Education, Business and Society: Contemporary Middle Eastern IssuesThe impact of learning orientation on NSD and hotel performance: Evidence from thehotel industry in IranKayhan Tajeddini

Article information:To cite this document:Kayhan Tajeddini, (2009),"The impact of learning orientation on NSD and hotel performance", Education,Business and Society: Contemporary Middle Eastern Issues, Vol. 2 Iss 4 pp. 262 - 275Permanent link to this document:http://dx.doi.org/10.1108/17537980911001099

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The impact of learningorientation on NSD and hotel

performanceEvidence from the hotel industry in Iran

Kayhan TajeddiniLes Roches International School of Hotel Management, Crans-Montana,

Switzerland

Abstract

Purpose – Although the significance of the learning organization concept is recognised in innovationmanagement, there are only a few studies on the way in which a learning orientation affects newservice development (NSD) in the hotel industry in Iran. This paper aims to fill that gap.

Design/methodology/approach – A questionnaire is designed to ask hotel managers and ownersfor their thoughts on a range of organizational variables including the nature of learning orientation,NSD and the link with hotel business performance.

Findings – Using 129 hotels in Iran, it was found that NSD can be driven by higher levels ofcommitment to learning, shared vision and open-mindedness. Furthermore, a regression analysissuggests that the effect of NSD on performance is positive.

Research limitations/implications – This paper focuses on senior managers and owners ofIranian hotels who have a specific culture, history and experience. It would be useful to take a similarapproach in other established industries with different cultural and environmental characteristics andexperience, so that comparisons can be made.

Practical implications – The findings reinforce the argument that a learning approach, coupledwith organizational creativity, is the main prescription for a creative quality process. It also provides aquantum leap in an organization in terms of innovation. Evidence from this paper also shows theimportance of managerial emphasis on creating an internal business environment conducive toinnovative activities.

Originality/value – The paper shows how learning deficiency is one of the main reasons thatcompanies find it difficult to remain successful in the market.

Keywords Learning processes, Learning organizations, Hospitality services, Innovation,Hotel and catering industry, Iran

Paper type Research paper

IntroductionThere is a burgeoning interest in organizational learning (the acquisition by anorganization or any of its units of knowledge that it recognises as potentially useful forthe organization) (Leitch and Harrison, 2005) in the organizational and managerialliteratures (Rebelo and Gomes, 2008; Huber, 1991) and also in the strategic marketingliterature (Day, 1994; Kandemir and Hult, 2005) because of its impact on a firm’sperformance. At the same time, a firm must develop service innovation to gain acompetitive advantage and in order to survive and grow (Deshpande and Farley, 1999)in a volatile environment (Johnson et al., 1997). This makes a firm differentiateits market offerings and relationships and thus create unique customer value.

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1753-7983.htm

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Education, Business and Society:Contemporary Middle Eastern IssuesVol. 2 No. 4, 2009pp. 262-275q Emerald Group Publishing Limited1753-7983DOI 10.1108/17537980911001099

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Consequently, it is not surprising that services are among the fastest growing sectorin emerging, transitional, and developed countries, typically accounting for over60 per cent of employment and a comparable share of gross domestic product (Lonialet al., 2008). However, despite the fact that services dominate the economic landscape ofthe post-industrial OECD economies, empirical work related to services is still quitescarce in empirical economics and in innovation research (Hollenstein, 2000) within thehospitality sector (Ottenbacher and Gnoth, 2005).

More specifically, little knowledge exists regarding the effect of learning orientationand new service development (NSD) on the performance of companies that provideservices to the consumer, such as hotels and leisure facilities. The existing literature isbased on knowledge gained from the manufacturing sector. Nevertheless, “applyinginnovation theory to service sectors, we must take into account the inter sectorheterogeneity which makes it important to study innovation in one specific sector ata time” (Orfila-Sintes and Mattsson, 2009, p. 380). Owing to constant change andincreasing competitive pressures on today’s hotel industry, hoteliers strive to maximisebusiness results through growth and increased profit margins. Hence, they face moredemanding customers, new regulations, globalization, and the destabilizing effects oftechnological advancement. All of these critical factors change the hotel landscapesignificantly and introduce new challenges and requirements for hoteliers. Therefore,they have to be innovative (Giri and Tse, 2006) and, similar to other serviceorganizations, need to develop a highly learning-orientated service for their employeesin order to improve and extend their skills and knowledge.

However, caution must be used in generalizing the results of innovation theorydeveloped from manufacturing into the service sector. This issue should be taken intoaccount in the hotel industry because it is a homogeneous industry that provides animportant part of tourism services (Borooah, 1999) and it is also generic in the sensethat different levels of hotel quality do not really have an impact on hotel operations assuch (Orfila-Sintesb and Mattssona, 2009). The object of this study, therefore, is toexamine the impact of learning orientation on NSD and performance in the hotelindustry in the context of Iran. The current study’s emphasis is designed to providehotel managers with more understandable guidelines on specific learning-orientatedactivities and their effect on NSD from idea generation to market launch. We begin byexamining the plausibility of learning orientation as antecedents to NSD and hotelperformance and offer a collection of associated hypotheses. In the Method section, thestudy sample of 129 Iranian hotels is discussed and the construct measures areevaluated. Next, the relationships among these constructs are assessed and discussed.

Background and hypothesesNew service developmentWhile a large number of empirical studies over the last decade have focused on newproduct development, less attention has been paid to NSD. In their review of the NSDliterature, Johne and Storey (1998) contend that NSD research is still embryonic.Perhaps, it is because there is still no generally accepted, positive definition of service(Vargo and Lusch, 2004). It is questionable as to whether the activities that make up thesteps for new product development processes for services are markedly different fromthose for goods (Atuahene-Gima, 1996). de Brentani (1991) argues that the differencebetween goods and services are often a question of degree. Lovelock (1981, p. 13)

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defines service as “a process or performance rather than a thing”. Rathmell (1966, p. 32)noted, “Most marketers have some idea of the meaning of the term ‘goods’, but‘services’ seem to be everything else”. He argued that all economic products could bearrayed along a goods-services continuum.

Nevertheless, broadly speaking, services are regarded as activities, deeds orprocesses, interactions and performances (Lovelock, 1991; Matthing et al., 2004;Zeithaml and Bitner, 2000) They tend to engage customers, on their delivery, withthe complex role of both contemporary consumer and producer (Normann, 1984).The purchase of services is likely to involve a longer commitment and therefore a moreintimate relationship with customers (Alam and Perry, 2002).

Unlike product development, service development is the involvement of customersin services (Ennew and Binks, 1996). Although prior studies in new productdevelopment (Cooper and Kleinschmidt, 1987; Cooper, 1982) perceive no differencebetween products/goods and services, some other scholars (Avlonitis et al., 2001; Vargoand Lusch, 2004) distinguish services products from physical products, where serviceproducts tend to be perishable, inseparable, tangible, heterogeneous, noninventoriable,nonstandardised, simultaneously produced and consumed. Johne and Storey (1998)emphasised the shift from the traditional way of developing innovative services whichrequires a far wider set of commercial variables during service development process.They mentioned that rather than improving only the core performance attributes, thereis a trend towards developing the whole service. Acknowledging the importance of asystematic development process, some studies proposed different models for tangibleproduct development (Alam and Perry, 2002).

Learning orientation in servicesLearning orientation, because of its effect on an organization’s capability to contestold assumptions about the market (Baker and Sinkula, 1999), is one of the most valuableresources for successful competition in the global marketplace. The importance of thisresource has been seen by the significance endowed to knowledge in a businessenvironment conditioned by ever-increasing globalization and economic diversity.The development of learning in its various guises of individual, team and organizational,has been recognised by many as of critical importance to our economic prosperity(Sullivan, 2000). Senge (1994) argues that, as the world becomes more interconnected andbusiness becomes more complex and dynamic, work must become more “learningful”.He further states the organization that truly excels in the future will be the organizationthat discovers a way to tap people’s commitment and capacity to realise their highestaspirations.

Learning orientation is defined as the development of new insights that have thepotential to change behaviour (Huber, 1991; Slater and Narver, 1995). “Although it isthe individuals within the firm that participate in the process of organizationallearning, Duncan and Weiss (1978) define it as the process where knowledge iscommunicated and distributed across the organization, being at the same timeintegrated into the strategic and managerial philosophy of the organization”(Paparoidamis, 2005, p. 1055). In services marketing, Hennig-Thurau (2004) echo thedefinition of learning orientation (Kohli et al., 1998) and state that learning orientationis seen in an employee’s continual desire to improve and extend his or her skills andknowledge. This learning orientation is reflected in increased efforts by the employee

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to actively expand his or her existing repertoire of technical and social skills, and thuslearn new and better ways of interacting with customers.

In the marketing and organizational learning literature, value generative learning isa higher order level of learning (Day, 1991), and requires the following organizationalcapabilities: a commitment to learning (Sinkula et al., 1997), open-mindedness, sincethis is linked to the “notion of unlearning” (Nystrom and Starbuck, 1984) and sharedvision indicating the direction the organization is taking (Sinkula et al., 1997).

Commitment to learning and NSDCommitment to learning concerns the organization’s dedication to acquiring newknowledge through its employees. It indicates the degree to which an organizationvalues and promotes learning (Sinkula et al., 1997) which is associated with a long-termstrategic orientation, where short-term investments will yield long-term gains(Calantone et al., 2002). For example, managers in committed organizations expectemployees to use company time to pursue knowledge outside the immediate scope oftheir work (Calantone et al., 2002). Commitment to learning enhances the effectivenessof managers and leaders of innovation.

Service firms, such as the hotel industry, that perceive their environment ashypercompetitive tend to pursue continuous service innovations. These require themto build commitment to learning in order to keep abreast of environmental changes.If an organization does not encourage the development of knowledge, employees willnot be motivated to pursue learning activities (Calantone et al., 2002). The more anorganization values learning, the more likely it is that learning will occur (Sinkula et al.,1997). This leads us to the following hypothesis:

H1. Commitment to learning in the hotel industry is positively associated withNSD activity.

Open-mindedness and NSDOpen-mindedness is the willingness to critically evaluate the organization’soperational routine and to accept new ideas (Sinkula et al., 1997). It is also related tocontinuous proactive questioning of the firm’s long-held routines, assumptions andbeliefs (Senge, 1992; Sinkula, 1994). In other words, it expresses organizational valueand the willingness to unlearn current ways of thinking and to change mental modelsof the environment (Sinkula et al., 1997). At the heart of organizational change, firmsunlearn long-held beliefs and routines associated with operational practices, providedthat managers are open-minded enough to dispute them (Paparoidamis, 2005).Calantone et al. (2002) argue that firms must cope with rapidly changing technologyand turbulent markets, all of which require an ability to manage change.

Moreover, the rate of knowledge obsolescence is high in most sectors, so that lessonslearned in the past may be instructive if the organization has the open-mindednessto question them (Sinkula, 1994). It may be just as important to unlearn old ways as it isto renew or update the knowledge base (Calantone et al., 2002). The above discussionsuggests that:

H2. Open-mindedness in the hotel industry is positively associated with NSDactivity.

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Shared vision and NSDShared vision refers to an organization-wide focus on learning (Sinkula et al., 1997).Verona (1999) stresses that without a shared vision, learning by members of anorganization is less likely to be meaningful. In other words, even if they are motivatedto learn, it is difficult to know what to learn (Calantone et al., 2002). A widespreadproblem in organizations is that many creative ideas are never implemented (Hult,1998) for lack of a common direction (Calantone et al., 2002). Great ideas fail to betranslated into action because of diverse interests in the organization (Calantone et al.,2002; Hult, 1998). Norman (1985, p. 231) notes:

Every organization learns, and every organization has a set of dominating ideas [. . .] [T]heymay be more or less consciously formulated and more or less visible, and they may representgood or bad interpretations of what has led to success or failure, but they are always there.

Thus, a positive learning climate requires an organizational focus when newknowledge is implemented. A clear direction for learning is likely to form anorganizational strength or even a core competence (Calantone et al., 2002). Therefore,the following hypothesis is offered:

H3. Shared vision in the hotel industry is positively associated with NSD activity.

Finally, since NSD is proving to be an important power for the development of the hotelindustry, it is hypothesised:

H4. NSD in the hotel industry is positively associated with performance,measured by: (a) financial achievement; (b) competitive achievement; and(c) quality achievement.

Research methodologyData collection and procedureA questionnaire was designed to ask hotel managers and owners for their perceptionsof a range of organizational variables including the nature of learning orientation, NSDand the link with hotel business performance. This information was collected using afive-point scale (1 – strongly disagree to 5 – strongly agree) in response to statementsabout these variables. By using the parallel-translation method, items were firsttranslated into Persian, the formal language of Iran, by one person and thenretranslated into English by a second person. The two translators then jointlyreconciled all differences. The suitability of the Persian version of the questionnaireswas then pre-tested by four academics in order to ensure that the survey content andmeasurement scales were clear, valid and appropriate. Finally, a few open-endedquestions were added to give “color” to our data and lead the respondents to thinkanalytically and critically.

To maximise response, different strategies were used; such as making morecontacts, altering the length and the form of the survey, a personalised cover letter aswell as the promise of feedback and confidentiality. Data were collected throughvisiting each hotel and seeking permission to collect the same. In face-to-face contact,all the respondents were guaranteed anonymity for themselves and their hotels, andwere promised an offer of a report of the results as an incentive to participate in thestudy. The survey process consisted of two or more visits to the hotel. In almost allcases, the first visit consisted of leaving the survey with the owner/manager for them

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to complete. In the second or follow-up visit, questions were answered and thecompleted survey was collected. In this process, out of 500 hotels (one (12 per cent),two (11 per cent), three (62 per cent), four (10 per cent) and five (5 per cent) star rate)were visited or sent the questionnaires in nine major cities (Tehran, Isfahan, Shiraz,Tabriz, etc.) located in Iran. A total of 129 questionnaires were received and usable,resulting in a good response rate of 25.8 per cent.

MeasuresAll measures were drawn from previous research and aligned with the conceptualaspects of each construct. NSD was quantified using different measures includingcriterion cost; effectiveness; and speed, adopted from Voss (1992), because itincorporates a useful distinction between measuring the success of the developmentand measuring the performance of the development process (Johne and Storey, 1998).An NSD score is the simple average of the scores of the three components.

Business performance uses financial, competitiveness and quality measures derivedfrom Voss (1992). While success measures are likely to be related to the specificobjectives, the performance of the development process is the facilitating mechanismfor achieving success (Johne and Storey, 1998). As previous research has found, awell-executed development process is likely to allow a firm to attain better results thana poorly executed development process (Johne and Storey, 1998).

Learning orientation is measured using different authors:. commitment to learning was measured using four items (a ¼ 0.78) from Galer

and van der Heijden (1992) and Sinkula et al. (1997);. shared vision was measured by a four-item scale (a ¼ 0.72) from Sinkula et al.

(1997); and. open-mindedness was measured by four items (a ¼ 0.81) from that source as

well as Hult and Ferrell (1997).

A learning orientation score is the simple average of the scores of the threecomponents. These items are used because of their emphasis on the values thatinfluence the propensity of a firm to proactively pursue new knowledge and challengethe status quo. In prior research, this scale was used (Calantone et al., 2002, 2003).

Reliability and validity analysisAlthough the constructs developed in this study are measured primarily on previouslyvalidated measurement items and strongly grounded in the literature, they aremodified partly to suit the context of the hotel industry. Composite reliability assessesthe inter-item consistency, which was operationalised using the internal consistencymethod. This is estimated using Cronbach’s alpha. Typically, reliability coefficients of0.70 or higher are considered adequate (Nunnally, 1978). In Table I, the overallcoefficient alpha score for each construct suggests a high level of reliability since ineach case the value is greater than the suggested cut-off level of 0.7 (Nunnally, 1978).

Assessment of the content validity of the scales was based on a qualitative exercise.The two main characteristics were: the extent to which scale items depictedthe construct’s domain; and, the thoroughness with which the construct to be scaled andits domain were articulated (Parasuraman et al., 1988). The procedures observed bythe authors whose constructs were utilised in this study are congruous with the

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Item

Reliabilitycoefficients(Cronbach’s

coefficient a)Item-to-itemcorrelation

Alpha if item isdeleted

Learning orientationCommitment to learning (No. of items ¼ 4) (a ¼ 0.78)Learning as a competitive advantage 0.42 0.73Learning as a key to improvement 0.57 0.75Learning an investment,not an expense 0.46 0.72Learning as a key commodity toguarantee organizational survival 0.56 0.76Shared vision (No. of items ¼ 4) (a ¼ 0.72)Vision across all levels, functions anddivisions 0.55 0.69Commitment to the goals 0.66 0.70Employees as partners in changing thedirection of the business 0.57 0.68Commonality of purpose in organization 0.50 0.71Open-mindedness (No. of items ¼ 4) (a ¼ 0.81)Not afraid to reflect critically on the sharedassumptions about customers 0.60 0.81Personnel perceive the marketplace mustbe continually questioned 0.59 0.83Rarely question bias about the way tointerpret customer information 0.68 0.77Judgment about the quality of decisionsand activities 0.67 0.78

New product developmentCriterion cost (No. of items ¼ 3) (a ¼ 0.76)Average development cost per serviceproduct 0.52 0.79Development cost of individual serviceproduct 0.67 0.77Percentage of turnover spent on developingnew services, products and processes 0.75 0.73Speed (No. of items ¼ 4) (a ¼ 0.78)Concept to service launch time 0.65 0.77Concept to prototype time 0.61 0.78Prototype to launch time 0.59 0.79Time to adopt new concept from outsidethe firm 0.58 0.76Effectiveness (No. of items ¼ 2) (a ¼ 0.83)The number of new services developedannually 0.67 0.83Percentage new services that aresuccessful 0.60 0.84

PerformanceFinancial measures (No. of items ¼ 4) (a ¼ 0.74)Achieving high overall profitability 0.42 0.73Substantially lowering costs for the firm 0.57 0.75

(continued )

Table I.Reliability analysisfor multi-item scales

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recommendations of Churchill (1979) for developing psychometric marketingscales. Moreover, for this research, face and content validity checks were performedon the learning orientation and NSD measures to confirm that the dimensions would beunderstood by the sample and reflect the theme that the items were designed to capture.

ResultsThe impact of learning orientation on the hotels NSD and performance was examinedin a regression analysis. Multiple regression, using the hierarchical method of entry,was performed to test this hypothesis. Regression was chosen rather than a structuralequation approach because of sample size limitations. The regression results, for thepurpose of model testing, use the parameters based upon the independent variablesshown in Table II. With regard to H1-H3, we have hypothesised that the magnitude ofcommitment to learning, open-mindedness, and shared vision in the hotel industry ispositively associated with the magnitude of NSD activity, respectively. As Table IIshows, commitment to learning (b ¼ 0.41, p , 0.001), open-mindedness (b ¼ 0.34,p , 0.001), and shared vision (b ¼ 0.48, p , 0.001) in the hotel industry significantlyaffects NSD activity, supporting H1-H3, respectively. Hence, it appears that, generally,the owners and managers of hotels who see commitment to learning, open-mindedness

Item

Reliabilitycoefficients(Cronbach’s

coefficient a)Item-to-itemcorrelation

Alpha if item isdeleted

Performing below expected costs 0.46 0.72Achieving important cost efficiencies forthe firm 0.56 0.76Competitiveness measures (No. of items ¼ 8) (a ¼ 0.76)Exceeding market share objectives 0.55 0.75Exceeding sales/customer use levelobjectives 0.65 0.74Exceeding sales/customer growthobjectives 0.55 0.71Achieving high relative market share 0.50 0.76Exceeding market share objectives 0.67 0.76Having a strong positive impact oncompany image/reputation 0.59 0.75Giving the company importantcompetitive advantage 0.64 0.77Enhanced sales/customer use of otherproducts or services 0.60 0.78Quality measures (No. of items ¼ 5) (a ¼ 0.78)Resulting in superior service “outcome” tocompetitors 0.52 0.73Resulting in superior “serviceexperience” to competitors 0.63 0.77Having unique benefits, perceived assuperior to competitors 0.55 0.79Great reliability 0.52 0.70More user friendly 0.58 0.80

Table I.

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Table II.Results of multipleregression analysis

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and shared vision as the priority for their hotels are able to achieve their NSD activity.As Table II shows, higher levels of NSD activity has a significant and positive impactupon both financial measures (b ¼ 0.26, p , 0.01), and Competitiveness measures(b ¼ 0.39, p , 0.01), as well as Quality measures (b ¼ 0.33, p , 0.01), supportingH4a-H4c, respectively. Hence, it appears that, generally, the owners and managers ofIranian hotels who believe that businesses develop NSD activity are able to achievetheir financial and competitiveness as well as quality goals.

DiscussionThe purpose of this research is to investigate the extent to which learning orientationhas a positive impact on NSD and business performance. The findings of the majorsurvey questionnaire show that higher levels of commitment to learning, shared visionand open-mindedness lead these hotels to be more innovative. The results reveal thatthe components of learning orientation can be seen as commitment to learning, sharedvision and open-mindedness, all of which have a positive influence on NSD, andsupport hypotheses. In particular, the positive and significant impact of commitment tolearning on NSD reflects the fundamental value that these hotels attach to learning andwhich influences them to promote a learning culture. Also, it shows that these hotelsare committed to learning about values and the need to understand the cause andeffects of their actions (Nguyen and Barrett, 2006). In this sense, commitment tolearning, or the degree to which an organization values and promotes learning is likelyto foster a learning climate that welcomes new ideas (Norman, 1985; Sinkula et al.,1997). This argument is consistent with the views of Calantone et al. (2002) and Slaterand Narver (1994).

Furthermore, the positive and significant effect of a shared vision about NSDreveals that hotels are more likely to provide a focus for learning that “fosters energy,commitment, and purpose among hotels members” noted by Sinkula et al. (1997). Mostrespondents believe that, without a shared vision, employee learning is less likely tobe meaningful. In other words, even if they are motivated to learn, they may lackfocus and purpose. This view is consistent with the prior research of Calantone et al.(2002) and Verona (1999). In addition, there is a need for open-mindedness towardsNSD, as this research found that hotels are more likely to link to the idea of unlearning.This refers to the process through which they eliminate knowledge and questiontraditional practices. Open-mindedness requires hotels to reassess their long-heldroutines, assumptions, and beliefs (Nguyen and Barrett, 2006), and be driven by thehotels values if their unlearning efforts are to transpire. These findings are consistentwith prior research (Calantone et al., 2002; Hult et al., 2003, 2004) that found thatlearning orientation has a positive effect on innovation. They reinforce that learningand NSD, rather than separate constructs, are closely interrelated (Hult et al., 2004).These results are similar to many scholars (Huber, 1991; Kandemir and Hult, 2005;Slater and Narver 1995) who maintain that it is possible to adapt to new organizationalnorms and develop knowledge or insights that are likely to influence its behaviour anddevelop an innovation culture in service development.

These findings also reinforce the argument of Wang and Ahmed (2002) who notethat a learning approach, coupled with organizational creativity, is the main prescriptionfor a creative quality process. This provides a quantum leap in an organization in termsof a “value innovation”. Evidence from this study also highlights the importance

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of managerial emphasis on the creation of an internal business environment conduciveto innovative activities. Since this has focused on Iranian hotels, generalizing the resultsto other industries and countries may not be appropriate. Interesting comparisons couldbe undertaken by using an identical model for another culture or different serviceindustry and then comparing the results. Finally, using a longitudinal study may help toidentify further insight into this relationship.

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Further reading

de Brentani, U. and Cooper, R.G. (1992), “Developing successful new financial services forbusinesses”, Industrial Marketing Management, Vol. 21 No. 3, pp. 231-42.

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Hult, G.T., Ketchen, D.J. Jr and Nichols, E.L. Jr (2002), “An examination of culturalcompetitiveness and order fulfillment cycle time within supply chains”, Academy ofManagement Journal, Vol. 45 No. 3, pp. 577-86.

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Peters, T.J. and Waterman, R.H. (1982), In Search of Excellence: Lessons from America’s Best-runCompanies, Harper & Row, New York, NY.

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Senge, P.M. (1995), The Fifth Discipline, Bantam Dell, New York, NY.

Tajeddini, K., Trueman, M. and Larsen, G. (2006), “Examining the effect of market orientation oninnovativeness”, Journal of Marketing Management, Vol. 22 Nos 5/6, pp. 529-51.

Corresponding authorKayhan Tajeddini can be contacted at: Kayhan120@gmail.com

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