The linkages among adaptive leadership, learing organization and organizatinal performance

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Thai Van Trung Hieu

THE LINKAGES AMONG ADAPTIVE
LEADERSHIP, LEARNING ORGANIZATION
AND ORGANIZATIONAL PERFORMANCE

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – 2014


UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Thai Van Trung Hieu

THE LINKAGES AMONG ADAPTIVE
LEADERSHIP, LEARNING ORGANIZATION
AND ORGANIZATIONAL PERFORMANCE

ID: 21110006

MASTER OF BUSINESS (Honours)
SUPERVISOR: Dr. Nguyen Huu Lam

Ho Chi Minh City – 2014

ACKNOWLEDGE
I gratefully acknowledge the constructive comments provided by Dr. Nguyen
Huu Lam. His ideas and suggestions play an important role for research orientation.
I would like to thank the following people for their efforts and support, who
gave me much valuable advice in the early stages of this work: Mrs. Nhung (Joton
Paint Company), Mr. Son (Cai Lan Oil Company), Mrs. Lan (Anh Duy International
Company), Ms. Lan (MBA - HCMC University of Technology), and a lot of friends
of friends who attended my survey, without whose helped this work would never have
been possible.
In addition, I want to thank you for all of friends at AMIGOS Company, who
stood in the breach when I concentrated on research.
Last but not least, my sincere thanks owe to my family who gave me good
conditions to complete this work.


PLAGIARISM STATEMENTS
I hereby declare that this thesis represents my own work and any sign of
plagiarism would significantly drive rejection results by International School of
Business (ISB belong to University of Economic, HCMC). I fully understand the
statement above.


ABSTRACT

In the last years, the plight of the Vietnam economy has forced a lot of
companies to bankrupt. Enterprises are seeking ways to overcome this dark cloud to
survive and develop on the market, this made them aware of the importance of
learning capabilities and role of leader in organization which are considered as one of

the efficient ways to improve business’s performance outcome. Hence, this research
aims to explore whether there is the chain impact from adaptive leadership and
learning organization to organizational performance in chemical companies in a
Vietnam business environment or not. The collected data was analyzed and evaluated
by structural equation modeling (SEM) method through Analysis of Moment
Structures (AMOS software) at the sample size of 29 chemical companies with 128
responses returned from middle level managers. This study finds out the effects of
adaptive leadership on learning organization and learning organization has positive
impact on a part of organizational performance. In addition, learning organization
plays mediating variable role in this correlation. Nonetheless, this research has its
limitations due to only focusing on chemical manufacturing field. Hence, it could not
represent a general characteristic for other areas. The correlation among adaptive
leadership, learning organization and perceptual performance outcome are interesting
because the result is a vindication of the important of applying adaptive leadership as
well as building learning organization will contribute how to success of organization.
Therefore, firms can use this correlation or knowledge from it to improve their
adaptability to continuously compete in turbulent market.


TABLE OF CONTENTS
ACKNOWLEDGE
PLAGIARISM STATEMENTS
ABSTRACT
CHAPTER 1: INTRODUCTION ............................................................................ 1
1.1 Research background ............................................................................................ 1
1.2 Research questions................................................................................................ 3
1.3 Research objectives .............................................................................................. 5
1.4 Research methodology and research scope............................................................ 5
1.5 Research contribution ........................................................................................... 6
1.6 Research structure ................................................................................................. 6

CHAPTER 2: LITERATURE REVIEW ................................................................ 7
2.1 Learning organization (LO)................................................................................... 7
2.2 Adaptive leadership (AL) .................................................................................... 11
2.3 Organizational performance (OP)........................................................................ 16
2.4 Relationship among AL, LO and OP................................................................... 17
CHAPTER 3: RESEARCH METHODOLOGY................................................... 22
3.1 Research design .................................................................................................. 22
3.1.1 Research method .............................................................................................. 22
3.1.2 Research procedure ......................................................................................... 23
3.2 Measurement scales ............................................................................................ 25
3.2.1 Learning organization ..................................................................................... 26
3.2.2 Adaptive leadership .......................................................................................... 26
3.2.3 Organizational performance ............................................................................ 27
3.3 Pilot research ...................................................................................................... 30
3.3.1 Carry out reliability analysis for AL scale........................................................ 31
3.3.2 Analyze reliability for LO scale ........................................................................ 33
3.3.3 Conduct reliability analysis for OP scale ......................................................... 34
3.4 Introduce main research ...................................................................................... 36
3.4.1 Sample size ...................................................................................................... 36


3.4.2 Descriptive data ............................................................................................... 37
CHAPTER 4: RESEARCH RESULTS ................................................................. 40
4.1 Evaluate the measurement by CFA ..................................................................... 40
4.1.1 CFA result for Adaptive leadership .................................................................. 42
4.1.2 CFA result for Learning organization .............................................................. 44
4.1.3 CFA result for Perceptual performance outcome ............................................. 45
4.1.4 The saturated model......................................................................................... 46
4.1.5 The theoretical model ...................................................................................... 47
4.1.6 The competitive model ..................................................................................... 49

4.1.7 Bootstrap ......................................................................................................... 51
4.2 Hypothesis testing............................................................................................... 52
CHAPTER 5: CONCLUSIONS, IMPLICATIONS AND LIMITATIONS......... 54
5.1 Findings .............................................................................................................. 54
5.2 Implications of research ...................................................................................... 56
5.3 Limitations and directions for further research .................................................... 57
REFERENCES ....................................................................................................... 61
APPENDICES


LIST OF TABLES

Table 3.1 Measurement scale ................................................................................... 27
Table 3.2 Descriptive data ....................................................................................... 37
Table 4.1 Results for discriminant validity of each variable ..................................... 47
Table 4.2 Relationship between each concept in theoretical model (standardized) ... 49
Table 4.3 Relationship between each concept in competitive model (standardized) . 51
Table 4.4 Estimated result by bootstrap at N = 200 .................................................. 51
Table 4.5 Results of hypotheses ............................................................................... 52


LIST OF FIGURES
Figure 2.1 Learning loops .......................................................................................... 8
Figure 2.2 Research model ...................................................................................... 21
Figure 3.1 Research procedure................................................................................. 24
Figure 3.2 Research model revised .......................................................................... 35
Figure 4.1 CFA result for adaptive leadership .......................................................... 43
Figure 4.2 CFA result for learning organization ....................................................... 44
Figure 4.3 CFA result for perceptual performance outcome ..................................... 43
Figure 4.4 SEM analysis results for saturated model ................................................ 46

Figure 4.5 SEM analysis results for theoretical model ............................................. 48
Figure 4.6 SEM analysis results for competitive model ........................................... 50


LIST OF ABBREVIATIONS

The following table describes the significant of various abbreviations used throughout
the thesis.
Abbreviation
LO

Meaning
Learning organization

OL

Organizational learning

AL

Adaptive leadership

OP

Organizational performance

PPO

Perceptual performance outcome

DLOQ

Dimension Learning Organization Questionnaire

SEM

Structural equation modeling

EFA

Exploratory factor analysis

CFA

Confirmatory factor analysis


CHAPTER 1: INTRODUCTION

In this chapter, the important of becoming learning organization to adapt to
changing business environment is demonstrated. Briefly tell about the business
situation of Vietnam enterprise in last year and propose solution to face the difficult
circumstances. Furthermore, what is factor influencing organization to make it up
learning organization and the outcome of this process are also mentioned in here. The
aim, scope and significance of the study are also introduced.

1.1 Research background

We are living in the world where changing happen continually. Currently,
organizations confront a turbulent market; business environment becomes fierce

competition and unpredictable changing. Thus, in order to survive and continue
developing, they have to enhance their ability through learning process (Burke et al.,
2006). De Geus (as cited in Dimovski, Skerlavaj, Kimman & Hernaus, 2008, p. 3063)
states that “ability to learn faster than your competitors might be the only sustainable
competitive advantage you have”. In addition, according to Haley and Lazouskas
(2008) the learning organization (LO) is that the successful organization must
continually adapt and learn in order to respond to changes in environment and to
grow.
Besides, adapting with changing environment through learning, organization
needs leaders who have ability to confront the chaotic conditions. This requires one
leadership style that can learn and confront new situation that never know before.
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Therefore, adaptive leadership (AL) becomes a vital factor, because AL relates to
learning capability for adaptive challenges which considers matter as difficult to
identify, require changes in values, attitude, and beliefs to work. In contrast to
technical problems that is easy to recognize and carry out available solutions (Heifetz,
Grashow & Linsky, 2009). Cojocar (2008, p. 6) states that “Adaptive leadership is not
about individuals and how well they are doing; it is about understanding adaptive
pressures and dynamics and being able to use those insights to be more successful in
leading change.”
Additionally, when the organization adopt the features described as factors of
LO, it will be improved for performance (Senge, Holton & Kaiser, as cited in Haley &
Lazouskas, 2008). Hence, the positive result of LO is what the enterprises want to
achieve. It should be improved in outcome when LO is applied in firm.
Presently, Vietnam organizations are coping with difficult situation from
macro-economy. According to Dinh Thanh reporter come from Vietnam Chamber of
Commerce and Industry (VCCI) described that “In 2012, thousands of Vietnam’s
enterprises suffered losses, bankruptcy and closed down. Entering 2013, according to

many experts, although the economy will gradually recover, there won’t be many
opportunities for enterprises due to tight credit policies maintained by the
Government”. Thus, firms are under pressure to restructure and enhance
competitiveness to be adaptive to the environment and responsive to change.
Organizations want to continue surviving and expanding business activities need to
absorb knowledge that can help an organization to diagnose the sign of difficulties in
the early period before it’s too late. This means that building their organization
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become organizational learning. A lot of organizations had changed their business
model; however, some improvement programs meet fail than succeed. One of the
reasons, leaders do not realize and commitment to learning to adapt and develop
sustainably (Garvin, 1993). Hence, leaders have to know how to learn and choose
what appropriate model to learn that helps each individual and organization perceive
the important role of learning which will transform a normal organization to learning
organization.
According to discussion between Dr. Nguyen Huu Lam director of Center for
Excellence in Management Development (CEMD) belong to Ho Chi Minh University
of Economics with Bridge Investment newspaper, he said when business environment
changed rapidly and knowledge increase sharply, who learn better and faster will be
become winner. Beside, learning creates ability to adapt with turbulent market.
Vietnamese enterprises should improve considering learning as short term vision.
They need to comprehend learning is a strategy that will engage with mission and
vision tightly. The organization is the same individual, they want to exist they have to
learn and learn to live better (Nguyen, 2011).

1.2 Research questions

LO has been considered to be one of the most important strategies to gain

competitive advantage and organizational performance (Marsick & Watkins, 2003),
related literature lacks conclusive to support the effect of learning organization on
organizational performance (Moilanen, Weldy, as cited in Alipour & Karimi, 2011)

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Beside the influence of LO for performance, the impact of leadership styles on
organizational performance (OP) has also been a topic of interest among academics
and practitioners working in the area of leadership (Fatima & Al-Balqa, 2012).
Fenwick have devoted considerable attention to the potential effects of leadership on
OP. Despite increased research into the leadership-performance relationship, major
gaps still remain in our understanding. (Fenwick et al., as cited in Fatima & Al-Balqa,
2012).
There are many factors affect to the development of learning organization and
therein leadership is emphasized as the key element. (Senge, Bass, as cited in Milic,
Dudjak & Grubic-Nesic, 2012). However, literature rarely addresses the particular
relationship between AL and LO.
These queries above lead to critical questions what leadership behaviors will
have influence in creating and maintaining learning organizations? After selecting
adaptive leadership, the research come up with a new question how the relationship
between adaptive leadership and learning organization because two notions also
support organization face up to turbulent environment and whether developing a
learning organization lead to improved organizational performance or not? This is
certainly important questions for organizations in all industries.
Three vital questions to check linkage among three constructs:
1/ Whether adaptive leadership affect on the learning organization or not?
2/ Whether learning organization have any impact to organizational
performance or not?
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3/ Whether adaptive leadership have any effect to organizational performance
or not?
By addressing these research questions which will help the reader know more
the gap exist in the literature between adaptive leadership and LO as well as the
linkages among adaptive leadership, learning organization and organizational
performance.

1.3 Research objectives

This research aims to endeavor to bridge a gap in literature by examining the
three constructs – adaptive leadership, learning organization, and organizational
performance since offering insight for these relationships.
Moreover, the research will support some necessary information for
organizations that are looking for solutions to overcome the crisis, and adapt to
change.

1.4 Research methodology and research scope

The aim of this study is to test measurement scale and conceptual model. This
research uses questionnaire to collect data with sample size 128 in the main research
that obtains through snowball sampling method. The measurement scale is evaluated
through two steps. First, the preliminary assessment uses Cronbach alpha and EFA
method with SPSS software. Then, the measurement scale and research model are
examined through SEM method by using AMOS software.
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The research is conducted at companies which do business in the field of

chemical products in Ho Chi Minh City. This is one of the most important fields and
has made significant contributions to development of the economy.
1.5 Research contribution
The thesis result supply knowledge for building LO and apply adaptive
leadership style in organization to reach the best possible results.
Applying measurement scale for adaptive leadership is become meaningful in
the further research. Also, deploying this measurement scale will bring more
advantages than research AL based on case study method.
1.6 Research structure
This thesis is divided into five sections:
 The first section gives a brief overview of the main reason lead to research
topic, some practical information about Vietnamese enterprises, the
important of research goals and major contribution for Vietnam context.
 The second section describes some related concepts and linkages among
them. Thence, building theoretical model and put forward the hypotheses.
 In the third section a methodology is presented to appraise measurement
scale, research model and hypotheses proposed.
 Data analysis is described in the fourth section along with research results.
 Conclusions, implications and limitations are drawn in the final section.

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CHAPTER 2: LITERATURE REVIEW

This section will present some concepts related to three important matters as
adaptive leadership, learning organization and organizational performance. From these
concepts had researched and developed in the world, the hypothesis and model that
show the impact of among adaptive leadership, learning organization and
organizational performance will be proposed. This chapter has four parts: 1/ Points of

view for learning organization, 2/ the standpoint for adaptive leadership, 3/ the
outlook for organizational performance and 4/ the theoretical model for relationships
between these notions.
2.1 Learning organization (LO)
We need to know who are pioneers to create and disseminate this concept as
well as the current theories for LO. In literature review, the “founders” in this field
such as: Peter Senge, Chris Agyris, Donald Schon, and Margaret Wheatley have made
significant contributions (Cors, 2003).
Senge is father of learning organization in 1990 (Haley & Lazouskas, 2008).
According to Senge (1990, p. 3) in his publication The Fifth Discipline- The Art and
Practice of the Learning Organization, learning organization is an organization “where
people continually expand their capacity to create the results they truly desire, where
new and expansive patterns of thinking are nurtured, where collective aspiration is set
free, and where people are continually learning how to learn together”. The five
disciplines are:

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1/ Systems thinking: understand how their company really works
2/ Personal mastery: learn to be open with others
3/ Mental models: people put aside their old ways of thinking
4/ Shared vision: form a plan everyone can agree on
5/ Team learning: and then work together to achieve that vision
Chris Argyris, is well known for distinguishing between double-loop learning
and single-loop learning (Cors, 2003). Single-loop learning mentioned about routine
activities which do not require challenging the current situation for organization, it
focus on “how” rather than “why” question. While double-loop learning deal with
complex issues it requires members develop the suitable skills to understand and learn
new knowledge throughout asking “why” question. Besides two-loop learning,

Argyris also explain for triple-loop learning it focus on the ability to use single-loop
learning and double-learning effectively by supporting members learn how to learn.
(Soren & Kellan, 2005)

Figure 2.1 Learning loops
Source: Soren, E., & Kellan, L. (2005). Models of organizational learning. Kollner group.

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Garvin (1993, p. 3) has proposed a definition of learning organization “A
learning organization is an organization skilled at creating, acquiring and transferring
knowledge and at modifying its behavior to reflect new knowledge and insights”.
Thus, to transform organization into a learning organization, Garvin proposed five
activities:
1/ Solving problems systematically
2/ Experimenting with new approaches to work
3/ Learning from pass experience
4/ Learning from other companies and from customers
5/ Transferring knowledge throughout your organization.
Marsick and Watkins (as cited in Milic et al., 2012) define the learning
organization as one that is characterized by continuous learning for continuous
organizational improvement, and by the capacity to transform itself. They developed
the Dimension of Learning Organization Questionnaire (DLOQ) to identify the
learning activities in organizations. The instrument has been widely employed to
determine the characteristics of a learning organization. It is organized into seven
sections addressing individual level, team level, and organization level learning. The
seven variables include:
1/ Create continuous learning opportunities: opportunities for continuous
learning to support people equip knowledge for themselves and work better.

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2/ Promote inquiry and dialogue: allow people express their ideas and ability
to discuss with the views of others through questioning and feedbacks.
3/Encourage collaboration and team learning: work is done through the use of
employees' groups; members of the groups can become familiar with different ways of
thinking, it is expected from the groups to learn and work together; organizational
culture supports collaboration and rewards it.
4/ Create systems to capture and share learning: systems for sharing learning
are created and used in the work, and employees have free access to accumulated
knowledge.
5/ Empower people toward a collective vision: People are encouraged to learn,
create and shared vision and they are who make decision process and be responsible
for their action.
6/ Connect the organization to its environment: people in the organization can
use necessary sources into their enterprise to solve and adapt their work and the
organization is connected to external communities.
7/ Provide strategic leadership for learning: Leaders have a significant impact
for learning and to get better business results leaders consider learning as completed
strategy.
The DLOQ is selected for this research since it is the most appropriate
instrument for the learning organization. According to Ortenblad (as cited in Haley &
Lazouskas, 2008) evaluated some perspectives of learning organization and stated that
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the theoretical framework which developed by Marsick and Watkins (1993) covers
most opinions areas of the concept in the literature.

Differences between organizational learning and learning organization
Organizational learning is a process that aims to create a learning organization.
(Tsang, as cited in Ortenblad, 2001)
The terms of organizational learning and learning organization have been used
interchangeably in the literature. However, Mojab and Gorman (as cited in Haley &
Lazouskas, 2008) note different meanings of these two terms. They state that
organizational learning is the sum of individual learning within an organization, with
emphasis on individuals’ responsibility in learning and the collective outcome, while
the learning organization is the outcome of organizational learning.
2.2 Adaptive leadership (AL)

Leadership has received much attention in the several years. It is one of
important concepts nowadays with a lot of definitions. Leadership is not just about
vision, its process is associated with a competency to encourage, motivate people to
develop their expertise to fit the around environment and simultaneously bring
commitment, loyalty, trust from follower. Thus, in order to become effective leader
and lead organization overcome difficult situation to continue lasting developing is
becoming meaningful for research.

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The study takes a glance for existing leadership theory. According to Sherron
(2000) he mentioned several critical theories of leadership in his dissertation:
1/ Great Man theory: is based on the idea that the leader is born with innate
leadership skills.
2/ Trait theory: based on assumption leaders have been given superior qualities
physical attributes, mental attitudes, and personality characteristics that make them
“differentiable” from others.

3/ Behavioral theory: involve the person’s behavior and actions instead of
underlying traits.
4/ Situational theory: views leadership as specific to a situation rather than to a
particular trait, personality, behavior, or some combination of these. It is based on the
notion that different circumstances require different forms of leadership.
5/ Contingency theory: developed from situational theory. Contingency theory
attempts to select situational variables that best indicate the most appropriate
leadership style to suit the circumstances.
6/ Transformational theory: Whereas transactional leadership models are based
on the extrinsic motivation of an exchange relationship, transformational leadership is
based on intrinsic motivation. As such, the emphasis is on commitment rather than
compliance from the followers.

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7/ Servant leadership theory: is a practical philosophy that supports people
who choose to serve first and then lead as a way of expanding service to individuals
and institutions.
8/ New science theory: the new sciences provide equally powerful insights for
changing the ways of designing, leading, managing, and viewing organizations.
The new science theories include adaptive leadership theory. It is own theory
not derivative theory origin from situational or transformational leadership (Cojocar,
2008).
Avolio and Bass proposed (as cited in Antonakis, Avolio & Sivasubramaniam,
2003) “full range leadership theory” FRLT includes three types of leadership behavior
transformational, transactional and nontransactional laissez faire leadership.
According to Heifetz et al (as cited in Randall & Coakley, 2007). Adaptive
leadership is based on the premise that leadership is more of a process rather than
individual personal capabilities. This process requires people to focus on the specific

problems at hand and to modify the way they have worked in the past. This type of
leadership should compel all stakeholders involved to work towards a solution
through debate and creative thinking, identifying the rewards, opportunities, and
challenges they will face. Dimensions of adaptive leadership:
1/ Identify the type of problem
2/ Focus attention
3/ Frame the issues
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4/ Secure ownership
5/ Manage stakeholder conflict and maintain stress
6/ Create a safe haven
Hence, AL characterize learning ability, it acquires knowledge lead to change
behavior to obtain goals, mission and vision. While transformational leadership
emphasizes in culture with changing beliefs, values and attitude.
The another definition for Adaptive leadership (AL): The mobilization of
people and units that frequently have different needs, priorities and perspectives
toward new ways of working and ways of thinking (Heifetz et al., 2009).
AL come from the reality changing environment it required leader has ability to
solve difficult problems or complex situation. According to Glover (as cited in Hogan,
2008) AL is built based on two terms: assimilation and accommodation. He
emphasized on theory related to decision making of leader in the changing
environment. This model gives skill to help leader have alternative choices for
decision situation and a lot of choices it means that leader will have ability to choose
the best solution. This model show with order:
1/ Cultural competency: Leader has to have ability to observe, evaluate the
vital of culture as well as variety among cultures then make appropriate changes
culture if necessary.
2/ Managing knowledge: mentioned to ability to enhance awareness to catch,

keep and transfer knowledge that allows leaders to know more their environment.
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3/ Creating synergy: find win-win solutions for complex cases by involving all
members.
4/ Holistic vision: require leaders open their vision beyond the old ways of
thinking.
Torres and Reeves (2011) proposed their model relies on practices you should
employ to achieve adaptive leadership with four dimensions of AL:
1/ Navigating the environment: Adaptive leaders embrace uncertainty and
adopt new approaches to chart a course and turbulent conditions.
2/ Leading with empathy: Adaptive leaders create a shared sense of purpose
and manage through influence.
3/ Learning through self-correction: Adaptive leaders encourage and even
insist on experimentation. Some experiments will fail, but that is how they learn.
4/ Creating win-win solutions: Adaptive leaders focus on sustainable success
for the company and its network of stakeholders.
John Clarkeson, former CEO of BCG, anticipated this new model of leadership
20 years ago: Leadership will flow to those whose vision can inspire the members of
the team to put their best abilities at the service of the team. These leaders will create
rather than demand loyalty; use diverse points of view to reach new insights; exert
influence by the values they reinforce; and make leaders of their team members
(Torres & Reeves, 2011).

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