Organizational Learning

Chapter 1. GENERAL INTRODUCTION

1.1. General Introduction to the research

It is widely recognised and understood from early studies in management that an organisation while being an independent entity is significantly influenced by its external environment (Jennings, 1992). An organisation's success is dependent on its ability to sustain a balance with its external environment by readjusting its internal processes to match the various elements in the environment (Barnard, 1938). The organisations of this age face unprecedented challenges in maintaining commercial survival and success. Most of these challenges arise from the external environment, which can be a source of high uncertainty and complexity. While the broader environment can present an organisation with numerous opportunities enabling it to stay one step ahead of its competitors, it can also be a dangerous source of threats, which can significantly affect an organisation's performance and indeed its very survival.

Technological advances in diverse fields such as communication and transportation have presented companies with the opportunities to carry out real-time market research, reduce new product development time and costs, offer a wider product line, mass customise products and upgrade products at a faster pace than ever before (Kotha, 1995). As these opportunities are widely available the external environment has become hypercompetitive in case of many industries (D'Aveni, 1994). This is especially valid for companies operating in high velocity environments where new technologies are emerging quite rapidly and there is a significant competitive advantage to be gained by being the first mover in such a market (Brown and Eisenhardt, 1995). Technology change and competitive changes are just two aspects of change happening in the external environment. Changes can also occur at a regulatory, economic, political and social level which can alter the very context in which a company operates. All this renders the external environment a source of high uncertainty which generates an increasing interest in not just understanding the dynamics of adaptation but also the ability of organisations to adjust under conditions of uncertainty (Volberda, 1999). Achieving competitive advantage in uncertain and swiftly changing environments is not just a function of how well a company abides by the existing rules of the game but it also depends on changing those rules radically (Javalgi et al, 2005). For example, in the Personal Computers (PC) industry Dell set a new precedent by establishing direct contact with customers for selling its products and thus achieved a superior understanding of its customers needs and has been able to generate a competitive advantage.

Clearly there are aspects of firm behaviour which differentiates those companies who are better able to understand