Leaders’ perceptions of how learning and development affects organisational performance: are size and sector moderators?

Abstract

An extensive search of the literature revealed that only a few studies (e.g. Mabey and Ramirez, 2005) have examined the effects of executive development on organisational outcomes. Furthermore, it has been postulated that limited measures of executive and leadership development exist (Collins, 2002), and therefore, based on Luoma’s (2006) model of management development, an integrated measure is constructed in this research. In addition, this research advances an empirical examination of the relationship between a measure of executive learning and development (L&D) and a composite perceptual organisational performance measure (financial, market share, customer satisfaction, innovation, and employee engagement). Executive L&D is hypothesised to affect organisational performance on the basis of a number of interrelated theoretical concepts: Resource-Based View (Barney, 1991; Barney, 2001; Clulow et al., 2007), Dynamic Capabilities (Chien and Tsai, 2012; Eisenhardt and Martin, 2000; Zott, 2003), Human Capital (Rastogi, 2002; Ulrich, 1997; Wright et al. 2001) and Resource Dependency (Pfeffer, 1972; Pfeffer and Salancik, 1978; Hitt and Tyler, 1991; Hillman, 2005).

Furthermore, drawing on the Resource-Based View (Barney, 1991; Barney, 2001; Clulow et al., 2007) and Resource Dependency (Pfeffer, 1972; Pfeffer and Salancik, 1978; Hitt and Tyler, 1991; Hillman, 2005) theories, it is hypothesised that differences in firm size will have a bearing on the effects of executive L&D on organisational performance. Based on empirical research findings on learning orientation differences across sectors (e.g. Hyland et al., 2000; Taylor and Bain, 2003; Wright and Dwyer, 2003; Dymock and McCarthy, 2006; Lee and Tsai, 2005; Khadra and Rawabdeh, 2006; Lee-Kelly et al., 2007), it is hypothesised the effects of executive L&D on organisational performance will differ across sectors (service versus industry).

Initial validation of the executive L&D measure was based on data from a sample of 150 executives. Subsequently, data was collected from 222 organisational leaders across several geographic regions (Europe, USA, Africa, Asia, Australia) to allow further validation of the measure and to test the relations between executive L&D5 and organisational performance (profitability, market share, innovation, employee engagement, and customer satisfaction). The results derived from ordinal regression analysis suggest that organisations that implemented executive L&D practices tended to show improved organisational performance. The positive effects of strategic, experiential, participative, and structured executive L&D dimensions on the composite measure of organisational performance underscores the contribution of both formal and informal learning to organisational outcomes. Firm sector and size characteristics were also found to modify the organisational performance effects of executive L&D. Specifically, industry firms produced better performance effects of executive L&D than their service counterparts. In terms of firm size, Non-SMEs produced better effects of executive L&D on organisational performance than SMEs. An important practical implication emerging from this result is that HRD practitioners may have to align executive L&D to firm size and sector characteristics. Importantly, the research offers theoretical extension to the Resource-Based View and Resource Dependency concepts of the firm. From the practical perspective, the amalgamation of executive L&D dimensions into a broad measure (reflecting ambidextrous learning), offers a unique nexus of both concepts with practical implications. Specifically, this suggests that HRD practitioners and senior executives need to account for a wide range of learning (formal and informal) dimensions when designing and implementing executive L&D. The results of this research provide theoretical extension for a number of theories: Resource-Based View, Human Capital, Resource Dependency, Knowledge-based, and Dynamic Capability, given the positive effects of executive L&D on organisational performance. To conclude, this research provides an integrated measure of executive L&D, which can be applied across different firm sectors/sizes to drive organisational performance.

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