the role of organizational learning in the …

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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

COPY RIGHT © 2013 Institute of Interdisciplinary Business Research 72

JANUARY 2013

VOL 4, NO 9

THE ROLE OF ORGANIZATIONAL LEARNING IN THE RELATIONSHIP

BETWEEN QUALITY MANAGEMENT PRACTICES AND ORGANIZATIONAL

PERFORMANCE

Sisnuhadi ( Corresponding author) Faculty of Business, Duta Wacana Christian University, Yogyakarta, Indonesia

Jamal Abdul Nasir

Faculty of Business and Economics, University Malaysia, Sarawak (Unimas)

Abstract

This study investigates the relationships between quality management (QM) practices (infrastructure practices and

core practices), organizational learning, and organizational performance in Indonesia’s and Malaysia’s ISO 9000

registered manufacturing companies. The results of this study indicate that in Indonesia’s ISO 9000 registered

nufacturing mcompanies, the higher levels of infrastructure practices lead to higher levels of core practices and

organizational learning. The organizational learning has a positive influenceon organizational performance. The

core practices do not mediate the relationship between infrastructure practices and organizational learning, and

organizational learning mediates the relationship between infrastructure practices and organizational performance.

While in Malaysia’s ISO 9000 registered manufacturing companies, the higher levels of infrastructure practices lead

to higher levels of core practices, and the infrastructure practices and core practices influence organizational

learning. The infrastructure practices and organizational learning have positive impact on organizational

performance. The core practices mediate the relationship between infrastructure practices and organizational

learning, and organizational learning mediates the relationship between QM pracices and organizational

performance.

Keywords: QUALITY MANAGEMENT PRACTICES, INFRASTRUCTURE PRACTICES, CORE

PRACTICES, ORGANIZATIONAL LEARNING, ORGANIZATIONAL PEFORMANCE.

1.Introduction

In recent decade knowledge has become one the most important intangible assets for organizations because

it enabling organizations to produce products/services which are difficult to imitate (Nonaka & Toyama, 2003;

Garcia et al., 2007). Scholars also argued that the new knowledge and skills obtained through learning improve

firm’s innovative capabilities thus enhancing the level of organizations’ competitiveness and performance (Baker &

Sinkula, 1999; Huber, 1991; Kieser & Koch, 2008; Nonaka, 1994).

Some QM authors explain that concept of learning is embedded in quality practices. They believe that

learning facilitates organizations to develop their capabilities to identify customers' needs and to create a unique

products/services which are difficult to imitate (Chiles & Choi, 2000; Hackman & Wageman, 1995). Organizational

learning in quality practices enables organizations to develop new markets and improve to their competitive

advantage (Crossan, et al., 1999; Ruiz-Moreno et al., 2005; Sitkin). Samson & Terziovski (1999) argue that QM

practices (e.g. process management, information and analysis, customer focus, people management, and leadership)

provide learning opportunities for people to develop their abilitites (Chiles &Choi, 2000). QM practices facilitate

analytical tools and standardized procedures to increase work efficiency which lead to work commitment to improve

quality (Choo et al., 2007). The implementation of each group of QM practices leads to different intended outcomes

within organizations (Choo, et al.,2007). The infrastructure QM practices and core QM practices facilitate an

organization to improve its relevant resources to adapt with environmental dynamics. Infrastructure QM practices

encourage to develop their knowledge about customer needs, and to align that knowledge with the organization's

strategy, while core QM practices provide learning tools to share the knowledge effectively (Hackmane&

Wageman, 1995).

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Many authors have stated the relationship among QM practices (e.g. inrastructure practices and core

practices) and organizational performance. According to Sousa and Voss (2002), infrastructure practices and core

practices differently affect performance. Some studies reported that only the infrastructure practices (e.g. executive

commitment, employee empowerment, and customer focus) contribute to quality improvement, but the core

practices (e.g. information and analysis, process improvement, benchmarking, and use of advanced manufacturing

technologies) do not contribute (Powell, 1995; Dow et al., 1999; Samson and Terziovski, 1999). On the other hands,

other studies found positive relationships between the core practices and performance (Rahman and Bullock, 2005;

Sa´nchez-Rodriguez and Martı´nez-Lorente, 2004). Moreover, some studies also indicated that the infrastructure

practices such as the management supports, employee relations (Motwani et al. 2001), employee involvement,

employee selection, and development (Adam et al., 1997) were not significantly related to performance. However,

Sit et al. (2009) found that leadership, customer focus, informationa analysis and human resource have significant

relationship with customer satisfaction.

The investigations of the relationship between QM practices and organizational learning indicate that there

is a positive relationship between organizational learning and organizational performance (Ittner, 2001; Powell,

1995; Samson & Terziovski, 1999). Chiles and Choi (2000) state that customer focus, continuous improvement,

teamwork and adaptation in dynamic markets faciitate the organizational learning. In addition, information

availability has also been identified as a driver of organizational learning (Ruiz-Moreno et al. 2005).

There aremany publications of comparative research on TQM in global perspective, however only few

empirical works had been carried out in developing countries, particularly ASEAN countries (Young and Wilkinson,

2001; Arumugam et al., 2008). In addition, the researches above did not addresscomprehensively the relationship

between QM practices, organizational learning, and organizational performance. Therefore more comparative

empirical research on the relationship between QM practices, organizational learning, and organizational

performance in ASEAN countries, especially Indonesia and Malaysia is needed. This comparative study is aimed to

examines the interrelationship between QM practices (infrastructure and core practices), organizational learning,

and organizational performance and is intended to generate more cross-cultural and multi-country comparative

research (Sila & Ibrahimpur, 2002).

2.Literature Review and Hypotheses Development

2.1 Quality Management Practices: Infrastructure and Core Practices

Quality Management (QM) is a management philosophy that implemented by many organizations to

improve their effectiveness and performance in order to achieve competitive advantage (Zhang et. al., 2000; Yusof

and Aspinwall, 2001). Quality management (QM) is defined as a management approach which aims to "achieve and

sustain high quality output, focusing on the maintenance and continuous improvement of processes and defect

prevention at all levels and in all functions of the organization in order to meet or exceed customer expectations"

(Flynn et al., 1994, p. 342). Claver-Cortes et al. (2008) defined QM as a management approach to planning and

implementing continuous improvement in an organization to improve the organizational performance.

Some scholars differentiated TQM into two aspects: hard aspects and soft aspects. Some other scholars

named hard aspects as core practices, while soft factors called infrastructure practices. The core practices related to

management tools, technique and practices and well documented methods of achieving quality results. The core

practices consists of process management, quality improvement tools, information analysis, while the infrastructure

practices include management support, customer focus, supplier relationship, and continuous improvement (Kaynak,

2003; Samson & Tersiovski, 1999). Hard aspects are concerned with tools and systems that are necessary to support

the implementation of soft factors (Black and Porter, 1996). The infrastructure practicesis associated with

philosophical aspects such as, principles and management concepts(Zu, 2009). Soft aspects of TQM associate to

behavioural aspects and concern with “peopleaspects” such as leadership, empowerment,training and education,

loyalty, customer focus, teamwork, human resource utilization, contacts with suppliers and professional associates,

communication, integration of the voice of the customer and supplier, performance awards, quality culture “positive

attitude towards quality, cultural barriers”, social responsibility (Lewis et al., 2006a, b). These aspects have been

extensively discussed in the quality management literature (Rahman and Bullock, 2005; Lewis et al., 2006a, b).

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Many empirical findings suggested that there is relationship between infrastructure practices and core

practices. The infrastructure practices support organizational environment that focus on customer needs and

expectations, maintain reliable suppliers, encourage employees participation in quality decision making. Those

activities support core QM practices (Flynn, et al. 1995). Infrastructure practices such as, management leadership,

training, and employee relation have positive relation to quality data reports, product/service design, and process

management (Kaynak, 2003). Other studies have reported the statiscally significant correlation between

infrastructure practices and some core practices (Ahire, et al. 1996; Zhang, 2000). Considering the above discussion,

the hypotheses are formulated as below:

H1a Infrastructure practices significantly affects core practices in Indonesia’s ISO 9000 registered companies

H1b Infrastructure practices significantly affects core practices in Malaysia’s ISO 9000 registered companies

2.2. Quality Management Practices and Organizational Learning

Organizational learning (OL) is becoming an important area of research. OL studies how organizations

learn and improve their competitive advantage, innovativeness, and effectiveness. OL is defined as developing and

applying new knowledge that has the potential to change employees’ behavior, so that the organization is able to

improved results, and grows through innovation (Aydin and Ceylan, 2009). OL requires tools to facilitate

knowledge acquisition, information distribution, interpretation and organization (Abel, 2008). OL concern with the

way in which employees in an organization learn, address a task-related challenge, and increase their understanding

of how they should learn (Abel, 2008).

There some elements imbedded in the TQM that imply necessity for learning. TQM focus on motivation

and personnel development and training. Infrastructure QM practices facilitate many possibilities for employees to

understand the dynamic of customer needs (samson & Terziovski, 1999). In addition, infrastructure QM practices

provide many opportunities for employees to share their experience and knowledge. Accoding to Crossan, et al.,

(1999), infrastructure QM practices support to the promotion of informal and creatvie ideas and action. Therefore,

the formulated hypotheses are as follow:

H2a Infrastructure practices significantly affect organizational learning in Indonesia’s ISO 9000 registered

companies

H2b Infrastructure practices significantly affect organizational learning in Malaysia’s ISO 9000 registered

companies

Factual approach, system approch and process approach facilitate the use of data analysis tools and

techniques throughout organizations. They provide tools and techniques such as process flow diagrams tables so that

the employees can share the information to the whole member of the organization (Ahire, Landeros, & Golhar,

1995). Ruiz-Moreno (2005) argued that information availability is a driver for organizational leraning. TQM collects

information, analyize it and distributed to all of the organization members. This process can improve the ability of

the organization members in problem solving (Sitkin, et al., 1994). In addition, core QM practices facilitate the

utilization of existing knowledge to control and monitor the quality process. Choo et al. (2007b) state that structured

and standardized practices enable organizational members to consistently work toward the organizational purposes,

goals, and strategies. Thus, the following the hypotheses are proposed.

H3a Core practices significantly affects organizational learning in Indonesia’s ISO 9000 registered companies

H3b Core practices significantly affects organizational learning in Malaysia’s ISO 9000 registered companies

H3c Core practices significantly mediates the relationship between infrastructure practices and organizational

learning in Indonesia’s ISO 9000 registered companies

H3d Core practices significantly mediates the relationship between infrastructure practices and organizational

learning in Malayia’s ISO 9000 registered companies

2.3. Quality Management Practices and Organizational Performance

Many researchers found that there were a positive relationship between QM practices and organizational

performance (Kaynak, 2003; Prajogo and Sohal, 2006). However, some researchers found that QM practices may

not have direct but indirect impact on financial performance (Singh and Smith, 2004; Rahman and Bullock, 2005).

Scholars reported that there is statistically significant link between infrastructure practices and operational

performance (Samson and Terziovski, 1999; Madu, et al. 1996). Some infrastructure practices such as, work force

commitment, shared vision, and cutomer focus are significantly related to operational performance (Samson and

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Terziovski, 1999). Collaboration with selected reliable suppliers may improve the quality of products or services at

lower costs. Thus, the following hypotheses are proposed:

H4a Infrastructure practices significantly affect organizational performance in Indonesia’s ISO 9000 registered

companies

H4b Infrastructure practices significantly affect organizational performance in Malaysia’s ISO 9000 registered

companies

Other empirical studies also reported that core practices related to organizational performance. Data

collected from customer can be used by organization to produce good quality products and service according to

customer’s need, and therfore, create custoner satisfcation. Colletion and dissemination of quaity data and

information throughout organization help organization to detect quality problems and take neccessary actions

(Kaynak, 2003). Flynn et al, (1995) also indicated that there is a positive relationship between core practices and

operational performance. Based on the discussion above, the hypotheses can be formulated below:

H5a Core practices significantly affect organizational performance in Indonesia’s ISO 9000 registered

companies

H5b Core practices significantly affect organizational performance in Malaysia’s ISO 9000 registered

companies

2.4. Organizational Learning and Organizational Performance

Organizational learning facilitate learning process for organizationto adapt in the new environment. The

effective organizational learning can improve organization capabilities (Inpen, 2000) and can gain a competitive

advantage. Lopez et al. (2005a) indicated that organizational learning process directly influences organizational

competitiveness and financial performance (e.g. profitability, sales growth, profit growth, and sales margin). Other

scholars reported that there were positive effects of several organizational learning practices (e.g. flexibility,

teamwork, and supportive leadership) on financial performance (Khandekar and Sharma, 2006; Bontis et al’s,

2002). Based on the discussion above, the hypotheses can be drawn as follow:

H6a Organizational learning significantly affect organizational performance in Indonesia’s ISO 9000 registered

companies.

H6b Organizational learning significantly affect organizational performance in Malaysia’s ISO 9000 registered

companies.

H6c Organizational learning significantly mediates the relationship between infrastructure practices and

organizational performance in Indonesia’s ISO 9000 registered companies.

H6d Organizational learning significantly mediates the relationship between infrastructure practices and

organizational performance in Malaysia’s ISO 9000 registered companies.

H6e Organizational learning mediates the relationship between core practices and organizational performance in

Indonesia’s ISO 9000 registered companies.

H6f Organizational learning significantly mediates the relationship between core practices and organizational

performance in Malaysia’s ISO 9000 registered company.

3. Research Design and Methodology

3.1 Instrument and Measurement of the Variables

3.1.1. Quality Management Practices

This research adapted eight Quality Management Systems based on ISO 9000 as independent variable. The

ISO 9000 series are consistent with the MBNQA criteria (Sila, 2007). Sila (2007) explained that ISO-registered

organizations would be expected to implement effective TQM practices compared with non-ISO-registered

organizations as a result of their orientation towards ISO 9000. Therefore, ISO 9001:2000 certified companies were

selected because a certified ISO 9000 quality management system is an important international indicator and means

of proof that TQM is the focus of the organization (Kirchenstein and Blake, 1999).The new quality management

system standard of ISO 9000:2000 were based on eight quality management principles which could be used by

senior management as a framework to guide their organizations towards improved performance (Sun et. al., 2004).

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The quality management practices used in this study are:

Customer Focus (CF) : 6 items

Leadership (LE) : 6 items

Involvement of People (IP) : 6 items

Process Approach (PA) : 6 items

Systems Approach to Management (SA) : 5 items

Continual Improvement (CI) : 5 items

Factual Approach to Decision-making (FA) : 4 items

Mutually Beneficial Supplier Relationship (MB) : 6 items

Following Kaynak (2003), Samson & Tersiovski (1999), and Zu (2009), in this study infrastructure practices

consist of customer focus (CF), leadership (LE), involvement of people (IP), continual improvement (CI), and

mutually beneficiary supplier relationship (MB). The core practices include process approach (PA), system approach

(SA), and factual approach (FA).

3.1.2. Organizational Learning

This study employs the organizational learning construct measurement developed by Templeton et al. (2002).

Table 11 summarizes dimensions in the Organizational Learning Construct.To measure the level of organizational

learning, participants were asked to response questions about the employees, organization, and management which

derived from the OL dimensions.

Insert Table 1 here

3.1.3. Organizational Performance

Swanson & Holton (2001) explained that performance is the value of productive output of a system in the

form of goods or services. Organizational performance comprises the actual output of an organization as measured

against its intended outputs (or goals and objectives) (Richard et al. (2009). According to Richard et al. (2009)

organizational performance encompasses three specific areas of firm outcomes: (a) financial performance (profits,

return on assets, return on investment, etc.); (b) product market performance (sales, market share, etc.); and (c)

shareholder return (total shareholder return, economic value added, etc.). In this study, organizational performance

consists of two perceptual performance measurements: perceptual financial performance and perceptual knowledge

performance. Those two perceptual performance measurements were defined by Watkins and Marsick (1997). Table

below shows the variables and indicator codes of perceptual financial performance (PFP: 6 items) and knowlwdge

performance (KNP: 8 items).

The perceptual financial performance contains questions about return on investment, average productivity per

employee, time to market share, response time for customer complaints, market share, and the cost per business

transaction.Knowledge performance is an improvement of products or services as a result of learning and knowledge

capacity (Marsick & Watkins, 1999). The knowledge performance includes questions that ask respondents to judge

about customer satisfaction, the number of suggestions implemented, the number of new products or services, the

percentage of skilled workers compare to the total workforce, the percentage of total spending devoted to technology

and information processing, and the number of individual learning new skills.

The respondents were asked to respond the research instruments based on a five point Likert scale anchored

between “Strongly Disagree (1)” and “Strongly Agree (5)”.

3.2 Sampling and Data Collection Procedures

An online survey was applied to collect data from quality managers who are working on Indonesia’s and

Malaysia’s ISO 9000 registered manufacturing companies. Those respondents were sent questionnaires,including

cover letter that explain the objective of the research and instruction to complete the questionnaires and send them

back via email.

The Malaysian ISO 9000 registered companies are collected from Federation of Malaysian Manufacturers

(FMM) Directory 2009 and the information about Indonesian ISO 9000 certified companies are gathered from the

http://dictionary.sensagent.com/Organization/en-en/

http://dictionary.sensagent.com/Objective%20%28goal%29/en-en/

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several local ISO 9000 consulting firms. The questionnires are sent to 734 Indonesia’s ISO 9000 registered

companies, and 217 of the 734 respondents participated in the survey, resulting a response rate of 29.66%. In

Malaysia, the questionnaires are sent to 498 ISO 9000 registered companies and 108 of those companies returned

the questionnaires, yielding a (response rate of 21.69%.

4. Goodness of Fit and Data Analysis

This study employed PLS approachand used WarpPLS program for the analysis. PLS has been suggested

as an alternative to maximum likelihood approach in social sciences research (Haenlein & Kaplan, 2004).

PLS anlysis is appropriate for small sample size (Haenlein & Kaplan, 2004). According to Chin & Newsted

(1999), a sample size of 50 is appropriate for PLS analysis. PLS analysis also does not require multivariate normal

distribution and parametric assumption (Gefen et al., 2000).

4.1. Convergent Validity

Convergent validity is evident when the scale items load strongly on the intended construct (Gefen &

Straub, 2005). The minimum factorloadings of indicators on the intended construct is 0.7 (Barclay et al., 1995; Chin,

1998). Table 2 below shows the summary of factor loadings which are above 0.70.

Insert Table 2 here

4.2. Composite Reliability

To examine the reliability of a unidimensional construct in SEM-PLS, composite reliability is used instead

of Cronbach’s alpha. Composite reliability of a construct should exceed 0.7 (Chin, 1998, Hair et al., 2005). Tables 3

depicts the Ccomposite reliability of all constructs (Indonesia and Malaysia). All of the constructs have composite

reliability above 0.7.

Insert Table 3 here

4.3 Discriminant Validity

Discriminant validity requires that the correlation between indicators and their construct should higher than

the correlation between indicators and other constructs. (MacKenzie et al., 2005). Discriminant validity required that

the scale items load strongly on only one intended theoretical construct, but weakly on the other unintended

constructs (Gefen & Straub, 2005). There are two methods that can be used to examine discriminant validity: cross-

loadings and square root of AVEs.

To meet the cross-loading criterion, scale items of a latent construct should cross-load weakly on the other

unintended constructs (Straub et al., 2004). While table 4 shows the factor loadings second order for Indonesia and

table 5reports thefactor loadings second order for Malaysia.

Insert table 4 here

Insert table 5 here

To satisfy the AVE criterion, the square root of AVE of a latent construct should be larger than the

correlation between that particular construct and any other constructs in the model (Chin, 1998; Gefen & Straub,

2005). Table 6 below shows the latent variable correlation and square root of AVE and table 7 shows the latent

variable correlations second order for Indonesia.

Insert table 6 here

Insert table 7 here

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Table 8 below shows the latent variable correlation and square root of AVE and table 9 shows the latent

variable correlations second order for Malaysia.

Insert table 8 here

Insert table 9 here

.

4.4. Examine the Structural Model (Inner Model)

PLS analysis examines the correlation between the latent constructs to examine the structural model,

estimates the path coefficients between the exogenous and endogenous constructs and R2, or coefficient

determination, of the endogenous constructs (Gerbing & Anderson, 1988; Segars, 1997).

Figure 1 shows the structural model for Indonesia. As showed in the figure 1 that infrastructure practices

significantly affect core practices at p-value <0.01with standard β = 0.73 The R2 = 0.53 indicates that the 53% of the

variance in the core practices is explained by infrastructure practices. Infrastructure practices significantly affect

organizational learning at p-value <0.01with standard β = 0.55 and R2 = 0.37. This result showa that infrastructure

practices explained 37% of the variance of organizational learning. Organizational learning significantly affects

organizational performance at p-value <0.01 with standard β = 0.40 and R2 = 0.38. While core practices not

significantly (p = 0.21) affect organizational learning, infrastructure practices significntly (p < 0.05) affect

organizational performance, and core practices not significantly (p = 0.20) affect organizational performance. It can

be concluded that infrastructure practices indirectly influence organizational performance through organizational

learning.

Insert figure 1 here

Insert figure 2 here

Figure 2 depict the structural model for Malaysia. Based on figure 2, infrastructure practices signifcantly

affect core practices at p <0.01. Standard for the relationhsip is β = 0.60, and R2 = 0.36. Infrastucture practices

significantly affect organizational learning at p<0.01 and standard β = 0.49. Infrastructure practices significantly

affect organizational performance at p<0.01 and β = 0.28. Core practices insignificantly (p = 0.15) influence

organizational performance. Organizational learning significantly affects organizational performance at p<0.01, β =

0.37. Whereas the relationship of core pracices and organizational learning is not significant. It can be concluded

that infrastructure practices indirectly influence organizational learning through core practices. Infrastructure

practices also indirectly influence organizational performance through organizational learning.

4.5. Determination of the Mediating Role

4.5.1 Mediating Role of Core Practices in the Relationhip between Infrastructure Practices and Organizational

Learning

In Indonesia case, infrastructure practices significantly affect core practices and infrastructure practices

significantly affect organizational learning, but core practices insignificantly affect organizational learning;

therefore, core practices does not mediate the relationship between infrastructure practices and organizational

learning.

In Malaysia case, infrastructure practices significantly affect core practices, infrastructure practices

sginificantly affect organizational learning, and core practices significantly affect organizational learning. In order to

examine whether core practices mediate the relationship between infrastructure practices and organizationa

learning, the comparison between direct effect of infrastructure practices to organizational learning and indirect

effect of infrastructure practices to organizational leaning via core practices should be made. Table 10 shows the

comparison between the direct effect of insfrastructure practices to organizational learning and the indirect effect of

infrastructure practices to organizational learning via core practices.

Insert table 10 here

It can be seen from table 10 that the direct influence of infrastructure practices on organizational learning

resulted standardized β =0.66, significant at p<0.01 and R2 = 0.43 and the indirect influence of infrastructure

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practices on organizational learning through core practices resulted standardized β = 0.49, significant at p<0.01 and

R2 = 0.44 (see figure 4). After the introduction of core practices in the relationship between infrastructure practices

and organizational learning, the standardized β decrease by 0.66 – 0.49 = 0.17 and R2 increase by 0.44 – 0.43 =

0.01. It means that core practices partially mediates the relationship between infrastructure practices and

organizational learning. The partial mediating effect occurs when the relationship between the independent variable

and the dependent variable remained significant while the coefficient was reduced after the introduction of

mediating variable (Hair et al., 2005). The analysis shows that direct effect= 0.49, indirect effect= 0.15and total

effect = 0.64. This result implies that the introduction core practices as a mediating variable can improve the

influence of infrastructure practices on organizational learning (Daud & Yusoff, 2010).

4.5.2. Mediating Role of Organizational Learning in the Relationhip between Infrastructure Practices and

Organizational Performance

As it can be seen on figure 1( the structural model for Indonesia), in Indonesia, infrastructure practices

significantly affect organizational performance, infrastructure practices significantly affect organizational leanring,

and organizational learning significantly affects organizational performance. The mediating role of organizational

learning in the relationship between infrastructure practices and organizational performnace can be explore by

comparing between the direct effect of infrastructure practices to organizational performance and indirect effect of

infrastructure practices to organizational perforemance via organizational learning. Table 11 shows the comparison

between the direct effect of insfrastructure practices to organizational performance and the indirect effect of

infrastructure practices to organizational performance via organizational learning.


Table 11 depicts that the direct influence of infrastructure practices on organizational performance resulted

standardized β =0.52, significant at p<0.01 and R2 = 0.27 and the indirect influence of infrastructure practices on

organizational organizational performance through organizational learning produced standardized β = 0.20,

significant at p<0.05 and R2 = 0.38.

It can be seen from the table 11 that after the introduction of organizational learning as a mediating

variable in the relationship between infrastructure practices and organizational learning, the standardized β

decrease by 0.52 – 0.20 = 0.32 and R2 increase by 0.38 – 0.27 = 0.11. It means that organizational learning partially

mediates the relationship between infrastructure practices and organizational learning. Moreover, the direct effect =

0.20, indirect effect = 0.22 and total effect = 0.42 means that that by the introduction organizational learning as a

mediating variable organizations can improve the infrastructure practices and enhance their organizational

performance.

In Malaysia’s ISO 9000 registered companies (figure 2, the structural model for Malaysia), infrastructure

practices has significant effect on organizational performance, infrastructure practices has significat effect on

organizational learning, and organizational learning has significant effect on organizationl prformance. The

mediating role of organizational learning in the relationship between infrastructure practices and organizational

performance can be determined by comparing the direct influence of infrastructure practices on organizational

performance and the indirect influence of infrastructure practices on organizational performance

throughorganizational learning. Table 12 depicts the comparison between the direct influence of infrastructure

practices on organizational performance and the indirect influence of infrastructure practices on organizational

performance through organizational learning.


The standardized β for the direct influence of infrastructure practices on organizational performance is

0.52, significant at p<0.01, and R2 = 0.27. While the values of standardized β and R2 of the indirect effect of

infrastructure practices on organizational performance through organizational learning are 0.28 (significant at

p<0.01) and 0.37 respectively. After the intervension of organizational learning the standardized β decrease by 0.52

– 0.28 = 0.24 and R2 increase by 0.37 – 0.27 = 0.10. It means that the model demonstrated a partial mediating effect

of organizational learning on the relationship between infrastructure practices and organizational performance.The

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analysis also found that direct effect = 0.28, indirect effect = 0.167 and total effect = 0.45.This result indicates that

the influence of infrastructure practices on organizational performance can be improved by the introduction of

organizational learning (Daud & Yusoff, 2010). .

4.5.3. Mediating Role of Organizational Learning in the Relationhip between Core Practices and Organizational

Performance

Figure 1 shows that core practices insignificantly affect organizational performance, core practices

insignificantly affect organizational learning, and organizational learning significantly affects organisational

performance. It can be conclude that organizational learning does not mediate the relationship between core

practices and organizational performance.

While in figure 2, core practices significantly affect organizational learning, core practices insignificantly

affect organizational performance, and organizational learning significantly affects organizational performance. It

means that organizational learning significantly mediates the relationship between core practices and organizational

performance.

4.6. Differences in the Relationship among QM Practices, Organizational Learning, Organizational Performance

between Indonesia and Malaysia

The relationship among QM practices, organizational learning, and organizational performance in

Indonesia’s ISO 9000 registered companies is different than that of in Malaysia’s ISO 9000 registered companies.

The differences are depict on table 13.


5. Discussions

The findings of this study indicate that infrastructure practices have a significant relationship with core

practices both in Indonesia’s (H1a) and Malaysia’s (H1b) ISO 9000 registered companies.This results are consistent

with the past study (Flynn et al.,1995; Rahman & Bullock, 2005; Zu, 2008) which reported that infrastructure

practices support the implementation of core practices. It can be observed that infrastructure practices, such as

customer focus, leadership, involvelment of people, continuous improvement, and mutually beneficairy supplier

relationship support the application of core practices. For example, in order to produce products that meet the

customer expectations, company needs tools to collect data from its customers.

This research found that infrastructure practices significantly affect organizational learning both in

Indoneisa’s (H2a) and in Malaysia’s (H2b) ISO 9000 registered companies. This findings are in line with past

studies (Poswell, 1995; Samson & Terziowski, 1999; Chiles & Choi, 2000; Martinez-Costa & Jiminez-Jiminez,

2008; Mukherjee et. Al. 1998) that leadership, customer focus, continuous improvement, involvement of people, and

mutully beneficary supplier relationship facilitate a good enviroment for employees to develop thier competencies.

In order to continually improve the competencies and performance to satisfy customers, leaders together with

employees, suppliers should focus on understanding the dynamic of customer needs and expectations and then

translate the customer needs and expectations into products.

In Indonesia (H3a), core practices insignificantly affect organizational learning. This finding implies that

system approach, process approach, and factual approach do not facilitate learning environment in Indonesia’s ISO

9000 registered compnaies. This finding contradicts with other studies (Moreno, 2005; Choo et al. 2007). In Malysia

(H3b), on the other hand, core practices significantly affect organizational learning. This result is consistent with

previous studies (Moreno, 2005; Choo et al. 2007). The finding expains that system approach, process approach, and

factual approach facilitate learning environment in Malaysia’s ISO 9000 registered companies.

Furthermore, core practices (H3c) insignificantly mediate the relationhsip between infrastructure practices

and organiztional learning in Indonesia’s ISO 9000 registered companies. This findings implies that intangible or

behavior factors of QM practices (e.g. process management, customer focus, people management, and leadership)

are the most influential dimensions on providing learning opportunity for company as suggested by some scholars

(Samson & Terziovski, 1999; Chiles & Choi, 2000). While in Malaysia’s ISO 9000 registered companies (H3d),

core practices significantly mediate the relationship between infrastructure practices and organizational learning. In

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Malaysia’s ISO 9000 registered companies, both infrastrture (intangible) and core (tangible) practices affect the

company performance. The total effect of 0.64 implies that by introducing core practices as a mediating variable can

improve the influence of infrastructure practices on organizational learning (Daud & Yusoff, 2010). The study found

that the combination of “hard” aspects and the “soft” aspects of QM practices influenced organizational learning.

This result is make sense. In order to maximize learning process, it is necessary to implement on all aspects of

quality management including the soft or behavioural aspects and the hard “aspects of QM practices.

This study found that in Indonesia (H4a), infrastrucrure practices is significantly affect organizational

performance. This finding is supported with thesis identifed in the literatures (Terziowski, 2003; Martinez-Costa &

Jimenez-Jimenez, 2008; Madi et al., 2009) that there is significant relationship between infrastructure practices and

organizational performance. In Indonesia, customer focus, ledership, involvement of people, continuous

improvement, and mutullay beneficiary supplier relationship do not influence organizational performance.

While in Malaysia (H4b), the infrastructure practices significantly affect organizational performance. This

finding implies that leadership, customer focus, involvement of people, and muttulay beneficiary supllier

relationship influence organizational performance. This results in line with the literatures (Terziowski, 2003;

Martinez-Costa & Jimenez-Jimenez, 2008; Abdullah et al., 2009).

This study (H5a) fails to support the findings of previous studies concerning the influence of core practices

on organizational performance (Kaynak, 2003; Ahire & Dreyfus, 2000). In Indonesia’s ISO 9000 registered

companies (H5a), core practices insignificantly affect organizational performance. In Indonesia’s ISO 9000

registered companies process approach, system approach, and factual approach do not influence on organizational

performance. However, this findings accords with the literature (Martinez-Lorente et. Al., 2000; Madi et. Al. 2009)

that intangible or behavior factors of QM practices are the most influential dimensions on company results. In

Malaysia’s ISO 9000 registered companies (H5b) , on the other hand, core practices (process approach, system

approach, and factual approach) significantly influence organizational performance, therefore, support the previous

studies (Flynn et al. 1995; Kaynak, 2003).

In Indonesia and Malaysia (hypotheses H6a and H6b), organizational learning significantly affects

organizational performance. This results show that the process of knowledge creation has a significant impact on

organizational performance. The result of this study implies that companies can foster organizational learning to

improve their competitive advantage. This results are in line with Martinez-Costa & Jimenez-Jimenez (2008). This

results also consistent with theoritical agreement that learning is an important element for the achievement of

companies’ goals (DeGues, 1998; Garvin, 1993)

Furthermore, organizational learning significantly mediate the relationhsip between infrastructure practices

and organiztional performance in Indonesia’s and Malaysia’s ISO 9000 registered companies The total effect of

0.45 implies that the influence of infrastructure practices on organizational performance can be improve by the

introduction of organizational learning (Daud & Yusoff, 2010). In both countries, infrastructure practices (e.g.

leadership, customer focus, involvement of people, continuous improvement, and multually beneficiary supplier

relationship) encourage learning process and then affects performance. This findings is consistent with Montes et al.

(2003) that TQM influence on behavior and learning process of the employees through person interaction and the

interaction affect performance.

In Indonesia, since core practices insignifcantly affect organizational learning, therefore, organizational

learning does not mediate (H6e) the relationship between core practices and organizational performance, while in

Malaysia (H6f), organizational learning mediates the relationship between core practices and organizational

performance.

The results indicate that in Indonesia process approach, system approach and factual approach do not

contribute to the lerning activites and therefore, do not influence organizational performance. In Malaysia on the

other hand, core practices has indirect effect on organizational performance through organizational learning. Process

approach, factual approach and system approach facilitate employees to create new ways to improve their

competencies and enhance the organizational results.

This study shows that there is a difference in the relationship between QM practices, organizational

learning, and organizational performance in Indonesia’s and Malaysia’s ISO 9000 registered companies. In

Indonesia, infrastructure practices is the most influential dimensions that affect organizational learning and

organiztional performance, while in Malaysia’s ISO 9000 registered companies, infrastructure practices and core

practices influence organizational learning and organizational performance. This findings indicate that eventhough

QM practices are universal, but the QM practices implementation in different countries produce different results.

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6. Conclusion

In conclusion, this study has addressed a significant gap in QM practices, organizational learning, and

organizational performance literature. This is done by formulating, examining and establishing a research model

linking the multidimensional and mediating relationships between QM practices, organizational learning and

organizational performance. The results of this study indicate that in Indonesia’s ISO 9000 registered companies, the

higher levels of infrastructure practices lead to higher levels of core practices and organizational learning. The

presence of organizational learning induces higher levels of organizational performance. While in Malaysia’s ISO

9000 registered companies, the higher levels of infrastructure practices lead to higher levels of core practices, the

infrastruct ande practices and core practices influence organizational learning. The presence of infrastructure

practices and organizational learning induces higher levels of organizational performance.

The mediation analysis affirms that in Indonesia’s ISO 9000 registered companies, core practices does not

mediate the relationship between infrastructure practices and organizational learning, and organizational learning

mediates the relationship between infrastructure practices and organizational performance. While in Malaysia’s ISO

9000 registered companies, core practices mediate the relationship between infrastructure practices and

organizational learning, and organizational learning mediates the relationship between QM pracices (infrastructure

and core practices) and organizational performance.The results also indicate that eventhough QM practices have

universal characteristic, however every country implement the QM practices differently in order to achieve its own

objectives.

Given the significant impact of QM practices on organizational learning and organizational performance,

the practitioners could apply the current QM practices, select and fine-tune the right characteristics to improve

organizational learning process and organizational performance. In short, a comprehensive well-managed TQM

programme is needed for an organisation in this increasingly competitive business environment.

There are several limitations associated with this study. First, the researcher collected data from one key

respondent from each systematically selected firm that participated in this study. The key respondent may not have

had enough knowledge and information to evaluate quality management practices and organizational learning

activities in the firm.

Second, the characteristics of the participants for this study may be different because they belong to various

types of companies and industries; therefore, their responses will vary according to their experiences.

This study was conducted in industrial settings. Further empirical studies need to be undertaken in specific

industry sectors. The studies in specific industry sectors may produce different implications on the relationship

between quality management practices, organizational learning, and organizational performance.

In addition, future study needs to examine the moderating effects of organizational learning between

quality management practices and organizational performance to provide further meaningful understanding on the

relationship. The moderating effect examination could explore the impact of quality management practices on

organizational performance based on the level of organizational learning.

Moreover, a replication of this study should be performed to examine the relationship among QM

practices, organizational learning and organizational performance in other geographical regions. In this instance, the

results of diverse global studies may provide further empirical support for the present results.

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Table 1

Organizational Learning Construct Dimensions (Templeton, Lewis, & Snyder, 2002)

Dimension Description

Awareness (5 questions) Organizational members are aware of the source of key organizational

information and its applicability to existing problem areas

Communication (3 questions) The extent of communication that exist between organizational

members

Performance assessment The comparison between process- and outcome-

(4 questions) related performance and organizational goals

Intellectual cultivation The improvement of experience, expertise, and

(4 questions) skill among existing employees

Environmental adaptability Technology-related items pertaining to

(4 questions) organizational responses to environmental change

Social learning (3 questions) The extent to which the organizational members learn through social

channels about organizational concerns

Intellectual capital management The organization manages knowledge, skill, and

(3 questions) other intellectual capital for long-term strategic gain

Organizational grafting: The extent to which the organization capitalizes

(2 questions) on the knowledge, practices, and internal

capabilities of other organizations

Table 2

Summary of factor loadings (Indonesia and Malaysia)

Indonesia Malaysia

Constructs Items Constructs Items

CF 4 CF 5

LE 4 LE 5

IP 5 IP 5

CI 3 CI 4

MB 5 MB 5

PA 5 PA 6

SA 4 SA 4

FA 3 FA 3

OL 16 OL 13

KNP 5 KNP 6

PFP 4 PFP 5

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Table 3: Composite Reliability Indonesia and Malaysia

Indonesia Malaysia

Constructs Composite reliability Constructs Composite reliability

CF 0.908 CF 0.879

LE 0.846 LE 0.943

IP 0.863 IP 0.931

PA 0.919 PA 0.930

SA 0.887 SA 0.903

CI 0.871 CI 0.880

FA 0.847 FA 0.858

MB 0.872 MB 0.893

OL 0.957 OL 0.955

PFP 0.855 PFP 0.876

KNP 0.920 KNP 0.936

INFR 0.784 INFR 0.779

CORE 0.742 CORE 0.767

OP 0.842 OP 0.861

Table 4: Factor Loadings Second Order (Indonesia)

INFR CORE OP

lv_CF 0.524 0.269 0.285

lv_LE 0.579 0.524 0.324

lv_IP 0.675 0.411 0.364

lv_CI 0.728 0.717 0.312

lv_MB 0.725 0.387 0.387

lv_PA 0.613 0.804 0.300

lv_SA 0.470 0.779 0.358

lv_FA 0.439 0.595 0.186

lv_PFP 0.436 0.362 0.853

lv_KNP 0.440 0.334 0.853

Table 5: Factor Loadings Second Order (Malaysia)

INFR CORE OP

lv_CF 0.594 0.417 0.415

lv_LE 0.585 0.315 0.335

lv_IP 0.729 0.419 0.305

lv_CI 0.564 0.174 0.312

lv_MB 0.733 0.395 0.303

lv_PA 0.467 0.581 0.260

lv_SA 0.359 0.790 0.211

lv_FA 0.382 0.788 0.382

lv_PFP 0.379 0.318 0.869

lv_KNP 0.509 0.362 0.869

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Table 6

Latent Variable Correlation and Square Root of AVE First Order (Indonesia)

CF LE IP PA SA CI FA MB PFP KNP

CF 0.844

LE 0.244 0.760

IP 0.145 0.222 0.747

PA 0.186 0.221 0.337 0.833

SA 0.181 0.255 0.340 0.386 0.815

CI 0.236 0.280 0.404 0.519 0.451 0.832

FA 0.205 0.622 0.181 0.172 0.134 0.184 0.805

MB 0.226 0.268 0.371 0.312 0.305 0.370 0.178 0.759

PFP 0.224 0.236 0.233 0.267 0.261 0.292 0.148 0.274 0.773

KNP 0.154 0.236 0.312 0.210 0.276 0.226 0.131 0.307 0.413 0.774

Note: Square roots of average variances extracted (AVE's) shown on diagonal.

Table 7

Latent variable correlations and square root of AVE Second Order Indonesia

INFR CORE OL OP

INFR 0.748

CORE 0.652 0.703

OL 0.593 0.466 0.703

OP 0.459 0.375 0.511 0.841


Table 8

Latent variable correlations First Order Malaysia

LE CF IP PA SA CI FA MB PFP KNP

LE 0.876

CF 0.254 0.769

IP 0.243 0.288 0.854

PA 0.288 0.307 0.291 0.830

SA 0.216 0.268 0.328 0.224 0.837

CI 0.201 0.207 0.284 0.235 0.090 0.805

FA 0.197 0.289 0.296 0.215 0.382 0.117 0.818

MB 0.235 0.276 0.476 0.363 0.252 0.297 0.290 0.791

PFP 0.288 0.299 0.233 0.161 0.173 0.237 0.273 0.167 0.765

KNP 0.294 0.396 0.277 0.248 0.164 0.295 0.348 0.319 0.492 0.842


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Table 9

Latent variable correlations Second Order Malaysia

INFR CORE OL OP

INFR 0.651

CORE 0.541 0.720

OL 0.593 0.541 0.782

OP 0.491 0.367 0.492 0.864


Figure 1. TheStructural Model (Indonesia)

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Figure 2. The Structural Model (Malaysia)

Table 10

Comparison Relationship between Infrastructure Practices and Organizational Learning

Std. β p-value R2

Infrastructure practices to organizational learning 0.66 <0.01 0.43

(direct effect)

Infrastructure practices to organizational learning 0.49 <0.01 0.44

(indirect effect via core practices)

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Table 11

Comparison Relationship between Infrastructure Practices and Organizational Performance

Std. β p-value R2

Infrastructure practices to organizational performance 0.52 <0.01 0.27

(direct effect)

Infrastructure practices to organizational performance 0.20 <0.05 0.38

(indirect effect via organ)izational learning)

Table 12

Comparison Relationship between Infrastructure Practices and Organizational Performance

Std. β p-value R2

Infrastructure Organizational performance 0.52 <0.01 0.27

(before intervension of organizational learning)

Infrastructure Organizational performance 0.28 <0.01 0.37

(after intervension of organizational learning)

Table 13

Differences in the Relationship among QM Practices, Organizational Learning, Organizational Performance

between Indonesia and Malaysia

Path Results

Indonesia Malaysia

Core practices to organizational learning Not significant Significant

Core practices mediates the relationship

between infrastrcture practices and organizational

learning Not mediated Mediated

Organizational learning mediates the relationship

between core practices and organizational

performance Not mediated Mediated

the role of organizational learning in the …

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