

return on assets over the

last three years

48 My firm is usually

satisfied with return on net

worth over the last three

years

49 My firm is satisfied with

return on equity over the

last three years

Growth

50 My firm is satisfied with

sale growth over the last

three years

51 My firm is satisfied with

employee growth over the

last three years

52 My firm is satisfied with

market share growth over

the last three years

Profits

53 My firm is satisfied with

net profit margin over the

last three years

54 My firm is satisfied with

gross profit margin over

121

the last three years

Leadership

Idealized Influence

55 Instills pride in me

56 Provides reassurance

overcoming obstacles

57 Talks about trusting each

other

58 Behaves consistent with

values

Inspirational Motivation

59 Expresses confidence on

me.

60 Provides encouragement

to me

61 Talks enthusiastically with

me.

Individual Consideration

62 Provides advice for

development

63 Focuses my strengths

64 Treats us as individuals

65 Promotes development