Organizational learning and technological innovation: the distinct dimensions of novelty and meaningfulness that impact firm performance

Abstract

This manuscript delineates technological innovation into the separate dimensions of novelty and meaningfulness to examine how a firm’s organizational learning modes of adaptive learning and experimental learning, together with unabsorbed slack resources, influence the effects of novelty and meaningfulness on firm financial performance. The multi-method empirical approach leverages secondary data from firm patent information and COMPUSTAT, and primary data from senior executives at 167 firms in various high-tech industries. The results indicate that adaptive learning heightens meaningfulness but diminishes novelty, whereas experimental learning harms meaningfulness. Additionally, firms’ unabsorbed slack resources moderate the relationships of experimental and adaptive learning with novelty. In particular, experimental learning enhances novelty only when a firm has sufficient unabsorbed slack to adjust resource levels in accordance with experimentation. Further, the results suggest that meaningfulness increases firm financial performance as represented by Tobin’s q, both independently and jointly when considered with novelty. These insights underscore the necessity of treating novelty and meaningfulness as separate dimensions of technological innovation that impact firm performance.

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Acknowledgements

The third author acknowledes the financial support of the National Natural Science Foundation of China(71573079).

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Appendix

Appendix

Items and constructs Factor loading
Experimental Learning (coefficient alpha: 0.85, average variance extracted: 0.63)
1. Our firm stresses the importance of learning from R&D experimentation. 0.85
2. Our firm often experiments with different development approaches and methods to enhance our R&D knowledge. 0.75
3. Our firm encourages employees to try different development methods to enhance our R&D knowledge, even though the outcomes of these methods are uncertain. 0.81
4. Our firm regards failures of R&D experimentation activities as learning experiences, rather than development costs. 0.76
5. We gain a great deal of knowledge through our repeated trial-and-error R&D processes. 0.78
Adaptive Learning (coefficient alpha: 0.84, average variance extracted: 0.62)
1. Our firm emphasizes the importance of tracking the R&D activities by industry leaders. 0.82
2. Our firm encourages researchers and developers to adjust their skills and knowledge to catch up with industry leaders. 0.87
3. We adapt our R&D approaches to follow technological opportunities pursued by industry leaders. 0.72
4. Our firm continuously improves our innovation knowledge to face industry leaders. 0.79
5. We consistently keep track of the differences we have with industry leaders. 0.73
Environmental Dynamism (coefficient alpha: 0.81, average variance extracted: 0.60)
1. In the market, customers’ preferences change quickly over time. 0.88
2. Market demand and consumer tastes have been unpredictable. 0.69
3. Actions of competitors have been highly unpredictable. 0.74
4. The competition of our firm is changing very rapidly. 0.77
5. It is very difficult to forecast where technology will be in the next five years. 0.82
Model Fit Indices: chi-square (d.f. = 87): 134.87; GFI: .92; CFI: .97; NFI: 0.90; RMSEA: .05

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Zuo, L., Fisher, G.J. & Yang, Z. Organizational learning and technological innovation: the distinct dimensions of novelty and meaningfulness that impact firm performance. J. of the Acad. Mark. Sci. 47, 1166–1183 (2019). https://doi.org/10.1007/s11747-019-00633-1

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Keywords

  • Experimental learning
  • Adaptive learning
  • Slack resources
  • Innovation novelty
  • Innovation meaningfulness
  • Shareholder value
  • Organizational learning
  • Firm performance