Linking organizational learning and network characteristics: Effects on firm performance

Organizational learning capability has been considered a key factor that explains why and how some firms are more innovative and proactive than others in discovering and exploiting market opportunities to achieve successful performance. In the past decade there has been a considerable growth of the formation of alliances and interorganizational networks in an attempt to improve organizational learning. The impact on firm performance still needs to be examined. Building on organizational learning theory and network theory, this study investigates how certain network characteristics relate to firms' organizational learning capability and what performance outcomes they can achieve from such linkages. A cross-sectional survey was conducted in Thailand and the United States to examine the relationships between four network characteristics and organizational learning capability, and between organizational learning capability and firm performance.; Research results indicate that relational embeddedness relates positively to organizational learning capability, while knowledge/resource redundancy may have a positive or negative effect on organizational learning capability depending upon the types of direct ties. Organizational learning capability is found to have a positive effect on both domestic and international performance, and it also accounts for the relationship between the two network characteristics and firm performance. The implication for managers is that the quality, rather than the quantity, of network relationships is more important for organizational learning. In addition, the relationship between organizational learning capability and international performance is stronger than the relationship between organizational learning capability and domestic performance. This suggests that organizational learning capability is even more crucial in doing international business. It enables firms to produce more new innovative products to compete in highly competitive business environments. Firms should be careful to establish networks of relationships that help increase organizational learning capability so that they can perform successfully in the long run.