THE EFFECT OF ORGANIZATION LEARNING, EXTERNAL ENVIRONMENT AND IMAGE OF PRIVATE UNIVERSITIES TOWARDS

The effect of organization learning, external environment and

image of private universiTIES towards the performance

of the universiTIES’ competency as an

intervening variable

in Timor Leste

 

Adolmando Soares Amaral (Corresponding Author)

Email : f5.lacon@gmail.com

 

 

 

ABSTRACT

This research has a purpose to examine and analyze the causal link between the variables of organization learning, external environment and Private Universities’ image with the performance of Private Universities in Timor Leste, while the Private Universities’ competency as an intervening variable, at the same time verifying the validity and reliability of research instruments as a whole. It also observes whether there is any impact of Private Universities’ competency as an intervening variable towards the achievement and performance of Private Universities (PU)  in Timor Leste. The population in this study is all PU within Direccao Nasional do Ensino Suprior Ministerio da Educasao Timor-Leste, amounting to 9 universities. The samples in this research is 100 respondents representing heads of each university. Data collection is by means of anquette and data measurement uses 5 Likert scale. The result shows that all three variables prove to give a positive and significant effect towards the increase of PU’s competency. The analysis uses Partial Least Square (PLS) and the result answers the first, second, and third hypothesis which are basically intended to examine factors influencing PU’s competency. After examining that the three variables have effect on PU’s competency, a further research is done to investigate how PU’s competency can  influence its performance. The result concludes that increased competency of Private Universities’ will also increase their performances.

 

Keywords : Organization learning, external environment, Private Universities’ image towards performance in Timor Leste, Private Universities’ competency as an intervening variable.

 

1. Introduction

When more deeply observed, the model used by Wang & Lo (2003), Murray and Donegan (2003), Chaston & Bedger (1999), the effect of organization learning to competency, assuming that there is a linkage between organization learning, external environment, image of PU with competency of PU.  Also to examine whether competency have influential effect towards performances of PU. This research tends to be more explanatory model instead of confirmatory.  This will cause measuring bias to some aspects due to redundant elements. This is also the case with the aspects of organization learning, external environment and image of PU, which have direct impact toward performance of PU, and indirect impact, in which the PU’s competency function as intermediate factor of organization learning, external environment and PU’s image towards its performance. However the aspect of PU’s competency is considered as an intermediary factor which links the organization learning, external environment and PU’s image with the performance of PU, therefore the organization learning, external environment and images of PU should not have a direct impact towards PU’s performance. In this context this intermediary aspect can weaken or strengthen variables. From the above description this research tries to answer the research gap by improving the linkages developed by Wang & Lo (2003), Murray and Donegan (2003), Chaston & Bedger (1999), the effect of organization learning towards competency, Lopez at al. (2005), Khandekar & Sharma (2006), Murray (2003), bontis et al.(2002), Prieto & Revilla (2006), the effect of organization learning capacity towards organization performance, Barney (1991), Mahoney and Pandian (1992), Peteraf (1993), Wernerfelt (1984), O’Regan and Ghobadian (2004), Bharadwaj et al. (1993), Mehra (1996), Pace et al. (2005), Fernandez et al. (2005), Bhatnagar (2006), the effect of competency towards PU’s performance in Hidayat (2008), the effect of external business towards PU’s performance to avoid measurement bias, and at the same time function as Novelity, which is expected to improve measuring method. This is what happen likewise in the effect of organization learning, external environment, and PU’s image towards their performance in Timor Leste with PU’s competency as a mediation, where organization learning, external environment, and PU’s image have direct impact towards PU’s performance and indirect impact towards PU’s competency, in trying to increase PU’s performance. Problems about the role of organization learning, external environment, and PU’s image are being questioned in the model previously develop by Wang & Lo (2003), Murray and Donegan (2003), Chaston & Bedger (1999), the effect of Organization Learning towards competency Lopez at al. (2005), Khandekar & Sharma (2006), Murray (2003), bontis et al.(2002), Prieto & Revilla (2006), the effect of organization learning towards organization performance, Barney (1991), Mahoney and Pandian (1992), Peteraf (1993), Wernerfelt (1984), O’Regan and Ghobadian (2004), Bharadwaj et al. (1993), Mehra (1996), Pace et al. (2005), Fernandez et al. (2005), Bhatnagar (2006), the effect of competency towards PU’s performance in Hidayat (2008). Does PU’s competency represent individual satisfaction towards PU’s performance. 

 

Formulation of the problems

1. Will organization learning affect PU’s competency in Timor Leste ? 2. Will organization learning affect PU’s performance in Timor Leste ? 3. Will external environment affect PU’s competency in Timor Leste ? 4. Will external environment affect PU’s performance in Timor Leste ? 5. Will  PU’s image affect PU’s competency in Timor Leste ? 6. Will PU’s image affect PU’s performance in Timor Leste ? 7. Will PU’s competency affect PU’s performance in Timor Leste ?

 

Purpose of Research

1. To examine and analyze the effect of organization learning towards PU’s competency in Timor Leste.  2. To examine and analyze the effect of  organization learning towards PU’s performance in Timor Leste. 3. To examine and analyze the effect of external environment towards PU’s competency in Timor Leste. 4. To examine and analyze the effect of external environment towards PU’s performance in Timor Leste. 5. To examine and analyze PU’s image towards PU’s competency in Timor Leste. 6.  To examine and analyze the effect of PU’s image towards PU’s performance in Timor Leste. 7. To examine and analyze the effect of PU’s competency towards PU’s performance in Timor Leste.

 

Literature Review 

1. Organization learning

Organization learning was firstly adopted by Argyris (1978), “organization learning is a process of detecting and correcting errors“. Organization learning occurs when organization members act as learning agents for the organization, responding and changing internal environment as well as external organization by detecting and correcting theoretical mistake and keep the result for their personal image and for the organization interest. Nevis et al. (1995) stated that “ organization learning is a capacity or process in an organization to maintain and increase performance based on empirical experience”. Wood et al.(1998) declared that learning is a process where people require competency and belief which will influence their attitude in the organization.   

 

 

2. External Environment

Environment strategy management is defined based on the distance between the environment and  the PU or whether the environment directly can or can not  affect the PU. The closest environment to the PU is task environment, industry environment (Hitt et al. 1997 : 22; Pearce & Robinson, 2000 : 71), specific environment  (Robbins, 1998 : 231), i.e environment having direct effect towards strategy, covering competitors suppliers, customers, and trade unions. On the other hand environment which has no direct effect towards strategy is called general environment (Hitt et al. 1995; Robbins, 1997), remote environment (Pearce and Robinson 2000). Further Robins (1998; 226-228) distinguished environment of PU from general environment versus specific environment. He also differentiate actual environment from perceived environment.

 

 

3. Image of Private Universities

The meaning of  image  itself is abstract (intangible), unreal, can not be described physically or mathematically measured because image occurs only in imagination. Nevertheless  image can be felt whether positive or negative from  evaluation by people at large. Image can be found, measured and changed. A research on corporate image has proven that image can be measured and changed even though to change and image will take relatively long time. In short, an image will permanently last in a certain period of time (Sutisna, 2001; 330).

 

4. Private Universities’ competency    

It has become a liability for a PU’s management to comprehend the required competency for job accomplishment. From this point PU can design a proper development program to reach their competency if the existing human resources are still below the requirement. Sofo (1999; 123) stated “ A competency is composed of skill, knowledge and attitude but in particular the consistent application of those skills, knowledge, and attitude to the standard of performance require in employment.”  Spencer and Signe (1993 ; defined competency in other form i.e “ … the central issue concerning the aptitude and abilities of people at work. Aptitude represents a person’s capability to learn something. Ability reflects a person’s existing capacity to perform the various tasks needed for a given job and includes both relevant knowledge and skills’.

 

5. Performance of Private University

Performance concept is defined as a degree of accomplishment (Rue & Byass, 1997 in Keban 1995) it means that the performance of an organization can be judged from how far the PU can achieve their predetermined goals. Considering that Raison d’etre of a PU is to achieve the predetermined goals, the information of  how PU performs is significant.

 

2. Methodology Research

2.1 Population and samples

From  the  calculation,  proper samples  are selected according to population which is 9 units PU. From each PU registered under Director Nasional do Ensino Superior Ministerio de Educasao Timor-Leste, 100 respondents were chosen from various  positional background, Rectors, Vice Rectors, Deans, and Heads of Study Program. Sampling technique is a simple random sampling. This is because the population in this research is homogeneous.

 

2.2 Research instruments

The instruments used in this research to collect data and measure indicator is a structured anquettes based on Likert Scale with optional answers from 1 to 5 (very low to very high). Questionaires are questions describing each indicator with resulting data to be used further to examine the hypothesis. Questionaires must be valid and reliable.

 

 

2.3 Variable Measurement

The measurement of the three independent variables, Organization Learning, External Environment and PU’s image, one intervening variable of PU’s competency, one dependent variable of PU’s performance, all use Likert Scale with optional answer 1 to 5 (very low to very high).

 

2.4 Techniques of Data Analysis

This research has a purpose to examine and analyze the causal linkage between exogenous and endogenous variables, intervening endogen as well as dependent endogen, at the same time checking the validity and reliability of the research instrument as a whole. Consequently the analysis of Partial Least Square (PLS) is used. PLS is an alternative approach which shifts  Structure Equation Modeling (SEM) approach covariant based to variant based. This method is a strong method because it does not based on many assumptions, data do not have to be normally distributed multi variantly, and sampling does not have to be enormous. The purpose of PLS is to  predict one model and to confirm an existing theory, also to clarify whether there is or there is no linkage between the changer or latent variable.

 

3. Finding and Discussion

Validity is a suitability of measuring instrument with what is being measured. An instrument is said to be valid if it can measure which is required and can correctly reveal data being examined. An item is said to be valid if the co efficient correlation of product moment pearson (r calculated) > r table at alpha significance  of  5%, r table value  with alpha 5% and amount of observation of 100 respondents is 0,197. Reliability means consistency of instruments used, an indicator is said to be reliable if alpha cronbach > 0,6. In this dissertation validity and reliability are being tested. The result shows that all items questioned in the five variables have a coefficient correlation (r calculated), bigger than r table (0,197). This means that all items questioned in five variables are valid. The output also shows that the five variables are reliable because they have alpha cronbach bigger than 0,6.

 

3.1 Inner Model (Structural Model Evaluation)                  

 The following is a picture of a structural model developed in the research of the effect of Organization Learning, External Environment, and PU’s image towards competency and performance of PU under Direccao Nasional do Ensino Suprior Ministerio de Educasao Timor-Leste :

 

 

 

 

 

Pictures 1

The Linkage between exogenous and endogenous

The output of a complete model test towards the effect of Organization Learning, External Environment, and PU’s image towards competency and performance of PU under Direccao Nasional do Ensino Suprior Ministerio de Educasao Timor-Leste can be seen from R-Square value representing goodness-of-fit of a model . This can also be seen from the value of Q².

Table 1 : The value of coefficient Path and T-Statistic

Variable	Coefficient	T Statistic	T table	Remarks
OL  -> PUC	0.250	40.041	1.96	significant
EE  -> PUC	0.518	22.250	1.96	significant
UI - > PUC	0.333	12.028	1.96	significant
OL -> PUP	0.277	14.653	1.96	significant
EE  -> PUP	0.232	6.479	1.96	significant
UI  -> PUP	0.222	7.327	1.96	significant
PUC -> PUP	0.175	2.258	1.96	significant

 

From table 1 it can be explained in details the hypotheses of the research i.e the effect of organization Learning, External Environment, and PU’s Image towards competency and performance of  PU under Direccao Nasional do Ensino Suprior Ministerio de Educasao Timor-Leste :

1. Hypothesis 1 : There is a significant effect of Organization Learning towards PU’s competency in Timor-Leste. Path coefficient resulted is 0,250 with value of T-statistic 40,041, bigger than the value of t-table 1.96. This shows that there is a significant and positive effect of Organization Learning towards PU’s competency, which means that the better the Organization Learning, the better will be PU’s competency  under Direccao Nasional do Ensino Suprior Ministerio de Educasao Timor-Leste. From the result, hypothesis 1 which assumes there is a significant effect of Organization Learning, towards PU’s competency in Timor Leste can be accepted.
2. Hypothesis 2 : There is a significant effect of Organization Learning towards the performance of PU in Timor-Leste. Coefficient path resulted is 0.277 with T-statistic value of 14.635, bigger than t-table value of 1.96. This shows that there is a positive and significant influence between the Organization Learning and PU’s performance. This means that the better the Organization Learning, the better will be PU’s performance in Timor Leste. From this result hypothesis 2 which assumes that organization learning give a significant effect towards PU’s performance in Timor-Leste can be accepted.   
3. Hypothesis 3 : There is a significant influence of External Environment towards PU’s competency in Timor-Leste ; the coefficient path resulted is 0.518 with t-statistic value of 22.250, bigger than value of t-table of 1.96. This shows that there is a significant and positive influence between External Environment and PU’s competency. This means that the better the External Environment the better will be PU’s competency in Timor-Leste. From this result hypothesis 3 in this research which assumes that the External Environment significantly affects PU’s competency in Timor-Leste is acceptable.
4. Hypothesis  4 : There is a significant influence of External Environment towards PU’s performance in Timor-Leste. The coefficient path resulted is 0.232 with t-statistic value of 6.479 bigger than t-table value of 1.96. This shows that there is a positive and significant influence between external environment PU’s performance. This means that the better the External Environment , the better will be PU’s performance in Timor Leste. From the above result, hypothesis 4 of this research which assumes that External Environment give a significant influence towards PU’s competency in Timor Leste is acceptable .
5. Hypothesis  5 : There is a significant influence of PU’s image  towards PU’s competency in Timor-Leste. The coefficient path resulted is 0.333 with t-statistic value of 12.028 bigger than t-table value of 1.96. This shows that there is a positive and significant influence between PU’s image towards PU’s competency in Timor-Leste. This means that the better the PU’s image, the better will be PU’s competency in Timor Leste. From the above result, hypothesis 5 of this research which assumes that PU’s image give a significant influence towards PU’s competency in Timor Leste is acceptable.
6. Hypothesis  6 : There is a significant influence of PU’s image  towards PU’s performance in Timor-Leste. The coefficient path resulted is 0.222 with t-statistic value of 7.327 bigger than t-table value of 1.96. This shows that there is a positive and significant influence between PU’s image towards PU’s performance in Timor-Leste. This means that the better the PU’s image, the better will be the PU’s performance in Timor Leste. From the above result, hypothesis 6 of this research which assumes that Private PU’s image give a significant effect towards PU’s performance in Timor Leste is acceptable.
7. Hypothesis  7 : There is a significant influence of PU’s competency  towards PU’s performance in Timor-Leste. The coefficient path resulted is 0.175 with t-statistic value of 2.258 bigger than t-table value of 1.96. This shows that there is a positive and significant influence between PU’s competency towards PU’s performance in Timor-Leste. This means that the better the PU’s competency , the better will be the PU’s performance in Timor Leste. From the above result, hypothesis 7 of this research which assumes that PU’s competency give a significant effect towards PU’s performance in Timor Leste is acceptable.
8. To find out the indirect effect of Organization Learning, External Environment and PU’s’ image towards  PU’s performance through PU’s competency is done by multiplying coefficient path of direct effect of Organization Learning, External Environment and PU’s image towards PU’s competency with direct effect of PU’s competency towards PU’s performance. The result of the indirect effect is as follows :

 

Table 2. Calculation of indirect effect

 

Exogen Effect à     PUC		Effect PUC à PUP	Indirect coefficient
OL  à PUC	0.249	0.288	0.072
EE  à PUC	0.532		0.153
PUI à PUC	0.317		0.091

 

 

Based on the above table it can be seen that the value of indirect effect of Organization Learning towards PU’s performance through PU’s competency is 0.072. The value of indirect effect of External Environment towards PU’s performance through PU’s competency is 0.153 and the value of indirect effect of PU’s image towards PU’s performance through PU’s competency is 0.091. This explains why the variable of PU’s competency is an intervening variable of Organization Learning, External Environment and PU’s image towards PU’s performance in Timor-Leste.

 

4. Conclusion and Suggestion

4.1 The effect of Organization Learning towards PU’s competency.

The analysis result proves that Organization Learning gives a positive and significant effect towards PU’s competency. Organization Learning is an effective approach because the change in Organization Learning will bring about a positive change in PU’s competency. A descriptive analysis shows that Organization Learning gives a positive and significant effect towards PU’s competency. This research proves that if a University conducts an ongoing activities on Organization Learning, the competency of the University will increase. The more the university conducts activities to help increase Organization Learning process, the lecturers’ capacity as the main driving force to university development will also be increased. The harmonious work of the lecturers together to determined the vision of the university will play an important role for the development, hence increase the university competency.

 

4.2 The effect of Organization Learning towards PU’s performance

The analysis proves that Organization Learning gives a positive and significant effect towards PU’s performance. Organization Learning is a an effective approach because  a change in Organization Learning will bring about the change in PU’s performance in a positive way. This analysis also shows that the Organization Learning positively and significantly effect PU’s performance. This research indicates that there is a correlation between the level of Organization Learning with PU’s performance. This research verifies the findings of previous research, theoretically as well as empirically . PU’s which are prepared to conduct experiments and are able to learn from experiences will gain more success than the PU’s which do not conduct such experiments. The awareness will emerge that an enterprise should increase its learning capacity in order to gain optimum performance in the environments with development of technology, social, ecology and intense competition.

 

4.3 External Environment of PU’s towards PU’s competency.

The result proves that External Environment of PU’s positively and significantly affect the PU’s competency. This means that a change in environment will bring about a change in PU’s competency in a positive way. The analysis also shows that  External Environment of PU positively and significantly affect the PU’s competency. The research proves if  level of competitiveness and government regulation function as major contribution to form external environment variable, the PU ability to adapt and respond to the intense competitiveness and development of government regulation plays an important role in increasing PU’s competency. External Environment positively and significantly affect PU’s competency.

 

4.4 External Environment towards PU’s performance.

 The level of competitiveness and government regulation shows the largest contribution to form the external environment variable. This means that the ability of PU to adapt and respond to the intense and dynamic competitiveness, and the development of government regulation contributes significantly to the increase of PU’s performance. The  result of this study proves that external environment of PU positively and significantly affect the PU’s performance. This means that a change in external environment of PU will bring a positive change to PU’s performance.

 

4.5 PU’s image towards PU’s competency.

The analysis proves that PU’s image positively and significantly affect PU’s competency. This means that a change in PU’s image will bring about a positive and significant effect to PU’s competency. The higher the image of PU, the higher PU’s competency towards individual interaction based on public perception. How important PU adopt image management? This is a very important question. Why? Because nowadays people have experienced a quick change to observe what happens in their surroundings. People have larger rooms to monitor PU’s activities regarding their services, management and performance. Therefore the ongoing demand for a good image has been an urgency. A good PU’s image will have a beneficial impact, a valuable asset, because image will affect public perception as regards communication and organizational operation, while a bad image will give a detrimental effect to the organization.

 

4.6 PU’s image towards PU’s performance.

The variable of PU’s image shows indicator of innovation and social responsibility as a dominant factor to form the variable. This shows that innovation level and social responsibility of a PU have been a priority to form a good PU’s image.  Performing capability of innovation and being involved in public contribution directly, will give good impact towards PU’s image. Development of PU quantity wise should be supported by the increase of quality, or otherwise the PU condition will be unhealthy. This unhealthy condition will bring about low competitiveness, bad performance and image. Management of knowledge and talent as a modern management practices are solutions for PU in Timor Leste to increase performance and image.

 

 

4.7 PU’s competency towards PU’s performance.

PU’s performance is dominated by growing numbers of students and job readiness of the graduates. This shows that the main performance of a university is determined by the input and output. The more qualified input, learning process, ability to adapt with external environment, the better the image and output. Those two factors go in line with image contribution, which is bigger if compared with contribution of organization learning, and  external environment. In supporting better competency which will influence the performance of a university.

 

5. Suggestion

Considering the current situation in Timor-Leste such as poverty, health problems etc,  strategic steps should be taken to solve the problems amongst all through education. Education is a very important factor to develop human resources. Education is a factor directly related to the development and progress of the society. Education will lead society to a better way of thinking. A high the education level of the society will accelerate the national development to achieve the desired result. Education is the most important factor in Timor-Leste to be able to compete in this global era. The role of educational institution as a centre for society to learn and absorb all knowledge, is one of the major factors for the success of development of Timor-Leste in the future.

 

5.1  For the government

Timor-Leste government has to place education as a long-term investment, taking into account that the key to human development is education. The role of higher education is a necessity due to globalization and growing  demand of employment. The education system should be able to form a system to fulfill  the society’s needs of long life learning. It should be admitted that the success of sustainable development will depend on the prime quality of human resources. Consequently human development is a crucial and strategic tool for the success of sustainable development and the way to establish qualified human resources is through education. Education can enlighten society, develop self identity, noble social norms and various national culture. The process of education should be seriously managed so that young generation will become more religious, having noble characters, and have a global perspective to enable them to play a positive role for a better welfare and nation building. In this case Universidade da Paz (UNPAZ) University of Peace) Dili Institute of Technology- DIT  Instituto Ciencias Religiosas “Sao Tomas de Aquino” – ICR ( Institute of Religious Studies/Science) Instituto Catolico para Formacao de Professores – ICFP ( Catholic Institute of Teacher Training) Institute of Business IOB Instituto Suprior Cristal – ISC ( Suprior Institute of Cristal) East Timor Coffee Academy ETICA Instituto Profesional de Canossa - IPDC (Professional Institute of Canossa) Universidade de Dili (UNDIL) Universidade Oriental Timor Lorosa’e (UNITAL),  will have to be directed to be more competitive. So they can produce and disseminate sciences, technology, arts, and culture for the nation’s autonomy. The development is directed to relevant fields directly related to society interest, particularly development that can give added value to sustainable natural resources, to avoid being dependent to other nations. The government should guarantee that the system of education should be established in such away  which is accessible and best in quality. The growing demand of employment and globalization necessitates a management system of education which will create a life time learning society.

 

5.2 To PU management

Economic development is a strategic issue for the Republic Demokratik Timor-Leste. This issue has become academic discourse causing serious debates among academicians and politicians. A strategic step should be taken to handle this matter that is to solve this through PU such as Universidade da Paz (UNPAZ) University of Peace) Dili Institute of Technology- DIT  Instituto Ciencias Religiosas “Sao Tomas de Aquino” – ICR ( Institute of Religious Studies/Science) Instituto Catolico para Formacao de Professores – ICFP ( Catholic Institute of Teacher Training) Institute of Business IOB Instituto Suprior Cristal – ISC ( Suprior Institute of Cristal) East Timor Coffee Academy ETICA Instituto Profesional de Canossa - IPDC (Professional Institute of Canossa) Universidade de Dili (UNDIL) Universidade Oriental Timor Lorosa’e (UNITAL). This are Private Universities which give significant contribution to the economic development in Timor-leste.

 

5.3 To further Researchers                 

Globalization obliges every PU to maintain its existence. The competitiveness becomes more and more intense. To be able to compete, Private Universities must have a best strategy to face the intense competition. Basically this strategy can direct Private Universities to face the challenges by taking into account their strength and weaknesses. During the recent years there is a phenomenon in PU i.e the fluctuation of the numbers of new students. This prolonged symptom will affect the financial situation of the PU and also the learning cost.

 

This research is done with some limitations i.e samples used are PU which possibly might have bias in their empirical implication. The respondents are heads of PU and findings of this research might not be adopted by non academic industry. This research only includes PU under Direccao Nasional do Ensino Suprior Ministerio de Educasao Timor-Leste. It would be much better if the research is done to a private university nationwide, and also covered the state universities to be able to conclude more comprehensively the effect of organization learning, external environment and PU’s image towards the performance of PU. The design of this research in the form of cross – section also give a certain restriction due to the inability to observe profoundly every aspect related to the effects that occur in a certain period of time.       

 

 

 

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