Mediating role of organizational learning on the relationship between market orientation and innovativeness

This paper has three purposes – first, to establish the direction of relationship between market orientation (MO) and organizational learning (OL); second, to assess the effect of MO and OL on organizational innovativeness (OI); and third, to examine the mediating role of OL on the relationship between MO and innovativeness.

This research was carried out with a sample size of 321 respondents from Indian private and government/public sector industries, applying structural equation modeling (maximum likelihood estimation technique) using AMOS 16. To check the mediation, the study adopts the method suggested by Baron and Kenny (1986).

The study finds that MO acts as an antecedent to OL, and the direct effect of both the variables on innovativeness is positive. The study also exhibits that though OL plays a role of mediator between MO and innovativeness, yet the mediation is partial. However, the study also demonstrates the dominance of OL over MO to improve OI.

The study is survey-based, where self-reporting bias can occur. The study considers the cross-sectional data only, whereas OL is a dynamic process which constrains the ability to make causal relations. Therefore, to firmly show relationships, the use of longitudinal study is necessary. Moreover, the study mainly includes Indian organizations. The diverse sample from different multi-national companies could lead to a better understanding of the model.

The study suggests that organizations need an inclination toward market information to improve their innovativeness in changing the business environment. The innovativeness of the organization can be improved further with the introduction of proper organizational learning processes which includes both adaptive and generative learning. The partial mediation of OL suggests that firms have several other ways to improve innovativeness; however, learning offers opportunity to process the external information adequately that can be combined with other resources to enhance innovativeness.

The study contributes to the literature in three ways. First, it addresses a gap in literature by responding to issues regarding the direction of relationship between MO and OL. It also provides empirical evidence that MO precedes OL. Second, it bridges the gap between MO and innovativeness literature by providing empirical evidence. Third, it also demonstrates the possible mediating role of OL between MO and innovativeness.