5 Organizing learning relations

In order to identify which organizational conditions facilitates and stimulates employee’s learning and development of useful knowledge for building innovation capabilities, we can commence by resuming what theory can tell us on learning in organizations. From a management perspective at the strategic level it is fundamental to establish appropriate frames facilitating encounters of progressive learning processes and diffusion of useful knowledge.

Applying the perspective of configuring progressive learning relations and communication of useful knowledge, theory on learning in organizations has advanced within two approaches: The learning organization (Senge 1990, Pedler et.al. 1991) and organizational learning (Lave & Wenger 1991). Theories on the learning organization attempt to identify organizational configurations by which management can improve the learning propensity among the employees. In this way these theories belong to what has been called “management driven” learning in organizations (Elkjær 2000). Theories on organizational learning, on the other hand, consider learning as informal, practical related and experience based activities. Learning is situated in so called communities of practice, which are informal organized in relation to comprehension areas and learning practices. Beside the cognitive dimension such communities of practice have an affective dimension and give participants a feeling of identity and social belonging (Wenger 1998). Contrary to the first mentioned organizational configurations they are difficult to manage formally. An important challenge in understanding how to establish appropriate organizational frames of progressive relational learning and diffusion of useful knowledge is to understand the conditions and possibilities of syntheses between the two theoretical approaches on learning in firms: the employer driven and the employee driven (Elkjær 2000).

A way of handling this challenge from the employer driven approach would imply organizing structural frames, which can be expected to facilitate learning oriented interactions between individual, group and organizational level, in a way which allow management to cope strategically with the changing external conditions by developing a continuous and high level of innovative performance. Some organizational principles have in common that they facilitate both purposeful external adjustments and internal innovation performance (Lundvall 2008). Diffusion of useful knowledge and relational learning is organizational supported by integration of functions and cross disciplinary work groups. Systems for collecting employee proposals, quality circles and delegation of responsibility to employees are also of importance for learning as well as external cooperation with customers and suppliers. In addition to use of horizontal channels of external and internal knowledge communication another critical point is how the vertical levels in the firms are supporting relational learning. Here work groups or teams can play an integrative role between individual, group and organizational level. The degree of internal autonomy as well as cross discipline in teams thus has significant influence on individual as well as on collective learning (Nielsen 2015). In the table below the specific organizational principles of importance are related to innovation performance in the two periods of different economic conditions: 20032005 and 20072009.

20032005

20072009

Integration of functions

60,5

57,9

Cross disciplinary work groups

60,1

58,8

Autonomy in work groups

56,2

56,1

Delegation of responsibility

53,3

51,5

Systems for employee proposals

60,3

56,6

Quality circles/groups

57,1

55,8

All firms

52,2

50,5

Table 6 Organizational principles and innovative performance two periods. (percent shares)
Source: Disko 4 and GOPA survey

In both periods a positive relation can be observed between each of the individual organizational principles and innovative performance. At the firm level the individual firms will select different combinations of the principles according to their situation, context and management considerations. In general there is much empirical evidence of the effects on performance of bundling organizational principles (Huselid 1995, Huselid et al. 1996, Wood 1999, Osterman 2000, Nielsen 2004). It is therefore appropriate to proceed analytically by exploring how firms have bundled the organizational principles of framing relational learning in the two periods. 13 organizational principles have been identified as potential important for relational learning and knowledge diffusion in the firm (Nielsen 2004, Nielsen & Lundvall 2006). The implementation of these 13 principles has all been measured in the panel of firms in 2005 and in 2009:

Cross disciplinary work groups

Integration of functions

Delegation of responsibility

Autonomous work groups

Quality circles/groups

Systems for collecting employee proposals

Education sequences tailored to firm’s needs

Long-term educational planning

Cooperation with Danish costumers (on product/service development)*

Cooperation with foreign costumers (on product/service development)*

Cooperation with Danish subcontractors (on product/service development)*

Cooperation with foreign subcontractors (on product/service development)*

Cooperation with universities, knowledge institutions etc. (on product/service dev.)*

* The 2005 measurement of cooperation was not specified on product/service development which is indicated by the brackets

Figure 1 Firm distribution on index of relational learning 2005 (DX) and 2009 (DY)

The two diagrams DX and DY shows the firm distribution of composite index scores for organizational principles of learning used in 2005 (DX) and in 2009 (DY). The index score of each firm depends on the number of organizational principle of relational learning implemented, each weighted after number of employees included or after importance of the principle, according to management of the firm. Both distributions are almost normal, however in different patterns. The differences are caused by variations on use of principles as well as their individual weight in the firm. As we can expect there is a strong and significant correlation between the two distributions (Pearson correlation = 0,473) and a regression of DX on DY shows a significant beta coefficient of 0,452Y and R² of 0,229.

Even though the correlation is strong, it also delivers evidence of a comprehensive organizational dynamic between the distributions of organizational principles of relational learning, measured in the firms in 2005 and 2009. Thus there are more than fifty percent chance of variation in use of the distinct principle and its specific internal weight in the individual firm between 2005 and 2009. As explained the index score of the individual firms is weighted by number of employees included or bye the importance, according to management in each of the firms. For analytical purposes both indexes have been categorized into three groups of firms, representing a high-, a medium and a low score on the index of relational learning organization. This has been done in order to minimize the risk of bias in the results due to multilevel differences in data (multilevel structure).

High

Medium

Low

LO 2005

31,6

32,4

36,0

LO 2009

28,2

37,6

34,3

Table 7 Classification of scores on index of learning organization (LO) into three categories (percent horizontal)

The relation between the two grouped indexes (LO 2005 and LO 2009) is shown in the table below.

LO 2009 High

LO 2009 Medium

LO 2009 Low

LO 2005 High

55,8

31,4

12,8

LO 2005 Medium

19,3

46,6

34,2

LO 2005 Low

10,6

35,2

54,2

Table 8 Relation between the categorical indexes LO 2005 and LO 2009 (percent horizontal)

χ2 P = 0,000 Gamma = 0,574

A high dynamics between the levels of relational learning principles organized can be observed in the firms, when we compare the status in 2005 with its context of high economic activity and the status in 2009 with depressed economic activity. Among the firms with high level of learning organization (LO) in 2005, 56 percent have maintained high level in 2009 and 13 percent has declined to the lowest level in 2009. Among the firms with medium learning organization in (LO) 2005 47% has maintained this status in 2009 but more than one third has increased their use of relational learning principles to high level. Only 11 percent of the firms in the low category of 2005 has increased to high level in 2009 and a little more than one third of these firms have developed their principles up to medium level in 2009.

As mentioned it is a cardinal point in the theory of organizational learning that learning among employees is informal, practical related and experience based. It is therefore very interesting to explore the relation between the management driven development of learning organization and the occurrence of organizational learning: Does the frames of organizational learning provide leeway for communities of practice where knowledge related to functions, products and services can be generated? The idea is to set focus on the propensity of the formal structures as nourishing or nudging environment of more informal processes of learning in the relations of the firms and the transformation of tacit knowledge to explicit knowledge in order to enhance innovation performance (Nonaka & Takeuchi 1995). From the management perspective this can be considered a major challenge in coordinating relations between learning modes and practical knowledge management. Usually communities of practice are organized around certain areas of knowledge and skills, giving the participants a feeling of identity and social belonging. If an inclusive community can develop having participants from various professions or occupational groups new cross occupational knowledge may break through. Similar outcomes can emerge if employees with comprehensive, but diverse, experience foundation relate in a community of praxis. In this way the learning relations of the community will change from novice and experienced to experienced and experienced (Elkjær 2000).

The structural frame of learning organization thus needs to be complemented with a culture of cross functional and cross occupational learning if the idea of combining the management and the employee driven learning approaches should be synthesized in the firm. Both management and organization should be used consciously as relational drivers of continuous development of skills. By allying both formal and informal relations consciously in problem solving and relational learning, a process of inter-subjective competence development (Jensen & Prahl 2000) can be inaugurated. We have asked management how important this relational learning is in order continuously to develop the competences of the employees in the firm. Focus is set on importance of sparring between management and employees and between individual employees, on job rotation and on team organization, as well as on promoting cooperation and networking across divisions and groups. In the table below the importance of these drivers of relational learning nourishing inter-subjective competence development is related to high level of learning organization and the percent difference to low level of learning organization (in brackets).

LO high 2005 (diff. LO low)

LO high 2009 (diff. LO low)

Sparring with management etc.

68,5 (35,0)

75,3 (39,2)

Planned job rotation

17,3 (9,6)

23,5 (17,4)

Team organization

66,7 (42,8)

61,7 (46,5)

Cooperation and network

64,9 (48,7)

67,3 (51,6)

Table 9 Decisive or high importance of relational learning for continuous development of employee’s competence in firms with high level of organizational learning 2005 and 2009 (percent shares).
Source: Disko 4 and GOPA survey

The general observation from the table is that management recognizes the potentials of organizing work process with the intention continuously to develop the employee’s competences in firms with high level of learning organization (LO). This seems to be a growing trend of praxis between 2005 and 2009, apart from organizing work in teams with learning intentions. Perhaps the most interesting observation, however, is that the percent difference between proportions in high level and low level learning organizations are increasing. This indicates that management in high developed learning organizations become much more conscious of the potential of inter-subjective competence development and relational learning in 2009 with its context of economic slump. This consciousness may have influence on the innovation performance. We thus expect innovation performance to be positively related to the levels of learning organization and we will test this relation in logistic models using the low level LO as baseline and controlling for sector and size of the firm. We shall test two models for 2005 and 2009 in order to understand the nature of relation between learning organizations and innovation performance during economic upturn and downturn. Model 1 includes all 13 organizational principles and Model 2 includes only the organizational principles and educational planning without the 5 principles of external cooperation (on product/service innovation).

2005

2009

Model 1**

Model 2***

Model 1**

Model 2***

High developed LO (2005)

6.416*

4.437*

5.007*

4.202*

Medium developed LO (2005)

2.558*

2.085*

2.707*

1.655*

Manufacturing

0.559

0.731

0.705

0.852

Construction

0.174*

0.140*

0.101*

0.108*

Trade & transport

0.629

0.662

0.663

0.773

Finance & Information

1.526

1.388

0.845

0.869

50 – 99 employees

1.288

1.300

1.128

1.119

100+ employees

2.228*

2.353*

2.485*

2.655*

Nagelkerke R

0.277

0.239

0.256

0.241

Table 10 Logistic regression on innovation performance of learning organization level 2005 and 2009, firm sector and size (baseline: Low developed LO; Other services; 149 employees) (odd ratios)
* Significant at 0.00 level
** Model 1 includes organizational principles, educational planning and external cooperation
*** Model 2 excludes the external cooperation relations
Source: Disko 4 and GOPA survey – see appendix for complete models.

Model 1 shows effects of learning organization development including organizational principles, educational planning and external cooperation. The effect of development in learning organization frames on innovation performance is strong and significant in the first period (2005) with its high economic activity. The chances of innovation performance are 6 times higher for highly developed learning organizations and 2.6 times higher for medium developed learning organizations compared to the baseline of low developed learning organization. Also in the second period (2009) with lower economic activities the effects of development in learning organization frames stand out clear and hieratical. For highly developed learning organizations the estimated chance of innovation performance is somewhat lower showing 5 times higher chances compared to baseline. The chances of medium developed organizations are 2.7 higher compared to baseline, which is on level with the first period. It is interesting that model 2 which excludes the external cooperation relations, estimate a parallel pattern of effects, however with important differences related to the two periods measured. In the first period with high economic activity the high developed learning organization has 4.4 higher chances of innovation performance and the medium developed have 2.1 higher chances compared to baseline. In the second period with lower economic activity the high developed have 4.2 higher chances and the medium developed have 1.7 higher chances compared to the baseline of low developed learning organizations. These results seem to indicate that the model embracing only internal organizational principles and educational planning is somewhat more robust against the business cycle than the full model embracing also external cooperation. The core of organizational learning model seems thus to be the internal organizational and educational principles. The external cooperation principles are apparently more exposed to the business cycle. In these findings it is important to consider the methodical explanation that the external cooperation principles was measured differently in 2005 than in 2009, where the last measure focused directly on product or service innovation.