Performance feedback and incremental organizational learning: Does social capital make a difference?

Abstract

Drawing on insights from the behavioural and knowledge-based theories of the firm, this study examines the separate and combined effects of performance feedback and organizational social capital on the incremental learning orientation of a set of large multipurpose public service organizations. A positive relationship between performance above historical aspirations and an incremental learning orientation is observed, and a similar connection between performance below social aspirations and incremental learning. At the same time, social capital matters. Trust between key organizational members is positively related to learning, and there is a nonlinear inverted u-shaped relationship between a strong sense of mission and learning. When investigating the combined effects of feedback and social capital it becomes apparent that these vary depending upon the aspect of social capital under consideration. The prospects of incremental learning becoming stronger in the wake of performance feedback appear to be best in organizations with increased inter-departmental coordination, and worst in those with a burgeoning sense of mission. One important implication of the study is therefore that organizations should invest greater resources in cross-cutting initiatives if they wish to learn from performance feedback.