Learning Culture and Organizational Effectiveness in Emerging Market: An Exploratory Study in the Logistics Industry
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In a highly uncertain and complex business environment, a learning culture is crucial to be adopted. Undoubtedly, it encourages continuous organizational learning to produce innovative products, services, or systems to achieve high organizational effectiveness. This study aims to explore the extent to which logistics companies adopted the learning organization paradigm to achieve high organizational effectiveness or performance. This study examines the implementation of the organizational learning practices of the medium-sized logistic companies operating for more than five years. By identifying the critical role of organizational learning aspects, such as structure, culture, knowledge management, and technology, corporate leaders would have the clue to manage it effectively resulting in better organizational effectiveness. Data was collected by interviewing senior managers; then it was qualitatively analyzed. The findings indicated that the implementation of organizational learning supported the logistics companies to achieve their performance. However, it was also implied that several organizational learning practices such as knowledge management, training and development, and technology use were not strategically managed. The study provides significant input for logistics companies to improve their organizational learning practices for better performance achievement.
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Introduction
Companies from all sectors face tough challenges in maintaining performance due to increasingly fierce competition and complex business environments. While these external factors are beyond their control, companies can manage internal factors such as learning, innovation, and effective strategy implementation much better to influence the final results of their endeavors (Inthavonget al., 2023). Scholars and practitioners alike have recognized the positive effect of organizational learning on shaping companies’ strategic flexibility, innovation capabilities, and competitiveness to ultimately improve overall performance (Do & Mai, 2022; Freixanet & Federo, 2022; Santos-Vijandeet al., 2012). Further, Gilley and Maycunnich (2000) emphasized the importance of implementing lean structures and innovative strategies to cope with a competitive environment. Therefore, as an open system that resembles a living organism–a metaphor introduced by Morgan (2006)–companies should constantly seek to align between interrelated subsystems and the external environment. Companies must learn and adapt to their changing environment to achieve high performance and growth, especially those related to customers’ demands. One way to fulfill the demands is to offer innovative products or services that add new value.
Iranmaneshet al. (2021) confirmed that innovation supported by an effective structure is critical for a company to achieve its goals. A company should implement a flexible structure, encourage a learning culture, and define its innovation strategy clearly (Damanpour & Aravind, 2012). Those factors that are included in the organizational learning dimensions should be professionally managed to foster employees’ best contributions to the company’s development. In addition, leaders should encourage knowledge-sharing practices among their employees to create a positive learning atmosphere to nurture creativity (Park & Kim, 2018).
In a dynamic industry like logistics in Indonesia, companies should keep up with the changes to maintain their competitiveness. The companies also need to build adequate resources and capabilities to take advantage of the opportunities that arise from this growing industry as well as to mitigate associated threats. As the demand to facilitate the flow of goods increases, Indonesian logistics companies must be ready to perform various complex activities to satisfy diverse customer requirements and cope with the geographical challenges of the archipelago country. Given the crucial role of logistics in Indonesian economic development, it is important to understand how logistics companies achieve superior effectiveness and continue to grow. Although various studies have investigated the dynamic performance of the logistics industry, discussions on how logistics firms achieve effectiveness through organizational learning in emerging markets remain underdeveloped.
This study explores the role of organizational learning aspects in driving effectiveness within a dynamic and complex environment. In addition, this study attempts to understand the learning mechanisms that logistics companies apply to maintain well-functioning organizations in serving society and the macroeconomy. Logistics companies are expected to have strong organizational learning aspects to support their human capital to achieve high organizational effectiveness or performance. The interplay process of the organizational aspects leading to organizational effectiveness will be analyzed using a qualitative approach. By exploring and identifying the critical role of organizational learning aspects such as structure, culture, and knowledge management, leaders of logistic companies could manage it effectively, resulting in better organizational effectiveness.
Literature Review
Logistics companies play an important role in business growth because they distribute merchandise to retailers, which provides customers access to the goods. Those companies face a vigorous and competitive environment, due to the increasing complexity and unpredictability of the market. According to Daft (2021), to achieve its challenging goals, an organization should align its structure with organizational elements such as technology, strategy, and environment. In other words, an organization should apply a flexible structure and relevant technology to improve its innovativeness and maintain its competitiveness in a dynamic environment.
Environmental Dynamism
The external environment has a profound impact on the company’s performance and development. Its dynamism, which indicates the rate of change and degree of instability, forces companies to constantly adapt and improve their offers and processes (Jansenet al., 2009). In such a dynamic environment, companies have to adopt fast-changing technologies, adjust to fluctuating demands, and keep up with shifting customer preferences. High environmental dynamism creates uncertainty, volatility, and instability (Kafetzopoulos, 2023).
Social scientists at the US Army War College introduced the concept of VUCA (volatility, uncertainty, complexity, and ambiguity) to describe dynamic changes in the external environment that cause turbulence (Baran & Woznyj, 2020). Specifically, “volatility” refers to frequent and relatively unstable changes, “uncertainty” indicates difficulties in predicting whether an event will cause a significant change, “complexity” indicates the requirement of a great deal of effort to digest and deal with many interconnected elements, and “ambiguity” means lack of knowledge to comprehend the cause-and-effect relationship (Bennett & Lemoine, 2014). The VUCA model can be used to help business leaders conduct a systematic analysis of the external environment. By analyzing the environment carefully, leaders can prepare an effective strategic plan to solve the problems that arise (Bennett & Lemoine, 2014).
In line with this paradigm, leaders should exercise a transformational leadership approach to empower their subordinates to provide their best performance. Donate and De Pablo (2014) argued that transformational leaders develop a vision and encourage their followers to pursue it. Further, Baran and Woznyj (2020) postulated that an agile leader would inspire and motivate the employees through his or her charismatic behaviors as a role model when facing a competitive environment. In short, leaders should respond effectively to the environment by motivating employees to be agile, and innovative to gain success amid tough business competition.
In a changing environment with fierce competition, a company should adopt an open system paradigm (Morgan, 2006) focusing on satisfying all of its stakeholders, including customers, employees, the government, and suppliers. Within that paradigm, innovation is considered imperative to sustain the competitive advantage and long-term growth of the company. Therefore, the ability to learn, change, and adapt that is required in the innovation process may consequently affect the company’s effectiveness (Ferraresiet al., 2012).
Learning Organization
Garvin (2000) defined a learning organization as one that is skilled at creating, acquiring, interpreting, transferring, and retaining knowledge and purposefully modifying its behavior to reflect new knowledge and insights. Furthermore, Liaoet al. (2010) defined a learning organization as a setting in which knowledge is fully utilized, capacity is expanded, behavior is changed, and competence is obtained. To survive and grow, organizations must develop innovative capabilities that can be developed by practicing a learning organization paradigm (Senge, 1990; Garvin, 2000). Marsick and Watkins (2003) further underlined that all employees should share the vision of a learning organization by understanding and supporting it.
In an increasingly competitive environment, a company should offer new added-value products, services, or processes to succeed. To identify customers’ demands, needs, and wants, a company should establish a learning culture that encourages employees to share knowledge, ideas, and experiences leading to the creation of innovative products, systems, or services. Karp (2006) added that “learning” in a learning organization could happen at the individual, team, and organizational levels. Further, Kofman and Senge (1993) argued that the three levels of learning work together and influence one another. Thomas and Allen (2006) echoed this perspective by highlighting that a learning organization is the product or result of a critical combination of internal change mechanisms related to structure, process, and human capability allied to continuous environmental reviews aimed at maintaining or improving performance.
It is obvious that without organizational learning, continuous improvement cannot occur (Chang & Sun, 2007). In support of this notion, Spear (2009) introduced a high-velocity organization model referring to a high-speed learning capability characterized by these two components: a) Structure refers to high-velocity organization functions that are managed as parts of the process; b) Dynamics refers to continually improving the pieces and process. Principally, high-velocity organizations are constantly experimenting and learning to solve all problems, complexities, and potential problems. Related to the concepts proposed by Spear (2009), and Marsick and Watkins (2003), an organization should learn continuously and transform itself. In other words, it should become a learning organization to achieve high performance.
Garvinet al. (2008) proposed that, as a learning organization, a firm should fulfill the requirements of the following model composed of three building blocks, namely i) Supportive Learning Environment refers to how an organization bolsters psychological safety, differences, openness to new ideas, and time for reflection; ii) Concrete Learning Processes and Practices refer to the extent and frequency in which an organization performs experimentations, collects data/information, transfers information, analyzes situations, and constantly trains its employees; iii) Leadership Reinforcing Learning refers to how leaders encourage their employees to learn and share knowledge.
Based on the extant research, four essential organizational learning aspects assumed to affect corporate performance among others are i) Openness refers company’s response to its stakeholders. Sadri and Lees (2001) argued that a learning culture makes companies successful in business competition. Garvinet al. (2008) stated that one building block, known as a supporting climate, where the organization appreciates differences and respects new ideas, is crucial for improving employee engagement. Openness is determined to play an important role in supporting employees to achieve organizational performance; ii) Human Capital Capacity refers to the quality of human capital in a company. To be able to achieve high performance, a company should be supported by professionals. Highly competent employees should be hired; however, as the environment continues to change, they should be continuously developed through training and development as well as knowledge-sharing activities. Therefore, strategic employee development should be effectively implemented to achieve the organization’s vision (Pedleret al., 1991; Slater & Narver, 1995; Garvin, 2000); iii) Leadership refers to the extent to which leaders use the transformational leadership style which is required to manage a company in a dynamic and complex environment. A transformational leader is consistently visionary and motivates his or her subordinates to face a tough environment as well as speeds up the organizational learning process. In addition, he or she encourages employees to continuously learn, individually, or in groups (Garvinet al., 2008) to make positive changes in individuals, groups, teams, and organizations by inspiring, envisioning, and enabling their followers to achieve high performance (Avolioet al., 1991); iv) Technology refers to the company’s use of technology or IT (Information Technology). Due to the rapid development of technology, modern knowledge-sharing activities can be conducted more effectively by using relevant technologies. Technology will certainly be a learning enabler since a learning organization consists of systems and processes for sharing information and knowledge (Johnson, 2002). Thomas and Allen (2006) argued that through technology, a learning organization could elicit, codify, store, and distribute information and knowledge effectively. A company should therefore invest in appropriate information technology for present and future use to gain a competitive edge through its improved learning systems.
Knowledge Management
According to Nonaka and Takeuchi (1995), a learning organization is related to organizational knowledge creation (OKC); they introduced knowledge conversion known as the acronym of Socialization Externalization Combination and Internalization (SECI). Based on the SECI model, there are two kinds of knowledge: explicit and tacit. Explicit knowledge can be easily codified and articulated; therefore, it can be easily transferred. In contrast, tacit knowledge is less codifiable and hard to articulate, as it lies in an individual’s experience and mind; therefore, it is not easy to transfer (Nonaka, 1994). The conversion of tacit-to-tacit knowledge is called socialization, tacit-to-explicit knowledge is called externalization, explicit-to-explicit knowledge is called combination, and explicit knowledge to tacit-to-transfer is called internalization. The conversion of knowledge could be effective if it is supported by enablers such as vision, creative atmosphere, redundant information, and leadership. In brief, Rastogi (2000) argued that knowledge management is a systematic and integrative process through which the organization coordinates to achieve its main goals.
Wiig and Jooste (2003) indicated that knowledge management increases organizational productivity. Pitt and Mac Vaugh (2008) added that knowledge management plays an important role in facilitating innovation and product development. Mclver and Wang (2016) stated that the main way to gain a competitive advantage is to understand how organizations manage what they know or what they need to know. However, applying knowledge management is not always easy, as barriers could arise within corporate culture, employees’ sense of belonging, IT, and the substandard management process.
While practicing knowledge management, a leader should enhance a learning culture and at the same time motivate his or her employees to share knowledge systematically to find new ideas to support the success of the company. The relevant technologies should also be used to support the process of knowledge-sharing practices effectively. Organization capacity, which refers to a system of managing human resources, should be professionally designed. This dimension is related to human resource activities such as recruitment, selection, and training and development, aiming at developing employees’ competencies.
Human Capital Development
The important role of human capital in improving organizational effectiveness can not be understated (Kafetzopoulos, 2023; López-Cabraleset al., 2011). Training and development programs are one of the critical activities needed to increase human capital’s competencies. These competencies can also be enhanced through supported knowledge sharing that fosters the organization’s learning capacity. In short, training and development together with knowledge management will increase employees’ capabilities to create value and as a source of competitive advantage (Teece, 2007). Therefore, it is important to regularly develop employees’ knowledge and expertise–such as new analytics tools and related technologies-to fit relevant needs and adapt to environmental dynamism (Shetet al., 2021).
Organizational Effectiveness (OE)
Organizational effectiveness (OE), also known as corporate performance, indicates the extent to which an organization achieves its goals. Realizing high effectiveness is essential to ensure the sustainability of an organization. By consistently achieving its specified goals, an organization can maintain its competitiveness within a turbulent environment.
Effectiveness or performance can be measured using various indicators. Financial-related data provide objective measures, while satisfaction-related data present subjective measures. Gordon and Cummins (1979) used profitability and growth to measure companies’ performance. Germainet al. (2001) introduced two forms of performance indicators: a) internal performance, which refers to financial measurements such as costs, profit, and revenue, and b) benchmarked performance, which refers to the comparison of a company’s performance with its benchmarked company performance. Daft (2021) introduced four approaches to measuring organizational effectiveness (OE): i) A goal approach refers to the extent to which a company has achieved its output or goals; ii) A resource-based approach refers to the extent to which a company successfully obtains the required-valued resources; iii) An internal process approach refers to the extent to which the internal company is effective and efficient, and iv) A strategic constituents approach refers to the extent to which its stakeholders are satisfied. In conclusion, research has provided two main approaches, namely the financial approach measuring profitability and revenue growth, and the non-financial approach measuring market share, customer satisfaction, and employee satisfaction. Although there are many ways to measure effectiveness, extant research has shown that factors such as human capital development, learning organization, leadership, knowledge management, structure, strategy, and innovation profoundly affect effectiveness (Dhooparet al., 2023).
Research Methods
A qualitative study is used in this research; this open and exploratory approach provides a way to capture how managers perceive dynamism and what particular course of action is deemed appropriate to take. Ten directors or senior managers from the ten selected logistics companies representing the five areas of Jakarta (South, North, East, West, and Centre) were interviewed. All of the selected informants have at least five years of experience in companies with more than 100 employees. Semi-structured interviews were conducted for around one and a half hours and were based on a concept of organizational framework and theories (Budihardjo, 2016, 2020; Daft, 2021; Garvinet al., 2008; Nonaka, 2007; Nonaka & Takeuchi, 1995). The interviews delved deeply into human capital development practices, organizational learning, and innovation. Answers are rated by the researchers and triangulated to the informants. All collected data was transcribed and analyzed systematically based on the synthesized concepts related to the business environment and organizational learning aspects as presented in Table I.
Organizational aspects | Description |
---|---|
Environmental dynamism awareness | Awareness of the top management team toward environmental dynamics, characterized by volatility, uncertainty, complexity, and ambiguity (VUCA). |
Organizational learning culture | A culture encouraging openness, creativity, and freedom of experimentation. |
Lean structure | Lean and less hierarchical structure. |
Innovation strategy | A clear formulation of how innovation is approached and aligned with business strategy. |
Transformational leadership | The transformational approach that a leader employs to inculcate a learning culture to subordinates. |
Technology investment | The investment in technology which is based on the present and/or future needs. |
Human capital development | The process of employee training and development program based on the ADDIE concept. |
Knowledge sharing practices | The effectiveness of knowledge (tacit and explicit knowledge) dissemination process. |
Organizational effectiveness | The extent to which an organization achieves its goals, both in financial and non-financial measures. |
This study applies the above framework to identify and describe the organizational aspects leading to the high achievement of organizational effectiveness. The framework focuses on the dynamic external environment of the logistics industry, and the use of innovation supported by a learning culture, transformational leadership, and up-to-date technology to deal with the current tough competition. It also addresses the the role of knowledge-related practices, such as human capital development and sharing knowledge practices in improving organizational effectiveness.
Results and Discussion
The data gathered from the interviews was thoroughly examined and carefully interpreted. To identify the key points of the statements, an inductive and exploratory approach to data analysis was applied. All informants reported that their companies applied an open culture and encouraged employees to share ideas. Different perspectives and new ideas were respected and valued, indicating a safe psychological climate existed within the companies. Employees were also given time to reflect on what they had done and what they planned to do for advancements. This practice showed that the ten companies provided a supportive learning environment for developing their human capital capacity. Further, all informants also highlighted that openness was important to trigger innovative ideas. Given the importance of openness, this dimension should be improved by giving the employees appropriate training and autonomy to carry out their jobs. It was indicated that a few employees had innovative ideas, but they felt ashamed of letting them go due to personal and cultural reasons. In fact, all companies have an espoused value of openness, but it is not fully reflected in practice. Therefore, open culture must still be effectively socialized and inculcated.
Most senior managers shared their awareness of the intense competition with their subordinates to bring everyone to the same page. They expressed the importance of disseminating knowledge to increase employees’ learning capacity and strengthen innovation to deal with tough competition. Although most leaders showed some aspects of a so-called transformational leadership style, they lacked knowledge on effectively transforming learning value. To succeed amid business competition, particularly within the logistics industry, related companies should offer innovative products, systems, or services (Adiguzelet al., 2024; Freixanet & Federo, 2022). Therefore, a leader plays a vital role in inspiring employees to learn continuously to provide their best contribution.
The interviews also revealed that each of the companies had training and development (T&D) programs for their employees. Employee competencies were identified, and a need analysis was conducted. After the gaps between the “must have” and the “actual” competencies of the employees were identified, the T&D program was designed and developed. In addition to a formal development program, an informal program was enhanced. All companies select their employees to complete the development programs to meet the requirements. However, based on conceptual analysis, T&D was not entirely designed and developed based on the Analysis, Design, Development, Implementation, Evaluation (ADDIE) concept (Allen, 2006).
The human capital capacity dimension serves as the engine of the innovation process. The corporate policy should position T&D and human resource planning as a form of “wholeness” (not partiality); it should also be in line with the corporate vision and mission to have a significant impact on corporate performance. This concept is related to the high-velocity organization paradigm introduced by Spear (2009). The two important organizational components of structure and dynamic bring increased importance to the role of human capital capacity. Previous studies found that T&D should be based more on the concept of high-velocity organization which focuses on structure (oneness) and dynamics/continual improvements (Spear, 2009).
In terms of technology, all companies have invested in technology such as information systems, global positioning systems, advanced computing machines, and other relevant devices based on the present needs. Logistic companies have been dependent on technology for tasks such as tracking, scheduling, client orders, and information (Adiguzelet al., 2024). Therefore, the role of IT is very important, as technology helps bring efficiency and effectiveness to management in many ways. Currently, logistics companies use technology to perform certain jobs and purposes. The interaction between human capital and technology in these companies results in high performance. Based on the interviewees, the employees received training periodically, but not perfectly designed and conducted based on ADDIE’s concept. Many business transactions reported were based on information technology; employees were aware of the essential role between humans and IT. However, the capability of IT should still be improved; IT must be strategically planned and realized based on present and future needs. Thus, the interaction between humans and IT should be developed in a more sophisticated manner. In other words, logistics companies in Indonesia should invest more money in technology focusing on future needs and requirements.
The VUCA and the tough business competition drove leaders to prepare to use more advanced IT for fear that they would lose the market. Managers and directors were aware that technology gave the company a competitive edge. They planned to upgrade and update the IT use; however, realizing it seemed to take some time. Based on interviews, the companies’ performance which was measured by their actual versus the targeted standards such as revenue growth, customers’ satisfaction, and employees’ satisfaction index, indicated to be fairly good.
Eventually, the analysis of the in-depth interview revealed the organizational aspects of logistics companies in Indonesia could be described as shown in Table II.
Organizational aspects | Brief description of findings |
---|---|
Environmental dynamism awareness | Most informants were aware of the VUCA environment but did not respond to it strategically. More sophisticated IT system for instance was not adopted to anticipate future needs. |
Organizational learning culture | Openness and creativity were encouraged; employees were free to be innovative. However, this should be better socialized as few employees were not used to it. |
Lean structure | As logistics companies tended to use a hierarchical structure, the process of knowledge sharing was not smoothly done and customers’ demands were not immediately responded. |
Innovation strategy | The innovative strategy was clearly formulated but was not effectively executed as expected. |
Transformational leadership | Most leaders used a transformational leadership style, but it was not appropriately practiced. The individualized consideration process for instance should be improved. |
Technology investment | Investment in IT systems was mostly based on the present needs. Conversely, it should also be based on future needs. |
Human capital development | Human capital was developed through the T and D program, however, it was not entirely based on the ADDIE concept. |
Knowledge sharing practices | Knowledge sharing among employees was adequately practiced, however, it still had to be improved in order to gain better results. |
Organizational effectiveness | Organizational effectiveness was generally not bad although it was achieved with extra effort and work. Corporate performance standards could still be set higher, but to achieve it, the logistics companies should adopt a differentiation strategy supported by sophisticated IT systems, and competent human capital. |
Referring to Table II, it can be concluded that most companies’ leaders were aware of the tough and dynamic environment. They endeavor to anticipate the environment by building a good relationship with all stakeholders, especially the loyal big customers. They offered special prices and payment systems to retain them. Competition was tough. Therefore, they tried hard to build a learning culture that encouraged employees to learn continuously and offer some breakthroughs. Knowledge management was practiced but not as expected. Since the lean structure was not fully applied, they had many difficulties with implementing innovative ideas properly. Therefore, although they tried hard to overcome the barriers by adopting a lean structure more consistently, the result was still not effective if it was not supported by other organizational aspects, such as organizational culture and strategy. Investment in technology should be made carefully and based on the present and future needs.
It was found that all companies reduced their T&D budget significantly, and as a replacement, knowledge-sharing practices were encouraged. However, knowledge management (KM) was not conducted as it should have been due to a lack of knowledge of KM as well as their bureaucratic structure. In fact, companies did not execute knowledge management strategically to share explicit and tacit knowledge. Based on the interviews, it can be concluded that logistics companies should learn more about how to design, implement, and measure knowledge management activities. In addition, knowledge management enablers such as intention, autonomy, and requisite variety, as proposed by Nonaka and Takeuchi (1995), should be made available, and dedicated knowledge officers should be appointed to oversee the knowledge management process more intensively.
Conclusion
This study investigates the practice of organizational learning in a growing logistics industry in emerging markets. Specifically, it illuminates the extent to which logistics firms apply learning culture to improve their effectiveness in a dynamic environment. This is an important venue for academics and practitioners alike since logistics play vital roles in the economic development of Indonesia but are facing considerable challenges due to the archipelagic geography of the country and its diverse capability requirements.
Our data indicate that all of the sampled firms realize the importance of organizational learning aspects, but only a few put their full efforts into optimizing their applications. The analysis leads to the conclusion that logistics firms should enhance the usage of information technology and, at the same time, improve the organizational capacity by refining the human development program and the knowledge management activities. Transformational leadership should be exercised to continuously nurture a learning culture that motivates employees to learn and share knowledge in a supportive, open climate.
The fact that logistics is important but also challenging requires companies in this industry to be innovative. They must adjust and improve their products, systems, and services accordingly. By inculcating openness and learning culture effectively, leaders establish fertile ground for innovation. Innovation has been proven to improve corporate performance (Scaringella, 2016; Tamayo-Torreset al., 2016).
However, given the total number of informants involved in the interviews for this study, generalization of the results should be cautiously exercised. Future studies may follow up with a quantitative method using a larger number of samples so the findings can be more generalizable. Alternate research approaches, such as mixed methods, would help to develop further theoretical understanding and explore the issue more deeply. Therefore, future research should include other organizational aspects such as risk-taking propensity, availability of time for reflection, information transfer and collection (Garvinet al., 2008), and other supportive styles of leadership such as participating and delegating (Franco & Almeida, 2011).
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