Saudi firms' performance dynamics: Organizational learning, innovation, and the dual roles of firm size and type

Abstract

The objective of this research paper is to propose a robust framework for understanding the correlation between organizational learning, innovation, and the performance of Saudi Arabian firms, encompassing both financial and non-financial aspects. Additionally, the study evaluates how factors such as “firm type” and “firm size” influence organizational learning, innovation, and overall firm performance. For this study, we distributed a questionnaire to Jeddah, Saudi Arabia's private firm employees for a year. Analysis involved 815 complete sets, utilizing Structural Equation Modeling (SEM) through Confirmatory Factor Analysis (CFA) to explore relationships among latent variables via path analysis. Organization learning significantly enhances both financial and non-financial performance. Additionally, innovation positively influences firm performance. The combined impact of organizational learning and innovation strongly influences overall firm performance. Introducing the mediating variable "type of firm" enhances the relationship between organizational learning, innovation, and firm performance, as depicted in Model 2. The result of path analysis shows that “firm size” as moderating variable is significantly negatively related with innovation and firm performance. This study contributes by exploring the interplay of organizational learning, innovation, and their impact on firm performance, particularly within the emerging Saudi context, enhancing existing knowledge.