The critical role of effective organizational learning to improve firm’s innovation and performance in a market turbulence condition

Abstract

Purpose The purpose of this study is to identify the effects of market turbulence as a moderating construct in relation to effective organizational learning on the company’s innovation and performance as well as on the antecendent of facilitative leadership competence. Design/methodology/approach This study used a cross-sectional and correlational research design. The period of data collection took place between March and May 2019 for three months. The questionnaires were distributed to 350 people who were randomly selected in the metal small and medium enterprises in Tegal district, Central Java, Indonesia. Analysis was conducted through the analysis of structural equation modeling (SEM). Findings Facilitative leadership competencies have a significant effect on effective organizational learning. Facilitative leadership competencies can support the learning climate and develop mechanisms for transferring learning from individuals and teams into organizational knowledge and experience. There is also an influence of organizational learning on the company’s innovativeness and the company’s performance. Contingency factors can be applied in situations that are always experiencing a change in turbulence Research limitations/implications This study contributes to the deepening of understanding of facilitative leadership concept and highlights the importance in the success of building effective learning, as well as its relationship with innovation performance and business performance. Practical implications This finding helps the management to understand the market forces and their impact on the company’s innovation and performance. In this case, the leader plays an important role in fostering a culture of learning, changing the habits and ways of working so that they are ready to support the organizational culture of learning. Originality/value Developing a mechanism for transferring learning into organizational knowledge is very important because organizational learning is believed to be an important strategy in an organizational learning process. This is particularly true in a rapidly changing environment, as it can create business resilience.