INTRODUCTION Several challenges buffeting today’s nonprofits such as increasing reliance on service-fee income, expanded competition from for-profit providers, opposition to nonprofit advocacy activity, and increased accountability pressures have provoked a strand of writings prescribing new approaches for managing in the nonprofit sector (e.g., Anheier, 2000; Drucker, 1992). A key postulate central to these writings is that an important aspect of better managing the nonprofit sector is to instill a strategic orientation in constituent organizations (see Voss and Voss, 2000). Generally, a strategic orientation is the organization’s philosophy of how to conduct business, reflecting a deeply rooted set of values that provides a systematic method of alignment with its environment (Grinstein, 2008; Slater et al., 2006). Drawing on traditional resource-based theory (hereinafter RBT, see Barney, 1991), it is suggested that a strategic orientation is fundamental to explaining inter-firm performance variations because it represents a “know-what” advantage–that is, a strategic resource–that can be deployed to adapt to changing environmental conditions (Eisenhardt and Martin, 2000; Teece et al., 1997). Studies in nonprofit management provide evidence that bears on the salience of strategic orientation to nonprofit organizations (NPOs): Davis et al. (2011) compare nonprofits and for-profits on the level of entrepreneurial orientation adopted, finding that entrepreneurial nonprofits are significantly more abreast of economic and technological trends than their for-profit counterparts; Shoham et al. (2006) offer a meta-analysis to assess market orientation in the voluntary and NPO sector, showing that the market orientation→performance link is stronger in voluntary and NPOs than in for-profits. Strategic management (Slater et al., 2006) and marketing (Grinstein, 2008) scholars alike suggest several orientations organizations can adopt to cope with ever changing business environments, including innovation, learning, market, and entrepreneurial orientations; but, to date, research providing insights on strategic orientation adoption and NPO performance has focused primarily on market orientation (Shoham et al., 2006; Voss and Voss, 2000; Macedo and Pinho, 2006), innovation orientation (Hackler and Saxton, 2007; Zorn et al., 2010; Burt and Taylor, 2003), and entrepreneurial orientation (Davis et al., 2011; Boschee, 2006), ignoring learning orientation. Yet it is important to study NPOs’ orientation toward learning because learning not only provides the necessary resources with which NPOs can invoke their innovation (Hurley and Hult, 1998), entrepreneurial (Slater and Narver, 1995), and marketing (Liu and Ko, 2012) capabilities but also remains the only means by which they can achieve sustainable competitive advantage (De Geus, 1988, p. 71). Indeed, Gill (2009) has argued that if nonprofits are to meet the demand for effectiveness, which is coming from many constituencies inside and outside of their organizations, then they must cultivate a learning culture. The purpose of this paper, therefore, is to present an empirical test of the relationship between learning orientation and NPO performance. The paper adopts a marketing-focused perspective on organizational learning (Hurley and Hult, 1998), and draws from RBT (Crook et al., 2008) and relationship marketing (Bhattacharya et al., 2009) to develop the conceptual argument that learning oriented NPOs will effectively be able to accomplish their mission-based tasks and therefore to attract critical financial resources from their funding entities. More concretely, the present study unpacks organizational performance into economic (e.g., fundraising) and noneconomic (e.g., program implementation) dimensions and contribute to the extant strategic orientation literature by testing a conceptual model which suggests that noneconomic performance is the primary organizational feature that drives economic performance and that learning orientation is an outgrowth of this characteristic. The contribution of this paper is by no means far-flung. Based on their meta-analysis of 125 studies of RBT that collectively encompass over 29,000 organizations, Crook et al. (2008, pp. 1152-1153) conclude that “much work remains before theory can map out the many contingencies that potentially affect a specific resource’s value,” calling for an “empirical inquiry into the processes through which strategic resources lead to high [economic] performance.” The present study answers this call –that is, it joins the global debate surrounding RBT’s central prediction, which asserts that the extent to which organizations possess strategic resources should relate positively to their economic performance, by presenting a finer-grained assessment that accounts for the role played by noneconomic performance. In particular, the paper studies an important yet less-researched strategic resource, that is, organizational learning, and presents an empirical test of how it affects economic performance–RBT’s main dependent variable–through noneconomic performance. The balance of the paper is summarized as follows. The next section presents the conceptual framing around learning and NPO performance in which it argues that noneconomic performance will mediate between learning orientation and economic performance (Figure 1). With this as the point of departure, the following section presents the empirical context of the study, the procedures used to collect data, and the measures utilized and their psychometric properties. Thereafter, the findings, implications, and limitations are discussed. Forthcoming in Leadership & Organisation Development Journal.
Posted on: Sat, 13 Jul 2013 14:56:54 +0000
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