Human Resources

AD 320

HUMAN RESOURCES MANAGEMENT

TERM PROJECT

BY:

Serdar Çalışkan

Fulya Yüksel Ersoy

Doruk Küçüksaraç

Sevnur Malik

Gülin Serpel

09.06.2009

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TABLE OF CONTENTS

I. LITERATURE REVIEW

A. What is Organizational Learning? ……………………………………3

a. Individual Learning and Organizational Learning…………………...4

b. Learning Organizations………………………………………………5

c. Why do firms learn?.............................................................................5

d. Levels of Learning……………………………………………………6

e. Factors Facilitating Organizational Learning………………………...7

f. Four Contrasting Models of Organizational Learning………………..9

B. What is innovativeness in organizations?...............................................13

a. Why some organizations are more innovative than others?.................14

b. Types of Innovation…………………………………………………..17

c. Innovation Process in Organizations…………………………………18

d. How manageable is the innovation process?........................................20

C. Comparison of Organizational Learning & Organizational

Innovativeness……………………………………………………………21

II. STATISTICAL ANALYSIS

A. Analysis of General Characteristics of Our Companies........................25

B. Hypothesis about Sector’s Differences and Organizational

Learning&Innovation...............................................................................27

C. Hypothesis I………………………………………………………………28

D. Hypothesis II……………………………………………………………...31

E. Hypothesis III……………………………………………………………..34

F. Hypothesis IV……………………………………………………………..37

III. CONCLUSIONS…………………………………………………………………

42

IV. APPENDIX……………………………………………………………………….4

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V. REFERENCES…………………………………………………………………..44

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I. LITERATURE REVIEW

What is Organizational Learning?

The idea of organizational learning has been present in the management studies

literature for decades but as it is said by Mark Easterby-Smith it has only become widely

recognized in the past twenty years. It is argued in the book Organizational Learning and the

Learning Organization that “Two developments have been highly significant in the growth of

the field. First it has attracted the attention of scholars from disparate disciplines who had

hitherto shown little interest in learning processes. For example, business strategies have

realized that the ability of the organization to learn faster, or “better”, than its competitors

may indeed be the key to long term business success (Collis, 1994; Grant, 1996). Some

economists have taken a similar path, arguing that firms learn by doing, as well as through

formal learning processes. Second development is that many consultants and companies have

caught onto the commercial significance of organizational learning. Consultants and

practicing managers have added to the theoretical literature on the learning organization with

accounts of how their own interventions have worked out in practice.” Organizational

learning approach is a very critical success factor for the companies today so they should give

attention to this issue. Definitions of organizational learning found in the literature include:

encoding and modifying routines, acquiring knowledge useful to the organization, increasing

the organizational capacity to take productive action, interpretation and sense-making,

developing knowledge about action-outcome relationships, and detection and correction of

error.

The important points to note about these definitions are that learning organizations:

Are adaptive to their external environment

Continually enhance their capability to change/adapt

Develop collective as well as individual learning

Use the results of learning to achieve better results

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Individual Learning and Organizational Learning

Some researchers contend that human capital by itself is of little value. For example,

Edvinsson (1996) argued that without the supporting resources of a firm, people do not have

the ability to do anything with their ideas. Nonaka & Takeuchi (1995) suggested that human

capital alone may not benefit the organization if there are no mechanisms in place for

employees to share knowledge with one another. Although learning is essentially based on

individuals in the workforce, a firm can learn as well. Evolutionary economic theorists have

suggested that firms effective at 'learning' develop routines that allow them to effectively

develop, store and apply new knowledge on a systematic basis (Nelson & Winter, 1982).

Organizational socialists suggest that a firm can be understood as a social community

specializing in speed and efficiency in the creation and transfer of knowledge (Kogut &

Zander, 1996). Thus, organizational learning is not simply an aggregation of the knowledge

held by a set of individuals (Brown & Duguid, 1991). It emphasizes the interaction patterns of

employees through which people acting together to achieve a meaningful purpose. According

to the knowledge-based view of the firm, knowledge starts with the individual and firms are

superior to markets in their ability to integrate knowledge across individuals (Kogut &

Zander, 1996).

An organization must try to encourage and provide various learning mechanisms so

that knowledge can be easily shared and enhanced. Because researchers comment that no

systematic effort has been devoted to developing valid measures for learning-related

constructs (e.g. Sinkula, 1994; Slater & Narver, 1995), we explored the construct of learning

orientation drawn from knowledge management theories. The learning orientation refers to an

organization-wide commitment to promote knowledge creation and sharing so as to increase

the firm's capability. Six components of organizational learning orientation were identified

(ICT, culture, organizational structure, measurement system, resource and leadership support)

by reviewing the major knowledge management literature. An organization that emphasizes

these six factors is considered a learning-committed organization.

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http://www.informaworld.com/smpp/section~content=a788598866~fulltext=713240929~db=all~start=788598934#CIT0046








Learning Organizations

Regarding learning, Mark Dodgson wrote in his article “It can be described as the

ways firms build, supplement and organize knowledge and routines around their activities and

within their cultures, and adapt and develop organizational efficiency by improving the use of

the broad skills of their workforces. This broad definition incorporates a number of

assumptions:

-learning generally has positive consequences even though the outcomes of learning may be

negative, i.e. firms learn by making mistakes.

-although learning is based on individuals in the workforce, firms can learn in total. While

emphasizing the role of human agency in learning, corporate and group culture is influenced

by individual learning and can assist the direction and use that learning.

-learning occurs throughout all the activities of the firm, and, as will be argued later it occurs

at different speeds and levels. Encouraging and coordinating the variety of interactions in

learning is a key organizational task.”

Mark Dogson continues with the definition of learning organizations. “Firms that

purposefully construct structures and strategies so as to enhance and maximize organizational

learning have been designated ‘learning organizations’. The characteristics of the learning

company are described by Pedler et al. (1989) who define it as ‘an organization which

facilitates the learning of all its members and continually transforms itself’, and argue that it:

-has a climate in which individual members are encouraged to learn and to develop their full

potential.

-extends this learning culture to include customers, suppliers and other significant

stakeholders.

-makes human resource development strategy central to business policy.

-continually undergoes a process of organizational transformation.”

Why do firms learn?

Common explanations of the need to learn are the requirement for adaptation and

improved efficiency in times of change. Learning is seen as a purposive quest to retain and

improve competitiveness, productivity, and innovativeness in uncertain technological and

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market circumstances. The greater the uncertainties are, the greater the need for learning is.

Learning is a key feature in the process by which firms accumulate technology in order to

compete. This is seen particularly in Japanese firms, whose industrial organization is

increasingly observed as a model to be replicated (Marceau 1992). Japanese firms place

particular emphasis on learning (Pucik 1988b).

Bertrand Moingeon defines learning why as organizational members inquiring into

causality using diagnostic skills. The objective is to develop these processes as a strategic

capability, such that individual members develop the capacity to diagnose and identify

underlying causes in a variety of new situations, including potentially difficult interpersonal

situations.

According to Dodgson, by building the metaphor of individual learning, conflict, and

hence learning, can be seen as inevitable in organizations as it is in individuals. It is a natural

state. Organizational learning is as natural as learning in individuals as they attempt to adjust

and survive in an uncertain and competitive world. We simply agree with the idea that firms

should continuously learn in not to lose their competitive advantage and better deal with the

new situations. Learning improves the competitive advantages we say “core competence” of

the companies.

Levels of Learning

John Farago and David J. Skyrme had stated that a learning organization is not about

'more training'. While training does help develop certain types of skill, a learning organization

involves the development of higher levels of knowledge and skill. They have developed a 4-

level model that we found the most useful:

Level 1: Learning facts, knowledge, processes and procedures. Applies to known situations

where changes are minor. We think that this is the easiest one and most of companies are

involved in that level of learning.

Level 2: Learning new job skills that are transferable to other situations. Applies to new

situations where existing responses need to be changed. Bringing in outside expertise is a

useful tool here. This is more difficult to achieve for many companies in Turkey. However, it

is very important for today’s business environment to survive.

Level 3: Learning to adapt. Applies to more dynamic situations where the solutions need to

be developed. Experimentation and deriving lessons from success and failure is the mode of

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learning here. Unfortunately very few companies can apply this level of learning in their

organizations, but the ones who achieve are competitively advantageous to others.

Level 4: Learning to learn. It is about innovation and creativity; designing the future rather

than merely adapting to it. This is where assumptions are challenged and knowledge is

reframed. This is the highest level of learning. It is about being the leader of the market,

leading the change. The innovative companies such as Apple, Google are the ones who make

this successfully. They have the products that design the future. They create the trends and the

future and others follow them.

Factors Facilitating Organizational Learning

Ricardo Chiva-Gómez comprehensively reviews the literature and represents his

findings in the paper called “The facilitating factors for organizational learning: bringing

ideas from complex adaptive systems”. According to Chiva-Gómez organizational learning

literature was divided into two categories by Argyris and Schön (1996, p. 180). One is “more

practically orientated and prescriptive” and the other is “more critical and descriptive”

literature of organizational learning. The first one is focused on the development of normative

models for the creation of a learning organization which has several facilitating factors. The

latter is mostly related with nature and process of learning. Hence according to author two

main categories of organizational learning arise (Easterby-Smith et al., 1998; Easterby-Smith

and Araujo, 1999): cognitive perspective (based on individual learning) and social perspective

(based on relational orientation).

Both studies from cognitive approach and social approach suggest factors that are

facilitating organizational learning. Chiva-Gómez includes in this article a great deal of

important names and their findings (Table 1 summarizing review of Chiva-Gómez is included

in the appendix). Here, we would like to mention findings of Hedberg and Ulrich as 2 brief

examples.

Chiva-Gómez indicates that Hedberg identifies 4 key factors as main facilitators of

organizational learning. These are: “(1) promoting experimentation; (2) encouraging

awareness in the organization, i.e. through discovering more about the organization; (3)

redesigning and improving inner environments (rewards and punishments); (4) achieving

dynamic balances, through diversity and heterogeneity. According the Hedberg, employees

should be free to experiment and make failures. Cost of these failures should be shared

through organization and employee selection should be based on applicants’ ability to

effectively structure problems.

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Chiva-Gómez indicates that Ulrich, in the learning organization literature, describes

some important factors regarding learning ability. These are “(1) building a commitment to

learning capability by making learning a visible and central element of the strategic intent, by

investing in learning and training, by measuring learning, etc.; (2) working to generate ideas

with impact by experimenting, continuous improvement, competence acquisition and

observing what others do; (3) working to generalize ideas with impact by a shared mind-set,

capacity for change, or leadership.”

We understand that researchers have a different understanding of organizational

learning and factors smoothing the progress of organizational learning. However, from these

examples and information given in the appendix we can conclude that despite these

differences researchers identify similar points as factors facilitating organizational learning.

After these analyses the author of the article proposes that the second perspective

namely social approach has similarities with Complex Adaptive Systems (CAS). Before going

into the details of this issue, we will have a look on what CAS is and what are its key

characteristics.

Sherman and Schultz (1998, p. 17) define CAS as a system:

“. . . composed of interacting ‘agents’ following rules, exchanging influence with their

local and global environments and altering the very environment they are responding to by

virtue of their simple actions.”

According to Chiva-Gómez “CASs are the combination of three concepts: they have

many autonomous parts, they are able to respond to external changes, and form self-

maintaining systems with internal feedback paths. Their essential essence is that they self-

organize.”

Chiva-Gómez develops key factors by the help of CAS and its similarities with social

approach of organizational learning. He proposes that when the characteristics presented in

the table below exist in an organization, then organizational learning will take place.

Figure 1 The facilitating factors for organizational learning according to CAS

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Four Contrasting Models of Organizational Learning

After analyzing the factors which help an organization through organizational learning

process, we will continue with models of organizational learning. Alice Lam in “Tacit

Knowledge, Organisational Learning and Innovation: A Societal Perspective” article

identifies four contrasting models of organizational learning based on knowledge types.

Before intensively exploring these four models of organizational learning, we would

like to inform you about the viewpoint of authors of this article on knowledge type-

organizational learning and innovation triangle:

“What organisations can do, in particular, their capacity for learning and innovation

are closely related to how their knowledge is constituted, utilised and generated. All

organisations will potentially have a mixture of different knowledge types. However, their

relative importance can differ. Organisations can be dominated by one knowledge type rather

than another. There is a close correspondence between the dominant knowledge type and the

structural configuration of the organisation, resulting in different dynamics of learning and

innovation.”

Article suggests 4 categories of knowledge, which are first suggested by Collins

(1993) and then are adapted by Blacker (1995). These four categories are a. ‘Embrained

Knowledge’ (depends on conceptual skills and cognitive abilities of the individual); b.

‘Embodied Knowledge’(action-oriented tacit knowledge ); ‘Encoded Knowledge’(based on

sign and signals) and ‘Embedded Knowledge’ (based on organization routines, practices and

shared norms).

Given the information above, we will comprehend these four models precisely. The

article, based on Mintzberg’s (1979) classic typology of organizational forms and the work of

Aoki (1988) and Nonaka and Takeuchi (1995) on the ‘Japanese model’, identifies four ideal

typical organizational forms in terms of organizational learning and its effects on innovation.

According to the article, each organizational form is related with a dominant knowledge type.

These models can be analyzed in terms of “the mechanisms for the coordination of operating

tasks” and “the knowledge agents”.

a. ‘Professional Bureaucracy’ :

Definition: According to the article “an organisation which derives its capability from the

formal ‘embrained knowledge’ of its highly trained individual experts can be defined as a

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‘professional bureaucracy’”. In this type, coordination is achieved by the standardization of

knowledge and skills. The formal knowledge creates a significant base for internal work rules,

standards, job boundaries and job status, states Lam.

Approach to problem solving: Logical and consistent application of existing knowledge

into problems. This approach results in deficiencies when dealing with uncertainties.

Key agents: The individual professionals.

Learning perspective: The learning focus is narrow and constrained within the boundary

of formal specialist knowledge.

Innovation Capacity: Model inhibits innovation.

Classic examples: Universities, hospitals and craft production firms are the classic

examples of professional bureaucracy according to article. Municipalities in Turkey can be

classified in this model.

b. ‘Machine Bureaucracy’ :

Definition: As stated in the article “an organisation which depends heavily on ‘encoded

knowledge’ can be defined as a machine bureaucracy”. The most important factors of a

machine bureaucracy are “specialization, standardization and control”. Machine bureaucracy

is utilized to achieve efficiency and stability in the organizations. Work is divided to small

routine tasks which require the minimal formal knowledge of workers.

Key agents: Not the employees who directly engaged in operations, but the formal

managerial hierarchy whose responsibility is to formulate rules, procedures and performance

standards.

Learning perspective: According to Lam machine bureaucracy learns by ‘correction’

through performance monitoring. Accumulation of new knowledge is very slow.

Innovation Capacity: Unable to deal with “novelty or change” due to the fact that the

model is designed to deal with routine problems. (Little capacity to innovate)

Classic examples: Lam states that mass production firms operating on the principles of

Scientific Management are classic examples. Production processes of automotive firms in

Turkey can be classified in this category.

c. ‘Operating Adhocracy’ :

Definition: “An organisation which relies not only on the formal knowledge of its

members, but draws its capability from the diverse know-how competencies and practical

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problem solving skills embodied in the individual experts, can be described as an 'operating

adhocracy'” based on the definition of article. In this organic model, standardization of

knowledge and work are minimized.

Approach to problem solving: Experience and capacity to adapt to new situations is vital

in this model according to author. Formal professional knowledge and standardized expertise

has little effect on problem solving. The knowledge structure is individualistic but

collaborative.

Learning perspective: Learning is broad and rooted in different experiences and know-

how of different experts (Not restricted with specialization). According the authors, learning

occurs on multiple levels and employees have a strong incentive to engage in 'extended

occupational learning',

Innovation Capacity: Model activates innovation. We would like cite an important point

from the article:

“…learning and innovative capabilities [of operating adhocracy ] stem from: 1)the way its

collaborative approach to problem-solving facilitates the distribution and dissemination of

knowledge; 2) the high degree of autonomy given to individuals and entrepreneurial project

teams leads to a diverse and varied knowledge base; and 3) its strong market-discipline exerts

pressures on individuals to accumulate their knowledge and expertise in line with shifting

market opportunities.”

“The operating adhocracy is the most innovative and yet least stable form of

organisation.”

Classic examples: Organizations providing non-standard, creative and problem-solving

services directly to the clients, such as professional partnerships, advertising agencies,

software engineering firms and management consultancies can be typical examples as stated

article. Mobilera, Alametifarika, Marka which are advertising companies founded in Turkey,

are perfect examples of this model.

d. ‘J-form’ Organization :

Definition: According to article in consideration “An organisation which derives its

capability from knowledge that is 'embedded' in its operating routines, team relationships and

shared culture can be described as a 'J-form' organisation.” This model is a combination of

bureaucracy model (stability and efficiency) and operating adhocracy model (flexibility and

importance of teams).

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Key agents: Lam indicates that the semi-autonomous project team (members from

different functions) has the utmost importance in this model. Both the autonomous individual

expert and the controlling managerial hierarchy lose its vital role over the project team.

Learning perspective: In J-form organizations learning generally takes place through

“shared work experiences and joint problem-solving in project teams” like in operating

adhocracy according to the article. The difference is that in J-form organization learning

perspective is broader due the cross-functional nature of teams. These cross-functional teams

create a culture which encompasses diversity of knowledge.

Innovation Capacity: Innovative and adaptive. Lam states:

“It is marked by a tremendous capacity to generate, diffuse and accumulate tacit

knowledge continuously through ‘learning-by-doing’ and interaction. It has a unique

capability to generate innovation continuously and incrementally. However, learning in the J-

form organization is also potentially conservative. Its stable social structure and shared

knowledge base can reduce the capabilities of the organization to learn from individual

deviance and the discovery of contrary experience (Levinthal and March 1993: 108; Dodgson

1993: 383).”

However, these characteristics of J-form organization can make radical innovation

difficult.

Classic examples: Japanese type of organization, knowledge creating factories. Turkish

telecommunication companies eg. AVEA and Turkcell are the examples for this model.

To conclude the article argues that “there are dominant societal patterns of learning and

innovation. Two out of four models can be accepted as alternatives for innovational learning.

These are operating adhocracy and the J-form organization. These two have a great deal of

similarities: being organic, decentralized problem-solving, importance of cross functional

teams, non-hierarchical structure. They both argue that learning and innovation cannot be

thought apart social interaction and practical experience. The most important difference

between two is their approach to learning: the former utilizes an external approach but the

latter an internal and firm-centered one.

What is innovativeness in organizations?

If we take the narrower concept of innovation first, the main definitional issue which

has occupied academic writers is how to distinguish it from the organizational change.

Probably the most widely cited formulation of this distinction is developed by Michael West

and colleagues (West and Farr,1990;King and West,1987). They characterize organizational

innovation as follows:

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-“An innovation is a tangible product, process or procedure within an organization. A new

idea may be the starting point for an innovation but cannot be called an innovation.

-An innovation must be new to the social setting within which it is introduced.

-An innovation must be intentional rather than accidental.

-An innovation must not be a routine change. The creation of an entirely new post would.

-An innovation must be aimed to produce benefit to the organization. Intentionally destructive

actions such as sabotage or purely whimsical changes are excluded from the definition.

-An innovation must be public in its effects. If an individual introduces a change to his or her

work which has no effect on other people in the organization, it wouldn’t be considered an

innovation.”

There are some criticisms about the definition of organizational innovation which is

done by Michael West and his colleagues. Nigel Nicholson(1990) has argued that they had the

difficulty of defining what is meant by terms such as intentional, accidental, new or

beneficial. Another criticism to West’s definition is that it doesn’t take into account the scale

or scope of the products, processes or procedures to which it is applied. Writers such as

Kimberly(1981)have argued that it only makes sense to define as innovations those changes

which has a substantial impact on the organization.

As a conceptual basis for theorizing innovation, definition of West has limitations but

as a pragmatic point of view his definition remains valuable.

Why some organizations are more innovative than others?

Researchers have identified some factors that help them in their attempts to describe

the characteristics of high or low innovative organizations. A vast number of different factors

have been examined as possible facilitators or inhibitors of innovation. The major ones are

listed below:

1) People

2) Structure

3) Climate and Culture

4) Environment

People:

When trying to explain why some organizations are more innovative than others, one

of the first factors at which researchers looked at were the characteristics of people in the

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organization. Leaders and other top decision makers were the principal focus of early studies.

Recent research has broadened its scope to consider other influential individuals, such as

internal change agents and informal ideas champions.

Early research into the influence of leaders on organizational innovation has been

based on individual characteristics: personality traits, values and beliefs, experience and

knowledge. There has been some research about these issues however the biggest problem is

that researchers have not been able to identify characteristics which predict innovation in all

types of leaders. In many studies, leader characteristics are found to be associated with

organizational innovation. Recent studies are based on the style required for innovative

leadership. Drawing heavily on the work of organizational gurus like Tom Peters and Robert

Waterman and Rosabeth Moss Kanter, writers in Europe and North America stressed the need

for a participative, democratic style of leadership which encourages subordinates to be

involved in innovation decisions and to feel able to suggest novel ideas without fear of

censure. According to these writers, the second aspect of innovative leadership is the ability

of the leader to provide a vision of where the organization is going to which organizational

members can commit themselves. More recently, academic and managerial authors have

argued that transformational leadership is facilitator of innovation. This concept was

developed by Bass to refer to leaders who inspire followers to act together towards shared

goals. It comprises components of charisma, inspiration, intellectual stimulation and

individual consideration. Many critics argue for a contingency approach, whereby the type of

the leadership depends on the nature of external demands on the organization and the attitudes

of organizational members towards change (Dunny and Stace,1988). Where an organization

faces a threatening, turbulent environment, leaders may need to be directive rather than

participative in order to implement innovations.

Research on the influence of individuals other than leaders on organizational

innovativeness has concentrated on formal change agents and informal idea champions. A

change agent may be defined as a person who has been given explicit responsibility for

overseeing the introduction of a specific change within an organization. He or she may be a

member of the organization or an outside consultant. However, the individuals responsible for

the introduction of an innovation often are not appointed as change agents but idea

champions. Idea champions feel a strong commitment to the idea and are able to transform it

to others in the organization. According to a research done by Frost and Egri (1990a,1990b),

two critical factors determine whether idea champions are successful or not. These are

personal power in the organization and ability to access and utilize wide communication

networks. According to Dougherty and Hardy; senior, long serving members of staff were

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often able to succeed in championing through their credibility and extensive personal

networks where less experienced staff found their efforts frustrated.

Organizational Structure:

John Child defines the organizational structure as follows: “The formal allocation of

work roles and the administrative mechanisms to control and integrate work activities

including those which cross organizational boundaries.”

Burns and Stalker state that organizational structure should be related to the

environment in which the organization operates. Where the organization is very stable and

predictable, a mechanistic structure is suitable. People know what is expected of them and can

concentrate on performing their tasks efficiently. Where the organizational environment is

unpredictable and subject to change, mechanistic organizations lack the flexibility to cope

with changes and an organic structure is required. This enables the organization to change

direction rapidly in response to market demand and to take advantage of new technologies.

The American researchers Lawrence and Lorsch took Burns and Stalker’s approach a stage

further. As well as saying that different types of overall structure were required according to

environmental conditions, they claimed that in turbulent environments a greater degree of

structural differentiation between departments is required than in predictable environments.

Thus in a firm facing an unstable market, the production department would have a more

mechanistic structure than the sales department, which needs to respond quickly to changing

demand.

According to Hill and Amabile, the psychological rationale for the effectiveness of

such structures is in terms of job discretion and idea ownership through participation. High

discretion is consistently found to predict innovation and creativity at work through the

motivating effects of a sense of control over one’s work and by removing hierarchical barriers

to try new ideas. Idea ownership stems from the participation in idea generation and decision

making in the context of team working, ownership associated with autonomy and participative

leadership may encourage the development of an innovative group identity.

Organizational Climate and Culture:

The 1980s and 1990s saw a shift in emphasis in the search for antecedents of

successful innovation away from characteristics of people and structures toward less tangible

features of organizations in particular their climate and cultures. According to Nystorm,

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organizational culture is the values, norms, beliefs and assumptions embraced by participants

and climate is the feelings, attitudes and behavioral tendencies, which characterize

organizational life. According to a study done by Nystrom, Ekvall and West common

recommendations for climates supporting innovation emerging from such work include

openness to change, risk taking, tolerance of debate and disagreement and playfulness.

Approaches to culture may be categorized as either structural or interpretative. The

structural focus is on the link between culture and organizational structure. One well known

structural typology is proposed by Charles Handy, who identifies 4 types of culture. Role

cultures are typical of the classic bureaucratic model of organization, where the structure is

one of multiple layers of hierarchy, each reporting to the one above. Key values are

adherence to and expertise within clearly defined roles. Ambiguity of any kind is highly

threatening and as a result formal rules, regulations and procedures around. Role cultures are

not effective innovators. They generally work in stable, predictable environments. Power

cultures are often found in organizations which have grown up around one strong,

authoritative individual. Status, obedience and control are highly valued but in contrast to role

cultures the central authority functions through ad hoc decisions. This enables such cultures to

respond and initiate change rapidly. If the organization is small and staff members largely

share their vision, power cultures can be effective. Task cultures are associated with matrix

structures. They stress flexibility, adaptability and egalitarianism within project teams, lateral

rather than vertical communications. Person cultures emphasize individual autonomy and

interpersonal relationships. They are associated with highly decentralized and informal

structures, where control is exercised through mutual accountability.

Environment:

In seeking to identify factors which help or hinder innovation, it is not enough to look

at features of the organization itself; its people, structure, climate and culture. It is also

necessary to look at the environment within which the organization exists, and the way it

interacts with that environment. In an economic analysis of organizational innovation, a wide

range of factors in both the physical and commercial environment would need to be

considered. Studies have shown innovativeness to be associated with the existence of

boundary spanning roles within the organization and with the professionalization of

organization members.

According to Miles and Snow, the extent to which an organization engages in an

active search of the environment for new ideas to adopt (environmental scanning) depends on

its perceptions of its own relationship with its environment. Such perceptions have been used

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as the basis for classifying organizations into strategic types. There are four types: defenders,

prospectors, analyzers and reactors. Defenders are the organizations which see their

environment as essentially stable and concerned with the efficiency of existing operations in

order to dominate their market niche. Prospectors see their environment as uncertain and

turbulent, therefore place high value on innovation.

Types of Innovation

Fariborz Damanpour and William Evan distinguished between technical innovation,

which occurs within the primary work activity of the organization and administrative

innovation, which occurs within the social system and is concerned with the organization of

work and the relationships between organizational members. In a study of American public

libraries, it is found that the adaption of administrative innovation triggered technical

innovation. Damanpour has since added a third category, ancillary innovations. These are the

innovations which span organizational-environmental boundaries and go beyond the primary

work functions of the organization.

In 2001, Damanpour and Gopalakrishnan distinguished the innovation into two

groups; product and process innovation. They define the product innovation as new products

or services introduced to meet an external user or market need and process innovation as new

elements introduced into an organization’s production or service operations.

The characteristics of an innovation are classified under 3 terms according to Zaltman,

Duncan and Holbek. These are programmed-non programmed, instrumental-ultimate and

radicalness. Whether an innovation is scheduled in advance is related to programmed-non

programmed. Non-programmed can also be divided into two as distress or slack. Whether an

innovation is introduced to facilitate a further innovation or as an end in itself is related to

instrumental and ultimate side. The extent to which the change is both novel and risky is

related to radicalness.

Innovation Process in Organizations

Managing the introduction of innovations in an organization does not only consist of

implementing the change and taking a single decision to adopt. It involves a range of

activities prior to and following the adoption such as fact finding, political maneuvering,

formal and informal discussion and so on.

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Writers have been proposing models describing the sequence of events in the

innovation process since the field first emerged in the 1960s. All of these models have three

common features. First, they are based largely and solely on theoretical speculation rather

than observation. Secondly, they are normative; they seek to describe how innovation

“normally” occurs. Thirdly, they describe a process as a sequence of developmental stages,

each of which must be passed through in turn.

A model to study innovation processes is to approach retrospectively; in other words

by constructing innovation histories. In this case, past events will be taken into account.

However, there is a problematic side of this model. People usually tend to reconstruct events

in their memories in a way which appears them more logical and orderly than it usually was.

In order to prevent this and increase the reliability and validity, innovation histories can be

enhanced by triangulation of methods – that is by using a combination of interviews,

questionnaires and analysis of documents. The information should be collected from as many

groups as possible. The concern in these circumstances is to have a sufficiently deep

understanding of the case and its context to enable a credible interpretation to be produce

Stage based Models:

In this part a typical stage based model which has been developed by Zaltman et al.

(1973) will be introduced. This model describes the process in two main stages. First one is

initiation and second one is implementation.

In this model (Zaltman et al.’s) the division between two main stages is at the point of

adoption of the innovation; that is, the point at which the organization makes a firm decision

to implement the innovation.

Initiation process consists of three sub-stages. First one is knowledge awareness which

implies that the organization becomes aware of the existence of an innovation which it has the

opportunity to utilize. Second sub-stage is formation of attitudes which means that the

members of the organization form and exhibit their attitudes to the proposed innovation. Last

sub-stage is called decision where the potential innovation is evaluated and the decision to

proceed with it or abandon the idea is made.

The following implementation process has two sub-stages. Firstly, initial

implementation occurs in which first attempts to utilize the innovation are made, often on

some sort of trial basis. Continued-sustained implementation is the second sub-stage where

the innovation becomes routinized as part of organizational life.

The start of the innovation process is ascribed conventionally to the detection of a

“performance gap” which is defined as a mismatch between actual and potential performance.

18

According to Zaltman, this may occur in two ways: either the organization realized that the

performance is unsatisfactory and looks for new innovative solutions or it becomes aware of

the potential innovation in its environment. It would be incorrect to state that all the

innovation process stems from “performance gap”. Some innovations are to be forced by law

to the organizations. For example, the parental leave for 6 months is such an innovation.

After the implementation process of innovation it becomes routinized. At the end,

innovation becomes absorbed into the daily life of the organization. So, it will be accepted as

a part of status quo. For the organization to accept the innovation successfully, any initial

problem has to be clarified. Then, routinization occurs without any problem.

The last process is called “exnovation” where the organization decides to get rid of the

fully realized innovation when it becomes obsolete, allowing the life cycle to start again and

continue this way. This process is also essential for organizations to keep up with the

changing world.

Criticisms of stage-based models:

In the literature, conventional innovation models have been criticized a lot. Schroeder

et al. put forward an alternative model based on longitudinal data from Minnesota Innovation

Research Program which describes a series of innovations but does not place them into stages.

The applicability of this model as a general approach was tested. However, some of the

observations showed that the model could not be completely applicable. Schroeder et al.’s

model was compared with a conventional stage-based model and found out that the broadly

defined model could not be applied by the raters independently and it was also shown that the

stages did not progress in the order Zaltman et al. suggested. Other studies have also found

limited support for developmental stages in innovation processes. Pelz (1983), found in a

study of urban innovations in United States that there were some signs of progressing through

stages but in a relatively simple, non-radical innovations but no evidence in more complex

innovations.

Another observed weakness was that people neglect the different perspectives and

approaches within the organization towards an innovation. Top management could think that

the innovation was implemented and routinized successfully whereas people on the ground

are more likely to avoid implementing the innovation. Another possibility is that the

innovation develops differently in different parts of the organization. It is the patterns of

interaction between individuals and groups within the organization which determine how

innovation progresses.

19

How manageable is the innovation process?

We saw that we may distinguish broad phases in innovation development, however at

a more detailed level of innovation, the progress is rarely in a clear and predictable sequence.

It is found that innovations frequently show a lack of “fidelity”. In other words, a mismatch

occurs between the outcome intended by those who initiated and the actual consequences

once implemented. Nevertheless, in the literature innovation is presented as a controllable

phase. Popular texts try to encourage managers about the positive outcomes of the innovation.

When managers follow the given advice, they will reach the desired successful outcomes.

More precisely, it is assumed that change can be directed from above and that, as its outcomes

are more or less predictable, the final outcome of the process is largely due to the competence

and skill of those directing the change.

It is found that this general illusion of manageability is composed of three sets of

second-order illusory beliefs. First one is the illusion of linearity. It implies that organization

change proceeds through a neat set of stages and that change always proceeds through this

order of stages. Second one is the illusion of predictability due to which change processes are

predictable. This predictability provides an unerring template for action. It also underscores

and therefore facilitates management of change. Third component is illusion of control. First

and second believes lead managers to exert extensive control over change. There are some

exceptional uncontrollable events in the change process. “Failed” change processes must be

due to something beyond managerial control.

To summarize, the illusion of manageability has remained unchallenged in the

literature for too long. It is important for managers to recognize their own limits in change

management. Realizing these restrictions early on during a major change will facilitate

appropriate and balanced action later in the change process. In managing the innovation and

change processes two characteristics have significant importance. First one is vigilance in

detecting the unforeseen as early as possible, second one is flexibility in reacting to it.

Comparison of Organizational Learning & Organizational Innovativeness

After organizational learning and innovation are explained separately, it is required to

compare them in order to make their difference clear and to determine their effects on each

other. Their difference can begin with their definition. Although a review of the literature

20

gives us diverse definitions of organizational learning, from each definition of them we can

understand the difference of these concepts. By definition, organizational learning has a

cognitively driven orientation while organizational innovation has a practically driven

orientation.

According to Nitza Schwabsky’s paper, a review of the literature on organizational

learning emphasizes that its core concept is the collective access, acquisition, transfer,

development and the memory collection of knowledge and insight that effect organizational

behavior. Learning, by means of accumulating and storing collective knowledge and insight

can be theoretical or experiential. While learning improves organizational capacity to

transform its future in cognitive and theoretical means, the practical implementation of the

idea or the new knowledge is not central to learning. Based on the explanation above, it is

right to say that organizational learning has a cognitively-driven organizational orientation.

Also, according to Nitza Schwabsky’s paper, “innovativeness refers to the

organization's openness to new ideas, as well as to its capacity to innovate, to implement and

to adopt the new idea, process or product successfully. Innovativeness encompasses both the

tendency to change as well as the practical capacity to innovate. While openness to new ideas

and learning is part of innovativeness, the practical aspect of the organizational capacity to

innovate is central. An organization that does not implement innovations cannot be perceived

as innovative.’’ At that point from the preceding explanation, the definition of innovativeness

can be drawn as an organizational tendency to support new and creative ideas towards their

implementation, as a result innovativeness is perceived as a practically-driven organizational

orientation.

Although organizational learning and innovativeness are different terms, their effect

on an organization should not be evaluated independently from each other. However it is also

important to say that learning and innovativeness are not perceived as overlapping terms

(Hurley and Hult, 1998). They are perceived as overlapping because their relationship with

each other is very strong. Organizational innovation can take place while learning and

learning can take place while innovating. If it is required to speak theoretically, there have

been many studies and theories suggesting that learning is an antecedent of innovativeness

(e.g. Cohen and Levinthal 1990, Hurley and Hult 1998), and of internal efficiency and

organizational competitiveness. According to that view , innovativeness requires a firm to be

able to turn their knowledge to their different kinds of development processes. The point is

that innovations need knowledge and knowledge can be gained by organizational learning,

however while translating knowledge into developments via innovations, these organizational

innovations feed back organization with new learning processes. In short, although

organizational innovativeness and learning are not same concepts, they are not evaluated

21

seperately because their sustained effect on each other and organizations increase the

efficiency of organization’s value added processes.

Resource based view (RBV) of the firm can help us to explain the relationship of

learning and innovativeness by providing some examples. The RBV defines strategic assets as

rare, valuable, inimitable, and non-substitutable resources. Trafalgar War which contains

lessons from resource based view is one of the most suitable example to clear the

organizational learning and innovativeness.

According to the article of Andy C. L. Yeung*, Kee-Hung Lai and Rachel W. Y. Yee ,

learning-oriented organizations consistently improve their existing abilities through

experience. An RBV of strategic management involves examining the resources and

capabilities of firms, as a result they gain above-normal rates of return and a sustainable

competitive advantage. Learning-oriented organizations generate collective tacit knowledge

that is difficult for competitors to imitate (Osterloh and Frey 2000). This knowledge thus

becomes a strategic asset that is the source for creating sustainable competitive advantages. In

Trafalgar also we can see that organizational learning as a navy is created a great knowledge

which becomes a competitive advantage later. At the heart of the Royal Navy’s competitive

advantage lay the inescapable fact that Great Britain was an island. This natural setting,

unique among European states, gave rise to a nation of seafarers through experience which

resulted from organizational learning.

As we have already explained that organizational learning results in experience and

tacit knowledge which give the power of translating knowledge and experience into the

innovativeness. Trafalgar is also one of the examples which shows the relationship how an

organization that has a great learning capacity turns its knowledge into innovation. The Royal

Navy implemented an innovative strategy that resulted from high experience provided by high

organizational learning. Lord Nelson was effective because he was willing to depart from

convention and employ innovative strategies to catch his opponents off guard.

To sum up, we can compare organization learning and innovation with each other,

innovativeness is perceived as a practically-driven organizational orientation, while

organizational learning has a cognitively-driven organizational orientation. But also we

should not forget that these two processes result in and affect each other very deeply. RBV

can give us very suitable examples which show the difference of them and their strong

relationship.

22

II. STATISTICAL ANALYSIS OF GROUP DATA AND INTERPRETATIONS

1. Analysis of general characteristics of our companies:

1. Our companies are service companies and they have exteremly internal financing in

order to make new investment. Because the average of the their B4 variables are 98%.

Mean 0,98

Standard Error 0,02

Standard Deviation

0,04472

1

Sample Variance 0,002

Confidence

Level(95,0%)

0,05552

9

From the data above, it is obivious that the confidence level is very high. As a result, we can

conclude that external financing is not preferred by our companies.

2. Our companies don’t have much R&D investment. Their average R&D investment is

15,8% of their total sales but you can see that standartd deviation is very high because

only two of our companies have a good R&D expenditure compare to others.

Mean 0,158

Standard Error

0,09728

3

Standard Deviation

0,21753

2

Sample Variance 0,04732

Confidence

Level(95,0%)

0,27010

1

3.

A. In comparison with our competitors, our company has introduced more innovative

products and services in during the past five years.

B. The technology of our main machinery in use is very up-to-date.

23

C. Our company changes production methods at a great speed in comparison with our

competitors.

D. We encourage people to think and behave in original and novel ways.

E. When we cannot solve a problem using conventional methods, we improvise on

new methods.

F. New product development

The above listed factors as A,B,C,D,E,F are the indicators of the organizational

innovativeness other than the R&D expenditures. Moreover the summary table shows

that the frequencies are very high at above average rates of 4 and 5. Our companies

deal with organizational innovativeness at the product development level especially

because our indicators are selected to analyse the product development process. They

agree or highly agree with the indicators.

4.

A. We use networks and links to acquire knowledge.

B. We jointly work with other organizations to acquire knowledge.

C. We share information with employees.

D. We continuously improve our personnel.

E. We learn from market changes that enable us to successfully compete.

F. We evaluate the cost of failures not as a loss but as an opportunity to learn.

The above listed factors as A,B,C,D,E,F are the indicators of the organizational

learning selected from the questionnaire. In the summary table, you see that about all

24

A B C D E F

str.disagree 1 0 0 0 0 0 0

disagree 2 20% 0 0 0 0 20%

indifferent 3 20% 40% 0 0 20% 20%

agree 4 0 40% 80% 60% 40% 20%

str. Agree 5 60% 20% 20% 40% 40% 40%

SUMMARY TABLEfrequency as percentage

A B C D E F

str.disagree 1 0% 0% 0% 0% 0% 0%disagree 2 0% 0% 0% 0% 0% 0%

indifferent 3 0% 0% 0% 20% 0% 20%

agree 4 60% 60% 80% 40% 20% 60%

str. Agree 5 40% 40% 20% 40% 80% 20%

SUMMARY TABLEfrequency as percentage

of the companies agree or strangly agree with organizational learning indicators.

Based on that summary table and accepting that these indicators are the most suitable

for organizational learning, our companies have high degree organizational learning.

As a conclusion, because there is a strong relationship between organizational

learning and innovativeness, it is possible to say also our companies prove that strong

relationship. According to our above short analysis, our companies have

organizational learning and innovativeness .

HYPOTHESIS ABOUT SECTOR’S DIFFERENCES AND

ORGANIZATIONAL LEARNING& INNOVATION:

After we try to find general characteristics of our companies related to the

literature review and our topic, now we want to continue our statictical analysis with

finding some relationships between variables and organizational learning and

innovation and making some differences deal with our reserch clearer between service

and manufacturing companies. Below , we generate some hypothesis, now we try to

evaluate these hypothesis statistically on our questionnaire.

The processed data set is used to analyze hypotheses which have been either

derived from the relevant literature review or been developed according to our

considerations. In addition to that, some hypothesis will be established with aim of

data mining in order to find a unknown pattern between variables. Four topics we

developed are given as follows:

1. The higher organizational innovativeness applied or organizational learning

generalized by the company, the greater total sales growth achieved in the

company (positive correlation is expected).


generalized by the company, the more market share obtained by the company

(positive correlation is expected).

3. If a company has a target to decrease cost as much as possible or if a company

engages in cost leadership strategy, that company provides it organizational

learning or innovativeness.

4. If a company engages in differentiation strategy, that company take care of

organizational learning or organizational innovativeness.

25

Because there is no single indicator which asks respondents directly about

organizational learning , organizational innovation and cost leadership strategy, we

wanted some other subindicators listed below which represent highly the

organizational learning , innovation and cost leadership and the points given by

respondents to these subindicators are averaged and round the nearest intiger

because Likert scale used in the questionnaire contains only integers as values.

For Organizational Learning: C30, C37, C44, C46, C50, D68 are the

main subindicators of organizational learning in the questionnaire

according to the literature review and we take average of the scores of these

subindicators then round the mean to the nearest integer and then we get a

score for the organizational learning for each company.

For Organizational Innovation: A5, A11, A17, A27, A29, E12 are the

main subindicators of organizational innovation in the questionnaire

according to the literature review and we take average of the scores of these

subindicators then round the mean of scores to the nearest integer and then

we get a score for the organizational innovation for each company.

For Cost Leadership Strategy: D53, D54, D59, D60, D61, D69 are the

main subindicators of cost leadership strategy in the questionnaire

according to the course AD320 that we take from Prof. Dr. Güven Alpay

and we take average of the scores of these subindicators then round the

mean of scores to the nearest integer and then we get a score for the cost

leadership strategy for each company.

For Differentiation Strategy: A6, A9, A18, D56, D57, D63, D74, are the

main subindicators of differentiation strategy in the questionnaire

according to the course AD320 that we take from Prof. Dr. Güven Alpay

and we take average of the scores of these subindicators then round the

mean of scores to the nearest integer and then we get a score for the

differentiation strategy for each company.

There are variables directly for market share (E2) , total sales growth

(E1) in the questionnaire, that’s why we use the scores of these variables

directly as an indicator for market share and total sales growth.

26

The chi-square test is used to determine whether there is a

significant difference between the expected frequencies and the observed

frequencies in one or more categories.

Chi-Square Test Requirements

1. Quantitative data.

2. One or more categories.

3. Independent observations.

4. Adequate sample size (at least 10).

5. Simple random sample.

6. Data in frequency form.

7. All observations must be used.

If your chi-square value is equal to or greater than the table value,

reject the nullhypothesis, it means that differences in your data are not due

to chance or the Chi-square tests table will show the value of Pearson Chi-

Square value, associated with the significance value. From the two-tailed

significance value, we can make a statistical decision and accept or reject the

null hypothesis. If the value of significance is less than the predetermined

level of significance, we will reject the null hypothesis and conclude that

relationship is significant.


generalized by the company, the greater total sales growth achieved in the

company.

HYPOTHESIS 1A:

Ho: Organizational learning is independent of total sales growth.

Ha: Organizational learning is associated with total sales growth.

ORGANIZATIONAL LEARNING* TOTAL SALES GROWTH

CROSSTABULATION

Q3

Total1 2 3 4 5

Q1 1 Count 1 0 0 0 0 1

% of Total ,8% ,0% ,0% ,0% ,0% ,8%

3 Count 0 1 2 5 1 9

% of Total ,0% ,8% 1,6% 4,1% ,8% 7,3%

27

4 Count 1 3 18 47 13 82

% of Total ,8% 2,4% 14,6% 38,2% 10,6% 66,7%

5 Count 0 0 9 11 11 31

% of Total ,0% ,0% 7,3% 8,9% 8,9% 25,2%

Total Count 2 4 29 63 25 123

% of Total 1,6% 3,3% 23,6% 51,2% 20,3% 100,0%

About all the firms, you will see exact percentage as bold in the table, have a high total

sales while their organizational learning scores are also high, in other words there is no firm

which has a high total sales while their organizational learning score is very low. According

to cross tabulation table, we can draw the conclusion that there is a positive relationship

between organizational learning and total sales. But, it is also important to see a statistically

significant result in the chi square table. From the chi square table below, we can reach a

statistically significant result. As a result, we reject the null hypothesis in chi square test and

we prove that organizational learning is associated with total sales growth, and cross

tabulation also supports that relationship between variables.

Chi-Square Tests

Value df

Asymp. Sig.

(2-sided)

Pearson Chi-Square 71,297a 12 ,000

Likelihood Ratio 19,665 12 ,074

Linear-by-Linear

Association13,254 1 ,000

N of Valid Cases 123

28

Chi-Square Tests

Value df

Asymp. Sig.

(2-sided)



Linear-by-Linear


a. 14 cells (70,0%) have expected count less than 5. The

minimum expected count is ,02.

HYPOTHESIS 1B:

Ho: Organizational innovation is independent of total sales growth.

Ha: Organizational innovation of is associated with total sales growth.

ORGANIZATIONAL INNOVATION* TOTAL SALES GROWTH

CROSSTABULATION

Q3

Total1 2 3 4 5

Q2 2 Count 1 0 0 0 1 2

% of Total ,8% ,0% ,0% ,0% ,8% 1,6%

3 Count 0 2 7 17 2 28

% of Total ,0% 1,6% 5,7% 13,8% 1,6% 22,8%

4 Count 1 2 16 39 13 71

% of Total ,8% 1,6% 13,0% 31,7% 10,6% 57,7%

5 Count 0 0 6 7 9 22

% of Total ,0% ,0% 4,9% 5,7% 7,3% 17,9%

Total Count 2 4 29 63 25 123

% of Total 1,6% 3,3% 23,6% 51,2% 20,3% 100,0%

29

About all the firms, you will see exact percentage as bold in the table, have a total

sales growth, while their organizational innovation scores are also high, but for the

organizational innovation, it is very easy to say that there are some firms which have lower

total sales growth while their organizational learning score is very high, moreover also there

are some firms which have very low innovation scores although their total sales growth scores

are very high. According to cross tabulation table, we can draw the conclusion that there is no

strong relationship between organizational innovation and total sales compared to

organizational learning, although it is important to see a statistical result in the chi square

table. In the chi square table below, we see that there is statistically important relationship

between variables. We can conclude that organizational learning is much more related with

the total sales growth than the organizational innovation but it can not be concluded that

organizational innovation is not associated with the total sales growth.

Chi-Square Tests

Value df

Asymp. Sig.

(2-sided)



Linear-by-Linear






generalized by the company, the more market share obtained by the company.

HYPOTHESIS 2A:

Ho: Organizational learning is independent of market share.

Ha: Organizational learning of is associated with market share.

ORGANIZATIONAL LEARNING*MARKET SHARE CROSSTABULATION

30

Q4

Total1 2 3 4 5

Q1 1 Count 1 0 0 0 0 1

% of Total ,8% ,0% ,0% ,0% ,0% ,8%

3 Count 0 0 7 2 0 9

% of Total ,0% ,0% 5,7% 1,6% ,0% 7,3%

4 Count 2 7 17 38 18 82

% of Total 1,6% 5,7% 13,8% 30,9% 14,6% 66,7%

5 Count 0 3 4 11 13 31

% of Total ,0% 2,4% 3,3% 8,9% 10,6% 25,2%

Total Count 3 10 28 51 31 123

% of Total 2,4% 8,1% 22,8% 41,5% 25,2% 100,0%

About all the firms, you can see exact percentage as bold in the table, have a high

market share while their organizational learning scores are also high, in other words there is

nearly no firm which has a high market share while their organizational learning score is very

low, it is also required that there is one exception. According to cross tabulation table, we can

draw the conclusion that there is a positive relationship between organizational learning and

market share. But also it is important to see a statistically significant result in the chi square

table. In the chi square table below we can reach a statistically significant result. Because if

the value of significance is less than the predetermined level of significance, we will reject the

null hypothesis and conclude that relationship is significant. As a result, we reject the null

hypothesis in chi square test and we prove that organizational learning of is associated with

market share, and cross tabulation also supports that relationship between variables.

31

Chi-Square Tests

Value df

Asymp. Sig.

(2-sided)



Linear-by-Linear





HYPOTHESIS 2B:

Ho: Organizational innovation is independent of market share.

Ha: Organizational innovation of is associated with market share.

ORGANIZATIONAL INNOVATION*MARKET SHARE Crosstab

Q4

Total1 2 3 4 5

Q2 2 Count 1 0 1 0 0 2

% of Total ,8% ,0% ,8% ,0% ,0% 1,6%

3 Count 1 4 9 9 5 28

% of Total ,8% 3,3% 7,3% 7,3% 4,1% 22,8%

4 Count 1 4 14 34 18 71

% of Total ,8% 3,3% 11,4% 27,6% 14,6% 57,7%

5 Count 0 2 4 8 8 22

% of Total ,0% 1,6% 3,3% 6,5% 6,5% 17,9%

Total Count 3 10 28 51 31 123

% of Total 2,4% 8,1% 22,8% 41,5% 25,2% 100,0%

32

About all the firms, we may see exact percentage as bold in the table, they have a high

market share, while their organizational innovation scores are also high, but for the

organizational innovation, it is very easy to say that there are some firms which have a low

market share score while their organizational innovation score is very high, moreover also

there are some firms which have very low innovation scores although their total market share

scores are very high. According to cross tabulation table, we can draw the conclusion that

there is no strong relationship between organizational and total sales compared to the

relationship between organizational learning and total market share, although it is important to

see a statistical result in the chi square table. In the chi square table below, we see that there is

statistically important relationship between variables because we reject the null hypothesis.

We can conclude that organizational learning is much more related with market share than the

organizational innovation but it can not be concluded that organizational innovation is not

associated with the market share.

Chi-Square Tests

Value df

Asymp. Sig.

(2-sided)



Linear-by-Linear





3. If a company has a target to decrease cost as much as possible or if a company

engages in cost leadership strategy, that company provides it with organizational

learning or innovativeness.

HYPOTHESIS 3A:

Ho: Organizational learning is independent of cost leadership strategy.

Ha: Organizational learning of is associated with cost leadership strategy..

33

ORGANIZATIONAL LEARNING*COST LEADERSHIP

CROSSTABULATION

Q5

Total1 2 3 4 5

Q1 1 Count 1 0 0 0 0 1

% of Total ,8% ,0% ,0% ,0% ,0% ,8%

3 Count 0 0 5 4 0 9

% of Total ,0% ,0% 4,1% 3,3% ,0% 7,3%

4 Count 0 1 26 48 7 82

% of Total ,0% ,8% 21,1% 39,0% 5,7% 66,7%

5 Count 0 1 8 16 6 31

% of Total ,0% ,8% 6,5% 13,0% 4,9% 25,2%

Total Count 1 2 39 68 13 123

% of Total ,8% 1,6% 31,7% 55,3% 10,6% 100,0%

Taking all the companies into the account, the chi square test draws a conclusion that

there is an association between organizational learning and cost leadership because we reject

the null hypothesis. In addition to that, it is more important to emphasize that according to

cross tabulation there is a positive relationship between organizational learning and cost

leadership because companies have high organizational learning scores while paying attention

on the cost leadership strategy. That conclusion is significant because cutting costs does not

mean cutting learning, in literature review we have already reached that organizational

learning has a great support to that strategy.

34

Chi-Square Tests:

Value Df

Asymp. Sig.

(2-sided)

Pearson Chi-Square 1,296E2a 12 ,000


Linear-by-Linear





HYPOTHESIS 3B:

Ho: Organizational innovation is independent of cost leadership strategy.

Ha: Organizational innovation of is associated with cost leadership strategy.

ORGANIZATIONAL INNOVATION*COST LEADERSHIP CROSS

TABULATION

Q5

Total1 2 3 4 5

Q2 2 Count 1 0 0 1 0 2

% of Total ,8% ,0% ,0% ,8% ,0% 1,6%

3 Count 0 0 13 14 1 28

% of Total ,0% ,0% 10,6% 11,4% ,8% 22,8%

4 Count 0 2 22 40 7 71

% of Total ,0% 1,6% 17,9% 32,5% 5,7% 57,7%

5 Count 0 0 4 13 5 22

% of Total ,0% ,0% 3,3% 10,6% 4,1% 17,9%

Total Count 1 2 39 68 13 123

% of Total ,8% 1,6% 31,7% 55,3% 10,6% 100,0%

35

Taking all the companies into the account, the chi square test draws a conclusion that

there is an association between organizational innovation and cost leadership because we

reject the null hypothesis in which the value of significance is less than the predetermined

level of significance that is equal to 0,005. In addition to that, it is more important to

emphasize at that point, that according to cross tabulation there is a positive relationship

between organizational innovation and cost leadership because companies have high

organizational innovation scores at the same time they pay attention on the cost leadership

strategy. That conclusion is very important because cutting cost does not mean decreasing

innovations because in literature review we see that organizational innovation has a great

support to that strategy by process innovation. Organizational innovation is as important as

organizational learning for cost leadership strategy. It is a different conclusion compared to

first two assumptions because the importance degree of organizational innovation increases

and becomes equal to organizational learning when we begin to talk about strategies unlike in

first two cases in which the main issues were total sales and market shares respectively.

Chi-Square Tests

Value Df

Asymp. Sig.

(2-sided)



Linear-by-Linear





4. If a company engages in differentiation strategy, that company takes care of

organizational learning or innovativeness.

HYPOTHESIS 4A:

Ho: Organizational innovation is independent of differentiation strategy.

Ha: Organizational innovation is associated with differentiation strategy.

36

ORGANIZATIONAL INNOVATION* DIFFERENTIATION Crosstab

V7

Total2 3 4 5

Q2 2 Count 2 0 0 0 2

% of Total 1,6% ,0% ,0% ,0% 1,6%

3 Count 2 20 6 0 28

% of Total 1,6% 16,3% 4,9% ,0% 22,8%

4 Count 0 15 53 3 71

% of Total ,0% 12,2% 43,1% 2,4% 57,7%

5 Count 0 0 12 10 22

% of Total ,0% ,0% 9,8% 8,1% 17,9%

Total Count 4 35 71 13 123

% of Total 3,3% 28,5% 57,7% 10,6% 100,0%

Taking all the companies into the account, the chi square test draw a conclusion again

that there is an association between organizational innovation and differentiation strategy

because we reject the null hypothesis. In addition to that, it is more important to attract your

attention to the point that cross tabulation says that a positive relationship between

organizational innovation and differentiation strategy, has a high diversity mainly at the

center of the table because it reflects that companies don’t pay attention on the

organizational innovation and differentiation strategy together at a high degree. Maybe it is a

major characteristic of our samples because they are operated mostly in domestic market, in

Turkey the differentiation strategy is not as significant as cost leadership because Turkey is a

developing country. That conclusion is very important because our data has a power to reflect

some differences and to give some indicators about domestic characteristic.

37

Chi-Square Tests

Value df

Asymp. Sig.

(2-sided)

Pearson Chi-Square 1,305E2a 9 ,000


Linear-by-Linear





HYPOTHESIS 4B:

Ho: Organizational learning is independent of differentiation strategy.

Ha: Organizational learning of is associated with differentiation strategy.

ORGANIZATIONAL LEARNING * DIFFERENTIATION

CROSSTABULATION

V7

Total2 3 4 5

Q1 1 Count 1 0 0 0 1

% of Total ,8% ,0% ,0% ,0% ,8%

3 Count 1 6 2 0 9

% of Total ,8% 4,9% 1,6% ,0% 7,3%

4 Count 2 26 51 3 82

% of Total 1,6% 21,1% 41,5% 2,4% 66,7%

5 Count 0 3 18 10 31

% of Total ,0% 2,4% 14,6% 8,1% 25,2%

Total Count 4 35 71 13 123

38

% of Total 3,3% 28,5% 57,7% 10,6% 100,0%

Taking all the companies into the account, the chi square test draws a

conclusion that there is an association between organizational learning and

differentiation strategy because we reject the null hypothesis in which the value of

significance is less than the predetermined level of significance that is equal to 0,005.

In addition to that, it is more important to emphasize at that point, cross tabulation

says that the positive relationship between organizational learning and differentiation

has a high diversity mainly at the center of the table because it reflects that companies

don’t pay attention on the organizational learning and differentiation strategy together

at a high degree. Again, it can be a characteristic of our samples because they are

operated mostly in domestic market in Turkey, the differentiation strategy is not as

significant as cost leadership because Turkey is a developing country. That conclusion

is very important because our data has a power to reflect some differences and to give

some indicators about domestic characteristic. It is a different conclusion compared to

first two topics because the importance degree of organizational innovation increases

and becomes equal to organizational learning when we begin to talk about strategies

like in third case in which we talked about cost leadership strategy and unlike in first

two cases in which the main issues were total sales and market shares respectively anD

the organizational learning had stronger effect on variables than organizational

innovation.

Chi-Square Tests

Value Df Asymp. Sig. (2-sided)

Pearson Chi-Square

62,10

2a9 ,000

Likelihood Ratio

37,486 9 ,000

Linear-by-Linear Association

30,258 1 ,000

N of Valid Cases

123

39

Chi-Square Tests


Pearson Chi-Square

62,10

2a9 ,000

Likelihood Ratio

37,486 9 ,000


30,258 1 ,000

CONCLUSIONS:

After we concluded to analyse the data, we want to draw some conclusions about our work.

First of all, we reached to the solution that organizational learning is associated with total sales

growth and cross tabulation. We have also seen that cross tabulation supports that relationship

between variables.

Another conclusion was that organizational learning is much more related with the total

sales growth than organizational innovation. However, we have not concluded that

organizational innovation is not associated with total sales growth.

Organizational learning is found to be associated with market share. According to our

analysis, organizational learning is much more related with market share compared to

organizational innovativeness however, we can not conclude that organizational innovation is

not related to market share.

We also found that a positive relationship between organizational learning and cost

leadership because companies had high organizational learning scores while they were paying

attention on the cost leadership strategy.

According to the data analysis, cutting costs did not mean decreasing innovations in the

company because in literature review we saw that organizational innovation was as important

as organizational learning for cost leadership strategy. This was a distinct conclusion compared

to our first two assumptions because the degree of organizational innovation increases and

becomes equal to the organizational learning when we begin to talk about strategies unlike in

first two cases in which the main issues are total sales and market shares respectively.

We have reached to the positive relationship between organizational innovation and

differentiation strategy, which had a high diversity mainly at the center of the table because it

reflected that companies didn’t pay attention on the organizational innovation and

differentiation strategy together at a high degree. Finally we concluded our analysis by stating, that this was a different conclusion again

compared to first two topics because the degree of importance in organizational innovation

40

Chi-Square Tests


Pearson Chi-Square

62,10

2a9 ,000

Likelihood Ratio

37,486 9 ,000


30,258 1 ,000

increases and becomes equal to organizational learning when we begin to talk about strategies

like in third case in which we talked about cost leadership strategy and unlike in first two cases

in which the main issues were total sales and market shares respectively and the organizational

learning had stronger effect on variables than organizational innovations.

APPENDIX

41

Chi-Square Tests


Pearson Chi-Square

62,10

2a9 ,000

Likelihood Ratio

37,486 9 ,000


30,258 1 ,000

42

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