The Mediating Effect of Organizational Learning on the Relationship between the Cost Leadership Strategy and Business Performance: A Study on Travel Agencies

Abstract

The aim of this research is to investigate the mediating role of organizational learning in the relationship between cost leadership strategy and business performance. The universe of the research is composed of middle and senior managers of The International Air Transport Association (IATA) member travel agencies operating throughout Turkey. Quantitative research method was conducted and the data were obtained by face-to-face and email survey techniques. The data of the 351 questionnaires evaluated were analyzed using the Structuralthe Structural Equation Modeling (SEM) AMOS package program. The results of the study indicate a positive relationship between cost leadership strategy and business performance. In addition, organizational learning plays a mediator role between cost leadership strategy and business performance. These results once again reveal the importance of cost leadership strategy and organizational learning in achieving desired performance goals in travel agencies. The population of this study is limited to IATA member travel agencies. Future research should review this limitation to improve rigorousness and generalisability. The population of this study was restricted to travel agencies. Comparative studies involving hotel and transportation establishments, and thereby changing the universe, will contribute to the relevant literature and provide more effective results.

Keywords

• Cost leadership strategy
• organizational learning
• business performance
• travel agencies

References

1. Aksoy, M., Apak, S., Eren, E. & Korkmaz, M. (2014). Analysis of the effect of organizational learning-based organizational culture on performance, job satisfaction and efficiency: a field study in banking sector. International Journal of Academic Research, 6(1), 301–313. doi:10.7813/2075-4124.2014/6-1/B.41.
2. Allen, R. S. & Helms, M. M. (2006). Linking strategic practices and organizational performance to porter’s generic strategies, Business Process Management Journal, 12(4), 433–454. doi:10.1108/14637150610678069
3. Amani, A., Masum, Z. H., Hasani, S. a& Ghodosian, B. (2016). Investigation of the relationship between differentiation strategies & cost leadership and organizational learning, 7th International Conference on Economics and Management, https://www.civilica.com/Paper-ICOEM01-ICOEM01_410.html
4. Arasa, R. & Gathinji, L. (2014). The relationship between competitive strategies and firm performance: a case of mobile telecommunication companies in Kenya, International Journal of Economics, Commerce and Management, 2(9), 1–15.
5. Argyris, C. (1999). On organizational learning (2nd ed.). Malden, MA: Blackwell Publishing.Argyris, C. & Schön, D. (1978). Organizational learning: A theory of action perspective. Reading, Mass: Addison Wesley.
6. Aşçı, H. B., Tan, F. Z. & Altıntaş, F. (2016). A strategic approach for learning organizations: mental models, 12th International Strategic Management Conference, 28-30 October, Antalya, Turkey: Procedia - Social and Behavioral Sciences, 235; 2–11.
7. Avcı, U. (2005). The relation between organizational learning and organizational performance: An investigation about the relation between organizational learning and organizational performance in the hospitalty industry(Unpublished doctoral dissertation). Süleyman Demirel University, Isparta, Turkey.
8. Barney, J. B. (2007). Gaining and sustaining competitive advantage (3rd ed.). Upper Saddle River, NJ: Pearson Education.

9. Bavarsad, B., Rahimi, F. & Seyfi, M. (2014). A Study of the relationship between organizational learning, strategic flexibility, competitive strategy and firm’s performance, International Journal of Psychology and Behavioral Research.3(3), 198–210.
10. Bean, L. & Jarnagin, B. D. (2002). New cost priorities: using a balanced scorecard approach in financial reports, The Journal of Corporate Accounting, March/April(13), 55–62. doi:10.1002/jcaf.10054
11. Birinci, M. (2012). The effects of strategic management practices on the university performances in Turkey: A comparative analysis of public and private universities (Unpublished doctoral dissertation). Beykent University, Istanbul, Turkey.
12. Bordeianu, O., Hapenciuc, C. V., Bejinaru, R., & Burciu, A. (2014). Dimensions of the learning organization within pharmaceutical companies in Romania. Proceedings of the 8th International Management Conference “Management Challenges for sustainable development”, November 6th-7th Bucharest, Romania, 605–616.
13. Braham, B. J. (1995). Creating a learning organization: Promoting excellence through education. Menlo Park, California: Crisp Publications.
14. Brockman, B. K. & Morgan, R. M. (2003) “The role of existing knowledge in new product innovativeness and performance”, Decision Sciences, 34(2), 385–419. doi:10.1111/1540-5915.02326
15. Brown, B. J. & McDonnell, B. (1995). The balanced scorecard: short-term guest or long-term resident?, International Journal of Contemporary Hospitality Management,7(2/3), 7–11.
16. Calantone, R. J., Çavusgil, S. T. & Zhao, Y. (2002). Learning orientation, firm innovation capacity, and firm performance, Industrial Marketing Management, 31, 515–524. doi:10.1016/S0019-8501(01)00203-6
17. Chan, C. C. A. (2003). Examining the relationships between individual, team and organizational learning in an Australian hospital, Learning in Health and Social Care, 2(4), 223–235. doi: 10.1046/j.1473-6861.2003.00057.x
18. Child, J., Faulkner, D. & Tallman, S. (2005). Cooperative strategy: Managing alliances, networks, and joint ventures. Oxford: Oxford University Press.
19. Crookes, D. (2007). Systems thinking in learning organizations, Society of Petroleum Engineers, 03(03), 22–24. doi:10.2118/0307-022-TWA
20. Çeken.,H., Dalgın., T. & Karadağ, L. (2009). Küreselleşme ve uluslararası turizm arasındaki ilişki, Muğla Üniversitesi Sosyal Bilimler Dergisi, (22), 21–36.
21. Çokluk, Ö, Şekercioğlu, G. & Büyüköztürk, Ş. (2016). Sosyal bilimler için çok değişkenli istatistik: SPSS ve LISREL uygulamaları (4. Baskı). Ankara: Pagem Akademi Yayıncılık.
22. Dess, G. G. & Davis, P. S. (1984). Porter’s (1980) generic strategies as determinants of strategic group membership and organizational performance, The Academy of Management Journal,27(3), 467–488.
23. DiBella, A. J. (2001). Learning practices. assessment and action for organizational improvement. New Jersey: Prentice-Hall.
24. DiBella, A. J. & Nevis, E. C. (1998). How organizations learn: An integrated strategy for building learning capability. San Francisco: Jossey-Bass.
25. Dodgson, M. (1993). “Organizational learning: A Review of some literatures”, Organization Studies,14(3), 375–394. doi:10.1177/017084069301400303
26. Edmonson, A. & Moingeon, B. (1996). “When to learn how and when to learn why: appropriate organizational learning processes as a source of competitive advantage” In B. Moingeon & A. Edmondson (Eds.), Organizational learning and competitive advantage, 17–37. US: Sage Publications, Inc.
27. Ellinger, A. D., Ellinger, A. E., Yang, B., & Howton, S. W. (2002). The relationship between the learning organization concept and firms’ financial performance: An empirical assessment. Human Resource Development Quarterly, 13(1), 5–22. doi:10.1002/hrdq.1010
28. Giannopoulos, G., Holt, A., Khansalar, E. & Cleanthous, S. (2013). The use of the balanced scorecard in small companies, International Journal of Business and Management, 8(14), 1–22. doi:10.5539/ijbm.v8n14p1
29. Goh, S. & Richards G. (1997). Benchmarking the learning capability of organizations, European Management Journal, 15(5), 575–583. doi:10.1016/S0263-2373(97)00036-4
30. Gorondutse, A. H. & Gawuna, M. S. (2017). Cost leadership strategy and performance of hotels in Nigerian context, Journal of Applied Structural Equation Modeling, 1(1), 1–12.
31. Güner, M. F. (2008). Balanced scorecard as a strategic management model, Gazi University Journal of Faculty of Economics and Administrative Sciences, 10(1), 247–265.
32. Hair, J. F., Anderson, R. E., Tatham, R. L. & Black W. C. (1998). Multivariate data analysis (5th ed.). New Jersey: Prentice Hall.
33. Hilman, H. & Kaliappen, N. (2014). Do Cost Leadership Strategy and Process Innovation Influence the Performance of Malaysia Hotel Industry? Asian Social Science,10(10), 134–141. doi:10.5539/ass.v10n10p134
34. Hult, G. T. M. (1998). Managing the international strategic sourcing function as a market-driven organizational learning system, Decision Sciences, 29(1), 193–216. doi:10.1111/j.1540-5915.1998.tb01349.x
35. Hult, G. T. M., Hurley, R. F. & Knight, G. A. (2004). Innovativeness: It’s Antecedents and Impact on Business Performance, Industrial Marketing Management, 33(5), 429–438. doi:10.1016/j.indmarman.2003.08.015
36. Jiang, X., & Li, Y. (2008). The relationship between organizational learning and firms’ financial performance in strategic alliances: A contingency approach, Journal of World Business, 43(3), 365–379.
37. Jiménez, D. J. & Valle, R. S. (2011). Innovation, organizational learning, and performance, Journal of Business Research,64(4), 408–417.
38. Kairu, E. W., Wafula, M. O., Okaka, O., Odera, O. & Akerele, E. K. (2013) Effects of balanced scorecard on performance of firms in the service sector. European journal of business and management,5(9), 81–88.
39. Kanji, G. K. (2002), Performance measurement system, Total Quality Management,13(5), 715–728. doi:10.1080/0954412022000002090
40. Kaplan, R. S. & Norton, D. P. (1992). The balanced scorecard: Measures that drive performance, Harvard Business Review,70(1), 71–79.
41. Kaplan, R. S. & Norton, D. P. (1996). “Using the balanced scorecard as a strategic management system. Harvard Business Review, (January/February), 75–85.
42. Kaplan, R. S. & Norton, D.P. (1999). Balanced scorecard, transforming company strategy into action, (S. Egeli, Trans.), İstanbul: Sistem Yayıncılık
43. Kaplan, R.S. & Norton, D.P. (1993). Putting the balanced scorecard to work, Harvard Business Review, 71(5), 134–142.
44. Karimi, K., Ganjinia, H. & Gilaninia, H. (2013). The relationship between organizational learning and competitive strategies and its impact on performance of business and customer, Arabian Journal of Business and Management Review (Nigerian Chapter),1(3), 54–60.
45. Kaya, R. (2017). Mediating effect of organizational learning in relationship between cost leadership strategy and firm performance: A study on travel agecies (Unpublished doctoral dissertation). Duzce University, Düzce, Turkey.
46. Kaya, R., Öncü, M. A. & Mesci, M. (2017). The effect of cost leadership strategy on business performance: A research on IATA member travel agencies, Journal of Recreation and Tourism Research,4(Special Issue 1), 84–96.
47. Kaygusuz, S. Y. (2005). The last point of management accounting in performance management: Balanced scorecard, İş, Güç Endüstri İlişkileri ve İnsan Kaynakları Dergisi, 7(1), 81–103.
48. Khandekar, A. & Sharma, A. (2006). Organizational learning and performance: Understanding Indian scenario in present global context, Education Training, 48(8/9), 682–692. doi:10.1108/00400910610710092
49. Lindley, E. & Wheeler, F. P. (2001). Using the learning square, The Learning Organization, 8(3), 14–125.
50. Lo, Y. H. (2012). Back to Hotel Strategic Management 101: An examination of hotels’ implementation of Porter’s generic strategy in China, The Journal of International Management Studies,7(1), 56–69.
51. Maroofi, F. (2013). Effect of organizational learnin on firm’s flexibilty, competitive strategy and performance, Trends in Applied Sciences Research, 8(2), 73–91. doi:10.3923/tasr.2013.73.91
52. Marsick, V. J. & Watkins, K. E. (2003). Demonstrating the Value of an Organization’s Learning Culture: The Dimensions of the Learning Organization Questionnaire, Advances in Developing Human Resources5(2), 132–151. doi:10.1177/1523422303005002002
53. Mavondo, F., Chimhanzi, J. & Stewart, J. (2005). Learning orientation and market orientation: relationship with innovation, human resource practices and performance. Journal of European Marketing,39(11/12), 1235–1263. doi:10.1108/03090560510623244
54. Mawer, D. (2003). Enlivening analysis through performance. ‘Practising set theory’. In B. J. Music (Ed.),(pp. 257–276). Cambridge: Cambridge University Press.
55. McDonnell, B & Jackie. B. B. (1995),”The balanced scorecard: short-term guest or long-term resident?”, International Journal of Contemporary Hospitality Management,7(2/3), 7–11. doi:10.1108/09596119510146751
56. Meydan, C. H. & Şeşen, H. (2015). Structural equation modeling with AMOS (2nd ed.). Ankara: Detay Yayıncılık.Nakip, M. (2006). Marketing research techniques and applications (SPSS Supported), (2nd ed.). Ankara: Seçkin Yayıncılık.
57. Nandakumar, M. K., Ghobadian, A. & O’Regan, N. (2011). “Generic strategies and performance – evidence from manufacturing firms”, International Journal of Productivity and Performance Management, 60(3), 222–251. doi:10.1108/17410401111111970
58. Niven, P. R. (2002). Balanced scorecard step by step (2nd ed.). London: John Wiley and Sons Inc.
59. O’Dell, C. & Grayson, C. J. (1998), “If only we knew what we know: the transfer of internal knowledge and best practice. New York: Thee Free Press.
60. Ören, K. & Erol, M. (2009). Learning curves, usage of learning curves in reducing workforce costs as a tool and an emprical study, Fırat University Journal of Social Science,19(1), 133–141.
61. Örtenblad, A. (2001). “On differences between organizational learning and learning organization”, The Learning Organization, 8(3), 125–133. doi:10.1108/09696470110391211
62. Özdemir, B. (2006). The association of organizational learning with environment and organizational performance: Research on perceptions of hotel managers (Unpublished doctoral dissertation). Akdeniz University, Antalya, Turkey.
63. Panayides, P. M. (2003). Competitive strategies and organizational performance in ship Management, Maritime Policy & Management: The f lagship journal of international shipping and port research, 30(2), 123–140. doi:10.1080/0308883032000084850
64. Pitt, M. & Tucker, M. (2008). Performance measurement in facilities management: Driving innovation?, Property Management, 26(4), 241–254. doi:10.1108/02637470810894885
65. Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: The Free Pres. Porter, M. E. (1985). Competitive advantage, creating and sustaining superior performance. New York: The Free Pres.
66. Porter, M. E. (1998). Competitive advantage creating and sustaining superior performance with a new introduction. New York: The Free Press.
67. Powers, T. L. & Hahn, W. (2004). Critical competitive methods, generic strategies, and firm performance, International Journal of Bank Marketing, 22(1), 43–64
68. Prieto, I. M. & Revilla, E. (2006) Learning Capability and Business Performance: A Non-Financial and Financial Assessment, The Learning Organization, 13, 166–185. doi:10.1108/09696470610645494
69. Robey, D., Boudreau, M.-C. & Rose, G. M. (2000). Information Technology and Organizational Learning: A Review and Assessment of Research. Accounting Management and Information Technologies, 10(2), 125–155. doi:10.1016/S0959-8022(99)00017-X
70. Rodrigez, L.T. (2004). Promoting A Learning Culture. In Michael J. Austin & Karen M. Hopkins (Ed.), Supervision as Collaboration in the Human Services, (pp. 127–136). California: Sage Paplications.
71. Schiff, J. B. & Schiff, A. I. (2009). Cost leadership for the current challenge, Strategic Finance, Finance, (November), 35–41.Senge, P. M. (1990). The Fifth Discipline: The Art And Practice of the Learning Organization, New York: Doubleday Currency.
72. Senge, P. M. (2013). The fifth discipline: The art and practice of the learning organization (16th ed.), (A. İldeniz, A. Doğukan & B. Pala, Trans.), İstanbul: Yapı Kredi Yayınları.
73. Sim, K. L. & Koh, H. C. (2001). Balanced scorecard: a rising trend in strategic performance measurement, Measuring Business Excellence, 5(2), 18–27. doi:10.1108/13683040110397248
74. Sinkula, J. M., Baker W. E. & Noordewier, T. A. (1997). Framework for Market-Based Organizational Learning: Linking Values, Knowledge, and Behavior, Journal of Academy Marketing Science, 25(4), 305–318. doi:10.1177/0092070397254003
75. Sümer, K. (2012). The effect of competitive strategy on manufacturing strategy and firm performance (Unpublished master‘s thesis). Istanbul Technical University, Istanbul, Turkey.
76. Şenaras A. & Sezen H. K. (2017). System Thinking, Journal of Life Economics,4(1), 39–58. doi:10.15637/jlecon.187Tanwar, R. (2013). Porter’s generic competitive strategies. Journal of business and management, 15(1), 11–17.
77. Şencan, H. (2005). Reliability and validity of social and behavioral measurements (1st ed.). Ankara: Seçkin Publications.
78. Tippins, M. J. & Sohi, R. S. (2003). IT competency and firm performance: Is organizational learning a missing link? Strategic Management Journal, 24(8), 745–761. doi:10.1002/smj.337
79. Ünal, A. (2006). Evaluation of primary school inspectors concerning of learning organization (Unpublished doctoral dissertation). Selçuk University, Konya, Turkey.
80. Wanto, H. S. & Suryasaputra, R. (2012). The effect of organizational culture and organizational learning towards the competitive strategy and company performance (case study of east java smes in Indonesia: Food and beverage iIndustry), Information Management and Business Review, 4(9), 467–476.
81. Yamin, S., Gunasekaran, A. & Mavondo, F. T. (1999). Relationship between Generic Strategies, Competitive Advantage and Organizational Performance: An Empirical Analysis, Technovation, 19(8), 507–518. doi:10.1016/S0166-4972(99)00024-3
82. Yavuz, M. (2014). The role of organizational learning in crisis preparedness capability and its effects on firm performance (Unpublished doctoral dissertation). Gebze Technical University, Kocaeli, Turkey.
83. Yılmaz, V. & Çelik, H. E. (2009). Structural equation modeling with lisrel. Ankara: Pegem Akademi.