A VALIDATION OF THE LEARNING ORGANIZATION AS A DRIVER OF

PERFORMANCE IMPROVEMENT
by
David A. Herrera

SHEILLA FOURNIER-BONILLA, Ph.D., Faculty Mentor and Chair

IRVING BUCHEN, Ph.D., Committee Member
DAVID WALL, Ph.D., Committee Member

Kurt Linberg, Ph.D., Dean, School of Business & Technology

A Dissertation Presented in Partial Fulfillment

Of the Requirements for the Degree
Doctor of Philosophy

Capella University
August 2007

UMI Number: 3274577

UMI Microform 3274577

Copyright 2007 by ProQuest Information and Learning Company.
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 2007 David A. Herrera

Abstract
The speed of change in the competitive environment has identified learning as a strategy. This
has developed many attempts to identify learning models that transfer learning from the
individual to the organization in a manner that improves performance. Although there is a
general deficiency of empirical or supportive evidence beyond anecdotal reference, proponents
of the learning organization assume productivity enhancement from the learning organization
construct. This study empirically reinforces the systemic value of the learning organization to
financial and knowledge performance within a narrow cross section of the record company
industry. Through a review of learning, systems theory, and organizational learning constructs,
the learning organization was shown to improve both sales and market share performance. The
study indicated differences in the relative benefit of each variable of the learning organization in
relation to performance, as well as the size and stability of the internal and external
organizational environment. As organizational size increased, learning impedances that inhibit
knowledge and financial performance also increase. This suggested that practitioners should
adopt varying levels of intervention that target differing stages of organizational development
and learning elements. Additionally, the learning climate within an organization also varied
when perceived by differing authority levels of the respondent. This indicated that to avoid bias
and gather an accurate overview of an organization, organizational assessment should be
implemented throughout the organizational layers. Learning organizations were generally shown
to create value and foster improved performance through generative learning, suggesting that the
learning organization can lead adaptive strategies that can engage transitional marketplaces

Dedication
This is dedicated to my patient and loving wife, Kim. Her support, sacrifice, and love are
appreciated beyond any manner that can be described on paper. I also wish to dedicate this
research to all my teachers and mentors, whose patience encouraged and opened the doors to
learning as a lifetime pursuit.

iii

Acknowledgments
I wish to acknowledge the giants in the field of learning organizations on whose shoulders I
stand. I especially wish to acknowledge Dr. Fournier-Bonilla for her patience and tenacity, and
all my committee members, as well. Without all of their help and direction, I could not have
completed this work.

iv

Table of Contents
List of Tables

viii

List of Figures

ix

CHAPTER 1. INTRODUCTION
Introduction to the Problem

Learning and Performance

Problem Statement and Purpose of the Study

Research Questions

15

Methodology

16

Important Benefits

21

Limitations and Assumptions

22

Summary

23

Organization of the Study

25

CHAPTER 2. LITERATURE REVIEW

Introduction

27

Parent Discipline: Open Systems Theory

34

Organizational Learning Orientation

40

The Learning Organization

47

The Learning Organization: Peter Senge Overview

48

Watkins and Marsick Construct

57

Assessment Tool

60

Analytical Models of Organization Learning Assessment with the DLOQ

68

CHAPTER 3. METHODOLOGY
Introduction

72

Research Questions

72

Study Design

73

Sampling Design and Population

75

Unit of Measurement and Subjects

76

Data Collection

77

Instrument Validation

79

Internal Validity of Study

82

Analysis of Data: Conceptual Design

84

Ethical Considerations

87

CHAPTER 4. DATA COLLECTION AND ANALYSIS

Introduction

89

Data Collection

91

Research Question and Results

91

Research Question 1

92

Research Question 2

96

Research Question 3

99

Research Question 4

103

Research Question 5

106

Research Question 6

111

Research Question 7

115

Research Question 8

118
vi

Research Question 9

124

Research Question 10

132

Results Summary

137

CHAPTER 5. SUMMARY, DISCUSSION, IMPLICATIONS, AND RECOMMENDATIONS

Introduction

143

Summary Discussion of the Findings

145

Implications for Research and Practice

191

Recommendations for Further Study

194

REFERENCES

197

APPENDIX. DIMENSIONS OF THE LEARNING ORGANIZATION QUESTIONNAIRE

210

vii

List of Tables
Table 1. Descriptive Analysis of Elements of the Learning Organization

93

Table 2. Embedded Systems of the Learning Organization

93

Table 3. Mean Scores with Percentage Change by Label Size

97

Table 4. Correlation of Learning Elements to Financial and Knowledge Performance 100

Table 5. Correlation of Individual Learning Organization Subconstructs

101

Table 6. Cumulative Learning Organization as Independent Variable

104

Table 7. Simple Regression Coefficients of the Dimensions of the Learning Organization with
Knowledge Performance
106
Table 8. A Stepwise Forward Regression Optimizing Model Fit

110

Table 9. Stepwise Forward Regression of the Learning Organization Variables

111

Table 10. Simple Regression Coefficients of the Dimensions of the Learning Organization with
Financial Performance
112
Table 11. 2004-2006 Change in Sales

125

Table 12. Year End National Summary of Unit Sales

132

Table 13. Year End National Summary of Market Share

133

Table 14. Change for Yearly Percent of National Market Share (Source: SoundScan) 133
Table15. Market Share for Nashville Market

134

Table 16. Percentage of Change for Nashville Market Share 2004-2006

134

viii

List of Figures
Figure 1. Mental map of methodology

17

Figure 2. Components of the congruence model

36

Figure 3. Comparison of Watkins and Marsick with Senge

58

Figure 4. Watkins and Marsick model of the learning organization

59

Figure 5. Model of learning action imperatives

61

Figure 6. LISREL estimates of structural model coefficients

81

Figure 7. Demand curve for the transfer of information to the organization.

95

Figure 8. Category scores for the elements of the learning organization

98

Figure 9. Primary linkage of learning organization to knowledge performance

102

Figure 10. Multiple regression of the learning organization and knowledge

performance

107

Figure 11. Multiple regression of the learning organization and financial

performance

114

Figure 12. Rating of learning organization by authority levels of management

116

Figure 13. Variance as a percent from scale average

117

Figure 14. Comparison to combined financial and knowledge as dependent

variable

119

ix

CHAPTER 1. INTRODUCTION

Introduction to the Problem

A transformational change in business is occurring. Many of the traditional
strategies that fueled regional success are moving into global economies (Christensen,
Anthony, & Ross, 2004; Hitt, Keats, & DeMarie, 1998). The distinctive competencies
and internal resource advantages of the organization, once considered sustainable longterm efforts, are moving toward shorter lifecycles that are cut short as global markets
lower labor costs, and allow competitors to swiftly replicate each other's core strengths
and competencies. The leveling effect of global competition increasingly accelerates
change, as products are copied, manufactured, and shipped anywhere in the world in a
matter of days (Zachary, 1995). The fuel of technological innovation has further
accelerated change as new product life cycles have never been shorter, with 6 months as
the norm in some high-tech industries (Makridakis, 1989; Ruggiero, 1997). Older
complacent products are pushed aside for newer innovative products that find both
untapped and over-serviced market niches where they can grow to establish strongholds
that eventually surpass existing mainstream markets (Christensen, 1997; Sheremata,
2004). This environmental turbulence has led to generally diminishing periods of
stability, with organizations struggling to find new outlooks than might quickly adapt or

improve the organizations ability to innovate (D'Aveni 1994, 1998; Eisenhardt &
Martin, 2000).
This acceleration of change is evidenced in many industries, but perhaps none are
as visible as the music industry, which is undergoing marketplace upheavals as new
technologies threaten to undermine its traditional core revenue stream, the selling of
compact discs (CD's) in traditional brick and mortar retailers. The digitalization and
downloading of music, once considered a mere nuisance, is now recognized as lifethreatening to the industry. More than 53% of teenagers currently rely on downloading as
a primary means of acquiring music (Duncan & Fox, 2005) and a 2004 study by the
National Association of Retail Merchandisers shows that hard copy CD purchases are as
foreign to younger music consumers as perhaps vinyl albums are to most current music
purchasers ("Getting closer to the truth," 2004). As teenage sales trends decline, further
erosion of traditional sales is expected, as these same consumer segments age and
younger demographics demonstrate even less likelihood to purchase in traditional retail
(Premkumar, 2003). The entire market is shifting as consumers embrace newer platforms
for the delivery of music, such as faster digital downloads cell phone streams and ring
tones, Ipods and MP3 players, and digital satellite radio receivers.
This exemplifies how traditional competencies of the music industry, such as
compact disc sales, are rapidly being displaced by new technologies. Combined with the
further cumulative effects of piracy and the unauthorized uploading of recordings, the
music industry estimates a loss of $4.2 billion to piracy worldwide ("One in three music
discs," 2005; Palenchar, 2005). This has sent the music industry scrambling to shift
techniques in the way an organization competes and adapts to this tremendous change in
2

the environment. Although the record company industry is not indicative of all business
models, it does demonstrate an example of a volatile marketplace that is in need of
change.
Some strategic writers use these types of examples as evidence that traditional
long-range competency-based strategic outlooks are unsustainable, and that new
competitive organizations must focus on rapid adaptation, innovation, and learning to
respond to market changes (Adair, 2002; Christensen, 1997, 2004; D'Aveni, 1994, 1998;
Senge, 1990). If this is true, then the traditional strategic outlooks that build on an
organization's ability to be competitive through long-term positioning or resource
development are perhaps ill equipped to address the need for rapid change and speed
(e.g., Hamel & Prahalad, 2005; Miles & Snow, 1978; Porter, 1980, 1985).
Some writers have maintained that innovation is the competitive edge that will
spur new markets and increase market growth beyond the incremental improvement
common to process improvement (Christensen 1997; Hamel, 2000; Ng, 2004). Hamel
(2000) wrote that if today's organizations cannot innovate, innovators will move to
control the market. According to Higgins (1995), drivers of innovative organizations are
team collaboration, shared knowledge, reward for creativity, allowing mistakes, and
creating new opportunities proactively.
Organizations face several strategic challenges, mostly related to increasing levels
of turbulence in their environments: more intense competition, an increasingly
global marketplace, rapidly changing technology, a more diverse work force, the
transition from an industrial to a knowledge-based economy, more demanding
customers, and a more demanding group of other constituents. (Higgins, 1995, p.
27)

Learning as a competitive advantage is also linked to innovation by Montgomery

and Scalia (1996, p. 439) who wrote, "Learning must surpass the rate of change if an
organization is to survive over the long term." Kaiser and Holton (1998) hypothesized
that learning organizations lead to innovation. Watkins and Marsick (1993) wrote that
"the promise of continuous learning is innovation... innovation is at the core of
productivity" (p. 25). Christensen (2004) further wrote that advantage cedes to
organizations that best move, learn, and adapt within a flexible outlook. If learning and
adaptability is construed as advantage, then perhaps the learning organization is the
model that can facilitate the organizational capacity to learn, thus facilitating learning as a
sustainable competitive advantage (Argris 2004; Senge, 1990). Many of the same drivers
and dynamics defined by Higgins (team collaboration, shared knowledge, creativity, and
allowing mistakes) include the elements that make up a learning organization (1995).
What, then, is the learning organization, and is it the new competitive advantage?
The learning organization (LO) is an organizational conceptualization or model.
The LO model is an organizational construct that was created to understand and imbed
systemic learning into the organization. The learning organization is defined as an
organization that continuously learns and adapts itself; a continuous system within the
organization at all levels where systems for capturing and sharing knowledge are part of
the organizational framework (Senge, 1990; Watkins & Marsick, 1992, 1993). Many
writers of organizational learning generally agree with the overall concept of the learning
organization presented by Senge and by Watkins and Marsick, albeit with small
differences.

Argyris and Schn distinguished learning as single-loop and double-loop learning

(1978, 1996). Single-loop learning reflects actions modified according to the difference
between expected and actual outcomes. In double-loop learning, individuals, groups, or
organizations question the values, assumptions, and policies (governing variables) that
led to the actions in the first place. According to Argyris and Schn (1978), if actions are
modified by double-loop learning, then second-order learning has occurred: a deeper,
systemic based learning. Double-loop learning is thus not process-centered, but systemscentered as it incorporates a broader reference perspective. Argyris (1982) further defined
organizational learning as the ecological system that facilitates or inhibits learning
activities.
Huber (1991) defined the learning organization not as individual learning, but as
four general elements: knowledge acquisition, information distribution, information
interpretation, and organizational memory. Huber embraced a more systemic view of the
learning organization, based on organizational process. Generally, learning begins with
the individual, moves to the team level, and then progresses to the organizational level
through a structure that enhances and encourages learning within the organization
(Crossan & Vera, 2004; Iles, 1994; Marquardt, 2002; Senge, 1990; Watkins & Marsick,
1993).
The value of the learning organization is that it is purported to create new and
expansive patterns of thinking by which the organization's collective aspirations are set
free (Senge 1990). This is implemented when all members work toward the continuous
transformation of the organization and the improvement of all systems with reference to
the external environment, that is, customers and markets (Pedler, Burgoyne, & Boydell,
5

1991). Learning organizations are collaboratively conducted and "direct change with
shared values" (Watkins & Marsick, 1992, p. 118).
Slater and Narver (1995) wrote that the fuel for the learning organization is
collective agreement and purpose that create superior outcomes, such as new product
success, customer retention, superior growth, and profitability. They wrote that this is
through the learning organization's ability to focus on understanding and satisfying the
expressed and latent needs of customers through new products, services, and a strong
market orientation (Narver, Slater, & Tietje, 1998; Slater & Narver, 1998). There are
many additional references to the elements of the learning organization within the
literature, with similar typologies of knowledge acquisition, culture of learning, open
information distribution, external environment orientation, and systemic learning
(DeGues, 1988; Fiol & Lyles, 1985; Hedberg & Jonsson, 1989; Huber & Daft, 1987;
Levitt & March, 1988; Lundberg, 1995; Nystrom & Starbuck, 1984).
Although the construct of this study is based on the writings of Yang, Watkins,
and Marsick (2004), their work is based on the general foundational work of Peter
Senge's study of the learning organization (1990). Senge coordinated the various
constructs of the learning organization into a system of strategies for organizational
improvement as an overall systemic concept from which research continues to develop.
Senge went beyond the adaptive resolution of expected results versus actual results as a
model for learning, and wrote that the creation of new patterns of thinking that can
modify our behavior and learning capacity is both innovative and generative, or able to
create beyond incremental improvement; learning that leads to a capacity to innovate
towards the future (Senge, 1990, p. 14). Senge (1990, p. 3) stated,
6

We can build learning organizations where people continually expand their

capacity to create the results they truly desire, where new and expansive patterns
of thinking are nurtured, where collective aspiration is set free, and where
people are continually learning how to learn together.

In order to achieve this goal, Senge (1990) identified five organizational

disciplines needed to facilitate the goals of a learning organization: personal mastery,
mental models, shared vision, team learning, and systems thinking. Although descriptive
narratives of the value of learning propagate the literature, this then begs the question of
how the various learning constructs actually affect performance of an organization.

Background of the Study: Learning and Performance

Even though there is much literature on learning organizations, it is primarily
based on either (a) the conceptualization of the learning organization model, (b) the
evaluative methodological tools that can help identify and promote the quality of learning
processes inside organizations, or (c) on the process by which organizations attain the
ideal of a learning organization (Easterby-Smith & Araujo 1999; Finger & Brand, 1999).
Jacobs (1995) reported that the learning organization literature needs empirical validation
that demonstrates a direct link from adoption of learning organization principles to
performance improvement. As he overviewed the literature, he also determined that, apart
from anecdotes, few studies supported or demonstrated the relationship between
individual and organizational learning, and there was little discussion of how the
individual benefited.
Ulrich, Jick, and Von Glinow (1994), in another overview of the LO literature,
focused on the development and limitations of the learning organization. They
7

determined that as the learning organization had become an organizational panacea, there
was a lack of clarity in the language and metaphors used to describe a learning
organization; that there was need to test and assess actions that lead to improved learning
capability. They claimed that the need exists to design models that identify and test what
managers can do to make learning happen.
Management actions to improve learning capability need to be identified, tested,
and assessed through multiple research methods. The challenge we see is to
design models that identify and test what managers can do to make learning
happen. To date, there have been far more "thought papers" on why learning
matters, than empirical research on how managers can build learning capability.
(Ulrich, Jick, & Von Glinow, 1994, p. 58)
This exemplifies the need for empirical research to understand the linkage of the
learning organization to operational performance.
A review of the literature of the proponents of the learning organization suggests
improvement through anecdotes. This was compounded by the fact that many businesses
mentioned overtly as learning organization models periodically break down (Solomon,
1994; Watkins & Marsick, 1993). Specifically, Ford's Lincoln Continental division broke
product development records, lowered quality defects, and saved millions. However,
despite Ford's success with LO principles, director Fred Simon was asked to take early
retirement or forced out by managers uncomfortable with the learning organization
(Dumaine, 1994). Dumaine also cited that GS Technologies, who used Senge's
techniques to get labor and management to listen to each other, did not spread its use fast
enough, and thus caused fear and suspicion among excluded workers.
Even Senge had some discouraging words when asked by O'Neil (1995) whether
schools are learning organizations. He said: "definitely not" (p. 20). He found that most
8

teachers are oppressed by trying to conform to rules, goals, and objectives. Schools are
built on the model of passive ingestion of information, and the educational enterprise is
fragmented and stratified.
Both the nature of anecdotal evidence for the learning organization and the
general lack of empirical evidence cited by commentators on the learning organizational
model show a deficiency in the empirical validation of a causal model that can validate
the construct of the learning organizations' effect on performance, including perhaps the
interrelationships of the independent learning variables. This is presumably due to the
intuitive nature of the argument: empowerment and dialogue induces better learning, thus
learning facilitates behavior that leads to improved performance. If behavior is modified
only when actual outcomes do not meet with expected outcomes, or if process is
modified based on reference to larger environmental concerns, then general improvement
outcomes will occur (Argyris, 2004; Garvin, 2000; Ross, 1995; Senge, 1990). Learning
organization proponents thus state that learning orientation strategies and behaviors
enhance individual and organizational learning, which foster performance improvement
(Baker & Sinkula, 1999; Ellinger, Ellinger, Yang, & Howton, 2002; Slater & Narver,
1995).

Problem Statement and Purpose of the Study

In spite of writings that purport that productivity is linked to the learning
organization construct, there are many who cite the lack of objectivity or supportive
evidence (Ellinger et al., 2002; Jacobs, 1995; Yang et al., 2004). Burke (2002) wrote that
within organizational change and learning literature, there is a shortage of validated
9

measurement of the theoretical constructs. Smith & Tosey (cited in Ellinger et al., 2002)
noted that because evidence that links the learning organization constructs to return on
investment (ROI) or to other financial barometers is hard to come by, it is difficult to
convince business leaders to risk their money on implementing the elements of the
learning organization.
The issue of empirical evidence and validation is basic to any study as a response
to any theoretical construct, especially when the results are assumed. The assumption is
that the learning organization positively improves performance, and that all of the
elements of the learning organization recognized in the literature are equally effective for
performance improvement. This precept needs to be further validated with empirical
research, especially if the learning organization is to be accepted as a strategic
competency for change (Christensen, 1997; Christensen, Anthony, & Roth, 2004;
D'Aveni, 1994, 1998; Senge, 1990). This then is an important research challenge, to
quantitatively establish the relationship between the learning orientation concept (in this
study, as articulated by Watkins and Marsick) and a firm's performance. Does the
learning organization affect organizational performance positively?

Problem Statement
Can each of the accepted constructs of the learning organization be shown to
empirically affect the performance of an organization? Additionally, do the levels of the
self-reported existence of these learning organization constructs differ, based on
organization size and respondent authority level within the organization?

10

The purpose of this study was to empirically assess the relationship between the
learning organization constructs and reported financial performance, both from internal
self-assessed measurement, and from comparison to external, secondary financial
measures. This survey data was compared to external data, as well as to levels of
authority of the survey participant and size of the organization. This researcher
speculated that, as the nature of empowerment, collaboration, and general learning
culture is based on the mental model speculated by Senge (1990), the existence of the
learning orientation constructs may differ, dependent on the authority level and size of
the organization.
This study also reviewed the concept and construct of organizational learning,
drawing from recognized writings in the literature that reflect systems theory and
organizational learning constructs, and then determined the effectiveness and correlation
between the separate elements and constructs of the learning organization. Additionally,
there were no studies addressing the variance of the learning organization construct when
measured by managerial authority level and size of the organization. This study
contributed to the existing literature with new information by further analyzing the
perception or existence of the learning organization when measured by levels of authority
such as administrative, managerial levels, size of the organization, and finally contribute
further to the general validation (if indicated) of each of the learning organization
construct and its construct relationships.
If radical changes are shifting the marketplace; created by the leveling effect of
increasingly rapid globalization and technology development, a procedure for change or
adaptation to the marketplace was needed. Older strategies based on resource positioning
11

have been criticized as minimizing the intentions of aggressive competition, innovation,

and shifts in consumer demand (Christensen & Overdorf, 2000; Christensen, Anthony, &
Roth, 2004; D'Aveni, 1994). Mintzberg & Lampel (1999) commented that traditional
focus on economic factors is due to a penchant for quantifiable data-which ignores the
important elements of innovation, social, and political forces that shape the marketplace.
With this in mind, D'Aveni (1994, 1998) emerged to define hypercompetition on the
premise that developing globalization and technology combine to create turbulent
environments where firms only have temporary, unsustainable advantage. D'Aveni
posited that technology, aggressive global competition, and instant communication have
leveled the competitive environment, rendering all core strengths obsolete in a short time.
Christensen and Overdorf (2000) argued that most new strategic innovations start
out as small, low-margin businesses that eventually grow to capture a large share of the
established market. In other words, a large-scale traditional SWOT analysis fails to
identify these threats, since many upstart technologies initially capture a smaller market
share than organizations wish to pursue. Hence, traditional strategic analysis favors large
organizations, economies of scale, and market size (Charitou, et al., 2003; Mintzberg,
1994). This shifts strategic focus from long-term sustainable advantage to short-term
goals as the means for long-term advantage. Therefore, greater returns often go to an
organization that does not pursue strategy as a long-term quest for competencies, but that
instead pursues aggressive short-term strategies that disrupt the status quo (D'Aveni,
1994, 1998; Hamel, 1996). The new strategic process is perceived as an adapting and
maneuvering process that allows managers scan the entire market at all levels, then to
"make decisions as late as possible, consistent with the information available and needed"
12

(Mintzberg, Ahlstrand, & Lampel, 1998; Quinn, 1980; Quinn, Anderson, & Finkelstein,
1992).
The system that can embrace change throughout the entire organization, as well as
spur innovation for new markets, is speculated as the learning organization (Maria &
Watkins, 2003). "Learning must surpass the rate of change if an organization is to survive
over the long term" (Montgomery & Scalia, 1996, p. 439). The promise of continuous
learning is innovation, and innovation is at the core of productivity (Watkins & Marsick,
1993). Learning allows an organization to respond to a dynamic environment (Kaiser &
Holton, 1998). If the learning organization can outpace competitors by improving
advantage or creating new advantages, then organizational learning can be a tool used to
devalue the incumbent's advantages over time. But this is precipitated on the assumption
that the learning organization facilitates improved performance.
In order for this premise to go forward, there must be substantive empirical
research that attempts to quantify the belief that the learning organization principles are
actually substantively and positively related to performance improvement. Without this
foundation, there is no rationale for an organization whose drivers are based on general
financial health to pursue any type of change in outlook or structure. By empirically
validating the general model of the learning organization and studying how each
subconstruct of the learning organization affects performance, an organization might be
better able to both rationalize the integration of the learning organization model, and to
emphasize or delete elements that do not help the organization. This can then lay the
groundwork for a prioritized system-level intervention that delivers the greatest benefit

13

by identifying the drivers of the learning organization construct that best fit its specific
needs.
Additionally, one aspect of this study was the examination of the difference in
ratings for the constructs of the learning organization as reported by differing levels of
authority within the organization. This study separated response types by executive, midlevel management, and general administration or operations. Differences shown to exist
in the levels of the LO within the company, a possible bias in existing studies, which
focus on managerial and executive measurement, might indicate a need to differentiate
assessment studies that seek to measure the levels of learning in an organization by
authority level. These differences in self-reported measurement might also begin to
suggest that practitioners seeking to implement organizational change in creating a
learning organization construct may need to target varying levels of authority differently.
Finally, although this study was targeted on the music industry due to its
accessibility and its need for innovation in a changing marketplace, the foundation of this
study is a broader understanding of how each factor related to the construct of the
learning organization directly and indirectly affects organizational performance.
Empirical assessment of the benefits of a learning organization is still in the early stages.
This study contributed to the growing literature that either substantiates or refutes
organizational learning by comparing the relationships within the learning organization's
subconstructs to their effect on financial and knowledge performance.

14

Research Questions
To better understand the construct of the learning organization, this study was
designed to develop and validate each element of learning organizations, as suggested by
Yang et al. (2004). The purpose was to generally explain the interrelations among items
included in the survey instrument and then examine the relationships between learning
elements measured on the survey instrument and organizational performance outcome
variables. To explore the dimensions of authority level and size of organization relative to
learning orientation, this study separated responses by executive, mid-level management,
and general administration/operations, as well by the size of the organization. The
following questions specifically served as guides for the study:
1.

To what extent do record companies perceive their organizations as

learning organizations in relation to Watkins and Marsick's seven
dimensions of the learning organization?

2.

Are there differences in the perceived ratings of record companies in

relation to Watkins and Marsick's seven dimensions of the learning
organization according to organization size?

3.

How is a firm's degree of learning orientation related to self-reported

financial and business performance?

4.

Are there differences in financial and business performance related to

organization size?

5.

What are the relationships of each learning orientation subconstruct to

knowledge performance?

6.

What are the relationships of each learning orientation subconstruct to

financial performance?

7.

To what extent do authority levels of management and operations differ in

their self-reported levels of the learning organization with regard to
Watkins and Marsick's seven dimensions of the learning organization?

15

8.

What is the relationship between the firm's self-reported overall business

and financial performance and each of the seven dimensions of the
learning organization when measured against sales growth over a 2-year
span?

9.

What is the relationship between the firm's self-reported overall business

and financial performance and each of the seven dimensions of the
learning organization related to organization size?

10.

Do these correlations to performance exist when measured against an

increase in market share using external sales data?

Methodology
This study furthered existing research by examining the relationship between the
constructs of the learning organization as performance enhancement in relation to
empirical performance measures. This study also took each learning construct and
examined its relative contribution to growth in market sales, as well as to growth in
market share. (See Figure 1 for mental map of methodology.)
The study design was a quantitative-fixed design. This study used correlation,
ANOVA, and multiple regression techniques to analyze data gathered through a survey
instrument that examined learning constructs of the learning organization. The degree of
learning orientation was administered to the limited domain of the Nashville, TN music
industry, with data solicited from record companies through e-mail invitation, hard copy
invitation, and a general invitation directly using the local music industry database by
Music Row magazine.

16

Are there
differences in LO
perspective
relative to size?
Indie/Small
Record
Company
Major Indie

Major Record
Company

Information
Flow

Learning Organization
(DLOQ Survey Tool)

Elements of LO
*Continuous Learning
*Dialogue/Inquiry
*Team Learning
*Empowerment
*System Connection
*Embedded ness
*Leadership

How do LO
elements differ
repsective to size?

Self Reported
Outcomes
*Knowledge
Performance
*Financial
Performance

External Validation
*Soundscan Sales Reports
*Growth in Market Share
*Growth in Sales
External Data
from DLOQ

Figure 1. Mental map of methodology

Overall, each subconstruct of the respondent record company was considered an

independent variable and was related to its corresponding performance level (dependent
variable) through the Dimensions of the Learning Organization Questionnaire (DLOQ)
(Yang et al., 2004). The degree of learning orientation, both overall and by individual
elements of the learning construct, was also compared to self-reported financial
performance and knowledge performance, as well as to external SoundScan sales data,
which is a point-of-purchase sales measurement database collected at retail.
17

This was a non experimental survey. The survey instrument is available in

Appendix and is labeled the Dimensions of the Learning Organization Questionnaire
(Yang et al., 2004). The survey document was derived from research that was discussed
in the literature review. It has been extensively validated, both by the creators of the
survey and by additional studies referenced in the literature review (Ayers, 2002;
McHargue, 1999; Yang et al., 2004). The DLOQ consists of 55 questions constructed to
measure the seven learning organization dimensions and organizational characteristics
regarding financial and knowledge performance (e.g., continuous learning; dialogue &
inquiry; team learning; empowerment; system connection; embedded system; provide
leadership). Respondents were asked to indicate their perception of the degree to which
their organization practiced the described behaviors on a 6-point Likert type scale, where
1 = the assessment that the behavior almost never occurs, and 6 = almost always.
With respect to internal validity, serious threats due to subject characteristics, loss
of subjects, location, characteristics of the data collector, data collector bias, maturation,
regression to the mean, or implementation of treatment were not anticipated for this
study. Confidentiality was assured, and an offer of summarized results of the study was
made available to all participants who requested it.
The target sample population was recruited through a general e-mail solicitation
for participation directing participants to a Web-based DLOQ instrument. There was also
a drop-off reminder/request card hand delivered to six selected firms that represented a
cross-section of Nashville record companies. Web solicitations were general Web-based
surveys in coordination with Music Row magazine, using the database from Music Row
magazine's Nashville Label Special Directory, as well as the Indie Special Directory from
18

the same trade publication. Direct drop-off of hard copy requests for participation was
targeted to six selected representative labels that are commonly designated as Major
Label, Major independent (Indie) label, and independent (Indie) label. This quantitative
approach was expected to have a normal distribution in its response rate, as a
representative stratified cross-section was used, as well as an anticipated high response
rate in the Nashville community.
The study used traditional and appropriate statistical tests to encourage validity,
reliability, generalizability, objectivity, credibility, minimal bias, and replicability. The
study was cross-sectional (when compared to the national recorded music market), and
future measurement of the same cross-section might allow longitudinal implications
(Robson, 2002). Data was analyzed as both cumulative overall data and as cluster
sampling. The population split was the self-designated subgroups of Indie, Major Indie,
and Major subgroups drawn from voluntary participants with a high degree of
representation of the population for normal distribution. The Kolmogorov-Smirnov or
Shapiro-Wilk tests were utilized within SPSS in order to test for normal distribution of
the sample; however, normal distribution was expected.
The study grouped data into three commonly accepted sizes within the record
company industry. Size orientations are industry accepted dimensions of business units
defined by Major Label, Major Indie, and Indie. Major Label is a branch division of the
parent multinational corporation; Major Indie is a unit reflecting sales plateaus
comparable to Major Label and association with Major Label branch retail distribution.
Indie labels are smaller labels independent of multinationals and usually without Major
distribution, along with far lower gross sales plateaus. These levels are further described:
19

1.

Indie: (a) labels not affiliated with Major international conglomerate, (b)
unit sales under 500,000, and (c) distributed through independent
distributor or affiliated Major distributor

2.

Major Indie: (a) label not affiliated with Major international conglomerate,
(b) unit sales over 500,000, and (c) distributed through affiliated Major
distributor

3.

Major: (a) labels affiliated with Major international conglomerate, (b) unit
sales over 1,000,000, and (c) distributed through affiliated Major branch
distributor of parent multinational corporation

The population consisted of all executive, management, and operational/

administrative employees within the organization. All levels were solicited in order to
determine if the learning perspective differed in relation to levels of employment. Data
collection primarily used Web delivery and collection of the survey instrument.
SPSS software was utilized for analysis, and answers not falling into
predetermined categories were grouped and classified into categories as appropriate. The
measuring instrument or DLOQ was framed in the literature by constructs described by
Watkins and Marsick (1993, 1999) as well as extant literature described by Yang et al.,
(2004) and is discussed further within the literature review, as well as in the methodology
chapter.
There are two sections to data analysis. Section I was the analysis of the
frequencies and percentages of respondents with regard to the demographic section in the
instrument entitled Additional Information about You and Your Organization, including
what is your primary responsibility, what is your role; what is your educational
experience; how many hours per month do you spend of your own time on work-related
learning, how many employees are in your organization, genre of music, and how (what
size) would you categorize your company?
20

Section II examined the more detailed subconstructs of the DLOQ. These

analyses break into inquiry and dialogue, team learning, embedded systems,
empowerment, system connectedness, leadership, financial performance, and knowledge
performance. These elements were compared to research questions, with corresponding
analyses in table form using correlation, descriptive statistics, and ANOVA tables. This
provided a broad overview, as well as addressed a narrower focus for each element of the
research questions. Multiple regressions were also used to measure the bivariate
relationships between the independent variables (the dimensions of the learning
organization) and the dependent variables listed within research questions. Coefficients
of determination, direct indicators of shared variance, were used to interpret the
regression coefficients. As previous modeling of the DLOQ tool had been extensively
tested for multicoliinearity (estimators are linearly related), heteroscedaticity (unequal
variance), and simultaneity (inconsistent ordinary least squares indicators), similar testing
was not performed.
This study also used the traditional expressions of quantitative data, and tests for
reliability were used and appropriately displayed for the data type. The data display used
sought a clear conveyance of themes, categories, or summaries of the data in order to
accentuate stated or hypothesized conclusions.

Important Benefits
This study strengthened the emerging validity of research linking the constructs of
the learning organization with performance improvement. This study began to explore the
relationships of the learning organization constructs using the variables of organization
21

size and respondent authority level within the organization, and it compared internal selfassessed perceptual differences of the learning organization constructs to external data.
This study further reinforced the groundwork for preemptively determining
needed changes or deficiencies related to the learning organization and, by association,
optimizing organizational performance. It supported the task of creating the LO from the
ground up by first establishing the need for improvement. Additionally, there was little
research on any aspect of the music industry, with the exception of the habits of
downloading and the effects of piracy. There may be evidence of learning organization
constructs within the music industry that had not been revealed in research. If the
industry lacks crucial learning elements, there may be implications for the relative
decline of sales each year. This study may initiate secondary research into the decision
process, structure, and strategic outlook of the industry, as well as organizational inertia
that might be a contributor to the perceived lack of progress in record companies' failure
to embrace new technology unless spurred by external factors.

Limitations and Assumptions

As the data was collected from a relatively small segment of the music industry,
the findings should be generalized with caution. However, the construct of the broader
learning organization dimensions have been recognized as basic learning precepts that
may be universal. Additionally, the assessment instrument, the DLOQ, was validated.
This study may then imply relationships but not causality between the LO constructs and
financial performance; however, this examination can certainly spur further investigation
as the field of research expands.
22

There is concern that the impact of job loss due to general downsizing and
restructuring occurring in record companies may have skewed the data. For this reason
care was taken to cross-sample labels that were unaffected by these concerns. The largest
merger applicable to this study in Nashville was the BMG/Sony merger; however, many
felt the restructure was complete at the time. The anonymous nature of the study, along
with a potential comparison with the same sample at some point in the future, minimized
this possibility.

Summary
If competitive advantage is moving toward shorter lifecycles, and globalization
and technological change increasingly push radical change, the need for a new outlook is
evident. The music industry is a ripe example of upheaval as new technologies threaten to
undermine its core revenue stream, which is generated by selling CDs at traditional music
retailers. As a signpost of the change enveloping many other industries, organizations
need a way to change how an organization competes and adapts to tremendous transition
in the environment. A new model for innovation is suggested by the learning
organization, as this model is reported to foster the capacity for organizational change
and responsiveness to the environment (Argyris 2004; Senge, 1990). Learning
organizations are speculated to improve organizational effectiveness when all members
work toward the continuous transformation of the organization within what is called an
open system perspective, a system that interacts dynamically with minimal boundaries
between the organization and external environment (Katz & Kahn, 1978, Nadler &
Tushman, 1980).
23

Initially unified with the construct of Peter Senge's system of five organizational
disciplines needed to facilitate the goals of a learning organizationpersonal mastery,
mental models, shared vision, team learning, and system thinking (1990)Yang et al.
(2004) further refined a model for the examination of the separate learning constructs.
Much of the literature on learning organizations is based on diagnostic and testing tools
that evaluate or promote the learning processes inside organizations. A review of the
learning organization literature suggested that few causal models of a learning
organization have been used to empirically validate performance improvement through
the learning organization construct. Jacobs (1995) reported that learning organization
literature needs rigorous research to be conducted to address the claim that there is a
learning and performance link. His concerns were that the metaphors used to describe the
learning organization are difficult to test, which has led to the relative lack of quantifiable
performance improvement.
This study examined how each of the constructs of the learning organization
system affects the financial performance of an organization, and then it examined if there
are differences in the perception of the existence of the accepted constructs of the
learning organization. This will contribute to the validation of the general learning model,
and specifically contribute by the examination of each reported element that helps in the
learning organization construct. If the learning organization can outpace competitors by
improving advantage or creating new advantages (Hamel & Prahalad, 2005), then
organizational learning can be a tool used to devalue the incumbent's advantages over
time. However, this is based on the assumption that the learning organization facilitates
improved performance, an assumption that needs further clarification.
24

When applied to a record company or the music industry, this study began to
address the lack of general research in the entertainment field. However, within the
broader research context, this study also examined the perceptual difference of the
learning organization constructs as reported by differing levels of authority within the
organization. Differences manifested in the study disclosed possible bias in prior studies
that may lead to future study on leadership and levels of authority.
Finally, although much of the assessment is self-reported by survey of a cross
section of the population, data was compared to both the financial and knowledge aspects
of the Watkins and Marsick DLOQ, as well as to external data from SoundScan. This
may serve as groundwork for a predictor of organizational adaptability or innovation
within a shifting and hypercompetitive marketplace. This analysis is important. If
learning organizations do indeed foster improved performance and foster innovation and
creative learning, then the LO is one of the leading adaptive strategies that can engage
transitional marketplaces.

Organization of the Study

The literature review in Chapter 2 reviews strategic thought that leads to the need
for new models of learning. It examines parent disciplines, from open system theory to
learning orientations, and then leads to the learning organization. Senge is discussed as
the foundation construct, with the Watkins and Marsick construct introduced and
compared. Chapter 2 discusses the learning assessment instrument developed by Watkins
and Marsick, which is further discussed, along with its validation, in Chapter 3,

25

Methodology. Relevant studies which also sought to validate the constructs of the
learning organization are presented.
Chapter 3, Methodology, introduces the general model of measurement and
describes the methods to be used to investigate the research questions. Each research
question is presented and the study design is discussed. Chapter 3 presents the sampling
design and discusses the units of measurement and population. Data collection is
presented and instrument validation is addressed in detail, as well as internal validity,
data preparation, and analysis, with a summary of specific statistical tools to be used for
each research question.
Chapter 4 presents the analysis of the data with discussion of subject patterns of
data for each research question. Chapter 5 discusses conclusions and implications about
each research question, the research problem, and implications for the theory. Possible
implications for practice are discussed, along with limitations.

26

CHAPTER 2. LITERATURE REVIEW

Introduction
The learning organization has emerged as a theme for strategic organizational
improvement. Both corporate and business strategy has grown increasingly difficult. The
growing complexity of global markets has made the decision process more difficult. The
presumption that any leader can have exhaustive knowledge of these same markets in
order to extrapolate future strategy was critiqued as a risky assumption (Mintzberg et al.,
1998). Aggressive competition, innovation, and shifts in consumer demand were argued
to be the elements that were unaccounted for by the typical strategic design foundations
that focus on economic and quantifiable date. Typical strategic design required time for
analysis, setup, and execution, and still failed to react swiftly to market innovation and
shifting social-political forces (Mintzberg et al., 1998).
Earlier research into strategy formulation and implementation was directed at
identifying reasons for superior performance. This focused on structure, and later on the
search for sources of competitive advantage. Traditionally, resource-based theorists had
emphasized inimitable firm resources and the distinctive capabilities and competencies
that resulted from combining resources (process, product, and structure) as being central
to obtaining a sustainable competitive advantage (Barney, 2004; Chandler, 1962;
Prahalad & Hamel, 1990). Porter's (1980) competitive analysis framework emphasized
27

industry attractiveness by enhancing the firm's power linkage to buyers and suppliers in
order to build barriers that can thwart potential entrants and out-position competitors. The
sustainability of competitive advantage was determined by the firm's ability to create
defensible niches based on the assumption of a predictable environment. This perspective
was typified by the work of Ansoff (1965, 1991), Andrews (1971), and Porter (1980), and
is viewed under various strategic perspectives such as the analytical, design, or planning
approaches to strategy formulation.
Recent theorists emerged to argue that the concept of sustainable advantage was
dated. New strategic innovations adapt to radical shifts in the marketplace and innovative
businesses eventually outpace static established markets (Christensen & Overdorf, 2000;
Christen, Anthony, & Roth, 2004). This occurred as large-scale SWOT analysis failed to
identify these threats, due to its favor towards large organizations, economies of scale,
and market size (Charitou, Markides, & Constantinos, 2003; Mintzberg et al., 1998).
D'Aveni (1994) defined this new market competition as hypercompetition, based on the
premise that environmental disruption, intensity, and speed of change create a
marketplace where firms have only temporary, unsustainable advantages and are faced
with unsustainable distinctive competencies. Hypercompetition assumed that competitors
quickly adapt within a global network to neutralize a competitor's advantage. This shifted
the strategic focus from long-term sustainable advantage to short-term goals. Greater
returns went to an organization that did not view strategy as the long-term pursuit of
competencies, but instead embraced aggressive short-term strategies that disrupted the
status quo (D'Aveni, 1994; Hamel, 1996).

28

Overall, one clear tenet of the hypercompetitive environment was that within the
premise of unsustainable advantage was the quick adaptation of new strategies, including
new outlooks on emerging markets using existing resources. Gary Hamel (2001) believed
that other reasons for change occur with the same affect. Unsustainable advantage
occurred as consultants transferred best practice from one company to another. Secondly,
employee mobility shifted ideas across organizational boundaries, and finally, increased
venture capital funding created diffusion mechanisms so that strategy insights were
everywhere (Bernhut, 2001). This created the need for perpetual innovation in ways that
are large and small throughout the organization (Hamel, 2001). You must train the
"organization how to think and perceive in ways that increase the probability that they
will see an unconventional opportunity" (Bernhut, 2001, p. 40).
It was granted that strategic insights such as satisfying customer needs, creating
new opportunities for customer loyalty, discovering new market niches, identifying new
ways to serve existing customers, or identifying new customers that were not currently
served were essential to the basic premise of strategy. But new strategic insights such as
moving quickly from one advantage to the next and changing the rules of competition by
reshaping the competitive playing field were more indicative of strong organizational
learning than typical strategy as a sustainable competency. This reflected an iterative
learning process within the environment by swiftly reacting to both the environment and
competitors. This strategic process became what Mintzberg called a maneuvering process
(Mintzberg et al., 1998). This allowed managers to make decisions as late as possible,
consistent with the information available and needed (Quinn, 1980). This precipitated

29

that all members of the organization have the capacity to affect decisions as a learning
process that involved the total environment in response changes.
Hypercompetitive models embraced reactive outlooks that omit the lengthy period
of evaluation, measurement, and implementation of traditional strategic models. Reactive
positioning assumed competitive advantages were unsustainable. The focus of strategy
then shifted from identifying the drivers of organizational success and moved towards
maximizing the flexible change potential of an organization. Adaptability was then the
ability to generate new perspectives, which has been the generative outlook of the
learning organization (Senge, 1990).
With this background, the learning organization evolved under the assumption
that quick adaptability was best coupled within the learning organization, thus moving
strategic focus towards learning as a systemic advantage for developing short-term
opportunities (Shane & Venkataraman, 2000; D'Aveni, 1994). Intuitively, learning that
flattened the executive hierarchy and empowered the employee was an attractive and
egalitarian construct that appealed to the democratic ideal of individual responsibility for
the collective whole. Perhaps this is why the learning organizational construct was
embraced as a positive driver of change that fit into adaptive strategy. Mintzberg (1987)
related that the key was not in getting the right strategy, but instead in fostering strategic
thinking within the entire organization.
One widely used learning organization example was the Shell Oil scenario
(Senge, 1990). Shell Oil, when faced with dramatic changes and unpredictability in the
world oil markets, realized that a shift in their basic task was at hand. It was no longer
valid to produce strategic master plan forecasts for 5- or 10-year outlooks, but find a
30

rationale for short term adaptability. The task became to consciously foster the learning
environment by engaging the managers with the implications of possible scenarios. Then
managers were to be mentally prepared by reacting to short-term goals outside of their
normal outlooks or modelsmuch in alignment with the learning organization. This
allowed Shell to survive and grow throughout the gas crisis of the 1970s to emerge as one
of the leading organizations. This anecdote was idiomatic to the central concept of this
study. Although much of the literature was prescriptive analysis of the elements of the
learning organization using case study and anecdotal history, many of the constructs were
not empirically validated. It is central to validate the constructs of any theory. In this
case, it is necessary to validate the accepted constructs of the learning organization and
examine whether they empirically affect performance.
Learning was accepted to be central to advantage and the inability to incorporate
learning was seen as a disadvantage. Additional research has shown that resistance to
learning was problematic to performance. Organizations demonstrated a tendency to
resist change when processes and decisions became institutionalized as part of the
procedure and culture of the organization. This resistance was a condition sometimes
labeled as organizational rigidity (Hannan & Freeman, 1977; Tushman & Romanelli,
1985). Organizational rigidity was an impediment to learning and reinforced the need for
the systemic design of learning as a system within the organization. This reinforced the
fifth discipline that equated learning becoming systemic within the organization-a part of
the very fabric of the organization (Senge, 1990). Organizational rigidity hindered
learning. Conversely, organizational flexibility was the organization's ability to identify
changes in the external environment and then quickly commit resources to new courses
31

of action that respond to the change. This involved acting promptly when it was time to
halt or reverse resource commitments (Shimizu & Hitt, 2004). Within a learning
organization, this flexibility rested with the ability to dialogue without fear, accept
negative feedback, collect and assess data objectively, and act.
Paradoxically, organizational rigidity began with success. Over time, managers
developed a particular mindset or mental model (Senge, 1990), along with a set of
decision rules and heuristics based on experiences (Shimizu & Hitt, 2004). As successful
managers were promoted or accepted leadership within an organization, successful
initiatives were repeated. Therefore, previously successful experience reflected the same
mental models or general outlooks and encouraged repeated enactment of the same
response to future issues. The mindset and rules were self-reinforcing, such that
successful history prevented managers from being sensitive to new information. Without
the learning ability of setting aside preconception and prior models (Senge, 1990),
managerial complacency was nurtured. The cycle progressed as successful experience
attracted attention and praise, support was created for managerial hubris, then decisions
unconsciously ignored negative signs regarding decision outcomes (Hayward &
Hambrick, 1997).
Further, developed decision rules of top management were shared, disseminated
down to routine, and taken for granted as successful decision frameworks within the
organization. Ideas and actions that deviated from accepted routines were therefore not
considered acceptable. This produced what was later called organizational inertia and
made it less likely that an organization would consider new information or change. New
information was ignored or assumed an exception, without further analysis (Boeker,
32

1997). Therefore, as the typically long tenure among executive teams moved forward, the
shared mindset multiplied with ever-narrowing perspectives (Boeker, 1997). This made
new routines, new perspectives, and learning more difficult.
The general nature of learning was set free by the ability to communicate and
dialogue in order to cope with environmental complexity: learning shaped expectations to
adapt or fit with opportunities in the environment (Boal & Hooijberg, 2001). This was
done by improving both organizational effectiveness and competitive advantage by
focused learning strategies (Kuchinke, 1995). If learning was a competitive resource, then
knowledge and learning logically led to competitive advantage (Nonaka & Takeuchi,
1995). Supported by Drucker (1994), it was believed that within the knowledge economy,
knowledge creation was the only significant resource. This was eventually linked to
survival: "Learning must surpass the rate of change if an organization is to survive over
the long term" (Montgomery & Scalia, 1996, p. 439), and placed substantial importance
on learning and knowledge creation for organizations.
Although the object of this study was not the comparison of strategic models,
there was a general premise for the model of the learning organization as one that can
create economic value and perhaps become a sustainable competitive advantage for the
new global marketplace (Allio & Ackoff, 2003). Intense global competition, an explosion
in information technology, and the emergence of a knowledge-based economy were
reshaping the world's business environment. Success and survival required organizations
to become learning organizations; that it, they must create the organizational conditions
(ideology, systems, and structures) that lead to the continual acquisition of new
knowledge. The purpose of organizational learning then provided the foundation for
33

rapid, dramatic organizational change, as well as a fundamental requirement for

organization success.

Parent Discipline: Open Systems Theory

Central to the learning organization construct was the construct of systemic
learning, or learning as a system. The learning organization is a combination of
ideologies, systems, and structures that not only facilitate learning by individuals and
groups, but also enable an organization to expand beyond its current understanding by
continually scanning, assessing, and re-assessing the existing mental models or points of
reference from which it gauges perceptions (Senge, 1990). This meant that learning
organizations should systematically and continuously question existing patterns of
thinking and be willing to change the beliefs, processes, and systems to act on new
knowledge (Prahalad & Bettis, 1986; Senge, 1990). It was the interaction of beliefs,
process, and environment that formed the basis of the iterative learning construct and was
the premise of open systems theory.
Open systems theory posits that results occur from the interaction of the
component parts of the systems (Katz & Kahn, 1978, Senge, 1990). Ludwig von
Bertalanffy (1951) introduced the systems concept when he emphasized that systems are
open to, and interact with, their environments and that they acquire new properties
through a continual evolution that focuses on the relation between the parts and how they
connect into a whole.
The organization was represented by inputs, throughputs, and outputs, all
connected by feedback loops (Argyris, 2004). Components were interrelated and each
34

subsystem directly and indirectly affected the entire system. This was due to feedback
loops that affected outputs (e.g., products and services) as well as inputs. Open systems
maintained that organizations must consider all operations and processes within the
system for analysis. This was linked to learning organizations, which engaged continuous
learning through a feedback loop that connects organizational outputs with renewed
inputs.
The inclusion of the environment distinguished open systems from earlier
organizational theories, which were viewed as closed systems that are internally focused.
Open systems used the broader external influence of both the organizational system and
the external inputs of the environment (Katz & Kahn, 1978). Open systems reflected that
transformation occurred within the direct transformation of the organization, but also in
reference to the external environment.
Gordon (in Kilmann, Saxton, & Serpa, 1985) examined the external
environments effect on the culture of different types of organizations and found that
when comparing a stable external environment to a dynamic external environment,
organizations developed cultural patterns to meet the environmental demands by
delegating authority within the hierarchy into smaller subunits. The environment of
shared philosophies, ideologies, values, assumptions, beliefs, expectations, attitudes, and
norms knit the organizational community together and formed the interrelated qualities
for agreement, implicit or explicit, on how to approach decisions and problems, that is,
"the way things are done around here" (Kilmann, Saxton, & Serpa, 1986, p. 89).
Nadler and Tushman discussed a systemic representation of open systems theory
represented as a congruence model based on inputs, throughputs, and outputs (Katz &
35

Kahn, 1978, Nadler & Tushman, 1980). The Nadler and Tushman modeled that (a)
organizations were open social systems within larger environments; (b) organizations
were dynamic entities (i.e., change was possible and occurs), (c) organizational behavior
occurred at the individual, the group, and the systems level, and (d) interactions were
reinforced between the individual, group, and systems levels of organizational behavior.
The congruence model included environment, resources, history (i.e., patterns of past
behavior), and organizational strategies. Systemically, the organizational transformation
process was depicted by informal organizational arrangements, task, formal
organizational arrangements, and individual components (see Figure 2).

Figure 2. Components of the congruence model

Note. From A Model for Diagnosing Organizational Behavior by D. A. Nadler and M.
L. Tushman, 1980, Organizational Dynamics, Autumn, 35-51. Copyright 1980. Adapted
with permission.

Harrison (1987) additionally proposed a systems model representing open

systems perspectives with minimal boundaries between the organization and external
environments. The external environment was simply a representation of resources and
feedback loops. Harrison modeled that the organizational level of performance
36

represented a function of the joint outputs associated with individual performance, group
performance, and quality of work life (QWL) outcomes. This recognized that learning
occurred not in a vacuum of individual interaction, but was reflective of all the interactive
elements of the organization, including the environment. These feedback loops, later
elaborated by Argyris (2004), indicated that individual characteristics and individual
attitudes, beliefs, and motivation also affect individual performance.
Bernstein and Burke (1989) proposed that organizational development should
understand and facilitate organizational culture and relationships in order to improve
individual and organizational behavior. In developing their model, Bernstein and Burke
(1989) focused on individual members and groups within the organization and how they
relate to the external environment, the organizational mission and strategy, organizational
culture, structure, management practices, policies and procedures, work unit climate,
individual needs and values, and motivation (1992).
Kim (1993) and Senge (1990) suggested that large systems exist in an
environment where learning is extremely unlikely due to the deconstruction of activities
for the pursuit of efficiency. Any learning in these environments must then be purposeful.
Kim (1993) suggested that the cause and effect of environments were mediated in
interventions and did not always produce obvious outcomes. This delay of action created
difficulty in seeing the importance of systemic thought. A framework that focused on the
crucial link between individual learning and organizational learning was then proposed to
explain the effectiveness of learning. Learning encompassed the acquisition of skills or
know-how, which implied the physical ability to produce action and the acquisition of
"know-why," which implied the ability to articulate a conceptual understanding of an
37

experience. Both individuals and groups acquire knowledge by eliciting or sharing

knowledge that their members already possess or by generating new knowledge through
collaboration and interaction (Kim, 1993).
Generating new knowledge, or generative learning, resulted from the learning
organization (Senge, 1990). While single-loop or double-loop learning was more adaptive
and reactive to system output, generative learning created new ideas by modeling from
broader external sources; organizations could question long-held assumptions about the
firm and its environment, as well as the basic perceptual mental models that influenced
decisions. Therefore, instead of concentrating on simply making existing patterns and
functions more efficient, generative learning was frame-breaking and led to a competitive
advantage (Slater & Narver, 1995). This frame-breaking reflected organizational learning
as a continual systemic cycle, where individual and group behavior within the
organization interacted with the environment, which was then framed and interpreted in
ways that resulted in knowledge creation.
Learning must then exist within a systemic framework. This directly reinforced
the effectiveness of organizational learning as the systemic construct proposed later in the
writings of Senge (1990). Beginning with Bertalanffy (1951), who introduced the
systems concept of interactivity with the environment, systems reflected organizational
interactivity through inputs, throughputs, and outputs. Argyris refined this systemic
learning construct as organizational activity built on feedback loops (2004). Feedback
provided a system of interaction with relationships had intended and unintended
consequences when intended-learning occurred (Dewy, 1948). However, Argyris
identified degrees of learning as single loop, which was a symptomatic reaction, and
38

double-loop; which involved questioning the root causation as a feedback to the learning
systems (Argyris & Schn, 1978).
Nadler and Tushman (1980) related organizational change as integrated with
informal organizational arrangements and formal organizational arrangementsmediated
by individual componentsanother basis for organizational change beginning with the
individual. Change was affected indirectly by the environment, but activity was fueled by
individual process or learning. Bernstein and Burke (1989) then reinforced the concept by
proposing that organizational development and change must improve individual members
and groups in order to improve individual needs,values, and motivation, which were then
fuel for larger organizational movement that generated knowledge. Within the scope of
this study, systemic constructs were identified as elements that affect change.
Later, within the learning organization construct, the separate elements were
purported as drivers of change for the organization. However, both early and later
writings generally assumed the relative value of each theory. In early writings, whether
the general input-output model (Bertalanffy, 1951; Katz & Kahn, 1978), the task,
informal, formal, and individual transformation process of Nadler-Tushman (1980), or
the Argyris model of single and double loop influence, the specific elemental
relationships or correlations of each construct were generalized and not usually validated
as performance improvement drivers. Neither were the relationships and strength of each
factor explored.
However, generally, systems theory confirmed the value of the systemic construct
of learning. Open systems constructs had identified that inputs, as resources, were
available to the organization and that feedback loops formed organizational outcomes.
39

Open systems maintained that boundaries were flexible and resources were derived from
the external environment, the organization itself, or a combination of the two. Outputs at
the organizational level were the products and services associated with group
performance, and within the organization were the solutions, plans, and tactics devised
during operations. At the individual level, outcomes included the quality of individual
members' work efforts, their initiative, cooperation with others, and commitment to their
work. Therefore, learning or any performance driver was established at the system level
in order to affect organizational outcomes. This led to the implication that the integration
of systemic learning would generate action beyond reaction; learning that innovates.

Organizational Learning Orientation

Dewey addressed learning as a resolution of the conflict between expected
outcome and actual results; thus, individual learning occurred as the adaptive integration
of behavior where expectations were resolved (Dewey, 1938; Fishbein, 1967). However,
learning theory evolved from earlier models of understanding labeled the (a) behaviorist,
(b) cognitive, (c) humanistic, and (d) social-situational schools of learning. These models
now frame the area of organization learning.
The behaviorist movement, attributed to the work of Watson (1913), focused on
the stimulus-response model of observable behavior; wherein the environment provided
stimuli for individual response. The environment shaped behavior and the principle of
contiguity (proximity of events) formed a bond that either reinforced or discouraged the
likelihood of behavioral repetition and learning (Merriam & Caffarella, 1991; 1998). This
was fostered on a stimulus-response theory wherein learning was either strengthened or
40

weakened by the consequences of behavior. This was later called operant conditioning,
which meant that behavior was modified by positively reinforcing desired action, and
negatively reinforcing undesirable behavior (Hartley, 1998; Skinner, 1973).
While behaviorism sought environmental cause, the cognitive school of learning
drew from the individual's mental processes or cognition; the act or process of knowing.
This evolved from criticism of behaviorists, whose focus on single events, stimulus, or
behavior seemed simplistic. Researchers such as Lewin (1935) believed that behavior
was based on perceptions from patterns of a whole rather than a sum of the component
parts. This drew on what would later be called gestalt, focusing on the individual's mental
processes, patterns, or the process of knowing. Piaget (1926) identified four stages of
mental growth (sensorimotor, preoperational, concrete operational, and formal
operational). Bruner explored learning through discovery. James Hartley (1998) drew
some key principles from cognitive psychology, such as that learning results from
inferences, expectations, and connections, as opposed to from habits. Learning was built
on prior knowledge. Learning was then identified through information that was
organized, clearly structured with logical relationships between key ideas and concepts,
and framed so that the features of the task were important (Merriam & Caffarella, 1998).
This recognized that differences between individuals affected learning as each individual
framed differing patterns of meaning through cognition based on their association to past
experience.
Humanism, as a model for learning, reflected a concern for human growth. The
concern with self was the hallmark of humanistic psychology (Tenant, 1997). This was
a reaction against scientific reductionism, or behavior as objects and rationalism. The
41

individual actions were affirmed through freedom, choice, motivation, and feelings.
Abraham Maslow developed the hierarchy of motivation (1968). This ran from the lowest
level of physiological needs to the highest need of self-actualization. Tennant (1997)
summarized these needs into five levels:
1.

Physiological needs (hunger, thirst, sex, sleep, relaxation and bodily

integrity) must be satisfied before progressing to the next level,

2.

Safety needs for a predictable and orderly world,

3.

Love and belonging as we seek warm and friendly relationships,

4.

Self-esteem needs for the strength, achievement, adequacy, mastery and

competence, as well as confidence, independence, and prestige, and

5.

Self-actualization as the full use and expression of talents, capacities and

potentialities.

The concept of hierarchy of needs influenced educators like Malcolm Knowles,

who viewed people as having the ability to control their own destiny, linked to unlimited
possibilities for individual development. Carl Rogers (1993) further wrote of learning that
engaged the whole person, combining logical with intuitive, and intellect with feelings
(1983). It followed that personal involvement, self-initiation, and pervasiveness of
learning could make a difference in the behavior, attitudes, and personality of the learner.
The social/situational orientation to learning reflected not acquiring structures or
models to understand the world, but the participation in frameworks that structured
learning in a community of practice. Social learning theory suggested that we learn from
observing others; thus learning took place in social settings (Merriam & Caffarella,
1991). Bandura (1977) focused on social interaction as a cognitive process. He wrote that
learning would be laborious, as well as hazardous, if people had to rely solely on their
42

own actions to inform them of what do. In this model, behavior resulted from the
interaction of the individual with the environment.
Finally, Lave and Wenger (1991) suggested situational learning. Rather than
learning as the acquisition of knowledge, they placed learning in social relationships;
situations of co-participation. Lave and Wenger based their theory on the observation of
others. Initially, humans join communities and learn at the periphery, and then as they
become more competent, they move to the center of the community. Learning was not
seen as the acquisition of knowledge, but more of a process of social participation
(Wenger, 1999). This was fueled by the concern with identity, through speaking and
acting in a way that fits into the community. The essential element of the
social/situational model of learning was that knowledge was contextual in a community
of knowledge.
In organizational business theory, learning was expressed as behavior that
resolves the dissonance or conflict between expectations and actual outcomes in a manner
similar to Dewey's work (Argyris & Schn, 1978, 1996). Argyris expanded learning by
first identifying the types of learning: single- or double-loop. Similar to Dewey's (1938)
resolution of expected outcome to actual results, Argyris defined learning with changes
of action to results as single-loop learning; learning that leaves the theory of action
(underlying assumptions) unchanged (Argyris, 1982). However, Argyris went further by
incorporating double-loop learning.
Argyris wrote that if organizations failed to reexamine the governing variables or
root causation of the error, then the underlying cause for the defect was unaffected so that

43

the initial error was institutionalized in a cycle of error and correction. Argyris and Schn
illustrated the process:
Single-loop learning is like a thermostat that learns when it is too hot or too cold
and turns the heat on or off. The thermostat can perform this task because it can
receive information (the temperature of the room) and take corrective action."
(1978, pp. 2-3)

Argyris proposed that double-loop learning would further examine action

strategies (operations and production) by addressing the precedent "governing variables"
or the underlying goals, assumptions, systems, and strategies that filter organizational
actions (Argyris, 1982).

Double-loop identified that the window was open in the thermostat example:
actions were corrected in ways that involved the essence of organizational learning,
reflected the "modification of an organization's underlying norms, policies and
objectives" (Argyris, 1978, pp. 2-3). Argyris argued that the foundation of a learning
organization was double-loop learning (Argyris 1974, 1982; Edmondson & Moingeon,
1999).
Similar in nature, Nevis, DiBella, and Gould (1995) discussed learning as
deutero-learning, or the conscious learning that occurs when organizations learn how to
carry out both single and double-loop learning. Both single- and double-loop learning did
not occur if the organizations were not aware that learning must occur; therefore learning
was intentional. This meant that identifying the learning orientation and the process and
structure (facilitating factors) required to promote learning were essential for learning to
occur. Nevis et al. (1995) identified learning as knowledge acquisition/assimilation,
44

dissemination and sharing, and utilization. They identified facilitating factors for
learning, such as the identification of performance gaps between targeted outcomes and
actual performance. This simple awareness made the organization recognize that learning
needs to occur and that the appropriate environment and processes must be created or
nurtured to sustain learning.
Argyris (1994) recognized that the period of feedback or good communication
could have either a positive or negative effect on learning. He explained that the feedback
loop, or double-loop learning, did not take place if the environment was not conducive
for members to question basic values and assumptions due to negative influences, such as
the fear of being reprimanded or other hidden assumptions that cloud the decision
process. Organizational culture (beliefs, ideologies, values, and norms) and the amount of
resources (money and personnel) also determined the quality and quantity of learning
(Shimizu & Hit, 2004).
While single-loop learning occurred in a number of organizations, very few
organizations reported experiencing double-loop learning or deutero-learning. This was
because organizational members resorted to defensive reasoning tactics in order to "avoid
vulnerability, risk, embarrassment, and the appearance of incompetence" (Argyris, 1994,
p. 80). This was attributed to the difference between what people say (espoused theory)
and what they practice, or theory in use. Double-loop learning, required a capacity to step
back and analyze the root causation or governing variables that effect variation or defects
(Argyris, 1994). It was required to bridge the gap between theory and practice.
However, the ability to step back and analyze the root cause of problems fostered
obstacles that could inhibit organizational learning. Seo (2003) explained three sources of
45

barriers that constrained the effectiveness of learning within the organization: emotional
barriers, political obstacles, and managerial control. These aspects were interwoven with
a cumulative effect of hindering organizations from engaging in transformational
learning. Gersick (1991) argued that people were not motivated to revolutionary change
because of the fear of uncertainty and the pain of loss that accompany the anticipation of
changing the status quo. Argyris (1990) acknowledged that emotional barriers triggered
participants strong negative emotions (anger, embarrassment, and threat) and that this
occurred because learning uncovered and challenged deeply rooted values and
assumptions. Nielsen (1996) wrote that social traditions and norms that govern behavior
are nested within awareness and action and are difficult to identify.
Theorists of organizational power and politics saw organizations as places where
individuals and groups struggle for limited resources, with information as the key
organizational resource, and a core bases of power (Perrow, 1986, Pfeffer, 1981; Salancik
& Pfeffer, 1977). As people gain, maintain, and negotiate power in organizations, they
intentionally hold and modify information and resources to their benefit (Seo, 2003).
Therefore, various organizational defensive routines distort valid information as
individuals in coalitions enhance their survival and personal well-being (2003). If true,
this illustrates that organizational defensive routines based on political processes will
resist individual interventions that attempt to uncover and remove defensive mechanisms
to learning. The efforts would be resisted by coalitions and the politics of those likely to
be threatened or weakened in these attempts. Summarily, learning would vary
dynamically across individuals, dependent on the political stances associated with the
issues at stake, regardless of their individual or organizational preference to such
46

practices. Seo maintained that these powerful and dominant forces in organizations would
inhibit or defeat organizational-level learning and transformation, even if learning takes
place within less powerful individuals in the organization.
Finally, Seo expanded on managerial control as the central concept in
organization theory, since the writing of Weber (1922, 1979). Although forms of control
changed over time, the control imperative of managers, controlling complex
organizations, did not. O'Connor (1995) wrote that organizational change required a
tolerance for loss of control and ambiguity. This conflicted with the direct interests of
management, which was control. Structural change necessitated more openness, as both
the governing values and the cultural systems were challenged through change (Nielsen,
1996). Seo (2003) framed the obstacle: How could organizations commit to change that
requires openness when they are pressured to retain tight control fueled by deadlines or
short-term goals? Thus, learning as a change impetus faced unexpected difficulties
through participants' minds and behaviors due to obstacles from political pressure,
managerial control, and individual fears and emotions. These obstacles must be
recognized in order to effect and encourage learning with fresh perspectives within the
organization.

The Learning Organization

The learning organization has evolved as a model created to understand a system
to promote and sustain organizational learning. The learning organization, viewed as the
acquiring, processing, and disseminating of information, is similar to individual learning
(Dewey, 1938). However, the LO includes the intra-organizational dynamics that new
47

knowledge creates; a shared interpretation that allows the organization to behave

decisively (Slater & Narver, 1995). The LO instills learning within the individual, team,
and organizational levels as a foundation for improvement, change, and performance
(Marquardt, 2002; Pedler et al., 1991; Senge, 1990; Watkins & Marsick, 1993). A
learning organization is then a firm that purposefully constructs structures and strategies
to enhance and maximize organizational learning (Dodgson, 1993). The concept of a
learning organization is increasingly relevant as organizations wish to be more adaptable
to change. Learning, as a dynamic concept, emphasizes the continually changing nature
of organizations. As the focus shifts from individual to organizational learning, the
organization must establish the necessary forms and processes to enable organizational
learning. However intuitive the discussion of the learning organization becomes, and
despite the depth of literature on the learning organization, most studies begin by
reminding us that one single definition is yet to be recognized (Garvin, 2000; Marquart,
2002). However, most overviews of the general construct of the learning organization
begin with the seminal work of Peter Senge.

The Learning Organization: Peter Senge Overview

Although this study was based largely on the writing and constructs of Watkins
and Marsick, much of their work was based on the foundational work of Peter Senge's
learning organization (1990). Senge defined learning within organizations, but went
beyond the adaptive resolution of dissonance. He maintained that organizational learning
was the creation of "new patterns of thinking that [was] beyond survival or maintenance
of the existing marketplaces, but instead was generative, [having] the capacity to create,
48

innovate, and generate the new knowledge from present knowledge (Senge, 1990, p. 14).
Senge pointed out that the learning as traditionally recognized by the quality movement
(Deming, 1986) focused on continual learning for performance improvement in an
organization (Senge, 1993). However, Senge (1997) believed that the quality movement
focused on improving work processes (Deming, 1986), while the learning movement
instead focused on improving how employees perceive learning. Senge believed that
systems thinking and the dynamics that affect system-wide performance were crucial, but
organizations that could create a climate of trust and dialogue could produce a system for
organizational learning that was the only sustainable competitive advantage. Senge
(1990, p. 3) stated:
We can build learning organizations where people continually expand their
capacity to create the results they truly desire, where new and expansive patterns
of thinking are nurturedwhere collective aspiration is set free, and where people
are continually learning how to learn together.

In order to achieve this goal, Senge (1990) developed five organizational

disciplines that create the interactivity that provided the system needed to accomplish the
goals of a learning organization: personal mastery, mental models, shared vision, team
learning, and systems thinking.
Personal Mastery: The Individual Action Imperative
Personal mastery reflected the individual learner's role in organizational learning;
individual learning fueled both team learning and organizational learning. Personal
mastery required two underlying activities: the clarification of focus and personal vision,
and the ability to see and interpret reality. Senge wrote that personal mastery was beyond
competence and skills (1990). It was the continuous clarification of what was most
49

important to one's self (personal vision) and learning how to see reality more clearly.
Individuals with high personal mastery are self-motivated to generative learning in order
to achieve vision and mastery of who they are. The individuals must have clarity of
personal vision in order to step out of their comfort zones to achieve something that
cannot be achieved within the comfort zones. Learning cannot focus without clear paths
or visions to follow. Personal mastery advocated a discipline between the creative tension
of vision and actions to achieve goals, while recognizing that reality is a reflection of
structure and not of ourselves. However, without a realization of personal mastery or
vision, our fears or other structural impedances would not allow us to innovate toward
our vision.
Mental Models: Organizational and Environmental Action Imperatives
Senge wrote that mental models were the assumptions or generalizations that
affect how we interpret information, as well as how we take action (Senge, 1990). Mental
models were deeply ingrained individual and organizational assumptions, generalizations,
and images that told us how the world works and reacts. They filtered our perceptions
and limited behavior to familiar ways of acting based on expectations (Senge, 1990).
Entrenched mental models hindered incoming information into preconceptions that may
not be reflective of reality; we hear only what supports our beliefs, discarding any new
incongruent information. The challenge was to recognize these hindrances and subject
them to rigorous scrutiny. The open questioning of assumptions allowed core concepts to
be questioned and helped to identify the root cause of symptoms. This concept involved
the delayering of a hierarchy in order to create a climate of openness that was reflected by
a lack of game playing where decisions were made for the political gain of the individual,
50

not the organization. Senge described the process as defensive routines that created
skilled incompetence. We base action on the underlying assumptions of how we think
others see us, thus developing behavior that adapts to their preconceptions: that is,
defensive routines. This recognizes that we must discard our underlying mental models in
order to discard this type of behavior and communicate openly and effectively.
Kim (1993) concurred that the key element differentiating individual and
organizational learning revolved around mental models and conceptualizations of reality
held by individuals. These may be implicit as viewpoints, or explicit, based on action or
performance. When individuals collectively made their mental models explicit and
organizational members developed and shared mental models, then organizational
learning was enabled.
Strategic Unity through Shared Vision
Shared vision encouraged mental models that allowed organizations to transcend
linear thought and grasp systems thinking within the openness of bringing a vision to
realization. Shared vision was seen as more than a goal; it was a deeply held conviction
that was shared at a personal level. It was a strong commitment that bound the
organization together and provided a focus for learning, focused as a shared picture of the
future. Within this common map, organizations were moved not by fear, but by desire,
which uplifted aspirations. They became part of a larger purpose (Senge, 1990). Shared
vision then fostered risk and experimentation within the learning environment towards
long-term growth. In the spirit of openness, genuinely shared dreams were directed
toward a shared vision. Senge relayed various levels of attitudes for a vision, with
commitment (I want it, I will make it happen) preferable to formal compliance or
51

grudging compliance. Senge discussed the two motivators for vision as fear and
aspiration. Fear underlay a negative vision comprised of "what do we want to avoid,"
while aspiration fueled positive vision as a continued source of learning and growth"what we want to become" (Senge, 1990, p. 225).

Collaboration and Dialogue through Team Learning

Team learning was the process of aligning and developing the capacity of a team
to create the "results its members truly desired" (Senge, 1990, p. 236). This was fueled by
open dialogue, or the capacity for members to suspend assumptions (mental models) and
enter into a genuine brainstorming session. Team learning aligned and developed the
capacity for the team to create the results truly desired. This built on shared vision and
personal mastery, as talented teams were made of talented individuals. However, shared
vision and talent were not enough. There were three critical dimensions needed:
1.

The need to think insightfully about the complex issues,

2.

The need for innovative, coordinated action with a relationship of

operational trust (each team member can be counted on to act in ways that
complement each other's actions), and

3.

The environment in which each team member was part of other teams
within the organization, in order to foster a broad collective understanding
(Senge, 1990).

Team learning involved a free and creative exploration of the issues within a
suspension of mental models that created defensive rationale. Good team learning
involved gaining access to a pool of common understanding, where many points of view
were explored and individuals suspended their assumptions while communicating freely,
52

allowing a free exploration that moved beyond the individual and toward a collective
view (Senge, 1990). Team learning was the fundamental unit of innovative organizations,
as organizational complexity was such that no individual had the vast breadth of
knowledge to be able to make informed decisions. When teams could learn to innovate
together, they were capable of producing extraordinary results for the organization
(Senge, 1990).
Organization/Systems/Environmental Outlook through Systems Thinking
Systems thinking was the overall picture of structural forces that condition
behavior and actions. Loosely based on open systems theory, it suggested that all
interactive inputs of a system affected the output in both direct and indirect ways
(Argyris, 1996). Senge wrote that most problems were created as unintended
consequences of yesterday's solutions. Senge elaborated that organizations and the
environment interacted in complex ways that manifested undesired actions, which
directly resulted from intended solutions. Solutions intended to solve symptoms instead
simply shifted problems to other parts of the system and they remained temporarily
undetected until they surfaced later as a new problem (Senge, 1990). The more
organizations tried to solve issues without recognizing the interdependency of a system,
the more the system pushed back, creating compensating feedback that thwarted solutions
in other parts of the system. One example given was that of governmental programs
assisting low-income residents, which created low-income housing centers for inner cities
in the 1960s. The solution created a cycle of overcrowding and poverty that actually
inhibited economic growth for residents. Other examples were companies that similarly
pushed for growth by increasing marketing and sales without increasing new product
53

development, quality, or customer relationships; therefore, increased stagnation occurred

as sales faltered, and the improvement showed temporary success before unintended
consequences were displayed. Senge reflected that the cure could be worse than the
disease (1990).
Systems thinking was then the cornerstone of a learning organization and was
labeled the Fifth Discipline (Senge, 1990). Systems thinking involved a shift of mind
from the part to the whole. It involved the adaptation of all five components of Senge's
learning organization. It posited that systemic thinking was the ability to see relationships
and patterns rather than static snapshots of single occurrences. Senge believed that this
reflected true dynamic complexity, where cause and effects are subtle. Conventional
forecasting, planning, and analysis were not equipped to deal with this complexity, but
instead adequate for what Senge labeled detail complexity (1990). Valuable management
rested in understanding dynamic complexity, perhaps evidenced by balancing market
growth and capacity expansion as a dynamic problem while improving quality, lowering
costs, and satisfying customers in a sustainable manner. The essence of systems thinking
occurred when one could see interrelationships rather than linear cause-and-effect chains;
rather than a static snapshot. This began with the concept of feedback and examination of
how actions could reinforce or counteract one another, then learning to recognize these
types of structures (Senge, 1990).
Holton, Ruona, and Leimback (1998) addressed the meaning of systemic
organizational performance as driven by performance drivers and defined them as the
elements of performance that build the capacity to maintain or intensify the ability of the
individual, the process, or the system to be effective in producing outcomes. Learning
54

and innovation were identified as examples of organizational performance drivers (Kaiser

& Holton, 1998). As a set, performance and performance drivers explained the
hypothesized cause-and-effect relationships in a system relationship (Kaplan & Norton,
1992, 1996). The learning organization then became an organizational development
strategy aimed at increased organizational learning that could be a primary performance
driver.
Open systems thinking recognized that complexity was the sum of its parts and an
interaction of parts. Therefore, the essence of systems thinking was a shift of the mind
(mental model) to see interrelationships. The building blocks for this transformation were
the five disciplines, according to Senge (1990). This moved organizational improvement
from static causal performance relationships to processes of systemic interaction; that is,
it advocated looking beyond the symptoms to see the underlying interaction of a system,
which allowed the discovery of root causes of the problems. These root causes were
identified as points of high leverage, system parts that could be changed with a limited
effort to bring about maximum benefits. Solving the root causes eradicated a host of
problem symptoms in one stroke (Senge, 1990).
Systems thinking was additionally reflected by a growing body of social systems
literature drawing on the concept of autopoiesis (Bakken & Hernes, 2003; Luhmann,
1995; Mingers, 1995). Autopoiesis, the process of a dynamic system, recursively
generates the production of its interactive components and revitalizes the system with a
resolved unity within its boundaries and external environment (Maturana & Varela,
1980). This reflected the give-and-take or pushback explained by Senge. Autopoiesis
maintained that organizational knowledge was not simply aggregate knowledge, but the
55

system of actualized communication (Carley, 1986). Organizational knowledge was then

assisted by consistency in communicated decisions with respect to environmental
contingencies (Carley, 1986). Organizational knowledge was based on the structure of
information, utterance, and understanding, and thus, the entire organizational production
network of communications and decisions. Autopoietic organizational learning was
concerned with the self-organizing and autonomous development of organizational
knowledge. This reflected back to earlier references to single-loop learning (Argyris &
Schn, 1978); however, the newer adaptive improvement occurred relative to the
perceived environment within the interaction of information and understanding as
synchronized with expectations regarding decisions on environmental opportunities
outside the internal system.
Additionally, although not reflected as a discipline but used as an impetus, Senge
identified empowering leadership as a central tenet to a learning organization. Traditional
leadership, according to Senge, was based on employee powerlessness, lack of personal
vision, and inability to master the forces of change, which was remedied only by great
leadership. In learning organizations, leaders were stewards and builders of organizations
where members expand their capabilities to understand complexity, clarify vision, and
improve shared mental modelsa response to learning. Leadership was then
inspirational in clarifying the vision of the learning organization (Senge, 1990).
Therefore, the integration began with the first task: building the governing ideasthe
purpose, vision, and core values by which people should live. This builds the shared
vision as a long-term imperative for learning (Senge, 1990).

56

Although Block (1993) wrote of the stewardship of the leader to employee needs,
Senge believed that the leader was also the steward of vision. Leaders were stewards of
vision and they managed it for the benefit of others, choosing service over self-interest.
Leaders cultivated an understanding of what the organization was seeking to become;
they fostered systemic understanding, then conceptualized insights so that they became
public knowledge, open to challenge and furthered improvement (Senge, 1990).
Summarily, the key ingredient of the learning organization was in how organizations
processed their experiences, through a systemic lens that allowed the organization to
learn from experience, rather than being bound by the past.

Watkins and Marsick Construct

Although Senge was credited with the learning organization, this
conceptualization was augmented by the theories and writings of others. Watkins and
Marsick (1993) explored a more complete overview of the learning organization. Watkins
and Marsick (1993) defined the learning organization as "one that learns continuously
and transforms itself" (p. 8). Learning organizations were characterized by total employee
involvement in a process of collaboratively conducted, collectively accountable changes
directed toward shared values or principles (Watkins & Marsick, 1993). Watkins and
Marsick (1993) listed action imperatives for the learning organization: the creation of
continuous learning opportunities; the promotion of inquiry and dialogue; the
encouragement of collaboration and team learning; the establishment of systems to
capture a collective vision; and the need to connect the organization to its environment

57

(p. 11). These imperatives were similar to the Senges disciplines and the inherent
strategies suggested by Senge's disciplines (see Figure 3).

Watkins and Marsick (1993)

Continuous Learning

Senge (1990)
Personal Mastery

Inquiry and Dialog

Mental Models

Collaboration/Team Learning

Team Learning

Systems Thinking/Capture Knowledge

Systems Thinking

Collective Vision-Empowerment

Shared Vision

Connect to Environment

Systems Thinking-Mental Models

The ability to see outside the internal model

Figure 3. Comparison of Watkins and Marsick with Senge

Marquardt (2002) similarly focused on a learning system as composed of five

linked and interrelated subsystems related to learning: the organization, people,
knowledge, technology, and learning. The learning organization then centered on
continuous learning; knowledge creation and sharing; systemic thinking; a culture of
learning, flexibility, and experimentation; and finally, a people-centered view similar to
personal mastery or a system of personal empowerment (Gephart, Marsick, Van Buren,
& Spiro, 1996). Watkins and Marsick defined empowerment as initiative, choice in work
assignments, participation on activity design, and control over resources needed to
perform. Empowerment also incorporated building the alignment of vision across
different work groups and levels.
Watkins and Marsick (1992), and Yang (2004) expanded to include the concepts
as action imperatives, or elements needed in order to facilitate a learning construct. These
58

included the typical imperativescontinuous learning, the promotion of inquiry and

dialogue, provision of strategic leadership for learning, encouraging collaboration and
team learning, and empowering people towards a collective spiritbut added the
pragmatic establishment of a system to capture and share learning, then concluded with
connecting the organization to the environment. These seven imperatives were used as a
basis for determining employees' perception of the learning culture within their
organizations (see Figure 4).

Action Imperative
Create Continuous-learning Opportunity

Definition
Learning is Systemic / Opportunity for
Ongoing Education / Training / Growth

Promote Inquiry and Dialog

Culture supports open questioning / feedback /

Experimentation / expand mental models

Team Learning-Collaboration-

Groups used to access various modes of thinking /

Collaboration valued by culture and rewarded

Empowerment/Collective Vision

Power to own and implement joint vision--responsibility

moved close to process

Leadership Models and Supports Learning

Leaders model, champion, and support learning; use learning

strategically for business results

Systems to Capture/Share learning

High and low end technology shared learning and

integrated to work systems--information access provided

Figure 4. Watkins & Marsick model of the learning organization

However, the systems perspective and recognition of intra-organizational

interdependency was upheld in the explanation of a learning organization of both models.
The components included in most ideas about a learning organization include
organizational learning, organizational transformation, empowering people, the

59

environment, and supportive systems (Marquardt, 1996; Senge, 1990; Watkins &
Marsick, 1993).

Assessment Tool
Watkins and Marsick (1993, 1996) provided an integrative model of a learning
organization. Originally defined by the concept of the learning organization as one that
learns continuously and transforms itself (Senge, 1990), the model reaffirmed that
learning was a continuous process that was integrated within the organization (Watkins &
Marsick, 1996). In their more recent book, Marsick and Watkins (1999) stated that
although the learning organization was characterized by continuous learning and by the
capacity to transform itself (Watkins & Marsick, 1993, 1996) the definition captured a
principle, but was not operational.
The question that Watkins and Marsick attempted to evaluate within their model
was the validation of what happens when learning does become an intentional part of the
organization. They surmised that alignment occurred around vision, mental maps allowed
interpreting the changing environment, and new knowledge generated innovative
methods to meet customer needs. In this regard, Watkins and Marsick developed a model
that defined seven action imperatives common to the learning organization constructs
(see Figure 5). The model emphasized systems-level continuous learning organization
constructs that may be used for improvement in the organization's performance and value
when measured through both financial assets and non-financial intellectual capital.

60

Provide strategic leadership for learning

Connect the organization to its environment

Global

Empower people toward a collective vision

Organization

Create systems to capture and share learning

Encourage
collaboration and
team learning

Teams

Toward

Continuous
learning and
transformation

Individuals
Promote inquiry and dialogue
Create continuous learning opportunities

Figure 5. Model of learning organization action imperatives (Watkins & Marsick, 1993)
Note. From Sculpting the Learning Organization: Lessons in the Art and Science of
Systematic Change by K. Watkins and V. Marsick, 1993, Jossey-Bass. Copyright 1993
by Jossey-Bass. Used with permission of the authors.

Watkins and Marsick (1993) integrated two organizational constituents: people

and structure. The two constituents were presented as the interactive components of
organizational change and development. Individual, team, and organizational levels layer
the seven dimensions or constructs of the learning organization:
1.

Continuous learning represents an organization's effort to create ongoing

learning opportunities for all of its members;

2.

Inquiry and dialogue refers to an organization's efforts in creating a

culture of questioning, feedback, and experimentation;

3.

Team learning reflects the "spirit of collaboration and the collaborative

skills that are the foundation of effective teams" (Watkins & Marsick,
1996, p. 6).

4.

Empowerment signifies the process to create and share a collective vision

and the ability to set, own, and implement a joint vision that addresses the
gap between current status and the new vision;
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5.

Embedded system reflects efforts to establish systems to capture and share

learning;

6.

System connection reflects actions to connect the organization to its

internal and external environment; and

7.

Leadership for learning demonstrates the extent that leaders use learning
to create change and to move the organization in new directions. (Watkins
& Marsick, 1993).

Continuous Learning
The learning relationship existed only in an atmosphere where "learning to learn"
becomes part of the culture and organizational system in a way that can then extricate an
organization from the bounded rationality or self-referential ecologies that typify many
organizations (Bateson, 1972; Kim, 1993; McHugh, Groves, & Alker, 1998; Senge,
1990; Yeo, 2002). A learning organization was then perceived as one that could resolve
the conflict between experience and expected results (Argyris, 1996). In this view,
organizations learn through individuals acting as agents: "The individuals' learning
activities, in turn, are facilitated or inhibited by an ecological system of factors that may
be called an organizational learning system" (Argyris, 1996, p. 117). This recognized that
learning is a systemic outcome of the organization-or an organization byproduct of
design, provided the organization provides the needed variables.
Promote Inquiry and Dialog
Inquiry and dialogue were similar to the mental models perception whereby we
are to step back, examine, and question the reference points that form our judgment
(Senge, 1990). Learning existed more strongly with dialog within an open environment.
This interaction was the basis for improved learning due to the collaborative team
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learning. These behaviors gave learning a social context where all must share and listen
while being willing to suspend adherence to personal mental models of reality. Marquardt
(1996) claimed that dialogue was important in the organizational learning process
because it was central to and enhanced team learning with the element of trust. Dialogue
allowed the organization to review organizational assumptions about the world in a
double-loop methodology (Argyris, 2004). Dialogue was sometimes referred to as
divergent conversation, as it allowed one to expand what was being communicated by
opening up many different perspectives (Ellinor & Gerard, 1998). This was the basis of
the systems construct of Senge, where a learning organization should see the whole
among the parts; see the connections between the parts; inquire into assumptions; learn
through inquiry and disclosure; and create shared meanings among many.
Dialogue, then, was a method to attain heightened awareness. This meant that the
understanding of perceptual preconceptions would affect information flow, strategies,
decision-making, reward systems and measurement of success, internal and external
alignment, and culture (Ellinor & Gerard. 1998). Ellinor and Gerard (1998) described
dialogue as a powerful practice field for advancing organizational learning capabilities.
Learning occurred when individuals made their implicit reasoning explicit and shared it
with others (Watkins & Marsick, 1993). This assumed an atmosphere where all
participants are equal and where every person was a source of learning (Senge, 1990).
Encourage Collaboration and Team Learning
Watkins and Marsick (1993) echoed Senge's (1990) claim on the importance of
team learning. The strategies reported within the process were framing, reframing, and
integrating perspectives (Watkins & Marsick, 1993). Framing was the formation of
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perceptions about a current situation based on individuals' interpretations of prior

experiences. Reframing placed the perception in the context of new understanding from
opening the other team views. Teams then integrated the new perspectives within existing
mental models, created new interpretations of reality, similar to changing governing
variables (Argyris, 1990), or frame breaking (Slater & Narver, 1995).
Marquardt (1996) suggested that recognizing team learning differed from team
training. Learning emphasized analysis and creation, where team learning was the result
of organizational learning. Dyck, Starke, Mischke, & Mauws (2005) elaborated that a
dynamic theory of organizational knowledge creation relied on an intertwined four-phase
process of (a) socialization (tacit knowledge amplification); (b) externalization (tacit
knowledge transformed into explicit knowledge); (c) combination (explicit knowledge
amplification); and (d) internalization (explicit knowledge transformed into tacit
knowledge); which were based on learning progressing from individual to team, then to
organization. The first phase, socialization, triggered by team building, facilitated sharing
of the members' experiences and perspectives and implied that group members trust one
another because of shared past experiences. The move from socialization to
externalization was triggered by meaningful dialogue. The combination of dialogue and
sharing of perspectives allowed the team members to externalize what was on their mind,
and knowledge that was invisible then became explicit (Dyck et al., 2005).
Watkins and Marsick (1993) concluded that team learning occurred within
boundary-crossing through inquiry, collaboration, and sharing. Organizational learning
was promoted when organizational members cross boundaries and share information for
the purposes of knowledge creation and learning. Redding (1997) stated that teams find
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new understanding and interpretation because of the process of collective learning.

Argyris (1994) claimed that interdependence is essential for the cohesiveness that is a
foundation of team functioning.
Empowerment, Collective Vision, and Leadership
The two dimensions of leadership and empowerment are difficult to separate;
each one affects the other. Leadership, defined as transformational, was a process in
which one or more people engage with others in such a way that leaders and followers
raise one another to higher levels of motivation and morality" (Burns, 1978, p. 20). To
Burn's, transformational leadership concerned itself with larger egalitarian values such as
liberty, justice, and equality. This was based on empowerment and greater altruistic
societal transformation (Bass, 1985, 1998; Bennis & Nanus, 1985). Transformational
leadership created influence that raises the motivation in both the leader and follower by
becoming attentive to the needs and motives of followers in ways that transcend work,
helping both leader and follower reach full potential in a true collaborative framework
(Burns, 1978; House, 1976). Collective purpose was then fueled by leadership, creating
an environment that allowed conflicting views and interests to rise under conditions of
complexity and uncertainty, engaging new critical reflection on organizational theories in
use with new proposals for restructuring within shifting environments (Argyris, 1985).
Northouse (2004) provided additional transformation elements, such as
developing a feeling of belonging, support and encouragement of specific followers, and
influencing to view problems from a fresh perspective with increased awareness. This
assumed that the need for social recognition and value within employees would transform
by incorporating emotions, values, standards, and long-term goals-along with the
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satisfaction of employee needs (Northouse, 2004). Leadership fostered a collective

mindset that empowered responsibility and collaboration throughout the organization
(Northouse, 2004). By fostering this collaborative environment, a greater sense of
achievement is possible than with direct control. If employees were involved in setting,
owning, and implementing a joint vision and responsibility was distributed closely to
decision makers, all were motivated and accountable within the shared vision (Buckler,
1996).
Systems to Capture Shared Learning
The broad area of knowledge management referred to gathering and managing
knowledge that the organization acquired. This was not explicitly addressed in the
Watkins and Marsick conceptualization, except to identify that the self-assessment
recognized that a system must be in place to share knowledge. Knowledge management
as a term for an approach to improving organizational outcomes and organizational
learning has introduced a range of specific processes and practices for identifying and
capturing learning as intellectual capital to transfer and reuse it across the organization.
Nonaka and Takeuchi (1995) further discussed the process for capturing intellectual
capital and transferring knowledge to organization action. They argued that successful
knowledge management must convert tacit (internal) knowledge into explicit codified
knowledge, but that individuals and teams must also make knowledge significant.
It is worthy to mention the tools available to codify knowledge and help with
knowledge management. Technology can enable and facilitate learning retention,
including databases, software for retrieval, information systems for organizational
knowledge flows, operations manuals, Web conferencing, collaborative software, content
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of corporate directories for expert advice, after- and during-action reviews, peer assists,
information taxonomies, coaching, mentoring, and finally, e-mail lists are among the
many tools. However, these are only tools that capture learning. The system of
collaborative learning begins with information to be shared in both the individual and
team collaboration process-especially during dialog and discussion.
Generally, the move to the externalization of learning was triggered by
coordination and documentation of team members and extant knowledge (Dyck et al.,
2005). Learning was embedded by the coordination among members through testing
processes and by documentation, drawings, and written procedures of the organization.
This built a body of explicit knowledge that can easily be shared among organizational
members. The final path to acquiring learning embeddedness was through internalization,
which was triggered by learning-by-doing where members with new explicit knowledge
of how things are supposed to work now begin to master their tasks. Repetition resulted
in embedding the innovation in the workers' personal routines, providing them with a feel
for quality.
Generally, Watkins & Marsick (1993) reinforced that learning was continuous
within the learning organization. Both Senge (1990) and Marquardt (1996) addressed
similar skills for the learning process, including systems thinking, mental models,
personal mastery, and dialogue. The implication of continuous learning described by the
Watkins and Marsick model for the learning organization embraced learning as an
organizational goal, as well as developed leadership and managerial support contributed
by work design, environment, climate, culture, technology and systems reinforcement,
and most likely, linkage to rewards, structures, and policies. It required allowance for risk
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taking and mistakes, for inquiry and challenges, and a new set of mental modeling and
theories-in-use (Argyris, 1996) for all members of the organization.

Analytical Models of Organizational Learning Assessment with the DLOQ

Watkins and Marsick's (1993, 1996) framework of a learning organization served
as the theoretical foundation for this study. This theoretical framework had several
distinctive characteristics. First, there is a clear and inclusive definition of the construct
of the learning organization within the construct. It defined the construct from an
organizational culture perspective and thus provided adequate measurement domain for
scale construction. Secondly, it included the dimensions of a learning organization at all
levels. Redding (1997) reviewed several assessment tools of learning organizations and
suggested that the framework created by Watkins and Marsick (1996) was among the few
that covered all learning levels (that is, individual, team, and organizational) and all
system areas.
Third, the model not only identified the commonly recognized dimensions of the
learning organization in the literature but also integrated them in a theoretical framework
by specifying their relationships. This theoretical framework provided useful guidelines
for instrument development and validation of the relative importance of each element,
allowing the possibility for the refutation of individual elements, and suggesting possible
further organizational studies as discussed in Chapter 1.
Finally, this construct defined the proposed seven dimensions of a learning
organization from the perspective of action imperatives and thus has practical or
pragmatic implications. This action perspective of the learning organization both
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provided a consistent cultural perspective on the construct and suggested that several
observable actions could be taken to develop or build a learning organization. Intuitively,
it seemed essential to construct a set of observable variables in order to measure the
validity of any theoretical constructs, as well as use the same types of variables in order
to gauge their implementation for organizational development.
Several key studies have validated the constructs of the learning organization.
Two recent dissertations specifically used the Watkins and Marsick survey instrument
(the DLOQ) to measure the learning orientation (Ayers, 2002) and non-profit
organizations (McHargue, 1999). Ayers (2002) studied the perceptions of business
counselors in an agriculture extension service and showed that the overall DLOQ mean
scores were high for an organization, and with the exception of systems to capture
learning, the business counselors scored the action imperatives higher than two other
measured comparative organizations. McHargue (1999) used the DLOQ within family
businesses and non-profit organizations. This study showed significant positive
relationships between the DLOQ seven dimensions and the dependent variables of
knowledge and financial performance within the DLOQ. McHargue (1999) included
financial ratios of net assets, debt ratio, and savings ratio.
Ellinger et al. (2002) used the DLOQ to assess the relationship between the
learning organization and financial performance, and their research also suggested a
positive association using return on equity, return on assets, and market value. Sorenson
(2002) focused more on the constructs pertaining to the organizational culture in relation
to learning orientation and organizational performance. The study discovered that higher
levels of innovation are associated with cultures that employ learning, development, and
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participative decision making, while strong-culture firms have more reliable (e.g., less
flexible) performance in relatively stable environments. Baker and Sinkula (1999), and
Farrel and Oczkowski (2000) observed the effects that market orientation and learning
orientation have on organizational performance and innovation. They determined that
market orientation and learning are mutually dependent constructs; however, the learning
orientation has a more significant correlation and significance on business performance
than market orientation.
Overall, studies directed at the learning organization as performance enhancers
indicated that the constructs of the learning organization need additional study, as well as
consistency in how the learning organization is measured. Each study, with the exception
of those using the DLOQ, had somewhat different conceptualizations and operational
definitions of the learning organization, as well as a variety of performance variables. As
a result, it is difficult to compare across the various studies. This showed that empirical
studies on the learning organization were still needed as a validated set of measurable
constructs (e.g., the DLOQ). Consistent empirical measures of business performance that
are recognized by the business community are still needed in support of the learning
organization model.
This study examined these needs in three ways. First, the study examined the
relationship between the learning organization constructs and business performance
within the DLOQ survey. Secondly, it continued to define the usefulness,
appropriateness, and validity of the DLOQ as a measure of a learning organization, as
well as the general LO constructs. Third, the study focused on one industry segment that

70

was typically underserved in the research community, the creative industry of the record
company organization.
Additionally, the examination of organizational climate (leadership,
empowerment, linkage to environment, dialog and inquiry, team learning) within small
(Indie), mid-size (Major Indie), and large (Major Labels) organizations explores how the
learning organization model affects performance by size of organization. This provided
further foundation for the linkage of innovation to size and types of leadership and
structure. This can furnish an impetus for suggesting organizational changes of structure.
If there is a clear link of responsiveness, growth, and market share with the organizational
learning environment, then on the broadest conceptualization, there is a starting rationale
to connect the learning organization to theories that offer strategic responsiveness to the
environment, as well as general organizational improvement.

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CHAPTER 3. METHODOLOGY

Introduction
Chapter 2 reviewed the general literature on concepts of learning, organizational
systems, and the learning organization. Gaps in the research base were noted. Chapter 3
describes the methods used to investigate the research questions. This study furthered
existing research by examining the relationship between the constructs of the learning
organization as performance enhancers in relation to empirical performance measures
within a specific industry. This study also examined the relative contribution of the
learning organization's performance to growth in market sales, as well as growth in
market share.

Research Questions
The research questions specifically examined the relationships among items included
in the survey instrument and then examined the relationship between learning elements
measured on the instrument, with organizational performance outcome variables. The
authority level and size of organization were also explored, along with response types by
executive, mid-level management, and general administration/operations. The research
questions were as follows:

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1.

To what extent do record companies perceive their organizations as

learning organizations in relation to Watkins and Marsick's seven
dimensions of the learning organization?

2.

Are there differences in the perceived ratings of record companies in

relation to Watkins and Marsick's seven dimensions of the learning
organization according to organization size?

3.

How is a firm's degree of learning orientation related to self-reported

financial and business performance?

4.

Are there differences in financial and business performance related to

organization size?

5.

What are the relationships of each learning orientation subconstruct to

knowledge performance?

6.

What are the relationships of each learning orientation subconstruct to

financial performance?

7.

To what extent do authority levels of management and operations differ in

their self-reported levels of the learning organization with regard to
Watkins and Marsick's seven dimensions of the learning organization?

8.

What is the relationship between the firm's self-reported overall business

and financial performance and each of the seven dimensions of the
learning organization when measured against sales growth over a 2-year
span?

9.

What is the relationship between the firm's self-reported overall business

and financial performance and each of the seven dimensions of the
learning organization related to organization size?

10.

Do these correlations to performance exist when measured against an

increase in market share using external sales data?

Study Design
This study used a fixed quantitative design. This non-experimental survey
measurement strategy did not manipulate the environment, but simply measured it
(Robson, 2002). The existing survey document was derived from research that had been
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validated as the Dimensions of the Learning Organization Questionnaire, or DLOQ

(Yang et al., 2004). As such, this study applied correlation statistics to each learning
construct measured within the organization. The degree of learning orientation (overall,
and of each subconstruct) of each record company (independent variables) was related to
its corresponding performance level (dependent variable), as self-reported by the DLOQ
(Yang et al., 2004). The degree of learning orientation, both overall and individual
element constructs, were also compared to the self-reported financial and knowledge
performance, as well as to external SoundScan sales data.
This fixed design strategy used the learning organization constructs as variables
(i.e., continuous learning; dialogue and inquiry; team learning; empowerment; system
connection; embedded system; and empowered leadership). The DLOQ had been
extensively tested to explore the accuracy of the variables before the implementation of
the survey or data collection (Ayers, 2002; McHargue, 1999; Yang et al., 2004). Prior
study established that the DLOQ instrument design was quantifiable and established
validity by correlation and statistical inference to the learning variables previously
identified in other studies. This did not allow causality, but recognized that research can
allow inference through association (Robson, 2002).
The study used traditional and appropriate statistical tests that encouraged results
with validity, reliability, generalizability, objectivity, credibility, minimal bias, and
replicability. The study was cross-sectional; thus potential future measurement of the
same cross section could allow longitudinal implications (Robson, 2002).

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Sampling Design and Population

In order to reflect substantive results and address participation bias, a purposeful
cross sectional survey of the general Nashville record industry population was taken,
reflective of a quantitative approach (Silverman, 2000). There were over 80 record
companies identified in the Nashville area, with a total employee population easily in
excess of 1,000 (Music Row Magazine, 2005). The target population was a cross-section
of six representative record companies, as well as a general solicitation of all Nashville
record companies through a direct e-mail solicitation of the Web-based DLOQ survey.
As well, a drop-off invitation for participation to the same general six selected record
companies was used, consisting of solicitation of two representative labels from each
segment: two Major Labels, two Major Indies, and two Indies.
Additionally, a general overall solicitation of the population through a Web-based
survey was used in coordination with Music Row magazine, using the database from the
Music Row Nashville Label Special Directory, as well as the Music Row Indie Special
Directory from the same trade publication. All listed companies were asked to participate
and if agreeable, were sent an e-mail link to the Web-based survey instrument for
distribution throughout the organization. Further, a reminder card for participation was
dropped off for mailbox distribution, placed directly in employee mailboxes, or provided
to company leadership.
This purposeful cross section facilitated a comparison between organizations. It
was designed to deliver a broad set of findings between differing employee authority
levels across the various sizes of organizations in the sample. This quantitative approach
represented a purposeful stratified sampling, with the population segregated into mutually
75

exclusive groups. Data was analyzed as both cumulative data and as subpopulations with
the population split into self-designated subgroups. This ensured that the data sample
reflected a high degree of representativeness of the population for normal distribution.
The Kolmogorov-Smirnov and Shapiro-Wilkes test utilized within SPSS confirmed
normal distribution of the sample; this was expected, as the sample data reflected the
central limit theorem using participation greater than 100 (Field, 2000).

Units of Measurement and Subjects

Units of measurement were grouped into three accepted levels of organizations
within the record company industry. These levels were:

1.

Indie: (a) labels not affiliated with Major international conglomerate, (b)
unit sales under 500,000, and (c) distributed through independent
distributor or affiliated Major distributor

2.

Major Indie: (a) label not affiliated with Major international conglomerate,
(b) unit sales over 500,000, and (c) distributed through affiliated Major
distributor

3.

Major: (a) labels affiliated with Major international conglomerate, (b) unit
sales over 1,000,000, and (c) distributed through affiliated Major branch
distributor of parent Multinational Corporation

Subject targets were representative of all executive, management, and

operational/administrative employees within the organization. All levels were solicited to
determine if the learning perspective differed relative to levels of employment or
authority. The survey instrument categorized five self-reported designations. The
designations were:
1.

Executive leadership/CEO,
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2.

Senior management/VP,

3.

Middle management (project or department manager/director/supervisor),

4.

Administration/staff/non-management/operations implementation

5.

Non-management (hourly employee)

Data Collection
Web survey and drop-off hard copy methodologies were used for data solicitation.
A cutoff date for data collection was set for 4 weeks following the initial delivery. Initial
response rate was deemed less than 10%; thus a second drop-off reminder card, as well as
a general e-mail solicitation from Music Row Magazine was sent to all companies, along
with a reminder not to complete the survey if already completed.
Source data, kept in a secure location within the researcher's office, will be kept
for a period not less than 7 years. Although the Web survey was anonymous though a
third party, direct drop-off surveys were also printed if requested by participants. Specific
individual identities were not traceable in either instance. Survey documents, when hand
delivered, were destroyed after data entry into a spreadsheet with SPSS software. Data
was imported directly into SPSS from the Web-based survey, with the survey encoded in
a manner that minimized non-answers. Answers not falling into predetermined categories
were separated and post-coded into categories for data entry and analysis.
Before any data was solicited, the Institutional Review Board (IRB) of Capella
University approved the study. Potential respondent companies' executive leadership
were contacted by phone and asked to allow company participation, with assurance of
anonymity. To avoid bias, any interested participants were forwarded to the Web-based
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survey, which included a cover letter reinforcing anonymity and reminding that
employees were not mandated to participate.
The Web-based survey instrument contained the cover letter of introduction and a
copy of the DLOQ instrument/survey (Appendix). The participants were informed that
the aim of the study was to investigate current business practices relative to
organizational learning. Specifically, it was suggested that this information could help the
industry in the long term by connecting to the customers and directing how organization
might become more adaptive toward innovation. Additionally, the survey examined the
relationship between the constructs of the learning organization as possible performance
enhancement for growth in market sales and in market share. The cover letter indicated
the anticipated amount of time required to complete the instrument (15-20 minutes), the
required return date, assurance of confidentiality, the anonymous nature of the survey,
and an offer to share the results with respondents upon completion of the study as an
incentive to participate.
Follow-up for non-response was sent 2 weeks after the deadline through e-mail
and post card reminders, with a reference to the Web-based survey in order to control
costs. Music Row Magazine (a popular local trade magazine) participated and sent
reminder notices to its subscribers, directing them to a Web-based link to the survey site.
In the event that the response rate had been inadequate, six representative labels (two
from each category) were to be aggressively targeted through personal efforts, but the
response rate did not necessitate this action. The survey was anonymous and no traceable
individual ID number was assigned to any survey response. This was also communicated

78

to survey respondents, in order to avoid any fear of a negative response from company
leadership for participation.

Instrument-Validation
Measuring learning orientation has been extensively framed in the literature by
constructs described by Watkins and Marsick (1993, 1999) as well as extant literature
described by Yang et al., (2004), (i.e., Argyris & Schn, 1978, 1996; Brown & Duguid,
1991; Fiol & Lyles, 1985; Garvin, 2000; Gephart et al., 1996; Hedberg, 1981; Huber,
1991; Isaacs & Senge, 1992; Miner & Mezias, 1996; and Senge, 1990).
The dimensions of the learning orientation scale were originally constructed and
validated by Watkins and Marsick (1999), with further validation as the Dimensions of
the Learning Organization Questionnaire or DLOQ (Yang et al., 2004). The DLOQ
consisted of 55 questions that measured the correlation of seven learning organization
dimensions and certain organizational characteristics regarding financial and knowledge
performance. Respondents were asked to indicate their perceptions of how much their
organization practiced the described behaviors on a 6-point Likert type scale, where 1
equals the assessment that the behavior almost never occurs, and 6 equals almost always.
See Appendix for the survey instrument.
The internal consistency of the DLOQ was validated previously (Yang et al.,
2004) with Cronbach's alpha testing for each scale identified item, with low item-total
correlations items replaced or revised in later versions until acceptable reliability and
content validity was achieved. In the same study, construct validity was further validated
by confirmatory factor analysis (CFA), which affirmed the construct validity for the
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measure of dimensions of the learning organization. This was deemed appropriate to

verify the adequacy of the item through factor associations within the dimensions
underlying the construct (Bollen, 1989; Thompson & Daniel, 1996).
Previous studies used structural equation modeling (SEM) to assess the
relationships between the dimensions of the learning organization and organizational
performance measures. The Yang et al., (2004) analysis (see Figure 6) affirmed the
learning organization and organizational performance measures with LISREL 8, based on
the covariance matrices generated by PRELIS 2 (Jreskog & Srbom, 1996). Further
instrument reliability testing was achieved through comparison of Cronbach's coefficient
alpha with the congeneric model paired with a confirmatory factor analysis (Yang et al.,
2004).
Structural equation modeling was used to examine the relationships between the
seven dimensions of the learning organization and the two outcome measures (financial
performance and knowledge performance). The results of SEM suggested that the
structural model illustrated in Figure 6 reported the closest fit to the data. Figure 6
presents the researched model and estimates of the structural coefficients. The model
displayed accepted values on many comparative fit indices such as GFI-.91, AGFI-.89,
NNFI-.91, and CFI-.92, as reported by Yang et al. (2004).
The model tested accounted for more than 90% of the joint amount of variance
and covariance of the data. Yang et al. (2004) explained that each coefficient was viewed
as a standardized regression coefficient of one exogenous variable on its related
endogenous variable when the effects of other variables were partialed out. Yang et al.

80

(2004) reported that all path coefficients were statistically significant and positive in
direction.

Figure 6. LISREL estimates of structural model coefficients for a nomological network

between dimensions of learning organization and performance outcomes
Note. From The construct of the learning organization: Dimensions, measurement, and
validation by B. Yang, K. E. Watkins, and V. J. Marsick, 2004, Human Resource
Development Quarterly, 15, 31-53. Copyright 2004. Used with permission of the authors.

Summarily, several additional studies were conducted earlier that established the
reliability as well as the content and predictive validity of the DLOQ (Ellinger et al.,
2002; McHargue, 1999; Selden, 1998). Overall, the reliability estimate for the entire scale
was .95 for the 42-item version of the instrument (Yang et al., 2004), indicating that the
instrument was a reliable measure of these dimensions of a learning organization. These

81

authors also presented evidence for instrument validity obtained from best model-data fit
among alternative measurement models, nomological network among dimensions of the
learning organization, and organizational performance outcomes. Cronbach and Meehl
(1955) referred to the measure of interrelations among constructs in social science
research as a nomological network. Reliability estimates from moderate to high were
obtained for the seven dimensions of the construct. The coefficient alpha in that study
ranged from .75 to .85.
In a study of family businesses also using the DLOQ, the coefficient alpha ranged
from .68 to .84 (Selden, 1998). Additionally, in a study of nonprofit organizations with
the DLOQ, the coefficient alpha ranged from .81 to .90 (McHargue, 1999). These results
indicated that overall, the DLOQ showed acceptable reliability estimates for the seven
proposed dimensions of the learning organization.

Internal Validity of Study

With respect to internal validity, serious threats due to subject characteristics, loss
of subjects, location, characteristics of the data collector or data collector bias,
maturation, regression to the mean, or implementation of treatment were not anticipated
for this study. The general job level and classification were standard to the music industry
and consistent across the examination of record company directories available for the
music industry. Size orientations were generally industry accepted dimensions of
business units defined by Major Label, Major Indie, and Indie. While these terms were
generally accepted, the survey allowed the respondent to self-designate size identification
in order to identify differences from the accepted industry perception.
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Location bias was not expected to be a factor, as the Web-based administration

combined with mailing and hand delivery ensured that the survey participants could
complete the survey at work or wherever convenient to them. Responses were
standardized, with few unstandardized responses due to the menu driven specificity
forced on respondents from the Web-based survey. Participant bias due to the nature or
purpose of the study may be an issue; however, as no single organization was identified,
there was little motivation to skew responses favorably or negatively for the organization.
Additionally, all the firms surveyed were equally subject to such distortion and should be
balanced from the number of responses and normal distribution achieved in the response
rate.
Finally, all participants were given valid business reasons and motivation to
respond appropriately to the survey. Confidentiality was assured, and an offer of
summarized results of the study was made to all respondents. As a potential extraneous
event, organizational restructuring within the music industry may be one additional
influencing issue as an external and internal environmental factor that affects the learning
organization. During this study, the industry was experiencing downsizing in order to
accommodate shrinking market values. These changes were seen affecting the
environment of the learning organization and were discussed as a factor affecting the
results of this study, particularly when comparing Majors to Major Indies and Indies,
some of who are affected by merger and downsizing. Finally, few labels are publicly
traded, with the exception of Major Labels. This made it difficult to obtain financial
information to the specific level needed, so little public data was utilized. However,
coupled with self-reported assessment from the survey, publicly accessible sales data
83

were available for all levels of record companies through SoundScan retail reporting,
which was furnished to the researcher through Curb Records.

Analysis of Data: Conceptual Design

Survey data was Web based and was downloaded to a Microsoft Excel
spreadsheet and visually inspected for errors and missing values. Little missing data was
obtained, as the survey construct did not allow respondents to proceed before answering
each question fully. Data was analyzed using the SPSS 14 for Windows statistical
package. Descriptive statistics were compiled for all subconstructs to determine normal
distribution. Analysis of the frequencies and percentages of responses were also
performed in regard to the DLOQ section titled Additional Information about You and
Your Organization.
Dimensions of Learning Organization (DLOQ)
Analysis of the sections subconstructs of continuous learning, inquiry and
dialogue, team learning, embedded systems, empowerment, system connectedness,
leadership, financial performance, and knowledge performance were measured with
regard to research questions, with corresponding analyses in table form.
Correlation, descriptive statistics (means of each learning organization dimension,
ranges, and standard deviations), and ANOVA were utilized to gauge a broad overview
and address the research question. Multiple regressions were used to measure the
bivariate relationships between the independent variables (the dimensions of the learning
organization) and the dependent variables listed within research questions. Coefficients
of determination, direct indicators of shared variance, were used to interpret the
84

regression coefficients. As previous modeling has extensively tested for multicollinearity

(estimators are linearly related), heteroscedacity (unequal variance), and simultaneity
(inconsistent OLS indicators), similar testing was not performed.
Summary of Research Questions with Corresponding Statistical Analysis
1.

To what extent do record companies perceive their organizations as

learning organizations in relation to Watkins and Marsick's seven
dimensions of the learning organization? (Descriptive statistics: display
mean, frequency, standard deviation, and ANOVA of all elements
cumulatively)

2.

Are there differences in the perceived ratings of record companies in

relation to Watkins and Marsick's seven dimensions of the learning
organization according to organization size? (Descriptive statistics
separated into three size categories: display mean, frequency, standard
deviation, and ANOVA of all elements under each of the three categories,
then compare to question 1)

3.

How is a firm's degree of learning orientation related to self-reported

financial and business performance? (Correlation with learning orientation
as independent variable and financial and business performance each as
dependent variables)

4.

Are there differences in financial and business performance related to

organization size? (Correlation with size as independent variable and
financial and business performance each as dependent variables)

5.

What are the relationships of each learning orientation subconstruct to

knowledge performance? (OLS regression with knowledge as dependant
variable)

6.

What are the relationships of each learning orientation subconstruct to

financial performance? (OLS regression with financial performance as
dependant variable)

7.

To what extent do authority levels of management and operations differ in

their self-reported levels of the learning organization with regard to
Watkins and Marsick's seven dimensions of the learning organization?
(Descriptive statistics: display mean, frequency, standard deviation, and
ANOVA of all elements of the learning orientation constructs separately
under categories; compare and note differences)
85

8.

What is the relationship between the firm's self-reported overall business

and financial performance and each of the seven dimensions of the
learning organization when measured against sales growth over a 2-year
span? (Sales growth or decline chart for 2-year period using averaged
sales for 2-year period-using at least 4 respondents per category of sales
reports with representative SoundScan data. Compare to research
questions 1, 2, and 3.)

9.

What is the relationship between the firm's self-reported overall business

and financial performance and each of the seven dimensions of the
learning organization related to organization size? (Sales growth or
decline chart for 2-year period using averaged sales for 2-year periodusing at least 4 respondents per category of sales reports with
representative SoundScan data; then compare to results of research
questions)

10.

Do these correlations to performance exist when measured against an

increase in market share using external sales data? (Market share chart for
2-year period using averaged monthly sales for 2-year period-using at least
four per category of sales reports with representative SoundScan data; then
compare to results of research questions)

Data Display and Analysis

This study used traditional expressions of quantitative data reflecting the
importance of clearly communicating each result for each research question. Various
charts and tests for reliability were used and displayed in context for the data type.
Exploratory analysis was exemplified by visual representations of relationships for
nominal data. The choice of data display was chosen in order to have the clearest
conveyance of the themes, categories, or summaries of the data in order to accentuate the
examined or hypothesized conclusions.

86

Ethical Considerations
In accordance with the principles of the Belmont Report, these directives were
addressed.
Respect for persons: Individuals within this survey were treated as autonomous
agents who are capable of deliberation of personal goals and self-determination as
subjects of participation in research.
Informed consent: The survey document was provided with the assurance that the
study recognized each individual's rights to privacy, along with a demonstrated respect
for persons, and with the assurance that individual results were not identifiable to any
individual or label.
Beneficence: This study assumed the primary responsibility to do no harm and to
design research that maximized the benefits relative to the risks of the research. The
Belmont Report recognized the complexity of determining who benefits from research.
This research was designed as a foundation for future research benefiting the work
environment within the learning organizational research. No harm was done to any
organization or individual by the generalization of the results, with no specific company
identified.
Justice: Justice is more applicable to clinical trials and there was no evident
detriment available to any participant due to the survey nature of the study.
Confidentiality of data: The right to privacy was implied and directly stated
implicitly on the questionnaire. The response was anonymous with no possibility of the
researcher determining which company or individual submitted the survey. The
participants were informed that the study survey was confidential and that all results
87

would be generalized in a manner that avoided the identification of any specific

company. Additionally, participants were informed that specific data would be kept
confidential and secure by the researcher.

88

CHAPTER 4. DATA COLLECTION AND ANALYSIS

Introduction
This chapter presents the analysis of responses from the Dimension of the
Learning Organization questionnaire as collected from a purposeful cross-section of
representative record companies in Nashville, Tennessee. Results presented are by order
of research questions without discussion or implication of the findings. It is important to
note that this study was not a validation or test of the learning organization model, but
rather an assessment of its existence in the sample population within the Nashville
market.

Population Sample
The sample was drawn from a target population of approximately 700 record
company employees, according to a 2006 economic impact survey of the NashvilleDavidson-Murfreesboro population conducted by the Nashville Area Chamber of
Commerce and Belmont University (2006). The population size of 690 employees was
indicated by the 2006 label directory, Music Row magazine, a local trade periodical. With
a general environment of declining market sales and mergers within the sample
population, this study cautiously assumed a general sample population of 700. Survey
respondents produced a net response of 275 respondents, for a response rate of 39%. Of
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this pool, 84 respondents (31%) were designated as Indie record company employees, 36
(13%) were Major Indie, and 155 respondents (56%) were Major Label employees.
The units of measurement were grouped into three accepted levels within the
record company industry:
1.

Indie: (a) labels not affiliated with a major international conglomerate, (b)
unit sales under 500,000, and (c) distributed through independent
distributor or affiliated major distributor,

2.

Major Indie: (a) label not affiliated with a major international

conglomerate, (b) unit sales over 500,000, and (c) distributed through
affiliated major distributor, and

3.

Major: (a) labels affiliated with a major international conglomerate, (b)

unit sales over 1,000,000, and (c) distributed through affiliated major
branch distributor of parent multinational corporation.

Visual analysis of frequency response patterns indicated that data followed a

normal distribution pattern, likely due to high response rates via the central limit theorem
(Robson, 2002). Additionally, both Chi-square tests and kurtosis statistics centered
between -.935 and +.860 for each separate survey question. Standard error of kurtosis
was also within normal distribution at .293 (Gujarati, 1999; Robson, 2002). The standard
error of skewness scored at .147, also within the bounds of normal distribution (Cohen,
1969). Regardless, it may be worthy to mention that some moderate violations of
parametric assumptions are shown to have little or no effect on substantive conclusions in
most instances (Cohen, 1969, Sterne & Smith, 2001).

90

Data Collection
Data was collected using Websurvey.com. Initial solicitation was sent via e-mail
to subscribers of Music Row magazine, a widely used Nashville music industry trade
periodical. After a low initial response rate, an additional mail-out solicitation card was
sent to all listed record labels, as well as further solicitation through Music row
Magazine's e-mail list. The deadline was extended for another 5-week window of
collection and response rate increased significantly. Data was entered directly though
data export from the survey Web site and imported directly into SPSS. The Web-survey
instrument was coded in a manner not allowing respondents to proceed to the next
question until each question was answered, creating little unusable data. A total of six
respondents submitted partially completed questionnaires, which were discarded from
final results.

Research Questions Results Introduction

The theoretical framework of the study was represented by the Watkins and
Marsick (1993) model (see Figure 5), which modeled the learning organization as the
seven constructs of continuous learning, inquiry and dialogue, team learning,
empowerment, embedded system, system connection, and leadership for learning. This
framework moved the theoretical benefits of learning into an organizational assessment
tool. Research methodologies used to examine the learning organization subconstructs
were measured with descriptive statistics and statistical analysis related to each question.
Correlations, ANOVA, and multiple regressions were used to measure the bivariate
relationships between the independent variables (the dimensions of the learning
91

organization) and the dependent variables listed within research questions. Resultant
coefficients of determination were also used to interpret the regression coefficients.

Research Question 1
To what extent do record companies perceive their organizations as learning
organizations in relation to Watkins and Marsick's seven dimensions of the learning
organization?
Watkins and Marsick's learning organization (LO) measured Continuous
Learning: create continuous learning opportunities; Dialogue: promote inquiry and
dialogue; Team: encourage collaboration and team learning; Embedded Systems: establish
systems to capture and share learning; Empowerment: empower people toward a
collective vision; System Connectedness: connect the organization to the total
environment (internal and external); and Learning Leadership: organizational leadership
for modeling and support of learning.
Record company respondents generally showed a tendency to rate themselves
slightly above average on a 6-point scale, ranging from 3.93-4.35 (n = 275) with 3.5 as
the midpoint average. The lowest rated element (subconstruct) of the LO was embedded
systems, or capturing/sharing learning and information across the organization (M =
3.21), which was below average and weakest of all survey measures. An overall
descriptive analysis is provided in Table 1.

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Table 1. Descriptive Analysis of Elements of the Learning Organization (n=275)

Mean
Std. Error of Mean
Std. Deviation
Variance
Skewness
Std. Error of Skewness
Kurtosis
Std. Error of Kurtosis

Continuous Dialogue Team

Embeded Empower- System
Learning
Learning Inquiry Learning System ment
Connected Leadership
4.05
4.27
4.27
3.21
3.93
4.23
4.35
0.06
0.07
0.06
0.07
0.07
0.07
0.07
0.99
1.10
1.00
1.16
1.12
1.13
1.22
0.97
1.20
1.00
1.34
1.25
1.28
1.48
-0.55
-0.47
-0.88
0.17
-0.50
-0.66
-0.65
0.15
0.15
0.15
0.15
0.15
0.15
0.15
-0.32
-0.32
0.86
-0.94
-0.46
-0.31
-0.29
0.29
0.29
0.29
0.29
0.29
0.29
0.29

________________________________________________________________________

Further examination of the lowest scoring subconstruct of embedded systems

provided more details of survey questions 20-25 (Q20-Q25), which showed specific
deficiencies within two-way communication represented by question 20 of survey (M =
3.28) (see Table 2).

Table 2. Embedded Systems of the Learning Organization

Survey
Question #
Q 20
Q 21
Q22
Q 23
Q 24
Q 25

Mean
3.38
4.14
2.62
3.02
3.4
2.78

Learning Organization Concept

Two way communication/suggestions/open dialogue
Ability to open information quickly and easily
Up-to-date database of employee skills
System to measure current and expected perofrmance gaps
Sharing "lesson learned' to all employees
Measure results of time/resources spent on training

________________________________________________________________________

Within embedded systems, Question 22 also indicated that up-to-date collection of

employee skills for the use of other employees was below mean average ( = 2.62).
Question 25 scored the second lowest value (M = 2.78) for the organizations use for
measurement of resources and time spent on training. Also below average were two-way
93

communications/open meetings (survey question 20: M = 3.28), systems used to measure

gaps in performance (survey question 23: M = 3.02) and lessons learned available to all
employees (survey question 24: M = 3.40).
Given that overall LO measures were above average, the standout subconstruct
was embedded systems (M = 3.21). The capture and sharing of learning across the
organization was below average and weakest of all survey measures. Question 22 showed
that there is no repository of knowledge or skills for the use of other employees (M =
2.62). Combined with below average scores for two way communication and open
meetings (survey question 20: M = 3.28), the data suggested that record company
structure was more dedicated to individual effort than that of the organizational whole.
This analysis followed the argument that without two-way communication, there was no
access to individual or team knowledge. If there were no transmittance of individual
knowledge to the team, then there would be no system for sharing or embedding the
knowledge for use of other employees. The lack of systemic measurement by the
organization in order to measure gaps in performance (survey question 23: M = 3.02) was
further indicated from the same logic flow: A general lack of shared organizational
knowledge precluded the formation of evaluation or benchmarks. Without the collection
of performance standards or benchmarks developed from a pool of shared knowledge of
success and failure, then there is little basis or need to design a system to identify gaps in
performance.
The below average score of knowledge from lessons learned available to all
employees (survey question 24: M = 3.40) indicated that as information is generally
withheld privately, learning and knowledge within the organization was not generally
94

available to all employees as a resource. Without a structured system for sharing or

embedding knowledge within the organization system, employees do not have access to
all the information they need from the organization. This relationship between dialogue
and openness that was indicated by Figure 7: the greater openness and dialogue, the
farther information moved from the individual to the organization. The more openness,
trust and dialogue that existed within an organization for the communication of
information, the more transferable knowledge became from the individual to the
organization. This indicated that employees cannot build decisions on the wholeness of
the organization's information if they cannot learn from each member's success and
mistakes within the system.

+
Openess
Dialogue

Individual
Knowledge

+
Team
Knowledge

Organizational
Knowledge

Figure 7: Demand curve for the transfer of information to the organization

The data reflected that the lack of knowledge sharing between employees was
linked to knowledge sharing within the organization. If knowledge began at the
individual level and progressed to the organization level, then knowledge withheld at the
95

individual level stops the learning transfer process. This indicated that organizational
feedback through the measurement of resources and time spent on the training of
employees flowed from the value of individual knowledge. If there was little individual
value at sharing knowledge, then there was little organizational value for generating
knowledge through training, as indicated through survey question 25, which measured
time/resources spent on measuring the value of training (M = 2.78). The data then
indicated a relationship between information and knowledge flow: If training generated
knowledge, but knowledge was not shared, then there was no incentive to institute
training as an organizational resource. Training, if implemented, was perceived as nonvalue added because its value was not measurable within the organization, but instead
was only measurable to the individual, resultant from the initial lack of information
sharing throughout the organization.

Research Question 2
Are there differences in the perceived ratings of record companies in relation to
Watkins and Marsick's seven dimensions of the learning organization according to
organization size?
There were general differences in the elements measured by Watkins and
Marsick's seven dimensions of the learning organization when reported by size of
organization. Generally, the learning elements were rated higher for the smallest
organization (Indie), second best for the largest organization (Major Label), and lowest
for the mid-size organization (Major Indie).

96

As shown in Table 3, while the sample size differed, the Indie label rated highest
in all categories. When measured as a percent of change, Major Indies averaged 18%
lower than Indies for the overall LO score, while Major Labels averaged 15% lower than
Indie labels. Salient factors were that Major Indie labels rated the learning organization
variables lowest with embedded systems to transfer learning throughout the organization
noticeably low at M = 2.87. Major Labels rated second best with the lowest element rated
as embedded systems at M = 3.00.

Table 3. Mean Scores with Percentage Change%byChange

Label Size
Indie to Major
Indie Label Major Indie Indie
Continuous Learning
4.47
3.71
-17%
Dialogue Inquiry
4.73
4.04
-15%
Team Learning
4.51
4.12
-9%
Embeded System
3.73
2.87
-23%
Empowerment
4.46
3.45
-22%
System Connectedness
4.88
3.66
-25%
Learning Leadership
4.89
3.97
-19%
Total Average
4.53
3.69
-18%

Major
3.90
4.08
4.17
3.00
3.76
4.00
4.15
3.86

% Change
Indie to Major
Indie
-13%
-14%
-8%
-20%
-16%
-18%
-15%
-15%

______________________________________________________________________
With regard to differences in the dimensions of the learning organization according
to organization size, there was a significant (-18 %) change in total average score from
Indie to Major Indie, and a significant (-15 %) drop in average score from Indie to Major
Label. This illustrated that the elements of the learning organizations differed when
measured across organizational size. The data indicated that smaller organizations
(Indies) are more accessible to the learning organization ideal as modeled by the
Marsick-Watkins instrument. As size increased, learning became problematic, illustrated
by a decrease in effectiveness of organizational learning transfer indicated by the lower
97

scores from both Major and Major Indie labels for embedded systems to transfer
knowledge, empowerment, and system connectedness to the environment (see Figure 8).

5.00
4.50
4.00
3.50
3.00

er
m
en
Co
t
nn
ec
te
Le
dn
ar
es
ni
s
ng
Le
ad
er
sh
ip

ste

Sy

ste
m

Em
po
w

Sy
de
d

Em
be

Le
ar
n

in

ry
Te
am

gu
e
D
ia
lo

Co
nt
in

uo
us
L

ea
rn

In
qu
i

in

2.50

Indie
Label
Major
Indie
Major

Figure 8. Category scores for the elements of the learning organization

Significantly, the midsize organization (Major Indie) rated lower than did the larger
counterpart, the Major Label. This seemed counterintuitive and suggested that there was
more to examine than the mere size of the organization related to the learning
organization. In Nashville, there were few midsize labels operating independently of the
Major Label system. Most had merged or closed due to dramatic sales decline. With
much of this merger activity and many rumors within Nashville, there seemed to be much
stress surrounding job stability within the community. If employee motivation had then
become the desire to survive, rather than share information, and if information is value,
then the withholding of information by the individual created power and value for the
employees in this environment. This chain of effects showed that the outside influence of
98

unstable environments motivated employee learning toward preservation rather than

toward learning. This was indicative that learning organizations best exist in a stable and
secure internal environment.

Research Question 3
How is a firm's degree of learning orientation related to self-reported financial
and knowledge performance?
The relationship between the learning organization and financial/knowledge
performance was measured as a linear association using correlation, indicating the
convergent validity of the subconstructs of the Watkins Marsick learning organization
model to financial and knowledge performance. Interpretation of the data was based on
Cohen's (2003) interpretations for correlations coefficients (small correlation is +/- .29
to+/-.10; medium correlation is +/- 0.49 to +/-0.30; and strong/large correlation is +/-.50
to +/-1.00). Both individual and joint analyses were examined. All correlation
coefficients were significant at the p < .01 (two-tailed) level.
Overall, the knowledge and financial performance of the organization were
positively related to the elements of the learning organization. When all the learning
organization subconstructs were combined into one factor, the total cumulative learning
model was strongly and positively correlated at .675 to knowledge performance with a
medium positive correlation (.434) to financial performance (see Table 4).
The data indicated that the learning organization as a whole was most positively
linked to knowledge performance (correlation .675: p<.01: 2-tailed) rather than financial
performance (correlation .434; p<.01: 2-tailed). Knowledge performance and financial
99

performance also correlated to each other (.524; p<.01: 2-tailed). This indicated that both
knowledge performance and financial performance had convergent validity or were
positive linked to each other, as well as to the learning organization model.

Table 4. Correlation of Learning Elements to Financial and Knowledge Performance

Correlation n=275
Learning Model
Knowledge
FinancialReward

Learning Model
1
.675(**)
.434(**)

Knowledge
.675(**)
1
.524(**)

Financial Return
.434(**)
.524(**)
1

Note: **Correlation is significant at the 0.01 level (2-tailed).

Individually, each LO element displayed a positive relationship between all the

elements of the learning organization. As displayed in Table 4, financial performance
was significantly the lowest grouping of correlations in the analysis to all other elements
(.329-.524). Conversely, knowledge performance was more associated to continuous
learning (.655) and empowerment (.650), with the remaining elements of the LO strongly
correlated between .524-.597, which displayed a stronger relationship between the LO
subconstructs to knowledge performance than financial performance.
Overall, knowledge and financial performance displayed positive correlation as
the resultant effect of the learning organization. Knowledge performance was strongly
related (.675: p<.01: 2-tailed) to financial performance (.434: p<.01: 2-tailed).
Knowledge performance and financial performance were also related to each other at
.524 (p<.01: 2-tailed), which indicated that both knowledge performance and financial

100

performance exist strongly dependent on each other and are perhaps not independent
elements within the LO.

Table 5. Correlation of Individual Learning Organization Subconstructs

Knowledge Financial Continuous Dialogue Team Embeded Empower- System Learning
Performance Performanc Learning Inquiry Learning System ment
Connect Leadership
Correlation Variables
e
Knowledge Performance
1
Financial Reward
0.524
1
Continuous Learning
0.655
0.437
1
Dialogue Inquiry
0.564
0.329
0.81
1
Team Learning
0.634
0.340
0.802
0.867
1
Embeded System
0.585
0.477
0.769
0.724
0.681
1
Empowerment
0.650
0.396
0.799
0.815
0.803
0.764
1
System Connectedness
0.597
0.384
0.751
0.730
0.761
0.684
0.818
1
Learning Leadership
0.586
0.374
0.809
0.832
0.821
0.714
0.858
0.795
1
Note: **Two tailed test. All Correlations are significant at the 0.01 level.

______________________________________________________________________

Even though Table 5 shows that each element of the learning organization was
generally positive, financial performance was significantly the lowest correlation
grouping (.329-.524). This indicated that financial performance may be a secondary
relationship to knowledge performance and the capacity to generate and improve
products does not always equate strongly to financial performance. This also suggested
that there were external factors outside of the learning organization and that knowledge
performance may also affect final financial performance. However, it is difficult to
suggest that knowledge performance, reflected by the ability to innovate, improve
products, and connect to the competitive environment, was not strongly tied to financial
performance--as the factors are correlated between themselves (.524, p<.01: 2-tailed).
This may instead show a weaker association between financial performance and other
101

elements such as dialogue inquiry (.329), team learning (.340), learning leadership
(.374), system connectedness (.384), and empowerment (.396), due to an association of
each subconstruct to knowledge performance, then secondarily to financial performance.
The data indicated that the learning organization construct was more associated to
knowledge performance, and then secondarily tied to financial performance. Figure 9
showed this correlation reflected from Table 4 and Table 5.

Empowerment
.650
Continuous
Learning

.655

Learning
Leadership

.675

.634

Team
Learning

Knowledge
Performance
.586
.524
.597

Financial
Performance

System
Connectednes
Dialogue
Inquiry

.564
.434

All Learning
Organization
Elements

Figure 9. Primary linkage of learning organization to knowledge performance

As suggested by Figure 9, if each LO element was more associated with

knowledge performance (.675 cumulatively) but only weakly associated to financial
performance (.434), then the cumulative systemic affect of the total learning organization
was more associated to knowledge performance (.675) than any individual element. As
102

the LO elements were shown to be weakly associated to financial performance (.434) and
more strongly associated to knowledge performance (.524), data indicated that the
learning organization's subconstructs may be more directly correlated or linked to the
performance enhancement of knowledge performance with financial performance as a
secondary linkage. Acknowledging that correlation does not lead to causation, this
argument was somewhat speculative and was based on the strength of association from
the proportion of variation explained by the correlation scores (Brace et al., 2006).

Research Question 4
Are there differences in financial and knowledge performance related to
organization size?
In order to gauge performance, the cumulative learning organization was
regressed as the independent variable with financial performance and knowledge
performance used as dependent variables (Robson, 2002). As dependent variables, the
data indicated differences for financial performance and knowledge performance with
respect to organizational size as defined by Indie, Major Indie, and Major. All results
were significant (p = .001) with the coefficient of determination (R2adj ) showing a poor
model fit to financial performance as the dependent variable, with Major Label r2adj =
.142, Major Indie r2adj =.277, and Indie r2adj = .292 (see Table 6). This explained between
14% and 29% of the variability and left between 71% and 86 % residual variability
unexplained. Knowledge performance displayed a stronger explanatory value with Major
Label (r2adj = .524), Indie (r2adj = .391), and Major Indie (r2adj =.235), indicating a model
fit accounting for between 39.1% and 52.4% of the variance (see Table 6).
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Table 6. Cumulative Learning Organization as Independent Variable

Dependent: Finance
Std.
ADJ. R2 Sig.(2 Tail)
Major
0.384
0.142
0.001
Major Indie
0.546
0.277
0.001
Indie
0.548
0.292
0.001
Dependent: Knowledge Std.
ADJ. R2 Sig.(2 Tail)
Major
0.726
0.524
0.001
Major Indie
0.506
0.235
0.002
Indie
0.631
0.391
0.001
Note: All ANOVA significant at .001 level
Independent Variable: All Learning Organization Variables

_______________________________________________________________________

As predictive coefficients (standardized ), Major Label financial performance

increased by .384 (38%), Major Indie by .545 (54%), and Indie Label increased by .548
(54%) for every unit increase of LO. Conversely, for every one-unit increase of the
cumulative learning organization score, knowledge performance increased by .726 (72%)
for Majors, .506 (50%) for Major Indies, and .631 (63%) for Indies (see Table 4). This
implied that the strongest gain from the learning organization was knowledge
performance, rather than financial performance, which was either affected by other
external factors or was indicated as a secondary result related to knowledge performance.
Data analysis indicated that there were differences in respect to organization size
to knowledge performance and financial performance. The largest organization generated
the best knowledge performance, but conversely generated the smallest financial
performance, while the smallest and midsize companies generated similar, and the best,
financial performance against knowledge performance. The constructs displayed a poor
fit of the model when examining the cumulative elements of the LO to financial
performance (Major =.384, R2adj = .142; Major Indie =.546, R2adj =.277; and Indie
104

=.548, R2adj = .292). However, knowledge performance displayed stronger explanatory

values (Major Label = .726, R2adj = .524; Major Indie = .506, R2adj = .235; and Indie
= .631, R2adj = .391). Again, this may indicate that the learning organization was more
linked to knowledge performance and then secondarily linked to financial performance.
The argument was that the effect of the LO was designed to affect knowledge generation,
which could then be applied to product improvement in order to generate financial
performance. However, financial performance, while tied to product improvement and
performance, may also be affected by external factors beyond the organizations reach,
such as marketplace competition.
The data indicated that there was a more direct connection between knowledge
performance and financial performance for Indie labels and Major Indie labels. Then, as
organizational size increased, the linkage between knowledge performance and financial
performance became more separate. This could indicate an increasing disconnect of the
transfer of knowledge from financial performance as the organization grows. This may be
the most salient aspect of this finding: that the data evidenced a strong impediment
affecting the transfer of knowledge from the individual to the team and then to the
organization as the organization grows, especially affecting the transfer of learning to the
organizations financial performance. This was best evidenced by Major Label groups
that exhibited the highest knowledge performance (=.726, r2adj = .524) but reflected the
poorest financial performance and financial model fit (=.384, r2adj = .142). Although
data indicated that Major Labels most effectively used the learning construct for
knowledge performance, this also indicated that smaller organizations somehow
overcome any inherent disability of the larger organization.
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Research Question 5
What are the relationships of each learning orientation subconstruct to knowledge
performance?
In order to indicate the single predictive nature of each separate independent
variable of the dimensions of the learning organization, a bivariate analysis using the
dependent variable of knowledge performance was regressed. All variables were
significant (p = .001). Continuous learning showed the strongest relationship ( = .66, r2
= .43) with dialogue inquiry indicating the weakest performance ( = .56, r2 = .32).
However, all predictors showed excellent explanatory effect with coefficients ranging
from .56-.66 (see Table 7) with no coefficient of determination standing out as deficient
with r2 ranging from .32-.43 (see Table 7).

Table 7. Simple Regression Coefficients of the Dimensions of the Learning Organization

with Knowledge Performance
Knowledge
Standardized Coefficients*
Independent Variables
()
Continuous Learning
0.66
Dialogue / Inquiry
0.56
Team Learning
0.63
Systems to Capture Learning
0.59
Empowerment
0.65
Connect to Environment
0.60
Leadership for Learning
0.59
*All Coefficients Significant at .001 (2 tailed)

Coefficient of
Determination
(r2)
0.43
0.32
0.40
0.34
0.42
0.35
0.34

____________________________________________________________________

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A multivariate regression examined the systemic relationships between each

independent variable (see Figure 10). The results determined significant change within
model coefficients and the general model fit of the variables.

Figure 10. Multiple regression of the learning organization and knowledge performance

The systemic effects of the variables, when compared to the single linear
regression, indicated that the cumulative systemic interaction increased the overall model
fit, evidenced by the r2 increase (r2 = .491) for the multiple regression, versus the single
values (r2 = .43-.34). Additionally, the singular value increased far beyond any single
regression value (see Figure 10). This empirically reinforced the assertion that the
interaction of the learning organization's cumulative value for knowledge performance
was greater than the effect and model fit of any single LO element. The highest
coefficients were continuous learning ( = 3.523), team learning ( = 3.363), and
empowerment ( = 3.031). Conversely, as a multiple regression, dialogue inquiry ( = 2.471) was negatively related to knowledge performance. Other variables rejected as
insignificant were systems to capture learning ( = 1.448, p = 149), connectedness to the
environment ( = .797,p = .426), and leadership for learning ( = -1.287, p = .199). The
degree of systemic change of from individual regressions in Table 6 was significant,
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ranging from -538% to +438%, with the most significant change from continuous
learning, team learning, and empowerment, which increased significantly (respectively
+438%, +430%, and +366%). Of note was that dialogue/inquiry (-538 %) and leadership
for learning (-320%) shifted to from positive to negative coefficients
While the Watkins Marsick learning organization model was designed as the
optimum model for assessment, actual practice may differ. An examination showed that
while continuous learning is important to knowledge performance, some elements such as
dialogue and inquiry, systems to capture learning, connectedness to the environment and
leadership for learning are non-existent or insignificant in the current model. With
dialogue inquiry reflected as -2.471, the results indicated that employees retained
knowledge at the individual level in what might be labeled as knowledge hoarding. A
rationale was explained by a response from an employee at a local record company when
he was asked what he thought about this result:
Much of your effectiveness is based on who and what you know. Knowledge is
power. You bring this value to the table. If you share information, it lessens your
worth to the company and allows others to move ahead of you.

Inquiries of other employees verified that individuals who focused on knowledge

hoarding were prevalent, possibly from the environment being in a state of uneasiness
regarding job security. It seemed that as employees jockeyed for retention of
employment, knowledge generation through open dialogue was minimized.
This may explain how systems to capture learning was reported as insignificant
( = 1.448, sig. = .149). The rationale flowed as follows: There was no motivation for an
organization to establish a database or repository of knowledge if individual knowledge
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was prioritized over the dissemination of gained knowledge to the organization. This may
have been further compounded by the insignificance of connectedness to the environment
( = .797, p = .426), arguably the result of learning and knowledge that was focused
internally, not externally.
Significantly, leadership for learning ( = -1.287, p = .199) was a negative and
insignificant contributor for knowledge performance. This data indicated two attributes:
(a) that employees are more concerned with self than organization, and (b) leadership, no
matter how encouraging, may not actually reinforce learning. Leaders have the authority
to shape learning through their individual encouragement, as well as through the creation
of structures of rewards or appraisal that reinforce and reward learning. Despite
verbalization that learning within the organization is valued, the learning culture may be
rendered ineffectual through the overall behavior and action of the leader, combined with
the effects of the institution in rewarding learning. While completing this research, the
daily activities of many of the sample group were observed. It seemed that daily meetings
were far more open and communicative than anticipated. However, as survey results
indicated differently, then perhaps employees were only performing for leadership and
actually acting as self-driven agents. Conversely, even as leaders implore employees to
share knowledge, leadership actions may reflect more interest in driving profit margins or
market share, showing a lack of understanding that perhaps the learning environment
must be connected throughout the reward and appraisal system to be more effective for
individual performance.
A regression was performed, using a forward stepwise regression for
determination of the optimum model fit with the LO variables surveyed. Results
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indicated several variables were discarded and the overall model fit (r2) decreased
slightly from r2 = .491 to r2 = .488 (see Table 8).

Table 8. A Stepwise Forward Regression Optimizing Model Fit

Model Summary(e)
Model
r
1
2
3
4

.655(a)
.688(b)
.695(c)
.704(d)

r2
0.429
0.473
0.483
0.496

Adjusted r2 Std. Error of the Estimate Change Statistics

R Square Change
0.427
0.711
0.429
0.469
0.684
0.045
0.477
0.679
0.009
0.488
0.672
0.013

Durbin-Watson
Sig. F Change
0
0
0.028
0.008
1.79

a Predictors: (Constant), Continuous Learning

b Predictors: (Constant), Continuous Learning, Empowerment
c Predictors: (Constant), Continuous Learning, Empowerment, Team Learning
d Predictors: (Constant), Continuous Learning, Empowerment, Team Learning, Dialogue Inquiry
e Dependent Variable: Knowledge Performance

________________________________________________________________________

The best-fit model reflected by continuous learning, empowerment, team

learning, and dialogue inquiry (Model 4) was determined within the record company
sample with standardized beta coefficients indicated in Table 8. Significantly, the
negative coefficient of dialogue inquiry retained and indicated performance increases in
the remaining variable of continuous learning, empowerment, and team learning (see
table 9), despite poor dialogue/inquiry.
The data (see Table 9) indicated that even negative coefficients could have a
positive influence on other system factors. Any amount of dialogue and inquiry, no
matter how positive or negative, increased the performance of other variables. This
implied that the transfer of knowledge at the individual level (empowerment, team
learning, dialogue, continuous learning) was more contributory to knowledge
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performance than systemic variables such as systems, leadership, and connectedness to

the environment. This also signified that in actual practice, knowledge performance was
not dependent on leadership, but more dependent on individual and team activities. The
data signified that if employees could be developed to learn in a manner that can
empower, knowledge performance could be enhanced.

Table 9. Stepwise Forward Regression of the Learning Organization Variables.

Model
1
2

Coefficients(a)

Unstandardized Coefficients Standardized Sig.

Std. Error

(Constant)
1.753
0.181
0.001
Continuous Learning
0.623
0.044
0.655
0.001
(Constant)
1.672
0.175
0.001
Continuous Learning
0.357
0.070
0.375
0.001
Empowerment
0.295
0.062
0.351
0.001
(Constant)
1.525
0.186
0.001
Continuous Learning
0.280
0.077
0.294
0.001
Empowerment
0.226
0.068
0.269
0.001
TeamLearning
0.170
0.077
0.182
0.028
(Constant)
1.532
0.184
0.001
Continuous Learning
0.334
0.079
0.351
0.001
Empowerment
0.279
0.070
0.331
0.001
Team Learning
0.293
0.089
0.312
0.001
Dialogue Inquiry
-0.224
0.084
-0.261
0.008
Dependent Variable: Knowledge Performance

_______________________________________________________________________

Research Question 6
What are the relationships of each learning orientation subconstruct to financial
performance?
A bivariate analysis for each separate independent variable of the dimensions of
the learning organization and the dependent variable of financial performance was
111

completed. The simple linear regression of each variable allowed for the estimation of
variation unique to each independent variable. This would then indicate and isolate the
single predictive nature of each variable.
Results indicated that systems to capture learning was the strongest relationship
( = .48, r2 = .22) for financial performance. This was followed by continuous learning
( = .44) with 19% of variation explained in the model (r2 = .19) (see Table 10).

Table 10. Simple Regression Coefficients of the Dimensions of the Learning Organization
with Financial Performance

Independent Variables

Standardized
Coefficient of
Coefficients Financial Determination
Performance ()
(r2)

Continuous Learning
0.44
Dialogue / Inquiry
0.33
Team Learning
0.34
Systems to Capture Learning
0.48
Empowerment
0.40
Connect to Environment
0.38
Leadership for Learning
0.14
All Coefficients Significant at .001 (2 tailed)

0.19
0.11
0.11
0.22
0.15
0.14
0.37

_______________________________________________________________________
In order of beta () strength, other predictors of performance included
empowerment ( = .40), connectedness to the environment ( = .38) team learning ( =
.34), dialogue/inquiry ( = .33) and leadership ( = .14). Interestingly, leadership was
again the lowest explanatory, but had the highest account for variation of the financial
model with a coefficient of determination of at r2 = .37. Compared to knowledge
performance (range = .66-.56), all predictors indicated for financial performance were
slightly lower, with coefficients ranging from .14-.48. The data indicated that the
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relationship of the learning organization was stronger to knowledge generation, and

secondarily to financial performance, as discussed earlier in research question 3.
As a multivariate regression, the Watkins Marsick variables were then applied to
financial performance as the dependent variable. Figure 11 compared both the simple
regression of each element and the overall multivariate regression. At first glance, the
overall model coefficient of determination value (r2 = .491) increased over single model
values, indicating that the systemic interaction of individual elements increases the value
of the model, as opposed to each single element. The relative order of coefficients
remained the same with system to capture learning ( = .365) followed by continuous
learning ( = .251) and dialogue inquiry indicated by a negative value ( = -.224; p =
.07). Other elements such as team learning, empowerment, connectedness to the
environment and leadership for learning changed values and became insignificant to the
assumptive null hypothesis that all variables affected financial performance. This was
significant, as it indicated that the institutional factors such as systems, reflected by
systems to capture learning, and then by continuous learning and dialogue, were more
significant than the individual and group elements of team learning, empowerment,
connectedness to the environment, and leadership. This seemed to reinforce the
derivative nature of financial performance to knowledge performance: the learning
organization reinforced group and individual learning while transfer to systems
reinforced financial performance.

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Simple Regression

Multiple Regression

Standardized Coefficient of Regression

Per Cent
Determination Coefficient (r2=
Financial
Change of
Independent Variables
Performance ()
(r2)
.491)
Significance

Constant =14.80
0.001
Continuous Learning
0.44
0.19
0.251
0.024
-43%
Dialogue / Inquiry
0.33
0.11
-0.224
0.071
-168%
Team Learning
0.34
0.11
-0.200
0.868
-159%
Systems to Capture Learning
0.48
0.22
0.365
0.001
-23%
Empowerment
0.40
0.15
0.026
0.837
-93%
Connect to Environment
0.38
0.14
0.084
0.403
-78%
Leadership for Learning
0.14
0.37
0.025
0.840
-82%
All Coefficients Significant at .001 (2 tailed)

Figure 11. Multiple regression of learning organization and financial performance

While the Watkins Marsick learning organization model was designed as the
optimum model, actual practice differed concerning financial performance. An
examination showed that the single regressors changed from single positive coefficients
to either insignificant or negative factors when evaluated systemically. This showed that
either the variation unique to each element was negatively correlated, or that the variation
unique to each independent variable did not affect performance as expected within the
system.
The systemic effects of leadership, connectedness to the environment,
empowerment, and team learning were not present within the sample population as an
effect on financial performance. This can be taken as a measurement of what is rather
than what should be within the sample, especially given the rather small explanatory
values. Conversely, it may simply indicate a causal relationship to knowledge
performance, rather than the subconstructs of the LO. However, the results indicated that
at the financial performance level, systems to capture and share knowledge are
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paramount to increasing the financial performance value (systems to capture learning =

.365, continuous learning = .251, dialogue inquiry = -.224). This indicated that the
transfer of knowledge at the corporate level was more important than at the individual
level when achieving improved financial performance as an output of the learning
organization.

Research Question 7
To what extent do authority levels of management and operations differ in their
self-reported levels of the learning organization with regard to Watkins and Marsick's
seven dimensions of the learning organization?
In addressing the research question of perception with regard to learning systems,
the data indicated that with the exception of non-management salary, there was a higher
level of expectations of the perception of the learning organization as managerial
authority increased. Management authority was defined through levels within the
Watkins Marsick survey as executive leadership/CEO/, senior management/VP, middle
management (project or department manager/director/supervisory),
administration/staff/non-management/operations/implementation, and non-management
(hourly employee).
Continuous learning reflected a categorical mean of 4.05, a better than average
rating, with the lowest rating for continuous learning given by non-management salary at
M = 3.63. Dialogue inquiry (M = 4.27) indicated the highest rating from nonmanagement hourly (M = 4.54). Senior executive rated "learning" highly (M = 4.53), with
non-management salary rated lowest (M = of 4.54) (see Figure 12).
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Continuous Dialogue- Team

Embeded Empower- System Learning Financial Knowledge Average
Learning
Inquiry Learning System ment
Connect Leadership Reward Performance by Level
Coordinator (48)
4.34
4.30
4.41
3.52
4.23
4.52
4.71
4.52
4.65
4.35
Non MGT-Hourly (30)
4.26
4.54
4.61
3.29
4.06
4.28
4.59
3.95
4.37
4.22
Senior/Exec (59)
4.16
4.53
4.33
3.24
4.07
4.33
4.65
3.99
4.06
4.15
Middle (78)
4.02
4.32
4.34
3.47
3.98
4.20
4.19
4.08
4.22
4.09
Non Mgt-Salary (60)
3.63
3.79
3.83
2.53
3.44
3.91
3.87
3.75
4.21
3.66
Category Mean
4.05
4.27
4.27
3.21
3.93
4.23
4.35
4.05
4.28

Figure 12. Rating of learning organization by authority levels of management

Team learning averaged 4.27, indicating that most record company types are
conducive to team projects; however, non management salary rated this lowest at 3.35, or
below the midpoint of 3.5 out of a 6-point scale. Embeddedness of the learning system
rated lowest of all categories, reflecting the lack of systems to transfer knowledge within
the system. The lowest perception rated from non-management salary employees at 2.53.
Empowerment was relatively high on all subsets, ranging from middle management (M =
4.19) to senior executive (M = 4.65), with the lowest rating from non-management salary
(M = 3.44). System connectedness ratings were similar (M = 4.23) with the exception of
non-management salary (M = 3.91) as the lowest rating. Learning leadership rated
highest at the senior executive scale at 4.65 with the lowest rating from non-management
salary (M = 3.87) or slightly above average.
Interestingly, financial reward was slightly lower than other categories (M=4.05)
with executive leadership at M = 3.99, boosted by both coordinators (M = 4.52) and
middle management (M = 4.08). Knowledge performance was rated higher than financial
performance in all categories, with all employees perceiving the knowledge performance
of the organization generally as above average.

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The data indicated that managerial levels reflected a mean difference within each
element and with the overall perception of learning organization outcomes. Indicated as a
percent change from the scale average (M = 3.5), Figure 13 indicated that the more direct
control an employee had over individual activity, the higher the rating. Thus, senior
executives, coordinators, and non-management rated continuous learning highest.
Significantly, senior executives, coordinators, and non-management hourly rated the
learning organization highest, with non-management salary rating consistently lowest.

Senior/Exec
Middle
Coordinator
Non Mgt-Salary
Non MGT-Hourly
Overall Mean

Continuous DialogueTeam
Learning
Inquiry Learning
16%
23%
19%
13%
19%
19%
19%
19%
21%
4%
8%
9%
18%
23%
24%
14%
18%
18%

Embeded Empower- System

Learning Financial Knowledge
System
ment
Connected Leadership Reward Performance
-8%
14%
19%
25%
12%
14%
-1%
12%
17%
16%
14%
17%
1%
17%
23%
26%
23%
25%
-38%
-2%
10%
10%
7%
17%
-6%
14%
18%
24%
11%
20%
-9%
11%
17%
20%
14%
18%

Figure 13. Variance as a Percent from Scale Average (3.5)

This suggested that job scope and span increased a perception of the learning
outcome, as well as learning being dependent on where employees fit into the
organization ladder. With this in mind, the significant result was that non-management
salary consistently rated lowest, suggesting that control and authority affected the
perception of learning.
Generally, the results indicated that any survey of the learning organization might
be relative to the level of authority, as well as to the environment. Any assessment study
based on one perspective, such as a survey of management, executive, or human resource
supervisors, would have bias in the results, as they are based on varying perceptions in
the context of job control. This implied that job scope and span affected the perception of
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the learning outcomes; perhaps due to learning being dependent on how much control
employees have of their activities.

Research Question 8
What is the relationship between the firm's self-reported overall business and
knowledge performance and each of the seven dimensions of the learning organization
related to label group designation?
The research question analyzed performance relationships through linear
regression in order to measure the contributive strength of relationships. Previous
correlation was addressed in research question 3, with each element displaying Pearson
correlations ranging from .329 to .858. Both knowledge and financial performance were
combined as a single dependent variable summarizing the expected result of the separate
learning organization's independent variables.
Multiple regressions were used to examine the seven independent variables
effects on the dependent variables of the combined financial and knowledge performance
score. Results indicated that there were differences in both significance and respective
scores defined by organization size as Indie, Major Indie, and Major. All general models
showed some significant relationships at the p = .001 level. The coefficients of
determination, along with individual explanatory variables, are displayed in Figure 14.
Indie label grouping showed non-significance of the variable team learning, with
empowerment arguably significant at p = .054. Continuous learning ( = .492), systems to
capture learning ( = .516), empowerment ( = .350), and connectedness to the
environment ( = .387) respectively contributing positively. At the Indie level, dialogue
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inquiry ( = -.435), team learning ( = -.015), and leadership for learning ( = -.569)
were negative contributions, the model explaining 76% (r2 adjusted) of variance with the
model ANOVA significant at .001 (see Figure 16).

Independent Variables
Continuous Learning
Dialogue Inquiry
Team Learning
Systems to Capture Learning
Empowerment
Connectedness to Environment

Indie
0.492
-0.435
-0.015
0.516
0.350
0.387

Leadership for Learning

-0.569
2
Indie r : .763
Major Indie r 2 : .651
2
Major r : .517
All regressions ANOVA sig. at .001

Grouping by Record Company Model

sig.
Maj. Indie sig. Major
0.001
0.252
0.090 0.355
0.001
-0.902
0.018 0.133
0.903
0.921
0.001 -0.142
0.001
-0.100
0.954 -0.097
0.054
0.403
0.033 -0.363
0.001
0.265
0.093 0.291
0.001

0.194

0.354

0.565

sig.
0.005
0.328
0.403
0.297
0.010
0.016
0.001

Figure 14. Comparison to combined financial and knowledge as dependent variable

Major Indie groupings showed insignificance of systems to capture learning (p =

.954) and leadership for learning (p = .354). Explanatory variables/standardized
coefficients indicated positive contributions from continuous learning ( = .252), team
learning ( = .921), empowerment ( = .403, p = .033), connectedness to environment (
= .265, p = .093) and leadership for learning ( = .194). However, leadership for
learning was not statistically significant to the model (p = .354). Negative contributions
were reflected by dialogue/inquiry ( = -.902; p = .018) and insignificant values are
shown for system to capture learning ( = -.100, p = .954).
Major Label grouping showed positive contributions from continuous learning (
= .355, p = .005), connectedness to the environment ( = .291, p = .016), and leadership
119

for learning ( = .565, p = .0001). Negative contributions included empowerment ( = .363, p = .01). Variables shown to be statistically insignificant to the model are
dialogue/inquiry ( = .133, p = .328), team learning ( = -.142, p = .403), and systems to
capture learning ( = -.097, p = 297).
When associated to the combined learning outcomes of financial and knowledge
performance, results suggested that continuous learning was higher at the Indie level,
decreased at the Major Indie level, and slightly increased at the Major level. Continuous
learning, reflected by openly learning from mistakes, training, growing skills, helping
each other, and viewing problems as the opportunity to learn, was evident in all label
types, with Indie labels having the highest level of learning. This indicated that smaller
organizational size fostered open communication.
Dialogue/inquiry was a negative variable within Indie labels and Major Indies and
not significant in Major Label grouping (Indie = -.435, Maj. Indie = -.902. Major =
.133, p = .328). The findings showed that the environment and culture of the record
industry in Nashville, either individually or organizationally, holds little value for
dialogue/inquiry in practice. This may be an indication of the current competitive climate
generating individual rather than team and organizational learning, or it may be a result
of structural leadership. The data indicated that the unstable business environment
fostered a lack of dialogue and inquiry, the opposite of what might better engage the
organization to compete.
Team learning was significant at only the Major Indie level. This might suggest
that smaller organizations were more individually driven and that Major Label groups did
not display team learning as a performance enhancer in the Nashville environment ( = 120

.142, p = .403). This indicated that learning or performance seemed to be geared towards
the individual rather than team accountability. This may also indicate that the structure or
leadership value for smaller and larger organizations reinforced individual, rather than
team performance.
Systems to capture learning was positive and significant at the Indie level ( =
.516, p = .000) and insignificant at both Major Indie and Major level. The results
indicated that learning and the transfer/retention of learning was higher within the smaller
structures at the Indie level than both Major Indie and Major groups. This reinforced the
general findings in this cross-sectional sample; there is no system to embed learning into
a shared environment so that it can be retained by the organization. This indicated that the
individual, rather than the organization, retained knowledge as size increased.
Empowerment was most significant at the Indie ( = .350) and Major Indie level
( = .403), with a negative measure in Major grouping ( = -.363). This indicated that
empowerment increased with smaller organizational types, and generally decreased with
larger organizations. With regard to Nashville Major Labels, empowerment was actually
a negative variable, meaning that rather than minimal contribution, employees in Major
Labels viewed empowerment as a non-contributory/negative factor, as opposed to Indies
and Major Indies, who experienced a positive contribution from empowerment. In the
worst sense, the data indicated that as the organization assigned task, it did not enable or
deliver the resources or build a consensus across the organization's levels to perform the
tasks adequately-likely contributing to the low scoring from Major Label employees.
Connectedness to the environment was demonstrated at the Indie level ( = .387,
p = .001), the Major Indie level ( = .265; p = .093), and the Major level ( = .291, p =
121

.016). Connectedness embraced a global perspective and the encouraging of customers'

viewpoints, as well as the impact of decisions on morale. Connectedness also was defined
by working with the outside community to meet needs and by encouraging solutions from
across all levels of the organization. The low explanatory scores indicated a moderate
connectedness to the outside environment at best, suggesting an internal focus within
leadership and employees who generate and frame problems, as well as solutions, from
internal sources. This may have created a self-referential ecology with little connection to
the outside environment as a reaction to the instability of the environment. However,
instead of reaching out to meet needs and address the changes coming, the organization
seemed to retreat into itself within leadership, structure, or individual employee action. It
was difficult to differentiate where this occurred from the data, but overall, the Indie
labels showed a more moderate connectedness, with larger label sizes becoming less
connected to the general environment.
Finally, leadership to support learning was reported negative at the Indie level (r2
= -.569, p = .001), insignificant at the Major Indie level (r2 = .194, p = .354), and positive
at the Major level (r2 = .565, p = .001). Leadership was defined as supporting requests for
training, sharing up to date information on trends, competitors and direction, coaching,
looking for opportunities to learn, and assuring the organizations actions are consistent
with its values (Watkins & Marsick, 1993). Conversely, even though Indie labels scored
continuous learning at .492, leadership for learning was a negative performance factor at
-.569, implying that leadership did not drive continuous learning. Additionally, leadership
for learning was highest at the Major group, but team learning was lowest at the same

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group, again suggesting that within this group, leadership was ineffective for team
learning.
Overall, these findings indicated that there were differences in learning outcomes
related to type and size of label. At the Indie level, performance was not enhanced by
leadership or dialogue inquiry, but by continuous learning and empowerment. The
smaller size of Indie label organizations did not make team performance necessary or
significant. Although it seems contrary to intuition, Indie labels were the most connected
to the environment and reflected an inherent system to capture learning, despite the lack
of formal systems or resources for transferring learning throughout the organization that
is required from larger organizations. This suggested that the flat hierarchy of smaller
organizations somehow encouraged a higher climate of knowledge sharing. Secondly,
leadership, continuous learning, empowerment, and team learning enhanced Major
Indies, possibly due to their increased size. As Major Indies did not reflect any positive
improvement through dialogue and inquiry, there was no real system to capture and share
learning. This may be related to not encouraging dialogue/inquiry. Thirdly, Major Labels
seemed to benefit from continuous learning, and leadership for learning and were
somewhat connected to the environment. However, Major Labels had none, or a negative
existence of dialogue inquiry, team learning, systems to capture learning, and
empowerment, while also showing minimal connectedness to the environment. This
indicated that although leadership ( = .565, p = .001) may be highly motivated to
encourage learning, the reinforcement of learning did not exist in the organization, as
there was no transfer of learning or dialogue, or even team learning. This may be a
reflection not only of leadership, but also of the individual pursuit of self-preservation
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through knowledge hoarding, as well as larger unknown knowledge impedances not

reflected in the data.

Research Question 9
What is the relationship between the firm's self-reported overall knowledge and
financial performance and each of the seven dimensions of the learning organization
when measured against sales growth over a 2-year span?
Overall, the music industry was experiencing a drastic shift in sales due to market
demands. Sales were reported to have declined 20% during the first months of 2007 when
compared to 2006 sales figures (Smith, 2007). Billboard magazine reported that
cumulative sales for 2006 dropped 9% from previous-year figures. Digital downloads
also reflected 5.5% of reported sales. Although this seemed small, this was an increase of
65% from 2006 sales figures, fueling the closure of over 800 specialty music retailers like
Tower Records (Christman, 2007).
A representative sampling of the Nashville market was selected, representing both
larger share of sales and market share, according to May, 2007, SoundScan data. The data
was calculated from actual yearly sales figures and then averaged for a cumulative
percent change in sales, representative of the Nashville record industry. In order to
preserve companies' anonymity, figures were shown as a percent change in sales per year,
not the actual units sold. This was needed after discussion with local labels, who wished
anonymity. Within the sample, four Major Labels, three Major Indie, and five Indie
labels were used for calculation. Table 10 was calculated to represent over 95% of
Nashville sales. The data represented Major Labels sales figures, Major Indies, and Indie
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labels identified within Nashville. Although this is only a representative sample, these
sales can be considered representative of the majority of local music industry sales,
according to June 2007 SoundScan data. Overall within the Nashville market, Indie labels
showed the most positive increase for both years, followed by the least negative decline
reported by Major Labels, and Major Indies reported the worst overall performance (see
Table 11).

Table 11. 2004-2006 Change in Sales (source: SoundScan)

Major
Major Indie
Indie

Average Percent Change In Sales

2004-2005
2005-2006
2004-2006
-16%
-8%
-31%
-35%
-30%
-53%
79%
11%
78%

_______________________________________________________________________

Within the Nashville representative sample from 2004-2006, Indie labels showed
the most growth as a combined average percent change in sales from 2004 to 2006 (M =
78%), Major Labels showed the second best growth, or more appropriately, the least sales
decline (M = -31%), and Major Indie labels displayed the worst sales growth, or greatest
sales decline (M = -53%) (see Table 11). It is difficult to make definitive association,
given the data reflective of yearly sales figures and the cross-sectional snapshot of the
sample. Additionally, the anonymous nature of the responses makes association of
specific data results with specific companies problematic.
Specific to this particular sample, an association can be suggested from learning
model elements evaluated in research question 8 that examined the relationship between

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business performance and knowledge performance and the seven dimensions of the LO.
When compared to the combined learning outcomes of financial and knowledge
performance, previous results showed that continuous learning was higher at the Indie
level, decreased at the Major Indie level, and slightly increased at the Major level (Indie
= .492., Major Indie = .252., Major = .355). This same order was reflected by results
in sales increases. As Indie labels have the highest performance value of continuous
learning (Indie = .492) it can be suggested that the results reinforced the aspect that
continuous learning, measured by learning from mistakes, training, increasing skills,
helping each other, and viewing problems as the opportunities to learn, was an element
that could empirically increase sales performance. However, it is problematic to infer a
fixed correlation, as the data set was a cross-sectional and the SoundScan sales figures
were a time series (Robson, 2002).
Dialogue/inquiry was a negative variable in Indie labels and Major Indies, and
was not a significant factor in Major Label grouping. (Indie = -.435, Maj. Indie = .902. Major = .133: p = .328). This indicated that within the record industry in
Nashville, while individually or organizationally holding little value in practice,
dialogue/inquiry needed to be improved in order to foster a more innovative and learning
culture, assuming that the ideal learning environment is indicated by the Watkins Marsick
model. Additionally, dialogue/inquiry did not seem to be a factor affecting sales
performance. Larger issues such as relative job stability and the threat of downsizing
indicated that an unstable business environment fostered a lack of dialogue and inquiry.
This was resultant from employees' engaging in protective behavior. However, this
behavior seemed to be overcome by the smaller organizational size of Indie label.
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Team learning was significant at only the Major Indie label, and insignificant to
Indie and Major Labels (Team learning: Indie = -.02, p = .903; Major Indie = .92, p=
.0001. Major = -.142, p = .403). This indicated that team learning was either ineffectual
to performance, or was related to organization size or structure. Within the Nashville
industry, data indicated that smaller organizations were either more individually driven,
or were structurally connected in a manner that did not necessitate a need for team
learning, as long as individual learning was strong. An example may be that the Indie
label's small size did not necessitate team interaction, and that perhaps a Major Label's
divisional or functional design also did not necessitate team interaction, indicated by its
insignificance ( = -.142, p = .403). If performance was geared toward individual rather
than team accountability, or if leadership valued accountability and reward through
individual rather than team performance, then this would be a natural progression.
Systems to capture learning, or embedded systems, was positive and significant at
the Indie level ( = .516, p = .000) and was insignificant at both Indie Major and Major
levels. The results indicated that sales increase and performance improvement might be
associated to the learning and transfer or retention of learning within the organization.
This indicated either that the size of the organization and the ease of communication
within smaller organizations might foster information exchange and transfer, or that Indie
labels somehow created a system that embedded learning through systems or personnel.
The results also indicated that poor sales performance might be saliently related to the
lack of a system for knowledge embeddedness within Major Indie and Major Labels. This
implies that as an organization grows larger, it is more problematic to share knowledge,
and the individual, rather than the organization, retains knowledge. Thus, in order to
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share information as an organization grows, a concerted effort must be made to do so or

performance potential will decrease.
Empowerment was most significant at the Indie ( = .350) and Major Indie levels
( = .403), with a negative measure in Major Label grouping ( = -.363). When compared
to sales performance, data results showed the association that an employees positive
empowerment increased sales within smaller organizational types, but decreased sales
performance as organizations grew. This indicated that larger organizations somehow
inhibited the transfer of knowledge or empowerment to sales performance. In regard to
sales and performance, empowerment was most positive and contributory to the smallest
organization (Indie labels), but was a negative variable within the Major Label group and
contributed little to sales performance in mid-size to larger organizations. This further
indicated that other contributing factors affect the relationship of empowerment to
performance as organizational size increases. These results then indicated that at the
smallest organization level, employees are empowered to perform and the results
significantly affect sales performance. The results showed that the smaller sized Indie and
Major Indie employees were empowered and in control of their job tasks. Results also
suggested that as an organization's size increases to the Major Label, empowerment
becomes a negative factor as employees are not enabled or provided the resources and
authority to design and control task completion. This suggests that as an organization
grows, it must enable employees to have direct control of the resources and job tasks to
perform adequately, or the performance may result in declining sales.
Connectedness to the environment or system connectedness was significant at the
Indie level ( = .387, p = .001), and arguably significant at both the Major Indie level (
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= .265, p = .093) and Major level ( = .291, p = .016). While p values for Major Indie and
Majors were a bit high for typical statistical analysis, as a behavioral measure, these
values could be acceptable. (Brace et al., 2006). Global perspectives, encouraging
customers' viewpoints, working outside of the system, and encouraging solutions across
all levels of the organization, described connectedness to the environment. Consistently,
the Indie score was associated with the most improved sales year-to-year, with 78%
average increase from 2004-2006, reflective of the best connectedness to the
environment. Major Labels scored next highest at = .291 (p = .016), an arguable
position as Majors displayed the smallest sales decline from 2004-2005 (-31%). This
suggested that sales performance was positively linked to a connectedness to the outside
environment, and that this connectedness diminished as organizational size increased.
This might suggest that as organizations grow; leadership and employees frame problems
and generate solutions internally, creating a self-referential ecology with little connection
to the outside environment. There may be many ancillary factors, such as the current
instability of the environment or larger organizational politics. However, the data shows
that as organizational size increases, the organization tends to retreat into itself within
leadership, structure, or individual employee action.
Finally, leadership to support learning was negative at the Indie level,
insignificant at the Major Indie level, and positive at the Major level. This relatively
correlated to sales performance reflected in Table 10. Although learning leadership was a
negative factor within the learning model ( = -0.569, p = .001), actual sales performance
was best at the Indie level. At the Major Indie level leadership for learning was
insignificant ( = .194, p = .354), which was substantiated by the poorest SoundScan
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sales performance. The second best sales performance was at the Major level, where
leadership was significant. ( = .565, p = .001), conversely reflected by the lowest decline
in sales, -31% from 2004-2006. This might suggest that when measured against actual
sales performance, leadership seemed to be ineffectual and even detrimental within the
Nashville community.
Leadership was most effectual as organizational size increased, especially when
measured within the learning model; however, when measured against SoundScan sales
data, leadership was a negative sales performance enhancement. As the best performer
reflected by SoundScan, sales growth by Indies indicated that leadership negatively
contributed to the learning outcome of the Watkins Marsick model. However, as Indies
actually attained the best sales growth, it seemed that within the smaller organization
size, leadership (if applied), was detrimental to the learning model, but was perhaps
overcome by stronger factors such as continuous learning.
The data also indicated that the efficacy of leadership for learning differs within
organizational size. Watkins and Marsick defined learning leadership as supporting
requests for training, sharing up to date information on trends, competitors, and direction,
coaching, looking for opportunities to learn, and assuring that the organizations actions
are consistent with its values. At the smallest organizational size, this attribute was
indicated to be unnecessary, possibly due to the relative flat organizational hierarchy.
This was evidenced by the data showing that at the Indie level, continuous learning
scored high at = .492, while leadership for learning was a negative performance factor
at = -.569. Thus, smaller organizations performed highly under strong continuous
learning, rather than leadership. Conversely, leadership for learning was highest at the
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Major Label group. This might suggest that as formal leader-employee

structure/organizational size increased, empowerment decreased (Major Label = -.363),
thus leadership must actively engage learning for a learning culture to exist within a
growing organization.
Overall, sales performance was associated to the differences in the learning
organizational outcomes related to type/size of label. At the Indie level, sales
performance was not enhanced by leadership or dialogue inquiry, but by continuous
learning and empowerment. The small size of Indie labels did not make team
performance necessary or significant and Indie labels were most connected to the
environment with a system to capture learning in place. This is suggestive that that a
smaller size encourages a climate of knowledge sharing that might be replicated through
design of smaller work units in larger organizations. Secondly, leadership, continuous
learning, empowerment, and team learning, possibly due to the increased size, enhanced
Major Indies. However, Major Indies did not reflect any positive improvement through
open dialogue and inquiry, and as a result, there is no real system to capture and share
learning, which can be a direct result of not encouraging dialogue/inquiry. As the worst
performance reflected by external SoundScan sales, Major Labels seemed to benefit most
from continuous learning and leadership for learning, and are somewhat connected to the
environment. However, Major Labels have none, or negative existence of
dialogue/inquiry, team learning, systems to capture learning, and empowerment, while
also showing minimal connectedness to the environment. This might indicate that
although leadership ( = .565, p = .001) may be highly motivated to encourage learning,
the reinforcement of learning does not exist in the organization. There is no transfer of
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learning, dialogue, or even team learning. This may not only be a reflection of leadership
but of the individual and the environment of self-preservation and knowledge hoarding,
which might empower value to the employee in this climate.

Research Question 10
Do these relationships to performance exist when measured against an increase in market
share using external sales data?
Generally, national SoundScan data did not support substantive change in market
share. While sales increase or decrease from previous years, the cumulative market share
reflected little change between total market shares within the market. National market
share for a two year span remained relatively stable, varying no more than 3% in any
market, while each segment retained its' relative position (see Table 12).

Table 12. Year End National Summary of Unit Sales (source SoundScan)

2005
2006

Album Sales
Unit Scans (000's)
654.1
646.4**

Market Share
% Change Universal Sony/BMG Warner EMI Indie
-9.2%
31.6%
27.5%
17.3% 10.4% 13.2%
-1.2%
34.4%
28.1%
16.9% 9.2% 11.4%

*Reflects 582 million digital downloads

The top 200 reported sales, measured from 2004-2006, also reflect little change.
When total market share was then recompiled removing what are called imprints labels,
or labels under the corporate umbrella that operate under separate leadership, little
change was also observed. Table 12 showed little change in market share reflecting total
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sales respective to each year. This indicated that although sales fluctuate, the learning
model does not actually reflect market share change, but change in sales within the
existing market.

Table 13. Year End National Summary of Market Share (Source SoundScan).
2004
82.63
54.94
27.69
17.37
100

All Major Labels with Imprints

Majors w/out Indies
Major Indie
Indie
Total Share

2005
81.87
54.56
27.31
18.13
100

2006
81.26
54.96
26.3
18.74
100

However, while the change is small, when recalculated as a percent of market

share increase and decrease (see Table 14) the same relative results as research question
9, relating to the learning model are indicated; best sales performance was obtained from
Indie labels, Major Labels, then Major Indie labels (see Table 14). Indie labels showed
the most increase in market share as a percent of total market followed by Major Labels,
then lastly, the Major Indie label.

Table 14. Change in Annual Percent of National Market Share (Source: SoundScan)

All Major Labels with Imprints

Majors w/out Indies
Major Indies
Indie

2004-2005 2005-2006 2004-2006

-1%
-1%
-2%
-1%
-1%
0.04%
-1%
-4%
-5%
4%
3%
8%

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Using previously selected Major Label, Major Indie, and Indie SoundScan data
measured against cumulative Nashville Sales, the market share for Major, Major Indie,
and Major Labels of the Nashville area are displayed in Table 15. This represented the
market share of each segment in the Nashville market for 2004-2006.

Table15. Market Share for Nashville Market (Source: SoundScan May 2007)

Major Label
Major Indie
Indie Market

2004
62%
26%
12%

2005
58%
18%
24%

2006
56%
15%
29%

However, in a similar fashion to research question 9, when examined as a percent

of change from year to year, the same respective association to learning organization
ratings was obtained with Indie labels (LO best rating) showing the best performance
respective of market share, followed by Major (second best LO rating), then Major Indie
labels (worst LO rating). Indie labels showed the only positive change with other label
groups reflecting smaller negative growth (see Table 16).

Table 16. Percentage of Change for Nashville Market Share 2004-2006.

Market Share % Change
Major Label
Major Indie
Indie Market

2004-2005
-7%
-30%
97%

2005-2006
-3%
-17%
19%

2004-2006
-9%
-42%
134%

The relative association linked to cumulative learning organization score ranking

of 1) Indie label, 2) Major Label, and then 3) Major Indie is maintained in relation to
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market share. Thus, the data indicated that the smaller organizations improved
performance relative to the positive association of the value of the learning organization
as a whole, as well as the individual variables discussed in research question 9.
Given the small and limited data set, as well as the small sample of SoundScan
data, there was still a positive association in the change in market share related to the
strongest learning organization as indicated through Watkins Marsick. The same
relationship existed when measured against an increase in market share using external
sales data as when compared to sales figures from year to year as previously discussed in
research question 9.
Overall, market share followed the same result as market sales. Market share
seemed to be related to the differences in the learning organizational outcomes related to
type/size of label. At the Indie level, the Indie label scored highest on the overall average
rating within the Watkins Marsick survey, and showed the only positive and exemplary
increase in market share. For Indie labels, market share was not enhanced by leadership
or dialogue inquiry, but by continuous learning and empowerment (see Figure 16).
Indie label results indicated that empowerment was significant to market share
improvement, but team performance, and learning leadership were not. Connectedness to
the environment with a system to capture learning in place seemed to contribute
positively to increase market share performance as well. Hence, market share was
positively affected by the LO, which may be affected by organizational size. This
suggested that the benefits of smaller size might be replicated through design of smaller
work units in larger organizations in order to encourage knowledge sharing-work units

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that empower ( = .350), connect knowledge to the system ( = .516), and encourage
continuous learning ( = .492).
However, Major Labels continued to display a decline in market share indicative
of the negative correlation of team learning ( = -.142), insignificant dialogue/inquiry
(N.S.), negative systems to capture learning ( = -.097), and negative empowerment ( =
.363). Again, as previously discussed in research question 8, leadership ( = .565:
p=.001) may be highly motivated to encourage learning, but the reinforcement does not
exist in the organization in a way to reinforce performance that can contribute to market
share increase. Major Labels displayed a negative correlation to the transfer of learning to
the organization (embedded system), insignificance for dialogue/inquiry, and negative
team learning. This indicated a lack of any type of team/organization structure--a culture
of individual preservation that cannot build on any type of cumulative knowledge base.
This may not be a reflection of leadership, as leadership for learning was rated positively
for Major Labels, but can instead be the result of the environment of self-preservation
that was generated from the environment and the general organization culture.
Major Indies displayed the worst performance related to market share
respective of the lowest average score for the LO. When compared to regressed variables
in research question 8, positive contribution may occur from continuous learning,
empowerment (=.252) and team learning (=.921), but seemed to be negated through
negative performance for dialogue and inquiry (=-.902), as well as the insignificance of
systems to capture learning (=-.100, p=.954). This perhaps indicated that
dialogue/inquiry was a strong performance enhancement within an unstable environment,

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but when strongly and negatively curtailed, seemed to have detrimental effects on market
share.

Results Summary
Continuous learning, dialogue/inquiry, empowerment, team learning, embedded
systems to transfer learning, system connectedness, and learning leadership reflected
slightly above average as indicated by the Watkins-Marsick assessment tool when
applied to the Nashville record companies. Within this sample, all results indicated a
deficiency for instituting embedded systems. This was manifest in an overall deficiency
for two-way communication between employees that did not allowed knowledge to
transfer and be shared to the organization. This later suggested that there was an overall
systemic effort for learning to be dedicated to the individual rather than organizational
effort-especially in unstable environments. The individual focus on information retention
was evidenced as two-way communication and openness was minimal and was later
indicated by a lack of any measurement valuing training or benchmarks in performance.
This indicated a causation that dialogue/openness seemed to move information from the
individual to the organization most effectively. The more openness, trust and dialogue,
the further knowledge moved from the individual to the organization.
The perception of the learning organization also differed with respect to
organizational size, with the smallest organization rating learning highest (Indie), while
the learning became second best for the largest organization (Major Label), and lowest
for the mid-size organization (Major-Indie). This was associated to Major Indies rating
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embedded systems to transfer learning noticeably low at M=2.87, followed by Major

Labels rating second best embedded systems at 3.00. This indicated that as size increased;
learning became problematic, displayed by organizational deficiency in embedded
systems, empowerment, and system connectedness to the environment. Even though midsized Indie labels rated learning lower than the Major Label, the data, coupled with
explanatory narration, indicated that the stability of the environment was associative or
needed for learning and knowledge to progress to the organization from the individual.
As the organizational size grew and was influence by instability, knowledge remained
with the individual due to the desire to survive, as knowledge created power and value for
the employee.
Overall, knowledge and financial performance displayed positive correlation as
the resultant effect of the learning organization with knowledge performance indicating a
stronger explanatory relationship than financial performance. Both financial and
knowledge performance indicated a dependent relationship to each other; however, as
financial performance was significantly the lowest correlation, financial performance
may be a factor resultant from knowledge performance. The capacity to generate and
improve products did not always equate to financial performance, but may be affected by
unknown external factors.
Results indicated that as organizational size increased, the linkage between
knowledge performance and financial performance was less correlated and moved apart.
This association illustrated that there were strong impediments affecting the transfer of
knowledge from the individual to the team that manifest as the organization grows. This
was evidenced by the largest organization exhibiting the highest knowledge performance
138

value in conjunction with the poorest financial performance. However, it is also indicated
that smaller organizations somehow overcome any inherent disability of the larger
organizations later indicated by empowerment, continuous learning, connectedness to the
environment and systems to capture learning that are embedded within the smaller
organizational size.
While the singular effects of each LO variable are strong, the systemic interaction
of the LO magnified the overall model fit to a higher degree and reinforced the premise
that the learning organization systemically contributed to performance. Continuous
learning, team learning, and empowerment increased scores, while dialogue inquiry
became a negative performance indicator. Systems to capture learning, connectedness to
the environment, and leadership for learning became insignificant, which suggested that
although the Watkins Marsick learning organization model was designed as the optimum
model for assessment, actual practice may differ. This seemed to imply that the tendency
for knowledge hoarding by individuals as a survival technique increased as the stability
of the organization decreases. Secondary results indicated that variables such as systems
to capture learning, and leadership for learning were insufficient and insignificant to
overcoming employees concern for self.
A secondary stepwise-forward regression indicated that continuous learning,
empowerment, team learning, and dialogue inquiry reflected a better model for this
sample population. The negative coefficient of dialogue inquiry was retained, as well as a
performance increase for continuous learning, empowerment, and team learning. This
indicated that leadership, whether positive or negative, had less effect than other factors
in the model, or that the individuals will somehow balance their activities regardless of
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leadership. Also indicated was that the individual and team level (empowerment, team
learning, dialogue, continuous learning) was more contributory to knowledge
performance than system variables such as systems, leadership and connectedness to the
environment. However, financial performance was more affected by system factors
(systems, leadership, and connectedness to the environment) as they transfer individual
knowledge to organizational performance. This indicated that the transfer of knowledge
to the organizational level was more important than the transfer of knowledge to the
individual level for financial performance expressed as an output of the learning
organization
The data further indicated that managerial levels perceive or work in a higher
environment of learning as control or authority rises. Job scope and span may increase
the perception of the learning outcomes as well as learning being dependent on where
employees fit into the organization ladder. This indicated that any assessment study based
on one perspective from one layer of authority/management would have result bias. This
was compounded by size differentials in respect to differences in learning outcomes.
At the smallest organizational level (Indie), performance was not enhanced by
leadership or dialogue inquiry, but by continuous learning and empowerment. Smaller
organizations were the most connected to the environment and best reflected a system to
capture learning that may be indicative of a higher climate of knowledge sharing related
to size. Mid-size organizations were most enhanced by leadership, continuous learning,
empowerment, and team learning. However, they did not reflect positive improvement
through open dialogue/inquiry and had no indication of a system to capture and share
learning. Although the largest organization seemed to benefit from continuous learning,
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leadership for learning, and were somewhat connected to the environment, they did not
indicate or foster dialogue inquiry, team learning, systems to capture learning, or
empowerment, and also showed minimal connectedness to the environment.
The positive empirical indication is that despite a turbulent environment,
the smallest organizations reported the strongest LO rating and showed a significant
positive average change in sales (M=+78%), and best average increase in market share
performance (M=+134%). The next best LO rating indicated the second least sales (M=31%) and market share decline (M=-9%) and the worst LO score reported the worst
average sales (M=-53%) and market share decline (M=-42%); respectively indicated by
Indie, Major Indie, and Major Labels.
The data indicated that continuous learning was commonly associated with the
strongest sales and market share increase. Dialogue / inquiry held little value in practice,
but might be resultant of an unstable business environment that seemed to foster
protective behavior. Team learning was significant at only the Major Indie label, which
also reported the second worst sales and market share performance, which indicated that
team learning was generally ineffectual in unstable environment and is not reportedly a
factor within smaller organizations. Systems to capture learning, or embedded systems
were positive only at the smallest organizational level, and empowerment was most
effective for increased sales and market share within smaller organizational types, but
decreased as organizations grew. Connectedness to the environment or system
connectedness was significant at the Indie level and arguably significant at both the
Major Indie level and Major Level. Finally, leadership to support learning was negative
at the Indie level, insignificant at the Major Indie level, and positive at the Major level.
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This relatively correlated to sales performance and market share performance, which
indicated that leadership was ineffectual, but was somehow overcome within the
Nashville community. This may have indications that differing types of interventions
may be needed to stimulate the elements of the learning organization--dependent on the
size of the organization.

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CHAPTER 5. SUMMARY, DISCUSSION, IMPLICATIONS, AND

RECOMMENDATIONS

This chapter presents a summary of the study and discusses the results in light of
existing studies and literature. This chapter also considers the implications of this study to
current theory and practice. The findings of this study apply to the fields of
organizational assessment and the learning organization as a driver of performance
improvement.

Overview of the Study

The purpose of this study was to explore the construct of the learning organization
and examine how this construct contributed to the knowledge and financial performance
of an organization. The rationale for the study was initiated from the generally accepted
concept that learning organizations enhance both individual and organizational learning
in ways that fostered performance improvement (Baker & Sinkula, 1999; Ellinger,
Ellinger, Yang, & Howton, 2002; Slater & Narver, 1995). Because of the intuitive
argument that learning facilitated behavior leading to improved performance, the
assumption was generally accepted that the learning organization construct would
improve performance (Christensen, 1997; Christensen, Anthony, & Roth, 2004; D'Aveni,
1994, 1998; Senge, 1990). This led to a general lack of supportive empirical evidence for
143

the benefits of the learning organization by writers in the field of performance

improvement (Burke, 2002; Ellinger et al., 2002; Jacobs, 1995; Yang et al., 2004). This
study addressed the validation issue by examining each individual learning construct and
measuring how each variable affected knowledge and financial performance. The LO
construct was then examined using external sales and market share data to further
confirm the results.
The underlying assumption was that organizations utilizing the learning
organization construct fuel innovation and performance. As an application, this study
further validated the LOs constructs and provided evidence for business leaders to risk
investment on the assessment and development of the learning organization construct.
Additionally, the study of each subconstruct of the LO organization further allowed
practitioners to identify those elements that best assist the organizations performance
and learning structure. This provided an additional basis for further research into a
prioritized system-level intervention to identify the drivers of the learning organization
construct that best fit specific needs. This study also furnished new information on the
perceptual variation of the learning organization within differing levels of authority and
size of the organization.
The theoretical framework of the study was the Watkins and Marsick (1993)
model (see Figure 5). Their model defined the LO into seven drivers of organization
improvement that integrate people and structure. The seven constructs of continuous
learning, inquiry and dialogue, team learning, empowerment, embedded system, system
connection, and leadership for learning were used to move the theoretical concept of the
LO into an assessment tool that would gauge performance. The design of the study was
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survey research, solicited through direct e-mail and hard copy invitation through a secure
Web based survey. The population sample was a purposeful cross sectional sample of the
Nashville Tennessee music industry, using a local music industry database provided by
Music Row magazine. The Dimensions of the Learning Organization Questionnaire
(Yang et al., 2004) was the survey instrument, derived and extensively validated by other
scholars (Ayers, 2002; McHargue, 1999; Yang et al., 2004). The data analysis applied
quantitative techniques such as correlation, ANOVA, and regression. Some qualitative
narration was incorporated in the results and discussion in order to expand and provide
context to the results. Although this study was sampled from the music industry, the
foundation of this study can be applied to a broader understanding of how each construct
of the learning organization directly and indirectly affects organizational performance.

Summary Discussion of the Findings

Research Question 1
To what extent do record companies perceive their organizations as learning
organizations in relation to Watkins and Marsick's seven dimensions of the learning
organization?
Record company respondents considered themselves slightly better than average
in reference to their perception as a learning organization (see Table 1). The lowest
scored construct of the learning organization (LO) was embedded systems, or
capturing/sharing learning and information across the organization, which was rated
below average and weakest of all survey measures. While the overall average showed
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that learning existed within the sample population, it also indicated that organizations
facilitated learning to some degree, despite any organizational deficiencies that were later
identified. This reinforced that learning, as the basic resolution of expected outcome and
actual results, was an inherent outcome within the daily activity of an organization
(Dewey, 1938; Fishbein, 1967). Learning was framed through behaviorist, cognitive,
humanistic, and social-situational learning. Most of these references served similar
actions: the behaviorist (Watson, 1913; Hartley, 1998; Skinner, 1973) focused on
observable behavior fueled by the stimulus-response of the environment. Cognitive
models focused on the individual's processes of knowledge based on the development of
perceptions through the identifying of patterns, through inferences, expectations, and
connections based on past experience (Hartley, 1998; Merriam & Caffarella, 1998).
Humanism recognized behavior as motivated through a movement towards ones selfactualization (Rogers,1993; Tennant, 1997). Whether learning is outcome based
(behaviorism), based on expectations generalized from past experience (cognitive), or
based on the need for self-actualization (humanism), learning might be generalized as the
individual need to adapt to the environment, or the self-actualization of personal to
organization needs.
Central to the LO construct was that learning exists within a system. It exists as a
combination of ideologies, systems, and structures that move learning from the individual
to the group, thus enabling the organization to expand beyond its current understanding
by continually scanning, assessing, and re-assessing the existing mental models or points
of reference from which it gauges perceptions (Senge, 1990). This evolved from open
systems perspectives that viewed the organization as inputs, throughputs, and outputs that
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were connected by feedback loops. All components were interrelated and each subsystem directly and indirectly affected the entire system; therefore, when one of the
inputs broke down, the entire system was affected (Katz & Kahn, 1978; Senge, 1990;
Argyris, 2004). With this basis, the systemic nature of the learning organization was built
on the environment of sharing knowledge. Therefore, even though individual learning
exists within an organization, the transfer of learning to the organization may not (Senge,
1990).
Although the overall LO ratings for all companies sampled were slightly above
average, the salient feature from research question 1 was the below average response for
"embedded system." When deconstructing the construct, the data indicated that learning
was not transferred throughout the organization and that there was little systemic transfer
or sharing of knowledge with other employees. The low scoring of embedded systems
indicated a lack of feedback on resources and time spent on training, a deficiency of two
way communications, a deficiency for systemic measurement of gaps in performance,
and a deficiency of sharing "lessons learned" to all employees. In the context of the
Nashville music industry, the results suggested that within an environment of instability,
knowledge was a commodity that was hoarded by the individual. Further, although it may
be likely that the record industry reinforced individual effort through its reward system
and entrenched leadership, there may be other factors involved.
This knowledge hoarding may be fueled by the instability of the environment.
Sales have declined dramatically; with recent reports for 2007 year-to-date CD unit sales
down 20% (Ross, 2007). This climate of downsizing and mergers has left many
employees unsure of job longevity. This has spurred employees to retain what knowledge
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they gain. This knowledge hoarding, in the context of social/situational learning, seemed
to show how learning built on relationships and participation in a contextual community
of knowledge, was defeated within a high risk environment (Merriam & Caffarella, 1991;
Bandura, 1977; Lave & Wenger, 1991). With employee security at risk, employee
knowledge created value. In the context of community, the individual's knowledge was
then worth more highly than organization knowledge. This led to the lack of learning
transfer from the individual to the organization, reflected by the low score of embedded
systems to transfer learning.
General discussion with several employees within this community confirmed the
general conclusion of knowledge hoarding. Many employees have seen friends and
colleagues downsized as their parent companies attempt to increase or sustain profit
margins through cost cutting and mergers with other companies for temporary market
share increase. Within the record industry, the intrinsic value of the employee is based on
contacts, relationships, and information. Thus, there is little incentive to share what little
information value employees retained in this environment. Organizational members
resorted to defensive reasoning tactics in order to "avoid vulnerability, risk,
embarrassment, or even the appearance of incompetence. In order to preserve their
position--employees displayed a difference between what they say (espoused theory) and
what they practice, or theory in use (Argyris, 1994). Seo (2003) explained this as
emotional barriers that hinder learning. Gersick (1991) wrote that the fear of uncertainty
and the pain of loss could trigger emotional barriers to learning as well. This was
confirmed by a series of cause and effect responses indicated by the survey.

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The cause and effect progression of learning barriers began with a reported lack
of measurement by the organization for gaps in performance or benchmarks. If
benchmarks were formed though shared knowledge, then the general lack of shared
organizational knowledge created a lack of benchmarks. Without performance standards,
developed from shared knowledge, there were no methods to identify gaps in
performance. When asked about whether knowledge from lessons learned is available to
all employees, the rated response was below average. This implied that within this highly
competitive environment, knowledge was not a resource available to all. This was further
indication that information was generally withheld. Without a structured system for
sharing or embedding knowledge within the organization system, it followed that
employees could not build decisions on pertinent information or learn from each
member's success and mistakes-thus knowledge was individually driven, not
organizational driven. Whether or not this was intentional, it did demonstrate that there
was a not always a connection between individual knowledge and knowledge
transference to the organization. The data reinforced that both individuals and groups
acquire knowledge, and that if knowledge was shared; new knowledge or generative
learning was created through collaboration and interaction (Kim, 1993; Senge, 1990).
If knowledge was withheld at the individual level, there were observable results
within the organization. This may be one of many factors that fuel the record industry
toward declining sales and a general lack of adaptability towards new technology. This
cascade existed in a logical sequence of cause and effect: If both individual and group
knowledge was not collected or shared organizationally, why would an organization
value feedback or measurement of resources and time spent on training employees? If
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value were not placed on sharing knowledge, then why would the organization value
knowledge generation through employee training? This suggested a relationship: If
training generated knowledge, but knowledge was not shared, then there was no incentive
to institute training as an organizational resource. In the broadest scale, this suggested
that large organizations that deconstruct activities for the pursuit of efficiency are likely
to diminish learning and possibly create an environment that was solely driven by
individual knowledge hoarding that is manifest though declining adaptability and
performance.

Research Question 2
Are there differences in the perceived ratings of record companies in relation to
Watkins and Marsick's seven dimensions of the learning organization according to
organization size?
The results confirmed differences in the rating of the elements measured by
Watkins and Marsick's seven dimensions of the learning organization when reported by
organization size. Generally, the elements of the learning organization rated higher for
the smallest organization (Indie), second best for the largest organization (Major Label),
and the lowest for the mid-size organization (Major-Indie). While the sample size
differed, the smallest organization (Indie Labels) rated highest in all categories (see Table
3). The results suggested that learning within an organization was fostered more easily
within smaller organizations and may also be affected by other constraints, such as the
stability of the working environment, or other learning inhibitors.

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These results reinforced that learning can be problematic with organizational

growth. As process and decision criteria became institutionalized, the institutionalization
of process, or institutional rigidity, flowed from a need for growing managerial control.
This process increased the resistance to learning; due to process becoming more
important than the rationale for the process (Tushman & Romanelli, 1985; Crossan, et al.,
2004). This suggested that increased organization size necessitated the need for the
learning to become a thoughtful and intentional design of the organization. Thus,
organizations should reinforce systemic learning, as suggested by Senge (1990) who
stressed that learning must become a part of the very fabric of the organization.
The difference in learning related to organizational size or growth might be
further explained by organizational rigidity as the organization develops (Hannan &
Freeman, 1977; Tushman & Romanelli, 1985). Over time, organizations establish
procedures and process for control as managers develop a set of decision rules and
heuristics based on experience (Shimizu & Hitt, 2004). As managers are promoted or
accept leadership, successful initiatives tend to be repeated--and previously successful
experiences become what Senge calls mental models (1990). This encouraged the
repetition of the same response to future issues by others who seek success within the
organization. Paradoxically, as the organization grows with success, successful history
prevents managers from being sensitive to new information that differs from past models.
Without the ability of setting aside preconceptions (Senge, 1990), managerial
complacency was nurtured and the cycle progressed: successful experience attracted
attention and praise, support was created for managerial hubris, and managerial decisions
unconsciously ignore negative signs regarding decision outcomes (Hayward & Hambrick,
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1997). Generally, this suggested that whether or not organizations grow in size, success
might impede knowledge growth as leadership is retained.
Within the sample population of Nashville based record companies; it was typical
for the same executive hierarchy to retain positions of authority for decades, no mater
how the organization performed. Many record company executives moved within a cadre
of friends from company to company, hired into executive leadership--even if they had a
history of declining sales. Many of the same leadership cadre emerged from successful
music careers from decades earlier. This may arguably lead to a general non-familiarity
with new technology or the inability to understand the shifting consumer preferences and
tastes of younger music buyers, due to an entrenched decision process that inhibits new
learning.
Significantly, the midsize organization (Major Indie) rated lower than its
larger counterpart, the Major Label. This seemed counterintuitive and suggested that
there was more to examine than mere size of the organization. This might be an
indication that the external environment affected learning as much or more than internal
size or process. It was previously indicated that in Nashville, there were few midsize
labels operating independently of the Major Label system. Most have merged or closed,
due to general sales decline. One existing Major Indie was rumored to be in the process
of being purchased by a rival. With much of this merger activity and rumors, employee
survival has taken control. It was theorized that if employee motivation is survival, and if
information was the commodity of value, then the withholding of information by the
individual created power and value for the employee. This was affirmed by Boal and
Hooijberg (2001) who wrote that learning was shaped by expectations adapted to fit with
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opportunities in the environment. However, when expectation or opportunities were

uncertain, learning reverted to self-preservation, as opposed to organizational success.
Further, if organizations are the context of social learning for the employee, when
individuals and groups struggle with limited resources, information becomes a core base
of power (Perrow, 1986, Pfeffer, 1981; Salancik & Pfeffer, 1977).) As employees gained,
maintained, and negotiated power within the organization; they intentionally held and
modified resources to their benefit (Seo, 2003). Therefore, various organizational
defensive routines distorted valid information as individuals and coalitions enhanced their
survival in environments of uncertainty.
This indicated that unstable environments affected employee learning beyond
internal size or structure. Learning organizations were then best constructed in stable and
secure internal environments. If true, leadership should struggle to create or retain
organizational stability within shifting external environments. One anonymous employee
cited (off the record) "We are all operating over our shoulder. At any time we might be
sold or merged, so we do all we can to keep our jobs and position for the next round of
layoffs. There was no value in my department beyond looking after yourself and doing
what you can to keep your position. We have seen the loyalty they (companies) have for
employees as they merge and downsize." Although this was an anecdote, the narrative
might explain why learning at the Major Indie level, the size most affected by dominance
of larger organization and instability, was least. Within this aspect, environmental
instability can then shift organizational members to resort to defensive reasoning tactics
in order to protect job security through the avoidance of the appearance of incompetence
(Argyris, 1994). This indicated that learning existed best within environmental stability.
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If true, this created an interesting paradox where the organization in most need for
innovation through learning was the most likely not to succeed. However, even with this
environmental effect, results indicated that there were also differences in the perception
of the learning organization related to size, with the smallest organization fostering the
best learning environment.

Research Question 3
How is a firm's degree of learning orientation related to self-reported financial
and knowledge performance?
The relationship between the learning organization and financial/knowledge
performance was generally positive when correlated to the subconstructs of the Watkins
Marsick Learning Organization model to self-reported financial and knowledge
performance. The cumulative learning model strongly correlated more highly to
knowledge performance than to financial performance (see Table 4). Knowledge
performance and financial performance indicated positive linkage to each other as well
as the learning organization model. Individually, each LO element displayed a positive
relationship between all the elements of the learning organization, but each correlation
was lower than the cumulative association of the learning organization. As each LO
element was only weakly associated to financial performance, the learning organization's
subconstructs seemed to be more directly correlated or linked to knowledge performance
with financial performance as a secondary linkage.
The results reinforced the learning organization as a construct of systemic
learning. The LO facilitated learning from individuals to groups, and enabled an
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organization to expand by continually scanning, assessing, and re-assessing the existing

mental models or points of reference from which it gauged perceptions (Senge, 1990).
The interaction of each learning construct created greater cumulative value than each
individual part, which reinforced open systems theory and generative learning (Katz &
Kahn, 1978, Senge, 1990). This concept allowed that as systems interact with their
environment, they acquired new properties that connect into a stronger whole. This was
theorized as the resultant effect of inputs, throughputs, and outputs connected by
feedback loops (Argyris, 2004). Generally, open systems were then linked to learning
organizations as both engage continuous feedback that connects organizational outputs
with renewed inputs. Reflective of earlier representations by Nadler-Tushman (1980),
Harrison (1987), and Bernstein and Burke (1989); systems models presented perspectives
with minimal boundaries between the organization and external environment that was
later indicated by Senge's work in the learning organization (1990).
The results confirmed that systemic learning and knowledge transfer generated
new or generative learning (Senge, 1990). Generative learning created additional value
by modeling from broader external sources, as well as the ability to question long-held
assumptions about the firm and its environment. Therefore, instead of making existing
functions more efficient, generative learning led to a competitive advantage (Slater &
Narver, 1995). This indicated a strong positive association to knowledge performance
from the learning organization.
Further, each learning element associated with knowledge performance (.675
cumulatively), but only weakly associated to financial performance (.434). This
suggested that the systemic affect of the total learning organization was greater when
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related to knowledge performance rather than financial performance. However, it was

difficult to suggest that knowledge performance, or the ability to innovate and improve
products, was not associated to the ability to increase financial performance. This instead
showed that the weak association between financial performance to other elements such
as dialogue inquiry (.329), team learning (.340), learning leadership (.374), system
connectedness (.384), and empowerment (.396), was more an indication that there was a
direct association of each subconstruct to knowledge performance and that financial
performance was a secondary effect of knowledge performance. The results (see Table 5)
showed knowledge performance and financial performance were more related to each
other at .524 (p<.01: 2-tailed) than the learning organizational constructs (.434, p<.01: 2tailed). This further reinforced that financial performance may be a secondary effect of
knowledge performance.
The implication that the LO construct was more associated to knowledge
performance, then secondarily tied to financial performance-indicated that strong
knowledge generation may not guarantee financial performance. This may fuel further
need for research into the specifics of how information correlates to financial
performance. McHargue (1999) used the Watkins Marsick survey instrument with family
businesses and non-profit organizations and showed significant positive relationships
between the seven learning elements of knowledge and financial performance in a similar
fashion. McHargue included external financial ratios of net assets, debt ratio, and savings
ratio, which confirmed the value of the learning organization's constructs. Given the need
for more research in cause and effect association, the simple explanation might be that an
organization can generate knowledge, but the implementation of new knowledge might
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be inhibited by many of the impedances such as organizational inertia or organizational

rigidity that are mentioned in the literature. However, both Kim (1993) and Senge (1990)
do suggest that in large organizations, learning became more problematic as activities
were deconstructed for the pursuit of efficiency. This may be the current record company
environment as it seeks increased efficiency to compensate for market decline. A result
indicated by the low association of knowledge performance to financial performance.
This indicated that knowledge generation and the capacity to generate to improve
products did not always equate strongly to financial performance. Perhaps also an
indication that knowledge generation is not transferred to organizational action as
knowledge is retained by the individual.

Research Question 4
Are there differences in financial and knowledge performance related to
organization size?
Data showed that there were differences in knowledge and financial performance
related to organizational size. The largest organization generated the best knowledge
performance, but conversely generated the smallest financial performance, while the
smallest and mid size companies generated the best financial performance against
knowledge performance.
Although the data showed the general relationship between knowledge
performance and financial performance could be related to organizational size, the results
were mixed. From smallest to mid-size organizations, both knowledge performance and
financial retain the same order of value. This confirmed linkage from knowledge to
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financial performance; reinforcing the positive capacity of the learning model through the
performance enhancement of systems thinking to encourage a new set of mental
modeling and theories-in-use (Watkins & Marsick, 1993; Senge, 1990; Marquardt, 1996;
Argyris, 1996).
The results generally reinforced the Watkins and Marsick (1993) integration of
the interactive components of organizational change and development for knowledge
performance. In review, individual, team, and organizational levels cumulatively
contributed to the value of knowledge and financial performance through the layered
effect of the seven dimensions or constructs of the learning organization. Continuous
learning represented the organization's effort to create ongoing learning opportunities;
inquiry and dialogue referred to efforts in creating a culture of questioning, feedback, and
experimentation; team learning reflected the "spirit of collaboration and collaborative
skills. Further, empowerment signified the process to create and share a collective vision
and the ability to set, own, and implement a joint vision that addressed the gap between
current status and the new vision; embedded system reflected efforts to establish systems
to capture and share learning; system connection reflected actions to connect the
organization to its internal and external environment; and leadership for learning
reflected the extent that leaders use learning to create change and to move the
organization in new directions. Each premise contributed collectively, demonstrated by
the results that show direct explanatory or predictive power ranging from Major Label (
= .726), Major Indie ( = .506), and Indie ( = .631).
The asymmetry of the largest organization (Major) reporting the best knowledge
performance and the poorest financial performance confirmed that external factors such
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as entrenched leadership, organizational rigidity, and organizational inertia can impede

the transfer of learning throughout the organization; regardless of any individual or
organizational preference for learning (Hannan & Freeman, 1977; Tushman &
Romanelli, 1985; Hayward & Hambrick, 1997). This indicated that as organizations
grew, structural impedances manifested to defeat knowledge generation and increase
poor financial performance. Seo (2003) confirmed that these forces could inhibit and
defeat organizational-level learning and transformation. This indicated that as
organizational size increased, the linkage between knowledge performance and financial
performance grew apart. If so, then there was an increased disconnect to transferring
knowledge to financial performance as the organization grew.
Dyck, Starke, Mischke, & Mauws (2005) elaborated a dynamic theory of
organizational knowledge creation that relied on a four-phase process of (a) socialization
(tacit knowledge amplification); (b) externalization (tacit knowledge is transformed into
explicit knowledge); (c) combination (explicit knowledge amplification); and (d)
internalization (explicit knowledge is transformed into tacit knowledge). This was based
on learning progressing from the individual to team, then to the organization. As
organizations grew, the first phase, socialization, (triggered by team building, sharing
experiences and perspectives) was more implicit as group members trusted one another
because of shared past experiences. Then as the organization grew, the second phase
(socialization to externalization) was inhibited by the lack of meaningful dialogue fueled
by organizational distrust as individual survival and knowledge hoarding increasingly
fueled member's behavior. Without the combination of dialogue and sharing of
perspectives, the team members could not externalize their knowledge and therefore the
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learning did not become explicit to the organization (Dyck et al., 2005). This indicated
that smaller organizations have less need for the learning construct to overcome any
inherent disability of a larger organization due to the relative small size and ease of
communication, and trust built on shared experience. However, this also shows the need
for growing organizations to address knowledge impendence as the organization grows.

Research Question 5
What are the relationships of each learning orientation subconstruct to knowledge
performance?
The results demonstrated that each separate independent variable of the
dimensions of the learning organization had a strong positive predictive contribution to
knowledge performance. All variables were significant; with continuous learning
showing the strongest relationship and dialogue inquiry showing the weakest predictor.
This demonstrated the general strength of each element as a construct of the learning
organization as single regressors, as well the variable strength as a single learning
element.
When used in a multivariate regression, the strength of relationships between one
dependent variable and the series of system variables (independents) changed
significantly. The data confirmed the learning organizations systemic nature as the r2
value increases significantly with r2 = .491, higher than any of the regressed single values
(r2 = .43-.34). This confirmed that the learning organization performed cumulatively, as
reported by leading writers in the field of organizational systems (Argyris, 1996,

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Bernstein & Burke, 1989; Nadler-Tushman, 1980; Marquardt, 2002; Pedler et al., 1991;
Senge, 1990; and Watkins & Marsick, 1993).
As a system, multiple regression indicated the highest coefficients reported by
continuous learning (=3.523), team learning (=3.363), and empowerment (=3.031).
Conversely, dialogue/inquiry (= -2.471) was negatively related and leadership for
learning, systems to capture learning, and connectedness to the environment reportedly
insignificant. Although this seemed contrary to the Watkins Marsick model, it was
important to remember that this data represented the current performance of the sample
population of record companies. The strength of the systemic nature was further
evidenced by the degree of change of from individual regressions to multiple
regression, ranging from -538 % for dialogue/inquiry to +438% for continuous learning.
The most significant aspect was that as a systemic agent, continuous learning, team
learning, and empowerment increased significantly (respectively 438%, 430%, and
366%) from performance as single repressors. Of note is that two elements shift to
negative coefficients: dialogue for inquiry (-538 % change) and leadership for learning (320 % change).
Data showed that despite a general lack of leadership for learning, as well as a
lack of dialogue and inquiry, there was an existence of learning and knowledge
generation. This begged the question of how performance existed within these attributes.
The general 2007 sales decline of 20% (Ross, 2007) may be an interesting and indirect
confirmation of learning attributed to the individual, and that in spite of the indication,
individuals sought learning in order to unify their environment with expectations, a
concept labeled autopoiesis (Bakken & Hernes, 2003; Luhmann, 1995; Mingers, 1995).
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Autopoiesis was the dynamic process that (a) recursively generated the production of its
interactive components, and (b) revitalized the system with a resolved unity within its
boundaries and external environment (Maturana & Varela, 1980). This created a giveand-take or pushback explained by Senge (1990). This meant that despite systems
deficiencies, the organizational system sought to resolve itself in a unity consistent with
respect to environmental contingencies (Carley, 1986). Autopoietic learning concerned
itself with the self-organizing and autonomous development of organizational
knowledge; therefore, employees engaged learning and performance in spite of
leadership or a lack of dialogue inquiry reflected within the results. This researcher
experienced this attribute when, after direct observation of one organization, the
researcher observed strong engaged learning, open dialogue, and an amazing abundance
of all the learning organization construct. The data conversely indicated that the explicit
employee behavior was a performance by the employees for management; and no matter
how the employees were actively encouraged by management to be open and dialogue,
the actual performance of employees was geared to individual reward based on the
expectations of leadership. Employees were acting within the parameters that reinforced
agreement with leadership, rather than any actual dialogue or open questioning of
assumptions. This was communicated to this researcher later, as I inquired on these
results informally with an anonymous employee, "I only say what I know they expect to
hear, or I keep my mouth shut, other than that--really speaking your mind is a clear path
out the door. We have seen how it all falls out later down the road." When asked to
illustrate their comments, the same employee said, "it's the little things, we can see who

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gets promoted, who gets downsized or overloaded with work that they cannot possibly
complete. Then they get fired, and this does not happen to those who go along."
The data then may indicate that while continuous learning was important to
knowledge performance, dialogue and inquiry, systems to capture learning,
connectedness to the environment and leadership for learning were non existent or
insignificant within the current model in the Nashville community. This further
confirmed both the suggestion that the stability of the environment affected the learning
organization, and that the growth of structural impedances to learning, such as
organization rigidity and knowledge hoarding, increased as employee value diminishes.
Problematically, it also suggested that despite leadership reinforcing learning, employees
behaved within the larger reinforcement of job retention and security.
The data confirmed that learning might be problematic with organizational growth
through institutional rigidity from managerial control as well as environmental
uncertainty or transition (Hannan & Freeman, 1977; Tushman & Romanelli, 1985,
Shimizu & Hitt, 2004). This was affirmed by Boal and Hooijberg (2001) who wrote that
learning is shaped by expectations adapted to fit with opportunities in the environment,
and then if expectations are uncertain, learning reverts to the individual domain of selfpreservation, as opposed to organizational success. A rationale was further explained by a
response from an employee at a local record company: "Much of your effectiveness is
based on whom you know and what you know. Knowledge is power. You bring this
value to the table. If you share information, it lessens your worth to the company and
allows others to move ahead of you."

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Other employees similarly verified that the environment was in a state of

uneasiness, with most employees are jockeying for retention of employment, thus
minimizing knowledge generation through open dialogue. This explained how systems to
capture learning was insignificant (=1.448: sig. = .149). There was no motivation for an
organization or establish a history of knowledge or a data base repository of individual
knowledge as there was little motivation for sharing information. This was compounded
by the loss of a connectedness to the environment, arguably the result of individually
focused communication. As we gain, maintain, and negotiate power in organizations; we
will intentionally hold and modify information and resources to our benefit (Seo, 2003).
Cumulatively, organizational defensive routines distorted valid information as individuals
or coalitions enhanced their survival and personal well-being (Seo, 2003).
Interestingly, leadership for learning was a negative and insignificant contributor
for knowledge performance. This showed two attributes: employees were more
concerned with self than organization, no matter how authoritative or encouraging
leadership became. Leaders existed in a culture that rendered leadership ineffectual,
either through the actions of the leader or the effect of the institution. This researcher was
involved in the observance of daily activities within many of the companies surveyed. It
seemed that the environment was rather open and communicative, much more than
anticipated. However, survey results showed differently. This suggested that perhaps
employees are gaming or performing for leadership--acting as self-driven agents.
Conversely, leadership may not be interested in driving organization learning but be more
concerned with other issues such as profitability or sales, and may indirectly show a lack

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of understanding that perhaps the learning environment might be connected to increased

sales and performance.
A forward stepwise regression for determination of the optimum model fit was
run as well. Several variables were discarded and the model reflected by continuous
learning ( = .351), empowerment ( = .331), team learning ( = .312), and dialogue
inquiry ( = -.261) was the best model applied within the Nashville record company
sample (see table 7). This further demonstrated the concept of autopoiesis, rather than the
discard of the Watkins Marsick Model. As discussed earlier in the literature, a system
recursively generated the production of its interactive components, and revitalized to a
resolved unity within its boundaries and external environment (Bakken & Hernes, 2003;
Luhmann, 1995; Mingers, 1995). This meant that in spite of a negative coefficient for
dialogue/inquiry, the organization moved towards optimum performance as best it can.
The best-fit model also indicated that an order of importance for variables may
exist for the transfer of knowledge at the individual level. This indicated that
empowerment, team learning, dialogue, and continuous learning may be more
contributory to knowledge performance than the omitted variables of systems, leadership,
and connectedness to the environment. This further signified that in actual practice,
knowledge performance was not dependent on leadership, but more dependent on
individual and team activities; therefore, the attributes and benefits of the learning
organization might be motivated from the middle out, rather than the top down. This
signified that if employees can be developed or trained to learn, be empowered, and work
effectively, knowledge performance could be enhanced.

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Research Question 6
What are the relationships of each learning orientation subconstruct to financial
performance?
A bivariate analysis was completed between each independent variable of the
dimensions of the learning organization and the dependent variable, financial
performance. Results indicated that systems to capture learning was the strongest
relationship ( = .48) for financial performance. This was followed by continuous
learning ( = .44), empowerment ( = .405), connectedness to the environment ( = .38,),
team learning ( = .34), dialogue/inquiry ( = .33) and leadership ( = .14).
As this accounts singularly for each variable, the financial parameters seemed to
be most affected by systems predictors such as systems to capture learning, as well as the
drivers of system design such as leadership for learning. Although coefficients such as
empowerment, continuous learning, dialogue inquiry, and group effects such as team
learning seemed to have strong predictive qualities, the overall fit to the model was
relatively low with r2 ranging from .11-.19. The scores indicated that financial
performance may be more contingent on systems design to transfer knowledge, which is
secondarily fueled by leadership. Thus, there may be a hierarchy of causation suggested
by these relationships; knowledge generation begins at the individual level, transfers to
group level, and then transfers to systems by the design of leadership.
This reinforced Nadler and Tushman's systemic representation of open systems
theory represented by the Congruence Model (Nadler & Tushman, 1980). The
Nadler/Tushman model (1980) proposed that organizational behavior began at the
individual, and then progressed to the group and systems level. Systemically, informal
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organizational arrangements, which are individually and team driven, then managerial
tasks, followed by formal organizational arrangements, depicted the organizational
transformation process. This indicated that knowledge transfer, although it begins at the
individual level, must have structure in order for knowledge to move into organizational
expression. As leadership reflected the lowest explanatory weight, but has the highest
model fit (r2 = .37), the lower explanatories may indicate that the performance of the
learning organization was more directly linked to knowledge generation as a transfer to
the system. This was then reflective of the enactment of transfer and the design of
structure that is more indicative of leadership authority. Further, when the LO was
regressed as a multivariate regression with financial performance, the overall coefficient
of determination value (r2 = .491) increased over all single model values, showing that
the systemic interaction of elements increased the value of the model. However, the
highest coefficients remained as system to capture learning ( = .365), followed by
continuous learning ( = .251), with dialogue inquiry changing to a negative value ( = .224; p=.07), and all other elements (team learning, empowerment, connectedness to the
environment, and leadership for learning) becoming insignificant to the assumptive null
hypothesis that these factors do affect financial performance. This again reinforced the
concept that institutional variables such as systems to capture learning, continuous
learning, and dialogue, were more significant than individual and group elements (team
learning, empowerment, connectedness to the environment, and leadership) for financial
performance.
The derivative nature of financial performance to knowledge performance
confirmed that the learning organization reinforced group and individual learning, but the
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transfer of knowledge to systems reinforced financial performance. This confirmed

Watkins, Marsick, and Yang's (2004) work that knowledge was transferred through
organizational action imperatives that facilitated learning construct. Part of this was the
pragmatic establishment of a system to capture and share learning.
This would seem to indicate that there might be an order to performance in order
to transfer knowledge into financial rewards. Bernstein and Burke (1989) also suggested
that while initial focus is on individual members and groups, in order to relate to the
external environment, the organizational mission and strategy, structure, management
practices, policies and procedures, work unit climate must be in alignment. Thus, data
indicated that systemic knowledge generation was optimized through leadership's
management of systems that can transfer knowledge to the organization in a way that
connects to the environment.
The other side of the discussion was that while leadership, connectedness to the
environment, empowerment, and team learning were not significant or present within the
sample population, this only reflected a measurement of what is rather than what should
be within the sample. However, the results did indicate that at the financial performance
level, a system to capture (and share) knowledge was paramount to increasing the
financial performance value (systems to capture learning = .365, continuous learning
= .251, dialogue inquiry = .-.224). This indicated that the transfer of knowledge at the
corporate level was more important than the individual level when achieving improved
financial performance.

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Research Question 7
To what extent do authority levels of management and operations differ in their
self-reported levels of the learning organization with regard to Watkins and Marsick's
seven dimensions of the learning organization?
The data indicated that there was a higher perception of the components of the
learning organization when managerial authority increased. This seemed to indicate that
as authority increased, learning increased. The lower the control and authority, as
reflected by non-management salary, the higher the lack of open dialogue, open
feedback, listening, critique, mutual respect, and a general openness for dialogue.
Overall, the data indicated that as authority and control increased, the perception
of learning organization also increased. This indicated that the more control an employee
had over their environment, the higher the rating. Senior executive, coordinators, and
non-management rated continuous learning the highest. Significantly, senior executives,
coordinators, and non-management hourly rated the learning organization highest, with
non-management salary rating consistently lowest. This suggested that job scope and
span may increased a perception of the learning outcomes, as well as learning being
dependent on where employees fit into the organization ladder. This might be due to the
control and proximity that employees may have in job design within the higher levels of
management. This reinforced the behaviorist concept that within the stimulus-response
model of behavior; the principle of contiguity or proximity to the event will form the
strongest reinforcement to the learning process (Merriam & Caffarella, 1991; 1998). This
indicated that the closer we are to the actions of our decision, the more rewarded we may
become. Tennant wrote of self-esteem reflected through achievement, adequacy,
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independence, prestige, and self-actualization, which were also reflective of a rise in

authority (Tennant, 1997). However, within the writing of Senge (1990), the results did
confirm that the level of personal mastery was the fuel for both team learning and
organizational learning. Senge wrote that personal mastery was beyond competence and
skills, but was the clarification of what was most important to one's self (personal vision).
Northouse (2004) viewed a parallel position that leadership empowered responsibility
and collaboration throughout the organization by allowing an environment that fostered a
greater sense of achievement by allowing individual responsibility for their actions. It
would then follow that the higher the leadership value, along with the ability to set, own,
and implement responsibility with accountability of your own actions, the higher the
sense of empowerment and learning, a view confirmed by Buckler (1996). This
conversely indicated that the more indirect employees are from control of their tasks, the
lower the perception of empowerment and learning.
The data results indicated that non-management hourly employees are the most
dissatisfied with their learning environment. They are generally kept to 40 hours per
week; however, they can be called upon to perform beyond normal nine to five business
hours, and are generally expected to do so. Within earlier discussion with local
employees, most agreed that they self-impose long hours in order to complete
increasingly arduous tasks, as workloads dramatically increase due to downsizing.
Several calls to local employees reflected this stress. Most agreed that "management left
us to pick up the pieces" and their job tasks regularly include long hours to meet
deadlines long after supervisors have left the building. This translated to a lower than
average wage, creating a system of frustration for overworked employees with no control
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over their activities. Another employee remarked, "due to downsizing and many area
universities cranking out graduates prepared to work for less, we are in a position to work
harder and cheaper to keep our jobs." This leaves the employees with little sense of
empowerment or stability as they work on the low rung of the managerial levels.
Data indicated that the perception of the learning organization presence within an
organization was relative, based on the level of authority, as well as the environment.
Therefore, a complete survey of all employees would be suggested as necessary for a
clear indication of the learning assessment of any organization. Any study based solely
on one perspective, such as a survey of management, executive leadership, human
resource supervisors, or leadership/coordinators will have biased results that may not be
true to actual practice. This suggests that if job scope could be designed in a way that
increased control of task and outcome, then the perception of the learning outcomes, as
well as empowerment will increase.

Research Question 8
What is the relationship between the self-reported overall business and knowledge
performance and each of the seven dimensions of the learning organization related to
label group designation?
Both knowledge and financial performance were combined as a single
dependent variable and then regressed against each of the seven independent variables
reflecting the dimensions of the learning organization. The data indicated differences in
both significance and respective scores defined by organizational size grouped by Indie,
Major Indie, and Major. All models were significant.
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When associated to the combined learning outcomes of financial and

knowledge performance, the results suggested that continuous learning was highest at the
Indie level, decreased at the Major Indie level, and slightly increased at the Major level.
Continuous learning was evident in all label types with Indie labels reporting the highest
level of learning within the organization. Discussion with multiple indie labels suggested
that smaller sized organizations seemed to foster more continuous learning within the
environment. Generally, smaller organizations seemed to exhibit higher degrees of crossdepartmental interaction, with most employees performing multiple tasks as needed. This
encouraged a climate of open dialogue that breeds learning from mistakes, cross training,
growing skills, helping each other, and viewing problems as an opportunity to learn. The
data did not reflect if this is structural or simply the environment of the Indie label, due to
the smaller employee size. However, this did indicate that smaller organizational
structure fostered open communication.
If compared to general learning concepts from the social/situational
orientation to learning, the data indicated that as the organization decreased in size, the
community of practice for continuous learning increased. If true, then the proximity of
employees seems to increase learning (Merriam & Caffarella, 1991). While Bandura
(1977) focused on social interaction as a cognitive process, the data confirmed that the
close interaction within a smaller environment modeled stronger learning with more
robustness. This reinforced social learning theories that reported that learning occurred by
observing others, with more observation available within closer proximity. Situational
learning was reinforced as learning occurred in the social relationships of coparticipation. In this case, employees learned at the periphery and then moved to the
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center of the community gaining knowledge as they progress. This indicated that as
knowledge was contextual in a community of knowledge, perhaps proximity or close
interaction also enhanced learning as well (Lave & Wenger, 1991).
Dialogue / Inquiry was indicated by a negative explanatory regressor
within Indie labels and Major Indies; as well as not being a significant factor in Major
Label grouping. This demonstrated that the environment and culture within the record
industry in Nashville, either individually or organizationally held little value for dialogue
in practice. The data could not indicate if this reflective of the current climate or more an
indication of structure or leadership. However, results reinforced that unstable business
environments fostered a lack of dialogue and inquiry. Learning became geared towards
self-preservation and encouraged knowledge hoarding. Previously discussed, this general
knowledge hoarding was referenced as social/situational learning (Merriam & Caffarella,
1991; Bandura, 1977; Lave & Wenger, 1991). With little incentive to share knowledge,
organizational members resorted to defensive reasoning tactics in order to "avoid
vulnerability, risk, embarrassment, and the appearance of incompetence" (Argyris, 1994).
Thus, the data supported that organizational uncertainty can trigger barriers to learning
(Gersick, 1991; Seo, 2003).
The Watkins and Marsick (1993) dialogue/inquiry model was similar to
the Senge's mental models whereby we were able to re-examine, and question the
reference points that form our judgment (Senge, 1990). This indicated that within the
Nashville sample, there was little learning to explore ideas and to dialog in an open
environment. This implied that there was little value for collaborative team learning and
that there was no context where employees can suspend personal mental models in order
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to re-evaluate their work environment (Senge, 1990). Without dialogue or divergent

conversation, there was little organizational learning as learning occurs within the
element of trust (Argyris, 2004; Ellinor & Gerard, 1998; Marquardt, 1996). The data
affirmed that a general lack of dialogue negated the basis of a systems construct (Senge,
1990). There was no basis for the organization to see the connections between the parts;
inquire into assumptions; learn through inquiry and disclosure; or create shared meaning
among the many.
Team learning was significant at only the Major Indie Level. This
indicated that smaller organizations, as well as Major organization were individually
driven. This implied that smaller size did not necessitate a need for team learning, but
that individual learning transferred through the flat structure of a small organization. Not
surprisingly, Major Label groups displayed team learning as both a negative factor and
insignificant in the Nashville environment. This reinforced that learning or performance
was geared toward individual rather than team accountability. This indicated that either
structure or leadership valued accountability and reward of the individual, rather than
team performance. Teams integrate perspectives within the organization (Watkins &
Marsick, 1993). This places the context of new understanding within other team views in
ways that can integrate new perspectives and create new interpretations of reality
(Argyris, 1990; Slater & Narver, 1995). However, within the learning organization, team
learning was triggered by team building, which is facilitated by group member trust. The
combination of team dialogue and sharing allows team members to externalize what is on
their mind, and knowledge that was invisible becomes explicit (Dyck et al., 2005). This
then encourages what Watkins and Marsick (1993) labeled as boundary crossing through
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inquiry, collaboration, and sharing. As team members cross boundaries and share
information, new knowledge was created. Redding (1997) stated that teams find new
understanding and interpretation because of the process of collective learning, with
Argyris (1994) concluding that interdependence is essential for the cohesiveness of team
functioning. This indicated a dysfunction within the sample population that was
inherently unable to address change and foster new knowledge creation, due to the lack
of team learning. Whether leadership or the environment fueled this was again unclear
from the data.
Systems to Capture Learning was positive and significant at the Indie level and
was insignificant at both Indie Major and Major Label level. This showed that learning
and the transfer or retention of learning was higher within the smaller structures of the
Indie level than both the Major Indie and Major Label group. This reinforced the general
findings that in this cross sectional sample, there were no systems to embed learning into
a shared environment so that it might be retained by the organization. This again
indicated that the individual retained knowledge, rather than the organization, as the
organization becomes larger.
How then does the Indie retain systems to capture learning? Small size fostered
open communication, thus learning and information was transparent within the smaller
structure. Learning transfer, or knowledge management, was recognized as the process
for improving organizational outcomes and organizational learning by introducing a
range of specific processes and practices for identifying and capturing learning as
intellectual capital in order to transfer and reuse it across the organization. Nonaka and
Takeuchi (1995) argued that successful knowledge management must convert tacit
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(internal) knowledge into explicit codified knowledge for individuals and teams to make
knowledge meaningful. The general tools available to codify knowledge include
databases, operations manuals, Web conferencing, collaborative software, content of
corporate directories for expert advice, after- and during-action reviews, peer assists,
information taxonomies, and even e-mail lists. This allowed learning within a transparent
system view that allows information to be shared in both the individual and team
discussion. However, within the community of instability, knowledge was again
internalized and the move for the externalization of learning and documentation of extant
knowledge is avoided (Dyck, et al., 2005). This meant that no body of explicit knowledge
was shared among organizational members in the sample. As employees move from
organization to organization, they take their knowledge, contacts, and expertise with
them. The data indicated that as history resided within the individual, there was little
organizational memory within the general body of the Nashville Industry. The lack of any
organizational experience or history may then explain some of the dire predictions and
sales decline rampant within the marketplace. There is little knowledge history to learn
from, as employees leave the organization with their knowledge.
Empowerment was the most significant at the Indie and Major Indie level, with a
negative measure in Major Label grouping. This indicated that empowerment increased
with smaller organizational types, and generally lessened with larger organizations.
Concerning Nashville Major Labels, empowerment was actually a negative variable,
meaning that rather than minimal contribution, employees in Major Labels actually
viewed empowerment as a non contributory/negative factor, as opposed to Indies and
Major Indies, who experienced a positive contribution from empowerment. This
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indicated that perhaps Major Labels delivered little sense of responsibility to employees
for their performance. Watkins and Marsick defined empowerment as initiative, choice in
work assignments, participation on activity design and choice, and control over resources
needed to perform. As a negative coefficient, Major Labels then impede empowerment,
not building an alignment of vision across different work groups and levels, and in the
worst sense, the organization assigned tasks, but did not enable or deliver the resources to
perform the tasks adequately--likely contributing to the low scoring. This was reflective
of knowledge hoarding related to the unstable organizational climate in the area, as well
as the preponderance of entrenched leadership. Again, organizations or individuals who
struggle for limited resources will view information as the key organizational resource
and base of power (Perrow, 1986, Pfeffer, 1981; Salancik & Pfeffer, 1977). As people
gain, maintain, and negotiate power in organizations; they intentionally hold and modify
information and resources to their benefit. Therefore, various organizational defensive
routines will distort valid information as individuals in coalitions enhance their survival
and personal well-being. This implied that learning organization should adopt more
aggressive steps to engage learning within periods of uncertainty, especially in order to
foster empowerment.
All segments were slightly connected to the environment with the Indie label
being the most connected, followed by the Major level, then the Major Indie level.
Connectedness to the environment encouraged a global perspective, encouraged
customers' viewpoints, considered how decisions affected morale, worked with the
outside community, and encouraged solutions across all levels of the organization. The
relatively low scores among all levels of size suggested a moderate connectedness to the
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outside environment at best. Given that all organizations displayed continuous learning
and varying levels of empowerment as well as leadership for learning, other impedances
within the organizational model may affect how the organization connect to the outside
environment. This may be addressed by the organizations retreating into an internal focus
within the organization to generate and frame problems, as well as solutions, from
internal sources. This created a groupthink or self-referential ecology with little
connection to the outside environment. Previously, this was discussed as a cycle of
managerial decision rules and heuristics based on successful experiences that are repeated
for future issues (Senge, 1990; Shimizu & Hitt, 2004). The mind-set prevented managers
from being sensitive to new information that may differ from their current perceptual
model. This created managerial complacency as the cycle progresses whereby successful
experiences attracted attention and praise, support was created for managerial hubris,
then decisions unconsciously ignore negative signs regarding decision outcomes
(Hayward & Hambrick, 1997). This general framework created decision rules that
disseminate to routine and were taken for granted as successful frameworks within the
organization. Therefore, as the executive teams proceed, the shared mind-sets multiply
with ever narrowing perspectives (Boeker, 1997). This made new routine, new
perspectives and learning more difficult. This exacerbated an environment that was less
and less connected to the outside environment as well as discouraging discussion of new
frameworks for decisions. This was perhaps the greatest challenge for an entrenched
leadership to overcome-allowing new perspectives.
Finally, leadership to support learning was negative at the Indie level,
insignificant at the Major Indie level, and positive at the Major level. Leadership was
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defined as supporting requests for training, sharing up to date information on trends,

competitors and direction, coaching, looking for opportunities to learn, and assuring the
organizations actions are consistent with its' values. At the Indie level, continuous
learning scores high and leadership for learning was a negative performance factor.
Conversely, leadership for learning is highest at the Major Label group (see Figure 16).
This indicated that at the smaller label level, leadership was either non-existent for
learning, or that leadership was not a factor as there was not a formal leader-employee
structure: typically Indie employees are multitasked to perform across all duties due to
small staffing. At the Major Label level, even though leadership for learning is
significant, there was no dialogue/inquiry, no team learning, no system to capture
learning, negative empowerment, and little connectedness to the environment. The results
showed that continuous learning existed across all organizations, regardless of leadership
or team learning. However, dialogue inquiry was indicated to exist only when leadership
for learning was significant. This confirmed that the social recognition and value within
employees and incorporated emotions, values, standards, and long-term goals-along with
the satisfaction of employee needs is more individually motivated. This confirmed that
the individual fostered the collective mindset that empowers responsibility and
collaboration throughout the organization (Senge, 1990; Northouse, 2004). The
collaborative environment, whether or not leadership fosters it, existed without direct
control. Buckler (1996) reinforced that with responsibility distributed close to decision
makers, all are motivated within the shared vision, so perhaps results indicate that as long
as empowerment is positive, learning was created. This reinforced that at the smallest

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organizational size, performance was not enhanced by leadership or dialogue inquiry, but
by continuous learning and empowerment.
Overall, the smaller organizations (Indie labels) did not make team performance
necessary or significant. Smaller organizations were most connected to the environment,
and a system to capture learning seemed to be in place and effective to learning
performance, although this seems contrary to intuitive thought, as a system for learning
transfer would require resources Indies did not seem to utilize for systems. This
suggested that smaller size encouraged a level climate of knowledge sharing through
proximity. Secondly, at the mid-organizational size, Major Indies were enhanced by
leadership, continuous learning, empowerment, and team learning, possibly due to the
increased size, but did not reflect any positive improvement through open dialogue and
inquiry. There was no system to capture and share learning-which can be a direct result of
not encouraging dialogue/inquiry or systems design from leadership. The largest
organizational size (Major Labels) seemed to benefit from continuous learning,
leadership for learning, and are somewhat connected to the environment. However,
Major Labels had none, or negative existence of dialogue inquiry, team learning, systems
to capture learning, and empowerment, with minimal connectedness to the environment.
This might indicate that although leadership ( = .565: p=.001) was highly motivated to
encourage learning, the reinforcement of learning did not exist in the organization either
though individual employee impedance, leadership, or unstable environments. This may
not only be a reflection of leadership entrenchment, but of the individual and the
environment of self-preservation and knowledge hoarding, which might empower value
to the employee in this climate.
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Despite recent affirmations by executive leadership who generally

affirmed learning and open dialogue at a recent panel discussion on changes within the
music industry, the researcher was denied direct access through e-mail for delivery of the
Watkins-Marsick survey instrument. Despite the researchers affirmations of positive
results from the survey for improvement or learning, executive leadership that were
solicited feared the survey may be interpreted as the personal inadequacy of leadership,
thus, the information was rejected for survival. This researcher again speculated that if
executive leadership reacted in the climate of self-preservation and fear of punitive action
from shareholders, how then could employees be expected to behave differently? This is
a direct reinforcement of the knowledge-hoarding concept discussed throughout this
discussion. One employee at a local Major Label quipped, "I am careful to answer in the
affirmative or simply say what I know my boss expects to hear back, even if we are
encouraged to have an open discussion, I have seen what happens to those who truly
dissent-they are out the door."

Research Question 9
What is the relationship between the firm's self-reported overall knowledge and
financial performance and each of the seven dimensions of the learning organization
when measured against sales growth over a 2-year span?
The results showed that there was a direct positive association between performance
and the ratings of the learning organization. Generally, the learning organization
reporting the highest scoring LO construct (Indie) reported the highest sales growth. The
second highest scoring LO (Major) reported the next best sales performance and the
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lowest scoring LO (Major-Indie) reported the lowest sales performance. From 20042006, Indie labels supported the value of the learning organization by showing the most
growth as a combined average percent change in sales from 2004-2006 (M = +78%).
Major Labels showed the second best growth, or more appropriately the least average
sales decline (M = -31%) and Major Indie labels displayed the worst average sales
growth, or most average sales decline in the current environment (M = -53%). This
suggested a direct reinforcement of the learning organization as a performance
enhancement.
Overall, continuous learning reported highest at the Indie level, decreased at the
Major Indie level, and slightly increased at the Major level. Dialogue / Inquiry previously
regressed a negative variable for Indie and Major Indies, and was not a significant factor
for Major Labels. Team learning was significant at only the Major Indie label and
insignificant to Indie and Major Labels. Systems to capture learning, or embedded
systems, was positive and significant at the Indie level and was insignificant at both Indie
Major and Major Label level. Empowerment was most significant at the Indie and Major
Indie level, with a negative measure in Major Label grouping. Connectedness to the
environment or system connectedness was significant at the Indie level and arguably
significant at both the Major Indie level and Major Level. Leadership to support learning
was inconclusive at all levels for sales performance. The inconclusiveness was indicated
as the best sales performance (Indie label) reflected negative leadership, the least sales
decline (Major) reflected significant leadership but poor sales performance, and
insignificant leadership (Major Indie) reported the second best sales decline.

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Overall, sales performance was related to the learning organizational outcomes

related to type and size of label. The smallest organization (Indie level) found that sales
performance was not enhanced by leadership or dialogue inquiry, but by continuous
learning, empowerment, embedded systems, and system connectedness. This indicated
that smaller organizations were more connected in a way that connects learning and
performance. This then suggested that a smaller size encouraged a climate of knowledge
sharing that might be replicated through design of smaller work units in larger
organizations. Although team performance scored negatively, Indie labels were
connected most to the environment within a system to capture learning that is transferred
in a way that negated the need to team learning or learning leadership. Continuous
learning was indicated to be the strongest factor that was consistent across all
organizations with respect to sales performance and associated to best sales performance
by embedded systems to transfer learning. This indicated that somehow, albeit that the
literature substantiates the cumulative learning organization model; the actual
performance factor was more directly tied to the transfer of learning to the organizational
system in a way that can improve performance by sharing knowledge through the
organization.
Recall that in open systems design and learning, individual and organization
knowledge sharing was linked, beginning at the individual level, and then progressed to
the organization level (Bernstein & Burke, 1989). This indicated that knowledge; in order
to be beneficial, must be transferred from the individual level to the organization in order
to have observable results. The learning organization (LO) was created to understand and
imbed systemic learning into the organization as a continuous system where systems for
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capturing and sharing knowledge are part of the organizational framework (Senge, 1990;
Watkins & Marsick, 1992, 1993). While it may seem that the results contraindicate the
value of the cumulative elements of the learning organization, they may indeed reinforce
that definition of the LO. The goal of the LO is the systemic transfer of learning in order
to foster the best performance improvement. This was substantiated as the best sales
performance is displayed by the highest rated continuous learning indicator (Indie label:
=.492, p=.001). This showed that learning, when directed for use of the organization
though embedded systems to transfer learning (Indie: =.516, p=.001) resulted in
increased sales performance (see Figure 16). This indicated that a hierarchy of learning
transfer may begin with the individual, but was capitalized by the organization through
the ability to transfer the learning throughout the organization through embedded systems.
This hierarchy of learning was reviewed through earlier discussion of learning
through the schools of behaviorist, cognitive, humanistic, and social-situational learning,
which referenced similar actions. Behaviorism focused on learning through stimulusresponse of the environment (Watson, 1913; Hartley, 1998; Skinner, 1973). Cognitive
schools focused on the individual process of learning from patterns through inferences,
expectations, and connections (Hartley, 1998; Merriam & Caffarella, 1998). Humanistic
schools focused on self-actualization (Rogers,1993; Tennant, 1997). Learning was then
generalized as the need to adapt to the environment though the individual reconciliation
to the environment, whether it is through organizational/social or individual interaction.
The learning organization was then a combination of ideologies, systems, and structures
that facilitates learning beginning with individuals to groups, which was affirmed through

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this study and representative of leading research in the field of learning organizations
(Senge, 1990; Katz & Kahn, 1978; Argyris, 2004).
The transfer of continuous learning was the vehicle for capitalizing on individual
learning by identifying and capturing learning in order to transfer and reuse it across the
organization. This confirmed Nonaka and Takeuchi (1995) who argued that knowledge
management must convert individual knowledge into codified knowledge, so that teams
and organizational can make knowledge meaningful and applicable. Although typical
tools within larger organization such as operations manuals, collaborative software,
directories for expert advice, and other information systems are not typically used within
smaller organization due to resource cost, the small size indicated that communication in
a transparent system allowed learning to be shared within individual and team discussion.
The challenge was then to address a method for expanding this transparent
communication to the larger organization. This is problematic to the Nashville industry as
data indicated that there was little or no body of explicit knowledge shared among the
larger organizational members in the sample.
The results generally confirmed that learning and the transfer of learning resulted
in increased sales performance and affirmed the value of the learning organization. This
reinforced Ellinger, et al. (2002) who used the Watkins Marsick survey to assess the
relationship between the learning organization and financial performance and found a
positive association with external data using return on equity, return on assets, and
market value. Baker and Sinkula (1999), and Farrel and Oczkowski (2000) also observed
that a strong learning orientation obtained significant positive correlation to business
performance. However, the mixed results of all variables indicated other contributing
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factors affecting the relationship of the learning organization to performance as

organizational size increases. As organizations increased in size, it became more
problematic to share knowledge as the individual, rather than the organization retains
knowledge. This created a decrease in performance, indicating that in order to share
information within larger organizations, a concerted effort must be made; or performance
potential will decrease. Previous discussion related that as organizations grow, leadership
and employees frame problems and generate solutions internally and are driven more by
individual needs than organizational needs. There may be many ancillary factors such as
the current instability of the environment, or larger organizational politics, organizational
inertia, individual knowledge hoarding, perhaps fueled by the instability of the
environment. However, the data indicated that performance could still be engaged as long
as there is a focus on continuous learning of the individual, within a system to transfer
learning through the organization.

Research Question 10
Do the relationships to performance exist when measured against an increase in
market share using external sales data?
Research question 10 examined the same general discussion and argument as
research question 9. Given the small and limited data set, SoundScan data indicated a
positive association in performance change in market share related to the learning
organization as measured through Watkins Marsick. Record companies that scored higher
within the learning organization reported the strongest increase in market share when
using external sales data from year to year. With the general overall scores indicated from
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research question 2, the best market share increase from year to year was maintained
within the relative order of the overall average scores for the learning organization within
label types (Indie labels-highest LO score, Major Labels second best LO score, and
Major-Indie labels lowest LO score). This correlated to the same respective order of
market share performance with the Indie label showing the only positive and exemplary
increase in market share increasing to 29% market share and showing a percent increase
of 134% from 2004-2006. Second rated, Major Label market share declined to 56%
market share for 2004-2005, reflecting a decline of -9%. Lastly, Major Indies label
market share declined from 15% market share with a negative decline of -42% from
2004-2006 (see Table 13 & 14).
This confirmed that external market share performance was positively associated
to the attributes of the learning organization representative of smaller organizational size.
Hence, organizational size affects the dimensions of the learning organization and may be
a performance enhancement to market share. This suggests that the benefits of smaller
size might be replicated through the design of smaller work units in larger organizations
that encourage the attributes of smaller work units that may reinforce empowerment,
systems to capture learning, connectedness to the environment, and encourage continuous
learning (see Figure 16).
Major Labels continued to display a decline in market share indicative of the
negative correlation of team learning, insignificant dialogue/inquiry, negative systems to
capture learning, and negative empowerment. As previously discussed, leadership may
be highly motivated to encourage learning, but the reinforcement did not manifest in the
organization in a way that reinforced performance to contribute to market share increase.
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Major Labels displayed a negative correlation to the transfer of learning to the

organization (embedded system), insignificance for dialogue/inquiry, and negative team
learning. This indicated a lack of any type of team/organization structure--a culture of
individual preservation that cannot build on any type of cumulative knowledge base. This
might not be a reflection of leadership, as leadership for learning was rated positively, but
can indicate that the environment of self-preservation and the general organization
culture of the organization exerts is a greater influence than leadership can overcome.
Similar to previous research questions, Major Indies displayed the worst
performance related to market share as well. Although Major Indies reported positive
continuous learning, empowerment, and team learning, possibly due to the increased
size, they generate negative dialogue and inquiry. Conversely, this implied that
dialogue/inquiry may be the strongest performance enhancement in this unstable
environment, and when curtailed, had detrimental effects on market share. This reflected
a similar discussion of the learning organization within research question 9. Figure 16
showed that smaller organization (Indie level) enhanced market share not by leadership
or dialogue inquiry, but through continuous learning, empowerment, embedded systems,
and system connectedness. Smaller organizations seemed to facilitate learning that
connects to performance. This suggested that a smaller size encouraged a climate of
knowledge sharing that through further study could be replicated by the design of smaller
work units in larger organizations. Indie labels were the most connected to the
environment and reflected a system to capture learning that was transferred in a way that
negates the need for team learning or leadership for learning.

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Previous regression (Figure 16) substantiated that the cumulative learning

organization model positively affects actual market share and sales. The best performing
organization (Indie label) maintained the highest number of positive LO which seemed to
indicate that the learning to organization did improve performance. Uniquely, the highest
performing organization (Indie label) indicated the only positive value for embedded
system to transfer learning to the organization. This affirmed that learning at the
individual level must be shared in order to progress to the organization level effectively
for observable results (Bernstein & Burke, 1989). The learning organization (LO)
modeled systemic learning into the organization as a continuous system for capturing and
sharing knowledge as part of the organizational framework (Senge, 1990; Watkins &
Marsick, 1992, 1993). Therefore, both the data and literature indicated a strong
association that the systemic transfer of learning increases performance improvement as
evidence by market performance. This was reinforced by the highest reported element of
continuous learning by Indie labels reporting the best market share performance year to
year. Again, when knowledge was focused for use of the organization though embedded
systems to transfer learning, Indie labels scored best and resulted in the strongest increase
in market share (see Figure 16). This indicated a strong association for learning
beginning with the individual; however, the capitalization of knowledge for external
performance depended more on the embeddedness of systems to capture and transfer
learning for use by the organization.
Finally, the results generally confirmed that learning and the transfer of learning
resulted in increased performance by affirming the value of learning through performance
indicators such as market share. To be sure, this does not suggest that a strong learning
189

organization will always increase market share, as many external factors exist in
determining market share; factors such as competition, consumer preference, market
demand, substitute products, pricing, advertising, distribution and product. However, this
reinforced Ellinger et al. (2002) who used the Watkins Marsick survey to assess the
relationship between the learning organization and financial performance and found a
positive association with external data using return on equity, return on assets, and
market value. Baker and Sinkula (1999), and Farrel and Oczkowski (2000) observed that
learning orientation obtains significant positive correlation on business performance.
Indirectly, data implied that as organizations increase in size, it was more problematic to
share knowledge, and that knowledge was retained by the individual, rather than the
organization. This created a decrease in performance, indicating that in order to share
information within larger organizations, a concerted effort must be made, or performance
potential will decrease. Previous discussion related that as organizations grow, leadership
and employees frame problems and generate solutions internally and are driven more by
individual needs than organizational needs. There may be many ancillary factors such as
the current instability of the environment, or larger organizational politics, organizational
inertia, individual knowledge hoarding, perhaps fueled by the instability of the
environment. However, performance can still be engaged as long as there is a focus on
continuous learning of the individual, within a system to transfer learning through the
organization.

190

Implications for Research and Practice

The results of this study empirically reinforced the value of the learning
organization as a knowledge and financial performance enhancement to the organization;
evidenced by the highest overall learning organization reporting the best sales increase
and market share performance within a two-year span. This complemented the
conceptualization of the learning organization model as well as the validation that
demonstrates a link from adoption of the learning organization principles to performance
improvement reflected demonstrably by both sales and market share increase from the
best learning organization group reflected by the smallest organization. This addressed
criticism that the learning organization has become an organizational panacea with a lack
of clarity in the language and metaphors used to describe a learning organization (Ulrich,
et al., 1994).
This study also addressed the relationships of the learning organization respective
to organization size and respondent authority level. The perception of the learning
organization differed with respect to organizational size, indicating that the smallest
organization rated learning highest, and that this propensity for learning decreases as the
organizational grows in size. This implication for practitioners is that as organizational
size increased, learning becomes more problematic-indicated by growing deficiencies in
embedded systems, empowerment, and system connectedness to the environment. The
implication is that practitioners must address organizational interventions by accounting
for the differences in learning variables relative to size and should target those elements
most affected. The implication is that size differentiation should become a part of future

191

research in order to confirm or refute how elements of the LO increase or decrease

effectiveness within differing organizational sizes.
Further indication for research as well as the practitioner is that the success and
growth of an organization paradoxically created declining performance as knowledge
impedances were manifested. Success breed failure from managerial hubris and selfreferential ecologies, as well as from individual knowledge hoarding that occurred as
employees pursued survival and individual success. Hoarded knowledge created a
general loss of value to the organization and illustrated that the overall organization will
always take second place to the individual in times of uncertainty. Within the behavior of
this study, organizations must address this systemically by reinforcing group and
organization over the individual.
Further, this study indicated that at all levels of size; continuous learning seemed
to be the one common element that fueled the learning engine. This reinforced that
individual learning, whether it is outcome based (behaviorism), based on expectations
generalized from past experience (cognitive), or based on the need for self-actualization
(humanism), can be generalized as beginning with the individuals need to adapt to the
environment or the self-actualization of personal to organization needs (Watson, 1913;
Hartley, 1998; Skinner, 1973;Merriam & Caffarella, 1998; Tennant, 1997).
At the smallest organizational level (Indie), leadership or dialogue inquiry did not
enhance performance; mid-size organizations did not reflect improvement through open
dialogue and inquiry, and the largest organization did not reflect improvement through
dialogue inquiry, team learning, systems to capture learning, or empowerment. This
implied that if the practitioner fueled individual continuous learning, other deficiencies
192

such as organization rigidity could be overcome. This implied that continuous learning
might better serve as the vehicle to move information further from the individual to the
organization. This also indicated a need for further research into the relative value of each
learning model element as well as their effectiveness within the varying types of
organization size, managerial levels. This demonstrates that perhaps a prioritized system
of intervention is more effective than a general "one size fits all" model.
Additionally, the linkage of environmental stability is relatively new to learning
organization. The findings indicated that within extremely insecure and unstable
environments, the organization tends to behave aggressively towards individual
knowledge hoarding, defeating any attempt to grow the learning organization. Even if
exhorted by leadership, employees adapt survival behavior that retains knowledge as the
commodity of value. This did not indicate that competitiveness merited this action, but
that when job instability and downsizing/merger activity are rampant, learning priorities
would be difficult to implement. This sadly illustrated that at the time when an
organization should pull together and increase performance though generative
knowledge, the organization behaved in the opposite direction-individual survival. This
indicated that further research was needed for a prioritized list of action variables for
generating improved performance within the organization respective of environmental
stability. Although not reflective of the entire Watkins-Marsick model, this begins the
identification that various contingencies may require varying models of interaction,
possibly dependent on the environment, the size of the organization, or even the layer of
authority targeted.

193

The results further indicated that managerial levels perceive higher degrees of
learning within the organization, relative to their own authority or job control. The
implication is that as job scope and span increased the perception of the learning
outcomes, any assessment study based on one perspective from one layer of
authority/management would have result bias that can falsely indicate the organizations
status. For practitioners, assessment should then be from differing levels of authority,
unless the intervention is targeted to one layer of leadership. As learning then varies
dynamically across individuals depending organizational size, entrenched leadership,
organizational rigidity, the stability of the environment, and even the political stances
associated with the issues at stake, learning may be affected regardless of the individual
or organizational preference to learning practices. This may have indications that
differing types of interventions will be needed to stimulate the elements of the learning
organization--dependent on this and other evolving elements to be determined with
further research.

Recommendations for Further Study

Research indicated that there is further need for the empirical validation of the
general learning model as well as the validation of the separate effects each learning
element has on the organization. This was reflected by the differing values and
insignificance of the traditional elements of the learning organization from this study.
Results showed that a contingency strategy may be indicated whereby each element of
the learning organization might vary in effect by the size of organization, managerial
levels, and environmental stability. If true, this indicates the need for refinement and the
194

exploration of the general model, in a stratified manner similar to this study, in order to
reflect the varying elements and build a body of focused knowledge that practitioners
may use.
If the central core to learning begins at the individual level and is fueled by
continuous learning, as indicated by this study, then further research may also indicate
which LO elements are more likely to contribute to performance, as well as indicate
which elements are more positive for overcoming barriers to organizational learning. This
indicated that further research was also needed for both successful and failing
organizations, in order to examine how organization adapt and overcome learning
impedances in spite of poor leadership or other dysfunctional elements of the learning
organizations. This would further enhance the body of knowledge for organizational
learning as well as add value to practitioners.
This study also suggested that further research was needed to determine and
further explore the nature of why the learning transfer to the organization becomes
problematic for organizations as they grow and how this differs according to size,
management, and environment. This will further refine the identification of learning
impedances and address targeted intervention that may alleviate deficiencies. Further
research may also be needed to solidify focused and efficient organizational interventions
by the identification of further evidence of the learning organization within failed
organizations. This may indicate which elements are irrelevant to success as well as
indicators that increase the impending failure of the company. This would create a tool
for the identification of correction of the paradox that success may nurture declining
performance.
195

As learning varies dynamically across organizational size, leadership,

organizational rigidity, environmental stability, and even the political stances associated
with individual employees can affect organizational learning. Learning varies regardless
of the individual or organizational preference for positive learning practices. This
indicates an overall need for the examination of both the environment of learning and the
systemic affect of the varying elements of the learning organization model on the
organization.

196

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APPENDIX
DIMENSIONS OF THE LEARNING ORGANIZATION QUESTIONNAIRE
Web Based Survey is Secure, Anonymous, and Confidential. No Tracking.
55 questions: Time Needed: 15 minutes or less.

Thank you for participating in this study measuring record company work environments. Your company
has been selected as representative of the Nashville Music Industry-along with other labels.
This study examines the learning environment. In the last decade, companies have experienced wave after
wave of rapid transformation as global markets, technology, and external political and economic changes
make it impossible for any business or service-whether private, public, or nonprofit-to cling to past ways of
doing work. The "learning organization" has been identified as a model for innovation through total change
strategies that help navigate these challenges.
In this questionnaire, you are asked to think about how your organization supports and uses learning at an
individual, team and organizational level. From this data, a method for improvement can be isolated in
order to suggest ways to build upon and the areas of greatest strategic leverage for adapting the industry
towards continuous innovation and growth.
Please respond to each of the following items in your best opinion. For each item, determine the degree to
which this is something that is or is not true of your organization. If the item refers to a practice that rarely
or never occurs, score it a one [1]. If it is almost always true of your department or work group, score the
item a six [6]. Fill in your response by marking the appropriate number on the answer sheet provided.
Example: In this example, if you believe that leaders often look for opportunities to learn, you might score
this as a four [4] by filling in the 4 on the answer sheet provided.
Question
Almost Never
In my organization, leaders continually look for opportunities 1
2
to learn.

Almost Always
5
6

There are no right or wrong answers. We are interested in your perception of learning.
For your convenience, you may complete this survey in segments; and take up where you left off.
However, 15-20 minutes should be sufficient for the entire survey. If you would like a hard copy please email me at herrerad@mail.belmont.edu and I will mail or drop a copy off at your convenience. Both
methods are completely anonymous and no participant or specific label/record company can be identified at
any time.
Thank you for completing this survey. If you have any questions, please call
David Herrera-615-XXX-XXXX PH/615-XXX-XXXX FX

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Note***Likert Scale placed after each question in actual survey.

DIMENSIONS OF THE LEARNING ORGANIZATION QUESTIONNAIRE

Individual Level
Almost
Almost
Never
Always
1
2
3
4
5
6
1. In my organization, people openly discuss mistakes in order to learn from them.
2. In my organization, people identify skills they need for future work tasks.
3. In my organization, people help each other learn.
4. In my organization, people can get money and other resources to support their
learning.
5. In my organization, people are given time to support learning.
6. In my organization, people view problems in their work as an opportunity to learn.
7. In my organization, people are rewarded for learning.
8. In my organization, people give open and honest feedback to each other.
9. In my organization, people listen to others' views before speaking.
10. In my organization, people are encouraged to ask "why" regardless of rank.
11. In my organization, whenever people state their view, they also ask what others think.
12. In my organization, people treat each other with respect.
13. In my organization, people spend time building trust with each other.
Team or Group Level
Almost
Almost
Never
Always
1
2
3
4
5
6
14. In my organization, teams/groups have the freedom to adapt their goals as needed.
15. In my organization, teams/groups treat members as equals, regardless of rank, culture,
or other differences.
16. In my organization, teams/groups focus both on the group's task and on how well the
group is working.
17. In my organization, teams/groups revise their thinking as a result of group discussions
or information collected.
18. In my organization, teams/groups are rewarded for their achievements as a
team/group.
19. In my organization, teams/groups are confident that the organization will act on their
recommendations.

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Organization Level
Almost
Almost
Never
Always
1
2
3
4
5
6
20. My organization uses two-way communication on a regular basis, such as suggestion
systems, electronic bulletin boards, or town hall/open meetings.
21. My organization enables people to get needed information at any time quickly and
easily.
22. My organization maintains an up-to-date data base of employee skills.
23. My organization creates systems to measure gaps between current and expected
performance.
24. My organization makes its lessons learned available to all employees.
25. My organization measures the results of the time and resources spent on training.
26. My organization recognizes people for taking initiative.
27. My organization gives people choices in their work assignments.
Organization Level
28. My organization invites people to contribute to the organization's vision.
29. My organization gives people control over the resources they need to accomplish
their work.
30. My organization supports employees who take calculated risks.
31. My organization builds alignment of visions across different levels and work groups.
32. My organization helps employees balance work and family.
33. My organization encourages people to think from a global perspective.
34. My organization encourages everyone to bring the customers' views into the decision
making process.
35. My organization considers the impact of decisions on employee morale.
36. My organization works together with the outside community to meet mutual needs.
37. My organization encourages people to get answers from across the organization when
solving problems.
38. In my organization, leaders generally support requests for learning opportunities and
training.
39. In my organization, leaders share up to date information with employees about
competitors, industry trends, and organizational directions.
40. In my organization, leaders empower others to help carry out the organization's
vision.
41. In my organization, leaders mentor and coach those they lead.
42. In my organization, leaders continually look for opportunities to learn.
43. In my organization, leaders ensure that the organization's actions are consistent with
its values.
Measuring Learning Organization Results at the Organizational Level
In this section, we ask you to reflect on the relative performance of the organization. You
will be asked to rate the extent to which each statement is accurate about the
organization's current performance when compared to the previous year. There are no
right or wrong answers. We are interested in your perception of current performance.
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For example, if the statement is very true of your organization, fill in a [5] on the answer
sheet provided.
Almost
Almost
Never
Always
1
2
3
4
5
6
44. In my organization, return on investment is greater than last year
45. In my organization, average productivity per employee is greater than last year.
46. In my organization, time to market for products and services is less than last year.
47. In my organization, response time for customer complaints is better than last year.
48. In my organization, market share is greater than last year.
49. In my organization, the cost per business transaction is less than last year
50. In my organization, customer satisfaction is greater than last year.
51. In my organization, the number of suggestions implemented is greater than last year.
52. In my organization, the number of new products or services is greater than last year.
53. In my organization, the percentage of skilled workers compared to the total workforce
is greater than last year.
54. In my organization, the percentage of total spending devoted to technology and
information processing is greater than last year.
55. In my organization, the number of individuals learning new skills is greater than last
year.
One more page for general grouping information!!
Additional General Information about You and Your Organization
In this section, fill in the number on the answer sheet which corresponds to the answer
that best describes you or your organization. The answer sheet has space for up to ten
options. Please mark your response accurately.
56. What is your primary responsibility? (Circle One)
1. Business Affairs/Legal/Licensing / Financial/Accounting
2. Management
3. Administration,
4. Marketing/Sales/Promotion
5. Radio Promotions
6. A&R
7. Distribution/Logistics
8. Creative/Video/Studio Production
9. Other _______________________________________________________
57. What is your role? (Circle One)
1. Executive Leadership/CEO/
2. Senior Management/VP
3. Middle Management (Project or Department Manager/Director/Supervisory)
4. Administration/Staff/Non-Management/Operations Implementation
5. Non-Management [Hourly Employee]
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58. What is your educational experience? (Circle One)

1. did not complete high school
2. high school graduate
3. certificate or associates degree
4. undergraduate degree
5. graduate degree
59. How many hours per month do you spend on your own time on work-related
learning? (Circle One)
1. 0 hours per month
2. 1-10 hours per month
3. 11-20 hours per month
4. 21-35 hours per month
5. 36+ hours per month
60. How many employees are in your organization? (Circle One)
1. 1-10
2. 11-20
3. 21 - 50
4. 51-100
5. Greater than 100
61. Genre of Music (Circle One)
1. Country
2. Christian
3. Rock/Alt Rock
4. Other ______________
62. How would you categorize your company (Circle One)
1. Indie
2. Major Indie (larger than typical "Indie" with Major distribution)
3. Major (parent co. multinational corporation with Major distribution)

Survey referenced in Sculpting the Learning Organization: Lessons in the Art and
Science of Systematic Change by K. Watkins and V. Marsick, 1993, Jossey-Bass.
Copyright 1993 by Jossey-Bass. Used with permission.

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