LEARNING ORIENTATION, INNOVATIVENESS AND FINANCIAL PERFORMANCE IN TRADITIONAL MANUFACTURING FIRMS: A HIGHER-ORDER STRUCTURAL EQUATION MODEL

Abstract

This study examines the relationships among learning orientation, firm innovativeness and financial performance in the context of the Norwegian wood industry. A questionnaire-based survey was sent to the CEOs of firms in the wood industry in Norway (241 usable replies, response rate of 49 percent). Learning orientation and firm innovativeness were conceptualised and analysed as latent second-order constructs by using structural equation modelling. The findings show that learning orientation has a positive effect on firm innovativeness in the traditional manufacturing industry. In addition, learning orientation was found to positively affect financial performance via the full mediating effect of firm innovativeness. Furthermore, firm innovativeness was also found to have an independent positive effect on financial performance. No direct effect of learning orientation on financial performance was found. According to the data, firm age also does not appear to affect the relationship between learning orientation and firm innovativeness.