Measuring the Effects of Learning on Business Performances: Proposed Performance Measurement Model

Abstract

In today's business environment, characterized by increasing dynamic and complexity, learning in organization, i.e. organizational learning has been proposed as a main source of competitive advantage of modern organizations. Statements such as „the ability to learn faster than your competitors could be the only sustainable competitive advantage in given environment„ (De Geus, 1988 ; Stata, 1989), best describe the importance that researchers give to the concept of organizational learning. On the other hand, in the last 20 years performance measurement has undergo a genuine revolution regarding the reorientation from traditional to contemporary, balanced, performance measures, i. e. performance measurement systems, and as such it moved to the centre of academic and practitioners’ interest. Given the fact that relationship between organizational learning and business performances is not nearly enough empirically investigated and explained, the purpose of this paper is to propose a balanced performance measurement model, specially designed to measure the effects of learning in organization on its business performances. Bearing this in mind, performance measurement literature has been reviewed, especially the most important performance measurement systems, such as BSC, EFQM, Performance Prism, Performance Pyramid System, etc., on the basis of which the balanced performance measurement model, encompassing seven non-financial and three financial measures, aimed to measure the effects of learning on business performances of organization, has been designed. In today's business environment, characterized by increasing dynamic and complexity, learning in organization, i.e. organizational learning is crucial for survival and advancement of modern enterprises. Specifically, in process of adapting to such a fast changing environment, modern organizations have freedom of choice of the ways of adjustment, which brings us to the organization's ability to learn over time, especially if we know that the adjustment itself implies the existence of potentials in the organization to learn, forget and relearn, based on its past behaviours (Fiol and Lyles, 1984, pp. 804). Statements such as „the ability to learn faster than your competitors could be the only sustainable competitive advantage in given environment„ (De Geus, 1988 ; Stata, 1989), best describe the importance that researchers give to the concept of organizational learning, i.e. it is regarded as a main source of competitive advantage of 21st century organizations. Moreover, some of the most famous gurus of organizational learning such as Argyris, Schein and Senge share a common view that organizations need to learn quickly if they want to maintain their competitive advantages (Lim and Chan, 2004, pp. 100). On the other hand, business performances are indicator of how well does organization accomplish its goals (Ramanujam, 1986 in: Lin and Kuo, 2007, pp. 1069), while business performance measurement results are basis for managers, owners, employees and other stakeholders for estimating organization’s overall success in particular period of time, as well as inputs for needed changes and improvements in organization’s future business activities. In the last 20 years performance measurement has undergo a genuine revolution regarding the reorientation from traditional to contemporary, balanced performance measures, i. e. performance measurement systems, and as such it moved to the centre of academic and practitioners’ interest.

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