Learning Organisation Models And Adoption Of Smes Business Essay

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The competitive advantage of companies does not lie any more in the choices of positioning in relation to the environment, but according to the use of the internal resources such as knowledge and the capability of the organisation to develop, diffuse and integrate it through individual and collective training.

In a globalised world where the competitiveness of companies is not only evaluated domestically, the situation of SME is even more critical than before. Whereas the large companies seek all kinds of management receipts in order to take up the market challenges, small companies are in more delicate situation because they do not have many funds, whether they are material or human. The situation is much worse in developing countries' SMEs. Institutional conditions which prevail in these countries leave much to be desired because of the small and reduced margin given to local small companies to compete with their peers in developed countries.

Thus, Algerian's SME, which do not benefit from an institutional support similar to what is provided for those in developed countries, are more vulnerable within this globalised environment. The diagnosis is very clear: in spite of the various policies pursued in their direction, the small and medium-size companies still do not manage to make great strides. However, there are in Algeria, like everywhere in the world, some SMEs which are in a higher growth rate and have a more dynamic functioning than their local competitors. It is thus interesting to distinctively highlight the reasons which brought success to those SMEs.

Different models can be helpful for organisational management, the learning organisation model is one of them and not only it proposes a continuous training process but also can prove to be interestingly tempting for companies which try to succeed in an unceasingly dynamic market. This model, very studied from the Nineties, does not require heavy and complex structures for its practical application, the reason for which it is very accessible to SME. Starting from this paradigm, we studied two small organisations which both look a lot like a learning organisation.

These SMEs, which succeeded within competitive markets, had adopted the continuous improving methods and were very growth-oriented; this is a proof of being in accordance with the learning organisation model, in other words, ''Firms which invest more in training tend to perform better''. (Mankin, 2009.p.353)

Our starting question is: which are the characteristics that facilitate and/or force SMEs to adopt the learning organisation model?

Firstly, I will present the learning organisation model as I envisage it.

Secondly I will make a brief description of the general situation of SMEs in Algeria.

Finally I will present outcomes and conclusions with reference to transposing the learning organisation model through which I hope contributing to improve comprehension of the learning organisation model and its adoption by SMEs.


Three definitions of a learning organisation:

''Learning organisations are organisations 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 to see the whole together''. (Senge 1990: 3)

''The Learning Company is a vision of what might be possible. It is not brought about simply by training individuals; it can only happen as a result of learning at the whole organisation level. A learning Company is an organisation that facilitates the learning of all its members and continuously transforms itself''. (Pedler et. al. 1991: 1)

''Learning organisations are characterised by total employee involvement in a process of collaboratively conducted, collectively accountable change directed towards shared values or principles''. (Watkins and Marsick 1992: 118)

Finger & Burgin Brand (1999) argue that the learning organisation notion focuses essentially on the cultural aspect, and does not sufficiently consider the other organisational dimensions.

In this work I privilege the approach which considers the adoption of the model as being a choice and a responsibility. In other words, Senge (1990) and Garvin (1993) consider that a learning organisation must show quite specific characteristics.

More precisely, Schein (1996.1&2) gives a major importance to the role played by organisational culture. According to this author, the culture is the basis of the ability to continuous learning of an organisation as well as the consequence of experimentations and trainings assimilated by this organisation. However, we consider the organisational culture as the key principle which is the foundation of all dimensions.

The organisational culture accordingly, should be the first critical step when building the learning organisation. In order to understand the key role of the organisational culture in building a learning organisation, we present five elements which identify an organisation whether it is a learning organisation or not. By closely examining each element, managers can evaluate and augment the rate of learning within their companies.

These elements are the following ones:

Internal environment which encourage the training;

Exchange of information at all levels of the organisation;

Shared objectives;

Systemic vision;

Monitoring of actions.

To be more precise, we will briefly describe each one of these dimensions.

1. Internal environment which encourage the training:

In every organisation, the behaviors of its members can be influenced by internal environment. Among these behaviors, an organisation can choose those to underpin by putting into practice specific strategy. In other words, the organisation plans out policies which principal purposes are:

To apply intelligent learning practices;

To develop creativity and exchange of ideas;

The strategic analyses are always accomplished in a joint way by all members.

(Garvin, 1993)

More concretely, there are 6 ways of developing the ability of learning in an organisation:

Learning by doing: through practice

Learning by changing: Through transition from known routine towards other new

and potentially better.

Learning by feedback: through result analysis.

Learning by knowledge development: Learning obtained starting from internal

programme necessary for improving members.

Learning through Contracts: When the company learns through engagement, either new members, or consultants, or through research centers contribution which increase savoir-faire and knowledge within the organisation.

Learning through acquisition: From the transfer of the technology bought or

obtained by partnership from companies which have distinctive knowledge.

Besides these six means of learning, external sources of learning can be explored through strategic alliances, benchmarking (Garvin, 1993; Wick and Leon, 1995), learning by customers and the learning through comparison with the competitors.

For this objective, it is preferable to have an organic organisation form which Burns & Stalker (1961) characterised as follow:

Decentralised decision-making and greater confidence in informal communication.

Constant redefining of individual tasks and roles.

Lateral communication rather than vertical one.

Information and guidance rather than orders and decisions.

In conclusion, internal environment reinforces positive behaviors which initiate the learning and encourage it by involving physical spaces such as assembly rooms, laboratories and libraries that facilitate exchange and experimentation.

2. Information exchange:

A learning organisation model can be established if only all members are involved.

Indeed, the organisation can only learn through all its members' training and never through the training implemented for the top-elite. As previously underlined, an organic organisation type where decision makings are decentralised is required.

However, we cannot speak about decision-making and generalised training without addressing the issue of the transfer of information in the organisation. Indeed, when a company wants that all its members take part in the process of decision-making and learning, it is necessary to envisage mechanisms which disseminate relevant information at all levels of the organisation.

For this reason, there is a variety of relevant information which stem from both internal and external source. With regard to the internal sources, Sligo (1996) distinguishes two different means, on the one hand, the interpersonal sources such as subordinates, people from other departments, meetings, seminars and workshops and, on the other hand published sources such as reports, databases, documents and books.

External sources consist of institutional environment of the company particularly other organisations, customers, suppliers, the government and different stakeholders.

As Huber (1991) underlines it, when information is shared, new sources appear and more individuals are entitled to learn.

According to Garvin (Ibid), the contents of information, must include both successes and failures of the company, so that the practices can be evaluated and cleared up for all. Successful behaviors are repeated whereas failures are avoided.

Because of the learning requires a high degree of self-criticism, the learning organisation must create a comfortable environment where the defensive attitudes are discouraged in favour of paying attention to all interested constructive criticisms.

3. Shared objectives:

Working with cohesion around clear objectives is very important for the learning organisation and its members. Senge (1990.1) declares that the feeling of loyalty towards the company and gathering around concrete and legitimate perceived goals makes that the members of an organisation imply themselves more voluntarily.

This participative approach makes possible transformational learning as all members of the organisation feel responsible for the success of the company.

Tobin (1996) states that when people understand the role assigned to them in order to reach the organisation objectives, they feel more committed in term of performance.

Management will be able to effectively pilot a conversion to a learning organisation if only employees are ready to follow. (Spencer, 2009)

Fulmer (1994) specified the importance due to the fact that members of the company define together the objectives and the complete program with stages to carry out in order to reach those goals. The author insists on the fact that it is necessary to plan the processes as well as the quantitative and qualitative results (employees' satisfaction, team work quality, creativity, etc). It is also important that forward planning must be followed by a keep-an-eye-on system. As underlined by Wick and Leon (1995) it is the monitoring of the actions which guarantees that the vision of the future is continuously connected to reality. The learning organisations work by constantly checking their efforts, their responsibilities and their progress in comparison with the predetermined objectives.

4. Systemic vision:

A company is considered as a learning organisation if and only if its members are constantly concerned of impacts of their individual actions on the overall performance. This implies the consideration of these impacts on the top-level, of other departments of the organisation, other companies and even of the environment, and vice versa. The systemic approach implies also the ability of both self-evaluation and change starting from the analysis of the feedbacks received from the environment. In the same line of thinking, Senge (1990.1) points out how important are the exchanges for the system effectiveness and put emphasis on the contribution and the interdependence of the organisation's elements.

Units of the same organisation must share the same identity and the same beliefs towards the training as the organisation as a whole. For this purpose, an organisation has a systemic vision when it encourages analysing all complex problems and making the different points of view matter of concern.

5. Monitoring:

As we underlined previously, a fundamental dimension for the learning organisation lies in the applicability. That implies changes brought through learning in the interest of the organisation. According to many authors (Garvin, 1993; Campbell & Cairns, 1994; Schein, 1996.2), learning is proved by changes in the behaviors and practices of the organisation. As Schein (1996.2) underlines it, organisational learning is a process which occurs in a community of practices and thus, ideas alone are not sufficient to guarantee the true learning or the change. Consequently, an effective learning organisation model must allow the organisation to plan strategies facilitating its actions to be fully reexamined and improved according to the acquired trainings and the fixed objectives.

The recommended accompaniment lies so much on the efficacy of the training methods (to check if these methods are really disposed to change behaviors) and on their effectiveness as well (to check if trainings changed really the behaviors in the desired way and for a better result of the organisation). Indeed, if there are several ways of learning, it is necessary in any case to persist. It is then important to accompany the actions in order to manage the regularity, and the assimilation of changes by all members of the organisation. To learn is also to increase the ability of efficient action and according to Schein (1996.2) the monitoring is not just an option but a necessity.

General situation of SMEs in Algeria

Having presented the characteristics of the learning organisation model, it is now necessary to study the issue of its adoption by SMEs. Here thus a brief description of the situation of SMEs in Algeria and how to adopt this model. Algerian SMEs occupy a particular position in the economy; they have not only an essential socio-economic role but a great capacity of innovation and creation as well.

As creators of employment, they are playing a leading role in the resolution of the current unemployment crisis. In a competition-based environment, they are indeed, a source of dynamism and vitality necessary to our economy. Thanks to their flexibility, they are able to quickly adapt to the most frequently growth of the market. The new trend SME is a major economic issue and because of this, it requires a big number of studies which at the moment remain insufficient for its rise.

Statistics displayed by the ministry of ''SME and Craft Industry'', enable us to have a vision on the total structure of Algerian private SMEs. At the first quarter of the year 2009, private SME and the craft industry represented 99.75% of the total of the companies which activate in Algeria; their number has grown from 75679 in 1999 to reach 335486 in the first quarter 2009 (more than 4 times).

In spite of that, the same researches indicate that Algerian SMEs in their majority are still in a fragile situation vis-à-vis the challenges of the increasingly spread of globalisation. According to this research, only 1.2% of their incomes are invested in research and development and less than 1% of the incomes go to the employees' education and training.

In the light of some researches Gillet, A (2003), Melbouci (2004), we can highlight some characteristics and singularities of Algerian SME, which are the results of the triple decade of socialist economy and which can be summarised in the following points:

SMEs are rather concentrated in positions and businesses forsaken by the public sector SMEs (after the winding-up) which gave them comfortable positions of monopoly, because of this they are beneficial but less innovative yet.

Small enterprises are rather family and not very predisposed to opening the capital to foreigner investors.

The most part of their business activities is within the informal practices (financing, Production, Marketing, supplying).

Informal HR practices (Sometimes nonexistent).

The market is mainly local and/or national, rarely international.

While this research detected that 34% of the suggestions to improve the products' quality comes from the employees, the average training of the personnel in the small company in Algeria is 12 hours/year, including 6 hours/year of on-the-job training.

This situation is gradually changing, but within a growing globalisation context where the only requirements are Excellence and market related-remuneration, it is still disastrous. In this case, the fact that they have less resource to confront the environment leaves them in a riskier position and only most competitive succeed.

However, some Algerian SMEs are characterised by their constant care about quality. These companies succeeded in adopting competitive management methods by constantly optimizing their results. Thus, we hope to better understand the learning practices of highly-capable SMEs and contribute to the evaluation of the adoption of the learning organisation model by small companies.

For this study I have selected two SMEs from different sectors and which common characteristic is the adoption of practices which look like the learning organisation model, these practices are as follow: the constant innovation, the success on a very competitive local market (each one in its related field) and orientation towards the future with the intention to continuously progress and develop itself. Both have less than fourteen employees.

Created in 2005, company 1 is young and belongs to two associates, while the company 2 belongs to only one owner and has eight years old. Both are located in Annaba my native city and the industrial capital of Algeria.

According to the five dimensions seen previously, I will expose for each company data that follow from the adoption of the learning organisation model.

INTERNAL ENVIRONMENT: Both companies encourage the training as a desired behaviour, with the following characteristics:

Company 1:

The market of company 1, which factory consists on lathes, tool grinding machine and milling machine, is very competitive and always changes according to new technologies related to its sector. As it is a young company in growth, its structure already changed several times to allow the accommodation of the new market demands. Parallel to its internal activities, this company offers its services to some industrial societies by designing and manufacturing parts, mechanical subsets and prototypes. Moreover, we checked various forms of Learning.

Through practice (by doing):

Senior technicians train the newcomers; according to their declarations, they learn much by doing their work and by discovering new ways of doing. According to the two owners, the growth amongst contract obliges each one to learn how to become more autonomous in decision making.

Through result analysis (by feedback):

A weekly meeting between the owners and the employees is hold to analyse the results and then implement performance and behavioural adjustments.

Through Contracts:

Because of its specification and its growth, the company employs more and more specialised employees.

Through acquisition:

Suppliers of the company transfer their knowledge, which allows members of the company to be up to date in term of technologies and behaviours.

Another way to encourage training contained by the internal environment is through benchmarking the companies of Algiers (for being the most modern). In fact the company was born only after one of the owners went to visit a company within the same sector in Algiers to learn from its way of doing.

Nevertheless, updating is only restricted to the technical functions of the organisation. For instance, on the subject of the new technologies they are in a constant contact with other companies from abroad, they read specific magazines and publications and take part in some meeting groups through Internet exchange of information. However, activities of administration and marketing are considered with less care. According to Mankin this is not a firm performance problem since ''A study of SMEs in India by Kastury et al (2002) reveals that it is the attitude of the owner-manager rather than the adoption of HRM practices that has the most significant impact on firm performance.'' (Mankin, 2009, p.353)

Moreover, one of the two associates is a part-time in his company and work in the largest Algerian company (SONATRACH) which invests more than any other Algerian organisation in the training of its employees. Thus, anytime this associate receives a relevant course in this big company, he repeats the contents of it with the members of his company. It is admittedly a costless training, but sometimes unrelated to the specific needs of the company however.

As Mankin observes, we are not surprised afterward that the most important influence on some SMEs is the owner-manager. Mankin, D (2009)

When a solution to a problem is found or a way of doing things is created, owners go straight to transform them into routines. This is the only established system. However, we can affirm that being a small sized company encourages the exchange.

Even if the company does not have specific installations for that, as supposed to be what advised by the above model, we admit that being so close to each other and to the owners at the workplace for the employees, promotes the communication, the introduction of innovations, new ideas and creativity. Nevertheless, there is no policy formalised for this purpose and some actions should have been integrated.

Company 2:

The company 2, which has a variable structure, is a factory that was built by a Danish company with offering to the owner a turnkey solution. It is about the production of the very popular American dessert Ice Cream. Although it belongs only to one person, it had several partnerships.

According to its owner, and as seen above with the first company, updating is only restricted to the technical functions of the organisation and the aim of finding new ways of improving its performance is only through acquiring new machines and new technologies. Always according to him, the competitive advantage of the company on the market is due to its capacity to be continuously in innovation. This strategy was difficult to achieve at the beginning because the customers were very conservatives, but gradually the company succeeded in carrying more customers than its competitors and today regarded as a positive reference in its area of business.

The organisation is solicited by other companies for benchmarking and by some interested partnerships who ask to obtain franchise for other cities in Algeria. It is the policy of the company to offer each month a new product with new flavour to the customers. For that the owner is always seeking ideas initiated by the employees.

Moreover, the company learns:

Through change: With the policy of constant innovation, the company is obliged to change the routines and to learn from other ways of doing.

Through result analysis: Regularly, The Company analyses the results of improvements.

Through the contracts: The Company has a long life contract with an HRM expert.

As exposed above, the company does not give much importance to other companies' activities and they are rather the others which seek for benchmarking. However, the organisation wants to remain opened to the environment through professional information exchange. The company does not subscribe to any specialised periodical, but the owner has a small library which is opened for the personnel.


Because of the small size of the two companies, the information flow is intense and easy. The employees accompany all that happens, but in an informal way. We found that none of the two companies intent to democratise the decision-making processes, which are always centralised by the owners.

Company 1:

While failures are communicated and that all employees are invited to look for solutions to the identified problems, successes are supposed "obvious" according to the owners. Also according to them, employees can easily realise that the company (after its growth), had improved its installations and its systems and then the amount of work had increased. However, the reasons of success are not communicated and the most interesting practices of the company are not emphasized.

There is no either specific criterion to choose between the information which will be communicated to all members and that which will not.

With regard to the competition, company 1 does not take it into consideration. According to the associates, the more the company grows, the more it ignores what competitors are doing. As underlined above, the associate who work part-time brings information only from his other occupation while the variety of sources of information in this sector is less explored. Such was the passivity that one of the owners simply avowed that "information arrives". Another example is that their external source of training is limited to what they read in specific magazines and publications related to the sector where they operate.

According to the owners, information collected from the customers never ceases. All the customers are called just few months after concluding the service of designing and manufacturing parts or mechanical subsets to know if they remain satisfied with the service. If a problem appears, it is immediately solved. Nevertheless, the company does not use these data in a systematic way to analyse the performance and divulge results to all employees.

Company 2:

The information sources mostly used by the company 2 are the skills obtained by its members when acquiring new machines and technologies in addition to the constant contacts of the owner with associations. Moreover, they make telemarketing in order to know how satisfied are the customers, but that is not very systematic. Informal exchange was the principal way of having access to information and employees are not involved in decision making.


As we noticed previously, little companies do not plan their future clearly and do not invite their employees to take part in the decision-making process. Nevertheless, employees affirm being very implied for the success of the company and the feeling of loyalty towards it is very present.

Company 1:

Growth is the main objective of the company 1 and quite clear for both associates and employees. All are said to be mobilised in order to successfully carry out this aim. However, the company does not have a strategic objective, which makes it difficult for the employees to understand clearly their role. The short-run objectives are determined by owners without any involvement of the other members of the company.

Company 2:

The owner of the company 2 affirms having a long-term plan of the company which he implemented alone. He is the only to make decisions and affirms that objectives are clearly revealed through all the company. We detected nevertheless, from the answers of the employees that they do not know very well what the long-run aims of company are. In fact, the only employees being put in the picture are those belonging to the same family as the owner.


The small size of the companies supports the exchange and despite that everyone knows the work of the other, team work is much reduced however.

Company 1:

The two owners are very anxious to share their knowledge and to make decisions together. They make two meetings per week between them besides that with the employees, as we previously mentioned. Thus, the small number of employees helps the company to get the systemic vision.

Company 2:

The field of activity of this company makes that each task of each employee is specialised and personalised. Even if team work does not exist and employees are not conscientious of the impact of the every one's work on the company success, there is an informal exchange of information however.


Despite the market vitality and the energy of SMEs which always trying out new ways of doing, the absence of monitoring for both companies weakens the motivation in relation to the selected targets.


According to what was previously presented, we can notice that there are some characteristics of the model of learning organisation which are very favoured by the intrinsic characteristics of SME. However, some others, which make it difficult to adopt the learning organisation model by SME, are independent of the size of the company.

SMEs are defined as follow:

Small number of employees;

Restricted funds;

Total domination and personalisation of management by the owner;

Organic structure, little bureaucracy, with a more informal relationship between people;

Great reliance on both external and internal environment with a great importance attached to the roles of different stakeholders.


In the light of this study, we can infer some characteristics of the adoption of the learning organisation model by the small companies. First of all we can affirm that the studied companies were rather close to an application of the model. However, it should be noticed that the least presently existing dimension at these two SME is the one which relates to the democratic access to information (information exchange).

Although the small number of employees advantages the full information exchange, the centralised management by the owners prevents the employees from contributing in decision-making and the use of knowledge. At the end of this study we state that small and medium-sized companies display some characteristics of the learning organisation, but not all of them. The two studied companies did not worry about both the use of the variety of external sources and the varied mechanisms of information diffusion for all members. In spite of that, several characteristics related to small size (with a small number of employees) encourage the adoption of the learning organization model.

Regarding the restriction of funds, it is obvious that it has negative effects such as the difficulties to finance projects or even to have suitable installations. In addition, this restriction becomes a challenge which obliges the company to develop new ways of doing and to encourage trialing, innovations and creativity. Also, the big dependence of the environment can exert a beneficial influence if it obliges the company to exploit various opportunities, to be self-controlled, and to test and implement relevant changes. In the same way, the fact that SMEs have more informal and less bureaucratised structures contributes to the adoption of the model. However, it should be noticed that while the structural features of the organisation facilitate the changes, the permanent growth without formal structure make difficult the adoption of policies which encourage the learning and planning.

Lastly we noticed in the learning organisation model that there are some elements which are not related to the characteristics of SMEs, such as the presence of the checking and measurements of learning and exchanges between persons, which are independent of the size of the company. We consider that the personalisation of management, which is one of the common characteristics to all SMEs, is the most harmful for the adoption of the model. This feature is closely linked to the centralisation of information and, consequently, prevents the communion around the objectives. However, this personalisation of management is in the middle of the adoption of the learning organization model. In other words, it is the responsibility and the decision of the owner to make so that his company is a learning organisation or not.