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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS An Empirical Investigation of the Determinants Innovativeness From viewpoint of learning orientation The case of Iran's Communications industry.
Hassan Ghorbani (corresponding author) Department of Management & Accounting; Islamic Azad University; Mobarakeh Branch; Isfahan; Iran Afsaneh soleimani(Associated author) Department of Management & Accounting, Islamic Azad University, Mobarakeh Branch.Isfahan;Iran

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Fatemeh Alsadat Madani(Associated author) Department of Management & Economics; Tarbiat Modares University; Tehran; Iran
Abstract In knowledge economics; enterprises need to learn and update its knowledge to keep their capability of innovation. Therefore; the relationship between learning orientation and its antecedents and organizational innovation is getting an important issue in research and in practical areas. The purpose of this paper is to provide a quantitative analysis; in which learning orientation; market orientation and entrepreneurial orientation as key success factors for innovativeness. The authors formulate a structural equation model to examine the relationship among these constructs .The statistical population consists of all employees and management of active companies of Iran's Communications industry. We have applied random sampling method in this research. In order to test the conceptual model, structural equations' model has been used that the results of it demonstrate acceptance and confirmation of all studied factors. Amount of goodness indexes (AGFI= 0.90; GFI= 0.91) shows suitability of the model. Keywords: Learning orientation; Innovation; Market orientation; Entrepreneurialism. 1. Introduction Innovation capacity is one of the critical factors that impact on business performance .Organizational theory researchers have reached consensus that innovativeness has a positive effect on business performance. However; the drivers of innovativeness, and how those drivers operate via innovativeness to influence collectively business performance, have not been well explored. More specifically; scholars have emphasized the significance of market orientation (Narver and Slater; 1990; Jaworski and Kohli;1993); learning orientation (Sinkula; 1994; Narver and Slater; 1995); entrepreneurial orientation (Hurley et al.; 2003).Hurley et al. (2003) studied the relationship among market orientation, learning orientation and entrepreneurial orientation and innovativeness .However; their study concluded that generalization of the results cannot be extended to venture companies or small and medium-sized enterprises (SMEs). This research proposes a quantitative analysis, in which learning orientation, market orientation and entrepreneurial orientation as key success factors for innovativeness. The authors not only attempt to formulate a structural equation model but also examine the relationship among those constructs. The article is organized as follows. First; the debate regarding the relationships between constructs. Second; the conceptual model regarding the Literature review is presented. Third; the method used to test the hypotheses is discussed. Finally, the results derived from Iran's Communications firms are presented. Finally; the results discussion of their implications are presented.

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2. Literature review

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2.1. Market orientation, entrepreneurial orientation and organizational learning Market orientation could be described as a set of processes that enable firms to learn .Although we have noted that there is a causal relationship between market orientation and organizational learning, the fact is that the dependent direction of this relationship is not clear. The study of the relationship between market orientation and organizational learning has increased since the works of Sinkula (1994) and Slater and Narver (1995). Following these authors; the literature has noted that market orientation is compatible with gaining external knowledge. Furthermore, market organizations provide the cultural framework from which a learning orientation can develop; and can also be seen as learning orientated organizations (Slater & Narver; 1995). According to Farrell and Oczkowski (2002) organizational learning is the foundation for market orientation which in turn leads to organizational performance (Gonzlez, & Vzquez-Casielles; 2005). The common objective of market orientation and organizational learning studies has been to examine how the successful acquisition of knowledge can help organizations understand customer needs and, ultimately; improve their performance (Slater & Narver; 1995). In spite of these affinities, these Concepts are not the same thing. First, learning orientation influences the propensity of the firm to create and use all kinds of knowledge; not just market-based knowledge (Baker & Sinkula; 1999); and specially promote generative learning as a core competency. Learning organizations are characterized by using internal and external sources of knowledge acquisition; while market orientation is focused primarily on observing customers and competitors outside the boundaries of the firm; for the profitable creation of superior customer value (Slater; 1996). Consequently; although market orientation provides information about the current and latent needs of their customers; and also monitors and anticipates what competitors are doing to provide customer value, organizational learning could generate information from experience; learning by doing or from a consolidated policy of R & D to give a few examples beyond the market sphere. Hurley and Hult (1998) contended that learning orientation is indispensable to market and entrepreneurial orientation. Van de Ven (1986) and Trice and Beyer (1991) asserted that entrepreneurial orientation is closely associated with innovative activities and culture. Thus; there are two hypotheses: H1. Market orientation has a positive impact on the process of organizational learning. H2.Entrepreneurial orientation positively correlates with learning orientation 2.2. Entrepreneurial orientation and market orientation Combined with the adequate organizational design and structures; entrepreneurial orientation will have a positive impact on market orientation, and this will in turn affect business performance (Matsuno et al.; 2002). Among the elements of entrepreneurial orientation; corporate pre-reactibility and risk-taking policies can assist firms in recognizing and seizing upon new business opportunities (Miller and Friesen, 1982; Venkatraman; 1989); as well as in forecasting and exploring potential markets (Lumpkin and Dess; 1996). Therefore, entrepreneurship-oriented firms tend to encourage innovative plans, and thus involve more activities of information-scanning (Hambrick, 1982); information-sharing and applications (Menon and Varadarajan; 1992). More specifically; entrepreneurial orientation is the key factor affecting organizational culture; which in turn will affect market orientation. The hypothesis is thus: H3. Entrepreneurial orientation has a positive impact on market orientation 2.3. Innovativeness and learning orientation The firms learning capabilities play a crucial role in generating innovations (Sinkula, Baker, & Noordewier; 1997). Innovation implies the generation; acceptance and implementation of new ideas; processes; products or services. Organizational innovation is defined as the application of ideas that are new to the firm; whether the newness is embodied in products; processes, and management or marketing systems (Weerawardena, OCass, & Julian; 2006). It is obvious that an organizational learning is closely related to organizational innovation. In Weerawardena et al. (2006); they concluded the higher the learning the greater the organizational innovation. What may see as drivers of the innovation processes within firms is their learning. After empirical test; they indeed verified the relationship between learning and

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organizational innovation. In other words; learning will influence organizational innovation positively. Calantone et al. (2002) argued that the higher the extent of learning orientation, the stronger the influence on innovativeness. Cohen and Levinthal (1990) asserted that learning orientation is significantly associated with innovative thoughts in firms. Hurley et al. (2003) also proposed that learning orientation is one of the most important antecedents of innovativeness.Much research has revealed that innovativeness is associated with learning orientation (Calantone et al.; 2002, Hurley et al.; 2003). For instance, Hurley et al. (2003) contended that innovativeness is an important determinant of learning orientation. The hypothesis is thus: H4. Learning orientation positively correlates with innovativeness 3. Conceptual framework of study In line with the literature review and the purpose of the study as described at the start of the paper and Literature review; the conceptual framework of study was configured as illustrated in figure 1(Refere to notes). 4. Research methodology To be able to investigate the study of factors influence organizational innovation, a survey is developed and conducted in Communications industry in Iran. The data is collected using 30 questions; which are submitted to employee and managements in order to measure their perceptions and attitudes. Respondents were assured of complete anonymity and no names or other means of identification were requested. Employees are asked to fill the questionnaire using a five point Likert scale (1 as very low, 2 as low, and 3 as moderate; 4 as high and 5 as very high). A total of eight question items were utilized to measure three sub-factors of market orientation .competitor orientation, customer orientation and inter-functional coordination that developed by Narver and Slater (1990). The reliability of the scales ranged from 0.791 to 0.892. Entrepreneurial orientation was measured using the 11-item scale developed by Hurley et al (2003) with reliability alpha of 0.931. Learning orientation was measured by a six-item scale adapted from Celuch et al (2002). With reliabilities of 0.84. From the collective perspective, innovativeness refers to openness to new ideas as an aspect of a firms culture. Five question items for measuring innovativeness were adapted by Hurley et al (2003) with reliability alpha of 0.901. All the measurement scales used in this study are 5-point Likert-type scale. 5. Sample selection and date collection The population of this survey includes all employees and management of active companies of Iran's communication industry. A total of 200 questionnaires were sent to a random sample the population of employee. A total of 187 usable replies were obtained; representing an effective response rate of 93 percent. Table 1 addresses the demographic characteristics of sample of employee (Refer to notes). 6. Studying hypotheses and conceptual model of research Structural equation modeling (SEM) was used to test the hypothesized relationships in the proposed model shown in Figure 2(Refer to notes). The structural equation modeling technique enables the simultaneous estimation of multiple regression equations in a single framework. Notably; all direct and indirect relationships in the model are estimated simultaneously and thus the method allows all the interrelationships among the variables to be assessed in the same decision context (Oh; 1999).The proposed model was analyzed via the maximum likelihood estimator of LISREL 8.5 by using the covariance matrix of the measured variables as input. Therefore we can represent the following structural equation with due attention to the output of LISREL software. Researchers have recommended that for Structure Equation Model (SEM) analysis, a sample size from 100 to 200 is appropriate (Bollen; 1989). The sample size in this study was 200; so SEM analysis could be applied. The main proposed question is that whether this model is suitable or not. In order to answer to this question we should evaluate circumstantial evidence / df and other suitability measures of the model's goodness.
2

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The calculated amount of

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2 / df is equal to 1.39 based on LISREL software' output. The low amount 2 /

2

df shows suitable goodness of the model, because the lower the amount of /df, the more suitable the offered model. With due attention to the following results that are obtained from the output of LISREL software:

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Amount of p-value is higher than the amount of standard significance level (= %5), so the represented model is suitable. Circumstantial evidence t is used in order to show significance of each parameters of the model. This circumstantial evidence is obtained from the proportion of each parameter's coefficient to the standard deviation error of that parameter which should be higher than 2 (t 2) in t-test and higher than 1.96 (z 1.96) in z-test. With due regard to LISREL output (Refer to notes; figure 3) amount of calculated t is higher than 2 in all variables Thus, all represented estimates are significant statistically. Table 2(Refer to notes) reports goodness of fit indices, standardized parameter estimates and their t-values for the structural model. The overall chi-square statistic is significant (x2 200 = 415; p <0:01). All other goodness of fit indices is within the acceptable ranges (GFI = 0.91; AGFI = 0.90, SRMR = 0.0045; CFI = 0.97; RMSEA = 0.005). All of the fit indices indicate that the proposed model exhibits a reasonably good fit to the data. In accordance with the parameter estimates shown in Table 1; market orientation is positively and significantly related to learning orientation (H1: 1 = 0.54, P < 0:05). In the same way, as proposed in H2, entrepreneurial orientation has a positive and significant Effect on market orientation (H2: 2 = 0.57, p< 0.01); H3, entrepreneurial orientation positively and significantly affect learning orientation (H3: 3 = 0.69, p < 0.01); H4, learning orientation positively and significantly affect innovativeness (H4: 4 =0.46,p<0.05). 6. Discussion and conclusions Our results confirm that market orientation and organizational learning are antecedents to innovativeness. Market-oriented culture helps monitor how the customers and the competitors move. As external innovation drive, the market information obtained from the customers and the competitors facilitates innovativeness. As internal innovation drive, on the other hand, organizational learning facilitates innovativeness by receiving the external market information and prompting the capabilities of organizational learning. Therefore, market-oriented firms, which aim at sustaining their competitive advantages, have to enhance organizational learning, as well as design and execute innovation.These results provide further empirical support to Slater and Narvers (1995) study, which argues that the marketoriented culture should enhance organizational learning and enhance innovativeness. According to the analysis of the overall structural model, Entrepreneurial orientation has a direct impact on market orientation and learning orientation. Specifically, the execution of Entrepreneurship contributes to innovativeness, Consistent with the studies of Stata (1989) and Mabye and Salaman (1995); this research further confirms the mediating role of learning orientation between market orientation and Entrepreneurial orientation and innovativeness.

df = 2.06 ; p value = 0.09 ; RMSEA = 0.005

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References Baker, W.E. and Sinkula, J.M. (2002). Market orientation, learning orientation and product innovation: delving into the organizations black box. Journal of Market-Focused Management. 5, 5-23. Calantone, R.J., Cavusgil, S.T. and Zhao, Y. (2002).Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management, 31, 515-24. Celuch, K.G., Kasouf, C.J. and Venkatakrishnan, P. (2002), The effects of perceived market and learning orientation on assessed organizational capabilities. Industrial Marketing Management, 31, 545-54. Gonzlez, L. I., & Vzquez-Casielles, R. (2005). Organizational learning and market orientation: Interface and effects on performance. Industrial Marketing Management,34, 1872002. Hurley, R.F., Hult, G.T.M. and Knight, G.A. (2003). Innovativeness: its antecedents and impact on business performance. Industrial Marketing Management, 33, 429-38. Jaworski, B. and Kohli, A. (1993). Market orientation: antecedents and consequences. Marketing, 1-18. Journal of 57,

Lumpkin, G.T. and Dess, G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135-72. Matsuno, K., Mentzer, J.T. and Ozsomer, A. (2002). The effects of entrepreneurial proclivity and market orientation on business performance, Journal of Marketing, 66 ,318-32. Miller, D. and Friesen, P. (1982). Innovation in conservative and entrepreneurial firms: two models of strategic momentum. Strategic Management Journal, 3,. 1-25. Menon, A. and Varadarajan, P.R. (1992). A model of marketing knowledge use within firms. Journal of Marketing,56( 10), 53-71. Narver, J.C. and Slater, S.F. (1990). The effect of a market orientation on business profitability. Journal of Marketing, 54, 20-35. Narver, J.C. and Slater, S.F. (1995). Market orientation and the learning organization. Journal of Marketing, 59 , 63-74. Oczkowski, E., & Farrell, M. A. (1998). Discriminating between measurement scales using non-nested tests and two-stage least squares: The case of market orientation. International Journal of Research in Marketing, 15(4), 349366. Slater, S.F. and Narver, J.C. (1995), Market orientation and the learning organization, Journal of Marketing, 59, 63-74. Sinkula, J.M. (1994).Market information progressing and organizational learning. Journal of Marketing, 58, 35-45. Sinkula, J. M., Baker,W. E., & Noordewier, T. (1997). A framework for marketbased organizational learning: Linking values, knowledge and behaviour. Journal of the Academy of Marketing Science, 25(4), 305318.

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Van de Ven, A.H. (1986). Central problem in the management of innovation. Management Science, 32, 590-607. Weerawardenaa, J., & O'Cassb, A. (2004). Exploring the characteristics of the market-driven firms and antecedents to sustained competitive advantage.Industrial Marketing Management,33, 419428

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Annexure Note Note 1.Figure1.conceptual model Market orientation Learning

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orientation
Entrepreneurial orientation

Innovativeness

Note 2. Table1. Characteristics of sample of employee Number of employees Age of the respondents Under 25 years 25-35 years 35-45 years Over 45 years Work history of respondents Under 5 year 5-10 years 10-15 years 15-20 years Over 20 years Gender Male Female Educational Level Diploma High School Masters & higher 67 60 45 15 20 54 64 34 15 102 85 50 90 47 Percentage 35 32 24 8 10 28 34 18 8 57 43 26 48 25

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Note 3. Figure2

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Note4. Figure3

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