A Proposal for a Standard With Innovation Management System

3. Hypothesis development
İpek Koçoğlu; Salih Zeki İmamoğlu and Hüseyin İnce
3.1 The relationship between OLC and innovation
Several studies in the literature argue that OLC is positively related to innovation (Calantone et al
2002; Hurley and Hult, 1998). Most studies consider that learning injects new ideas and strengthens
the creativity and the ability to discover new opportunities, so it supports the presence of innovation
(F.J. Lloréns Montes et al, 2005: 1160). Most successful innovations are the result of gradual changes
in concepts and procedure implemented continually over time (Liao et al, 2008: 185). This gradual
process relies on the creation, search, acquisition and sharing of knowledge which in turn will provide
organizational learning and will constitute the base for the successful innovation. Although literature
abounds of researches implicitly suggesting the positive leveraging power of OLC on innovation there
is still a lack of empirical investigation between the two concepts (Jimenez-Jimenez and Sanz-Valle,
2011). OLC is an intangible and non-transferrable resource which is firmly grounded in organizational
processes (Santos-Vijande et al., 2012). OLC improves innovation performance through
strengthening the interactions among organizational members and departments and exchange
between members and artifacts such as processes and values (Alegre and Chiva, 2008). Indeed
innovative outcome is achieved through clear, fast and focused communication of knowledge across
internal boundaries (Goh, 2003; Baker and Sinkula, 1999) as well as its absorption from external
environment (Cohen and Levinthal ,1989). For instance, as the exchange of ideas and collaborative
action increases among employees the hierarchical organizational structure is shifted towards a
participative decision making which increases commitment to innovate by decreasing resistance to
change and allowing the risk-sharing between all related parties (Mat and Razak, 2011). As also
indicated by Garcia Morales et al. (2007) "organizational learning performs an essential role in
innovation by supporting creativity, inspiring new knowledge and ideas, and increasing the potential to
understand and apply them, thus developing organizational intelligence and an innovative culture
(Garcia-Morales et al., 2011). OLC encourages the establishment of a learning culture which in turn
dedicates all of its members to translate knowledge and learning into innovative outputs (Hung et al,
2010).Camison and Villar-Lopez (2011) refers to the employee empowerment and the use of work
groups (i.e. workplace innovations) enabled through OLC. Further, product and process innovation
based on a full understanding of customer needs, competitors’ actions, and technological
development is made possible by organizational commitment to learn (Calantone, 2002). Firms
having higher capacity to learn will be less likely to miss market opportunities since they have the
necessary knowledge to anticipate and act according to the customer requirements, as well as track
and understand competitors'' strengths and weaknesses better (Garcia-Morales et al., 2011).
Moreover, based on the argument that innovation is achieved via the knowledge accumulation at the
organizational units through exploration and exploitation, we posit that OLC facilitates innovation by
balancing between the variation and selection which is equivalent to the process of balancing
between exploration (i.e. generation of new alternatives) and exploitation (i.e. selection among
routines) (March, 1991). For instance OLC has the potential to explore and exploit knowledge
enabling the organizational members to contribute to business processes by adding value by
developing and utilizing the existing and new knowledge stocks (Prieto and Revilla, 2006). This way
innovation becomes the top priority in firms having high commitment to learning, and a culture based
on open mindedness as well as exchange of knowledge since these are the knowledge-enhancing
and innovation-driving qualities in an organization (Bolivar-Ramos et al., 2012). Therefore:
H1: Organizational learning capability positively influences innovation.
3.2 The relationship between OLC and firm performance
Organizations that embrace strategies consistent with the learning organization are thought to
achieve improved performance (Ellinger et al, 2002; Calantone et al, 2002). The dynamic capabilities
based view of OLC emerging from the knowledge-based view offers insight on the performance
differences of firms (Teece and Pisano, 1994). OLC is considered as a critical factor which enhances
firm performance by many studies in the literature (Carayannis, 2006; Teece et al 1997; Argyris and
Schon 1996; Slater and Narver 1995). However, studies which focus both on financial and nonfinancial
measures of firm performance in the measurement stage of their research still lack among
the literature empirically examining the relationship between OLC and firm performance (Prieto and
Revilla, 2006) with a few exceptions such as Akgun et al (2007), as well as investigating this
relationship along with the OLC-innovation link (Jimenez-Jimenez and Sanz-Valle 2011). OLC
establishes a mechanism through which coordination and combination of resources and capabilities is
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