Organizational Learning and Performance in Two National Cultures: A Multi-group Structural Equation Modeling Approach

Abstract

This chapter examines the impact of organizational learning on organizational performance in two countries. Using a multi-group structural equation modeling approach on data from 203 Slovenian and 202 Croatian companies, it tests the impact of the organizational learning process on financial and non-financial performance (NFP). The results show consistent findings between both countries under investigation (which vary only in terms of effect strength). First, the organizational learning process connects information processing with behavioral and cognitive changes. Second, organizational learning has a very strong direct impact on NFP (reflecting performance from employee, supplier, and customer points of view). Third, the effect of organizational learning on financial performance (measured in terms of return on assets and value added per employee) is also positive and strong, but indirect and exhibited through NFP. Finally, no direct effect on financial performance has been observed in any of the two cases. This paper advances the theory and practice of organizational learning by uncovering one specific aspect of the context in which organizational learning processes occur. It is the first of its kind to control for the contextual variables of national culture and economic development regarding the organizational learning – performance link.