Learning Orientation, Market Orientation and Organizational Performance: The Mediating Effect of Absorptive Capacity

Abstract

Purpose: this paper aims to examine the mediating effect of absorptive capacity on the the relation between two construct: learning orientation (LO) and market orientation (MO) and organizational performance (OP).

Design/methodology/approach: data were gathered through field survey of 190 senior managers in manufacturing organizations in Jordan. The analysis was conducted using two-stage least squares estimators for latent variable models.

Findings: Results indicate that learning orientation, market orientation and absorptive capacity all have a positive and significant effect on organizational performance. Moreover, results suggest that absorptive capacity partially mediates the relationship between learning orientation and organizational performance. This study concludes that while knowledge acquisition and values of external knowledge are important, related prior knowledge, basic skills and research and development (R&D) (absorptive capacity) are important as well.

Practical implications: For managers in manufacturing organizations, the study proposes that organizations should focus on attaining high levels of Learning orientation and market orientation while also giving attention to building internal knowledge and basic skills including R&D.

Originality/value: This paper is the first to examine the mediating effect of absorptive capacity on the relationship between learning orientation, market orientation and organizational performance.