The purpose of this study is to measure the relationship between learning orientation of firms and their business performance. It also explores the moderating effect of firm size on relationship between learning orientation of firms and their business performance. The study was conducted on manufacturing and service sector firms from the State of Punjab, India. Self-developed non-disguised questionnaire has been used for the study. A purposive sample of 278 key informants (senior level managers who have insight about learning orientation and performance status of the firm) was used. Exploratory and confirmatory factor analyses were used to validate the learning orientation and business performance scales. The hypotheses were tested using multi-group moderation and structural equation modeling. The study shows that learning orientation has significant positive effect on business performance. The results have indicated that firm size (based on investment) significantly moderates the relationship between learning orientation and business performance. The findings of the study are relevant for practitioners as well as researchers. Practicing managers can gain insights from the suggested learning orientation and performance relationship, especially when they are engaged in small cap firms struggling to compete with relatively established businesses. Future researchers can use the scales developed in this study. The study contributes to the knowledge management literature by providing empirical evidence for relationship between learning orientation and business performance.

Organizations are perpetually searching for strategies to gain and sustain competitive advantage. Turbulent business environment renders the conventional strategies obsolete. In such a scenario, firms need to update their skills and capabilities to survive and grow. Effective strategy for sustaining and improving firm’s competitive edge and performance is having high organizational learning orientation (Senge, 1990; Sinkula et al., 1997; and Salim and Sulaiman, 2011). Learning is acquisition of knowledge or skills through study and experience. It is a critical operational resource because it enables the firm to maintain competitive advantage by continuously improving its capacity to process market knowledge at a faster rate than its rivals (Dickson, 1996).

It is suggested that knowledge management and organizational learning play an important role in creating organizational capability which leads to superior performance (Theriou and Chatzoglou, 2007; and Simonin and Ozsomer, 2009).

Knowledge Management Journal, Formulation of Hypotheses, Moderation Analysis, Relationship, Learning Orientation, Business Performance, Smaller Firms, Learning Orientation.