The Relationship between Learning Orientation and Business Performance : Do Smaller Firms Gain More from Learning Orientation?

The purpose of this study is to measure the relationship between learning orientation of firms and their business performance. It also explores the moderating effect of firm size on relationship between learning orientation of firms and their business performance. The study was conducted on manufacturing and service sector firms from the State of Punjab, India. Self developed non-disguised questionnaire has been used for the study. A purposive sample of 278 key informants (senior level managers who have insight about learning orientation and performance status of the firm) was used. Exploratory and confirmatory factor analyses were used to validate the learning orientation and business performance scales. The hypotheses were tested using multi-group moderation and structural equation modeling. The study shows that learning orientation has significant positive effect on business performance. The results have indicated that firm size (based on investment) significantly moderates the relationship between learning orientation and business performance. The findings of the study are relevant for practitioners as well as researchers. Practicing managers can gain insights from the suggested learning orientation and performance relationship, especially when they are engaged in small cap firms struggling to compete with relatively established businesses. Future researchers can use the scales developed in this study. The study contributes to the knowledge management literature by providing empirical evidence for relationship between learning orientation and business performance