The organizational performance of learning companies: A longitudinal and competitor analysis using market and accounting financial data

Abstract

Purpose

A growing body of literature on organizational learning suggests that companies or organizations with a learning capability can gain a competitive advantage. The argument is that learning organizations are better at knowledge transfer and generating new knowledge to solve problems. The objective of this study is to examine empirically if learning companies are more competitive and better performers than their competitors.

Design/methodology/approach

This study examines a portfolio of learning companies and a set of their competitors, looking at their financial performance over a significant period. Learning companies were selected based on content analysis of the published literature. Competitors were selected from an existing top 500 companies listing matched to the learning company's business domain. This study compares their performance using both market and accounting financial data.

Findings

The data show that learning companies demonstrate strong performance in financial markets over time, beating the traditional market indexes in both bull and bear markets. The accounting data show similar results. On a majority of the financial measures, the long‐term financial performance of learning companies is significantly superior to that of their closest competitors.

Research limitations/implications

This study discusses and explores the implications of these results in studying the link between learning companies and organizational performance. A limitation of the study is the small sample size of learning companies in the study. Also some potential alternative explanations for their performance cannot be completely ruled out due to the longitudinal nature of the study.

Originality/value

This study shows that there is a positive link between learning capability and competitive advantage, as measured by long‐term market financial performance of a group of learning companies.

Citation

Goh, S.C. and Ryan, P.J. (2008), "The organizational performance of learning companies: A longitudinal and competitor analysis using market and accounting financial data", The Learning Organization, Vol. 15 No. 3, pp. 225-239. https://doi.org/10.1108/09696470810868855