Relationship between organizational learning process and types of innovation capability within Indonesian manufacturing SMEs
Mulki Siregar, Achmad Sutrisna, Untung Setiyo Purwanto
Recent years, many small and medium sized companies have to face problems in the form of rapidly changing business environments, technology, and consumer preferences. Such a condition has forced the companies to build innovation capability to improve their business performance as a means of survival and development. Innovation capability can be influenced by several factors, including organizational learning process. The purpose of this study was to examine the relationship between organizational learning process and innovation capability of manufacturing SMEs. The study used a survey method to collect data relevant to the research objectives. The samples involved are small and medium scale companies producing electrical components located in Tegal Regency, Central Java Province of Indonesia. The findings indicate that seven organizational learning items significantly predict product innovation capability, five organizational learning items significantly predict process innovation capability, and seven organizational learning items significantly predict process innovation capability. The findings imply that company leaders need to encourage and facilitate an effective integration, transfer and adoption of external knowledge throughout the organization, build teamwork, and realize organizational learning at the individual, group and organizational levels. The new knowledge created from organizational learning is then directed at activities that support innovations in various company business process activities.