Theoretical Frameworks

Countless theoretical frameworks and models dominate the field of organizational learning.

As already mentioned, learning is often associated with adaptation and behavioral development. Given these points, learning can either take place on a lower-level basis as well as a higher-level basis (Fiol & Lyles, 1985). As technology, internal and external processes as well as business models have changed overtime, the next sections present three of the basic theories within the field of organizational learning.

2.3.3.1 Behavioral Theory of the Firm

The first debates among the importance of organizational learning gained prominence in the 1950s between behaviorists and economist. The former representatives such as March, Simon or Cyert disagreed with the latter, who stated that organizational decision outcomes are solely asserted by environmental constraints (Schulz, 2001). Cyert and March (1963) especially emphasized this as they conceived an organization as an autonomic, complex and adaptive system that could generate outcomes not solely driven by external constraints. Organizational learning was repeatedly triggered by external shocks and then adjusted by different operating procedures. Successfully proven procedures that led to a favored outcome were used more frequently. Based on these findings, Cyert and March developed a multi-level hierarchy of procedures that could foster organizational adaptation (Schulz, 2001; Cyert & March, 1963).

In this case, organizational learning theory outlined two considerable images of adaption.

One image of learning within an organization was characterized by coherent and rational traits including classical economic assumptions. Thereby, long-term organizational performance was highly correlated with environmental constraints. In contrast, a second image, which has played an important role within organizational learning ever since is characterized by non-rational, inconsistent learning outcomes. In here, adaptation processes were defined as slow and complex reactions in response to slight adjustments in organizational parameters (Schulz, 2001). This comes close to the concept of bounded rationality (Simon, 1991), or even a complete absence of rationality. Cyert and March found

that firms, or groups within firms, seek for satisfying rather than maximizing results (Cyert &

March, 1963). Here, people within an organization potentially settle for ‘sufficient results’

rather than seeking to generate the ‘best possible result’.

The results implicate a focus on the decision-making process rather than general economic variables such as output, price or resource allocation. In addition, their theory outlines that an organization is rather a slack coalition of specialized competencies that operates based on their developed routines (Unknown, 2006; Fiol & Lyles, 1985). Although firms favor solutions that are similar to their past decisions, a firm can change goals as well as decision rules as an illustration for organizational learning.

2.3.3.2 Theory of Action Perspective

Chris Argyris and Donald Schön have both made a meaningful contribution to the perception of today’s understanding of organizational learning. In fact, their work has influenced and deepened the relationship of people within organizations and linked organizational learning to experiential learning (Smith, 2013). Argyris (1980) initially started to analyze the influence of the formal organization, such as strategy or systems, on individual members. From there he started to focus on organizational change by bridging the gap between a theoretical researcher and a practical oriented actor. Within that approach, he collaborated with Donald Schön and further analyzed the relation between human reasoning, namely diagnosis and practical action. That is why their theory is called ‘theories of action’ (Smith, 2013).

Following the researchers’ initial argument, certain behavior leads to cognitive behavioral structures. These structures represent a mental model or ‘mental map’ that guides individual’s actions. Argyris and Schön’s theory on congruence and learning reasoned that these mental maps preexist in peoples’ heads with the key elements of planning, implementing and reviewing their actions (Anderson L. , 1992; Argyris & Schön, 1974). Important to realize is that only a few people are aware of the distinction between their believes and their will to take action. In other words, people behave differently to the way they are thinking and what they are actually doing. In fact, rather than the theories people explicitly espouse, Argyris and Schön assert that these mental maps carry out people’s actions. On top of that, even fewer people are aware of the existence of their own individual mental maps or theories they do use (Argyris, 1980; Smith, 2013). To clarify, this does not implicate the split between what people think and what people do. Therefore, their result of analyzing the distinction between theory and action is represented in two concepts called ‘Espoused Theory’ and

‘Theory-in-use’ (Argyris & Schön, 1974; Anderson L. , 1992). The ‘Espoused Theory’ can be seen as people’s theoretical mindset based on the worldview and values someone believes in. In contrast, the ‘Theory-in-use’ can be regarded as human’s behavioral patterns based on mental maps that guide specific action. Argyris and Schön described it as the following: “When someone is asked how he would behave under certain circumstances, the answer he usually gives is his espoused theory of action for that situation. This is the theory of action to which he gives allegiance, and which, upon request, he communicates to others. However, the theory that actually governs his actions is this theory-in-use” (Argyris & Schön, 1974, p.6-7).

Developing congruence between both theories is what results in effectiveness (Argyris, 1980).

In reality, people are often unaware of the mental maps that drive their actions, which raises the question of how to effectively manage their behavior. In order to create and maintain individual’s theory-in-use, Argyris and Schön (1974) explained its theoretical process. Figure 7 illustrates that process and includes their response to the mismatch of intention and outcome calling single and double-loop learning. The governing variable (values, norms or believes) is what people try to keep within acceptable limits. The action strategy is the executed strategy to follow the governing variables and act within their boundary. Finally, the strategic action will always have consequences, both what people believe the result will be (intended) and what they do not know (unintended). Argyris and Schön define a fundamental process of learning as ‘detection and correction of error’. Given these points it appears reasonable to look for another strategy for addressing the defined governing variables differently. According to Argyris and Schön (1974), this is called single-loop learning.

Alternatively, someone could critically question and reconsider the governing variable, which can change the entire strategy and ultimately its consequences. This is described as double-loop learning.

Single-loop learning is especially applicable if norms, values, goals or frameworks are taken for granted (Smith, 2013). In fact, it aims to improve strategies and increase their efficiency.

Figure 7 - Single and double-loop learning

Source: (Argyris & Schon, 1978; Argyris & Schön, 1974)

On the contrary, double-loop learning ‘changes the norm of the whole system’ and is therefore a more effective approach of making informed decisions based on our designed and implemented actions (Argyris & Schön, 1974; Anderson L. , 1992).

Altogether, Argyris and Schön’s theory of action perspective constitutes a significant contribution to organizational learning theory. Even though its focus is primarily on individual learning theory, its application will subsequently improve organizational learning due to explanation on the enhancement of people’s mental maps. The discussion part will critically search for applicable examples in practice gained within the qualitative research study.

2.3.3.3 Knowledge Management Environment

With the rise of information technology, the attention on knowledge management has increased in the last two decades (Easterby-Smith & Lyles, 2011). Pemberton and Stonehouse (2000) concluded that: “knowledge management is primarily centered on the formalization, storage, sharing and distribution, as well as co-ordination of existing knowledge assets throughout the organization, building and exploiting core competences that yield superior-performance” (Pemberton & Stonehouse, 2000, p.186).

Figure 8 illustrates the interrelated process of organizational learning and knowledge management. Whereas organizational learning generates new and adds to current knowledge assets, knowledge management is responsible for storing, processing and distributing the assets. In other words, organizational learning is the continuous development of new knowledge that needs to be managed efficiently (Pemberton & Stonehouse, 2000). Culture,

Figure 8 - The organizational learning and knowledge management environment

Source: (Pemberton & Stonehouse, 2000)

structure as well as infrastructure are necessarily interdependent for creating and establishing a sustainable organizational learning context. In addition, unlimited knowledge availability across all divisions is fundamental as literature has found considerable evidence that bureaucratic and hierarchical organizations are bound to their organizational structures (Easterby-Smith & Lyles, 2011; Pemberton & Stonehouse, 2000). To overcome such an obstacle, flatter organizational structures including a reduction in cross-functional divisions can provide a sustainable solution. Finally, so called ‘network organizational structures’ are notably designed for fostering and enlarging a learning environment. These network structures support collaboration among each other. Such alliances acknowledge the distribution and sharing of knowledge to simultaneously discovering new knowledge assets (Pemberton & Stonehouse, 2000).

2.3.3.4 Theoretical Framework Summary

To summarize, we have uncovered basic organizational learning theories that help us understand the nature of learning. In detail, the behavioral theory of the firm by Cyert and March (1963), was next to Simon (1991) the first behavioral research within organizations in a time where most of the attention focused on external economic constraints. They were the pioneers in considering the firm as an adaptive system that through interactive learning, routines and experimentation adapts itself to its surrounding and environmental constraints (Augier, 2010). Within their research, Cyert and March established a fundamental comprehension how individuals make decisions and act in the real world. Another key point was mentioned when the theory of action perspective by Argyris and Schön (1974) was outlined. Their contribution to organizational learning supports the understanding of individual-oriented learning by connecting the gap between theoretical mental maps and practical action. The concept of single-loop and double-loop learning emphasized their action-reflection cycle in which we can increase effective results from developing awareness as well as agreement upon theory-in-use and espoused theory. Ultimately, the knowledge management environment was represented by a role model that centers around the organizational context surrounded by organizational learning and knowledge management.

The next chapter introduces another management concept which restructures internal processes and knowledge creation. As organizations seek for sustainable learning and adaption, this concept demonstrates an ongoing approach for long-term transformation.