The critical role of effective organizational learning to improve firm’s innovation and performance in a market turbulence condition

Purpose – The purpose of this study is to identify the effects of market turbulence as a moderating
construct in relation to effective organizational learning on the company’s innovation and performance as well
as on the antecendent of facilitative leadership competence.

Design/methodology/approach – This study used a cross-sectional and correlational research design. The
period of data collection took place between March and May 2019 for three months. The questionnaires were
distributed to 350 people who were randomly selected in the metal small and medium enterprises in Tegal district,
Central Java, Indonesia. Analysis was conducted through the analysis of structural equation modeling (SEM).

Findings – Facilitative leadership competencies have a significant effect on effective organizational
learning. Facilitative leadership competencies can support the learning climate and develop mechanisms for
transferring learning from individuals and teams into organizational knowledge and experience. There is also
an influence of organizational learning on the company’s innovativeness and the company’s performance.
Contingency factors can be applied in situations that are always experiencing a change in turbulence

Research limitations/implications – This study contributes to the deepening of understanding of
facilitative leadership concept and highlights the importance in the success of building effective learning, as
well as its relationship with innovation performance and business performance.

Practical implications – This finding helps the management to understand the market forces and their
impact on the company’s innovation and performance. In this case, the leader plays an important role in
fostering a culture of learning, changing the habits and ways of working so that they are ready to support the
organizational culture of learning.

Originality/value – Developing a mechanism for transferring learning into organizational knowledge is
very important because organizational learning is believed to be an important strategy in an organizational
learning process. This is particularly true in a rapidly changing environment, as it can create business
resilience.