The Effect of Organizational Learning Capability on Firm Performance: Mediated by Technological Innovation Capability

Abstract

Researchers claimed that technological innovation and organizational learning capabilities are key for building sustainable competitive advantages and improving firm performance in the vibrant business arena. However, the significance of technological innovation capability as mediating variable between the organizational learning capability and firm performance is not well explored. This paper aims to fill the gap by developing a conceptual framework and testing hypotheses on the relationships using a survey data from 243 small and medium manufacturing firms in Ethiopia. SEM and PCA approaches were used to study the relationships. The study result discovered that technological innovation capability has a mediating role on the relationship between organizational learning capability and firm performance.  Moreover it has a direct positive effect on firm performance. It also showed that organizational learning capability has strong positive effect on both technological innovation capability and firm performance.

Keywords: Organizational learning, technological innovation, firm performance, SMEs, Competitive advantage, Mediation, Dynamics.