· web viewthe purpose of this paper is to argue that sustainability and self-transformation...

16TH INTERNATIONAL CONFERENCE ON HUMAN RESOURCE DEVELOPMENT & PRACTISE ACROSS EUROPE

Paper type: Working Paper Submission

Submission Reference No: S6-09

Stream 6: Organisational Learning and Organisational development

Title: Can Organisational learning enhance the future of public funded

SMEs? Lessons learned from the contemporary art sector in the UK

Authors: Vivek Mohan & Hazem Heswani

Organisation & Affiliation : Faculty of Business & Law , Leeds Business School, Leeds

Beckett University, City Campus, LS1 3HE , Leeds, UK

Corresponding author: Vivek Mohan, Doctoral Researcher in HR & Organizational

Behaviour, Faculty of Business & Law , Leeds Business School, Leeds Beckett University,

City Campus, LS1 3HE , Leeds, UK. Email: [email protected]

Tel: +44 (0)7927180616

mailto:[email protected]

UFHRD 2015 Working paper Submission: Stream 6

Abstract

Purpose

The purpose of this paper is to argue that sustainability and self-transformation perspectives

of Public funded Small and Medium Enterprises (SMEs) can be maximised by Organisational

Learning (OL).A public funded SME in the contemporary art sector in the UK is taken as the

case study as this organisation was recently detached of its funding from the Arts Council

UK.

Design/Methodology/Approach

The need for self-transformation in Public funded SMEs is justified by investigating and

outlining effective organisational learning outcomes as a basis for these SMEs to act as a

system. The study uses the perceptions of stakeholders in the contemporary art sector in the

UK and perceptions of manager-owners as a tool to investigate organisational learning

outcomes.

Findings

The paper finds that the need for compatibility within the set environment of public funded

SMEs should urge them to develop the ability to learn and relearn from past and potential

future behaviours. Interviews with managers and stakeholders confirms how the “double loop

learning” in OL literature critically reflects the public funded SMEs ability to learn over a

period of time.

Practical implications

In this paper both the literature review and evaluation suggests that the knowledge gained

from OL will assist practitioners and SMEs in developing practical guidelines that can assist

in selling hedonic products and promoting contemporary art in the UK.

Keywords: Organisational learning, Public funded SMEs, Contemporary art sector in the UK,

Stakeholder perceptions

Paper type: Working Paper

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Can Organisational learning enhance the future of Public funded SMEs? Lessons learned from the contemporary art sector in the UK

(Working paper submission)

Vivek Mohan & Hazem Heswani

Faculty of Business & Law, Leeds Business School, Leeds Beckett University, Leeds, UK

Introduction

The emergence of contemporary art in the UK as a vital force of change has brought with it a

comprehensive notion of public funded Small and Medium Enterprises (SMEs) which act as

digital platforms that promote contemporary art in the UK.Equippped with limited resources

and primarily funded by the Arts Council UK, it is highly essential for these SMEs to achieve

compatibility within the environment to remain competitive and innovate for long term

development and survival. Although much has been written on Organisational Learning as

playing an integral role in the healthy survival of SMEs(For example, Filion &

Lima,2011),the SME responses to adopting Organisational learning perspectives has been

mixed. Even though organisational learning is deemed important for all kinds of

organisations, it is critically important for SMEs which face more resource constraints when

compared with large corporations (Welsh & White, 1981; DeSouza & Awazu, 2006; Zhang et

al. 2006).Equally and at a more theoretical level, scholars have long argued that the ability of

organisations to learn and relearn from past and potential future behaviours corresponds to the

means of a sustainable competitive advantage in volatile business environments(De

Guess,1988;Lopez et al.,2005).

The importance of learning as a way of achieving competitive advantage is evident from the

criteria set by the Arts Council to secure funding by art promoting SMEs. However any

practical guidelines on the impact of adopting a learning philosophy or the kind of learning

systems which firms should utilise to effectively manage learning process towards this

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objective is absent. In the absence of empirically validated benefits of applying learning as a

tool towards the improvement of competitive advantage, it is reasonable to suggest that many

SMEs in any sector would be apprehensive to implement the concept.

In this paper, we aim to make two significant and inter connected contributions. Firstly, by

drawing on very recent developments on Strategic Management of SMEs through

Organisational Learning(For expample,Filion & Lima,2011-16),we argue that the “double

loop learning” concept proposed by Argyris & Schon(1978) when applied to public funded

SMEs in this scenario, will help them self-transform and avoid failure. Secondly, from a

practical perspective, we provide a framework for the Organisational Learning which has

transpired after the SME has been detached of its primary source of funding which of course

is the aid from the Arts council UK. Given the ability of Organisational learning to effectively

consider the characteristics of SMEs, such an approach through this working paper is likely to

provide a basis for future research agenda in terms of learning perspectives in public funded

entrepreneurship and small business management.

Public funded SMEs in the UK and OL perspectives

It has been well documented by Rae & Carswell (2000) that learning in SMEs is often based

on the context and previous experiences. While it is important to realise the fact that SMEs

follow a pattern of contextualised learning through action in their own natural environment,

such kind of learning cannot always be recognised as explicit learning since it is very much

random as pointed out by Devins & Gold(2004).Prior research has stated that the rate of

uncertainty in which SMEs operate in the UK have often urged organisations to respond

quickly all the while being scrutinised to maintain uncompromising quality and

service(Choueke & Armstrong,1998).Public funded schemes are often aimed at assisting

SMEs under well specified conditions. In our case, such ‘Well specified conditions’ coupled

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with the volatile and saturated nature of the contemporary art sector in the UK, puts public

funded SMEs in a precarious situation. As a result, such SMEs often move into a situation

they engage in learning through everyday practise all the while failing to realise that learning

has transpired. It is clear from Clarke et al.,(2006) that such organisations remain in the cycle

of adaptive learning rather than generative learning but is this clearly the sole reason for a

crisis or failure of such an SME and what kind of learning actually transpires during a crisis?

Fiol and Lyles (1985) clearly points to three characteristics of Organisational Learning

namely the need for environmental alignment, the distinction between Organisational and

individual learning the role played by four contextual factors on learning process namely

culture, environment, structure and strategy. Organisational Learning can be triggered by

challenges and problems (Kleiner & Roth, 1997) and it is argued that such events can have

transformational effect on the functioning of an organisation (Reuber & Fischer, 1993;

Appelbaum & Goransson, 1997). Significant changes in learning orientation due to

challenges/crises emanate from the understanding that learned responses and habitual ways of

behaving can be ineffectual in tackling the crisis (Marsick & Watkins, 1990). Even though

this is one of the major ways by which transformative learning can take place, learning may

be achieved through problem solving, experimentation and coping (Gibb, 1997), trial and

error (Young & Sexton, 1997) and making mistakes (Gibb, 1997).

Crisis or Failure of Public funded SMEs

Crises or discontinuous learning events can trigger different kinds of learning (Cope, 2003)

as it demands individuals/organisations to question their taken for granted beliefs and

assumptions (Schon, 1983). They also can serve as stimulation for organisations to unlearn, or

to undertake new higher level of learning leading to re-adaptation (Fiol & Lyles, 1985).

However most organisations, whether small or big do not capitalise on the learning

opportunity offered by failures (Sitkin, 1992; Leonard, 1995). This is the case even with

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companies which have invested heavily to become learning organisations but struggle to

change the basic mindset and activities so as to learn from the failures (Edmondson, 2002).

As far as the public funded SME learning is concerned, importance seems to be placed on

subjective and context specific knowledge which is in contrast to the traditional way of

learning - objective and decontextualized (Gibb, 1997; Goss & Jones, 1997). However Devins

& Gold (2004) mention of the drawbacks of context specific learning in the case of SMEs that

even though such learning is meaningful and have direct relevance to the issues pertaining to

work, its adhoc and randomness can fail to acknowledge the learning that took place and

contribution of such learning to organisational competitiveness. Further as such learning is

not the outcome of reflection or critical analysis it cannot help an SME to move forward or

the SME get stuck at a certain stage of learning. Thus the SMEs which follow adaptive

learning may lose competitiveness in the long run as opposed to generative learning.

Generative learning enables organisations to find new and innovative ways of managing

business (Senge, 1990). In this regard, Gibb (1990) contends that to improve the

competitiveness of SMEs it is vital that a higher level of learning should transpire which

makes effective use of experience. Thus an ideal organisation learning process associated with

SME should be reflective, critical and generative. Critical reflection can enable SMEs to go

beyond adaptive learning (Schon, 1983). Argyris and Schon (1974) state that the mental

models, theories of action and assumptions that individual maintain shape their view of the

world and influence the way they respond to situations and review such responses.

An alternative to the linear model of learning is social learning (Lave & Wenger, 1991;

Brown & Duguid, 1991). According to the social perspective, individuals as social actors are

also part of a network of social actors who develop a collective understanding of the

environment around them and learning takes as an outcome of these interactions (Gherardi et

al. 1998). This is why Brown & Duguid (2001) maintain that individual learning is

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inevitability dependent on the context in which the learning and subsequently put that into

practice. The context dependent nature of learning can be better understood if the impact of

crises on learning is taken into consideration. It requires individuals/managers to reflect on

the crises and as the adaptive learning does not suffice to tackle the crises, demand new higher

level of learning (Fiol & Lyles, 1985; Reuber & Fischer, 1993; Cope, 2003). Thus social

learning is mentioned as a way of confronting issues which are context specific which

demand an individual or organisation to combine reflection and experience to produce

solutions (Gheradi, 1999; Chiva & Alegre, 2005). Easterby- Smith et al. (2000) contend that

social learning leads to the development of new ways of sustaining and fostering learning

processes. SME learning is considered as highly context specific (Gibb, 1997; Goss & Jones,

1997) and if they fail to apply reflection in their practices, they may fail to take powerful

decision concerning their future (McGill & Beaty, 1995). The success of an organisation can

be dependent on the manner in which it responds to learning opportunity like crises. Zhang et

al. (2006) mentions that an organisation may respond to learning trigger with different

degrees from little to significant changes to organisational norms and values. This then

signifies how well the organisation responds to environmental calls for learning.

However social learning in SMEs could be constrained by context specific factors as well.

Further resource constraints are one of the main challenges SMEs face (Welsh & White,

1981; DeSouza & Awazu, 2006; Zhang et al., 2006). This is a situation where in SMEs

learning could be limited by fund constraints and the resultant learning could be fragile with

limited impact on the re-adaptation. Thus it can be argued that triggers for learning can be

opportunities for higher level learning and at the same time can place constraints for such

learning. Higgins & Aspinall (2011) maintain that action learning is context specific and

reflective. Marquardt (2000) contends that action learning derives its power from the non-

isolation of dimensions from the context in which managers’ work. Clarke et al. (2006) state

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that action learning is evident in SMEs as the focus there is action in the context of

owner/manager, critical reflection on important events and the provision of a social

environment. In action learning, pertinent time is provided for doing, questioning,

understanding and critically reflecting (Higgins & Aspinall, 2011). Action based on reflection

to resolve critical issues is the key feature of action learning (McGill & Beaty, 2001). Clarke

et al. (2006) opine that a characteristic aspect of SME learning that can prevent it from action

learning is the lack of critical reflection on the part of owner/managers.

Thus ability to critically reflect and offer solutions for context specific issues is one of the

main features of action learning and Marquardt (2000) maintain that action learning develops

the whole leader for the whole organisation. As mentioned by Clarke et al. (2006), action

learning is assimilated in an organisation wherein the needs of social learning such as

dialogue, critical reflection and interpersonal communication as tools to resolving context

specific issues are acknowledged.

The case organization and context of work in progress

The organisation in context is a UK based digital organisation that promotes contemporary art

in the UK. Since the organisation’s inception in the early 1990s, it has responded creatively to

artistic practice and technology in order to furnish its mission of promoting artists in the UK.

The Arts Council UK provides around £350 million a year regular funding to 880 arts

organisations. This represents almost three quarters of the Arts Councils investment in arts

and is perceived as the most significant way in which the Arts Council supports art in the

UK.The organisation was established in 1991 and was one of the first to develop a multimedia

database of UK artists and was one among many organisations which was fully supported by

funding from the Arts Council, UK. Within a decade, the organisation had set up its trading

company along with an online forum for artist members. The vision of the organisation has

always been to lead the digital presentation of contemporary art practice in the UK, creating

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opportunities for exchange and interaction that would benefit a wide constituency of artists

and art professionals and strengthen the contribution of visual arts to the society. It is

interesting to note that even though the organisation had attracted more than nearly 4.5

million page views from 200 countries and advertised opportunities for artists worth more

than £30 million the previous year, it failed to secure funding from the Arts council for the

corresponding year. The Arts council puts forward a standard set of norms through which

they urge organisations to work towards fitting these set guidelines for securing funding on a

regular basis. However it is not the reasons behind the loss of funding that interest us but the

aspect of learning that transpires in this organisation, more specifically the role of double loop

learning in such a public funded SME. Given this scenario, the organisation is in the state of

transition or crisis as it has been stripped of its primary source of funding. In the wake of such

a change process, we investigate the aspect of learning which has transpired over a period of

about 8 months after the organisation’s loss of funding.

Is “Double loop” the final piece of the puzzle?

Argyris & Schon (1978) describes that double loop learning occurs when a change of action is

associated with a change in the members’ logic of action which in fact can be termed as

“theory in practise”. An Organisation’s learning remains one dimensional when the members

do not make changes in their action logic but only to correct errors(Argyris & Schon,1978)

and this is termed as single loop learning. Filion & Lima(2011) suggests that the

Organisational Learning process is cyclic and that members action generate changes in the

inner and outer realities and further go on to confirm that the process of double loop learning

involves a change in the logic itself and is often triggered by negative feedback. Using a

practise based approach through this paper, we investigate whether the organisation in

question can adapt to the double loop learning process to avoid a crisis.

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Diagram 1: A Perspective for adapting “Double Loop” learning in public funded SMEs

The model in Diagram 1 shows a perspective for adapting the double loop learning process in

the context of public funded SMEs: The manager/owner approach and single loop learning

followed before crisis and the change in approach after loss of funding. The prospect of

reflective/generative/social/action learning is speculated by detailed semi structured

interviews on managers of the organisation. Lima (2004) states that owner-managers play a

prominent role in these processes. At this point, such a prospective model, when developed

with double loop learning will act as a generator for learning and is highly useful in

understanding and analysing how the elements are formulated by the members of the

organisation in the context of a volatile business environment such as the contemporary art

sector in the UK.

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Design of the study and conceptualization

The literature delineated the context specific nature of SME learning and the influence of

broader factors in the process associated with their learning (Goss & Jones, 1997). This

implies that research to divulge the learning process in SMEs should entail the collection of

SME specific factors thereby effectively informing the research process. In this regard, even

though SMEs in the art sector in UK cannot be considered to have a highly unique nature as

far as learning is concerned when compared with other SMEs, they face unique industry

specific challenges; say for example, to remain competitive enough to secure funding from

the Arts Council of England. As mentioned earlier, loss of funding can be considered as a

crisis which is highly context specific for SMEs in the art sector in UK and can act as an

impetus for organisational learning notwithstanding the factors that enabling an SME in this

sector to remain competitive in a highly saturated market. The case study organisation,

excepting the previous year, had been able to successfully secure funding from the Council.

This loss of funding can be considered as a major trigger/crisis/failure which can have

significant ramifications for organisational learning in the form of the imperativeness of

obtaining an enhanced critical understanding of the prevalent learning processes, thereby

determine its efficacy and questioning taken for granted beliefs (Schon, 1983) so as to

embrace higher, generative, reflective and context specific learning leading to enhanced

organisational competitiveness. However such learning need not necessarily be a natural

corollary of crisis as it is argued that many organisations fail to capitalise on the learning

opportunity offered by a crisis (Sitkin, 1992;Leonard, 1995) and if learning is triggered, then

the post crisis innovative behaviours serve as a means to corroborate it (Fiol & Lyles, 1985).

In order to effectively unravel the learning processes which pervade the SME under study, the

project is divided into two phases – learning before crisis and effective learning after crisis.

Semi structured interviews with 15 stakeholders in the contemporary art sector in the UK and

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10 managers/owners of the SME was conducted to analyse their perceptions to outline the

learning skeleton of the SME itself and the path to crisis. A few key themes based on which

stakeholder and manager perceptions were analysed were as follows:

Learning in terms of previous experience and general awareness

Learning in terms of services offered

Relevance to contemporary art in the UK

Relevance to artists and art professionals in the UK

Learning with regard to future direction

The themes and categories were identified using Nvivo 9 with the aim of examining

perceptions about the type of learning and the learning structure. Now seven months after loss

of funding, the second phase is to conduct detailed interviews with the owner-managers and

15 staff members to analyse the learning which has transpired over this period of time. The

analysis and data can be compared with Filion & Lima (2011) to establish the role of double

loop learning process in preventing a crisis under such an environment. Further, towards the

identification of crisis triggered learning, it was deemed appropriate to wait for seven months

due to two main reasons. First learning from crisis can be a time consuming process and

secondly reckoning that learning can be hindered and difficulties associated with learning can

be exacerbated by resource constraints like loss of fund (Welsh & White, 1981; DeSouza &

Awazu, 2006; Zhang et al., 2006).

Discussion

In discussing the self-transformation of public funded SMEs through organisational learning,

primary issues based on qualitative approach to data collection have been highlighted. Since

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the approach closely follows the construction of a conceptual idea, it provides a varied

understanding of learning perspectives in public funded SMEs.The speculations on Double

loop learning process and its adaption in public funded SMEs are based on the perceptions

data along with previous empirical work from Lima (2004, 2007) and Filion & Lima (2011)

as well as the core research by Argyris & Schon (1974).

Further research and development can be completed by looking at varied perspectives of

learning in public funded SMEs but by no means is limited to the following questions :-

What are the key learning features of a public funded SME and how does it evolve around

the managers during a period of organisational crisis or failure?

What is the main learning perspective which is triggered in a public funded SME due to a

crisis or failure?

How do organisational factors in the public funded SME influence the aspect of learning

and relearning from past and potential future behaviours?

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