The influences of strategic orientation and innovation capability on small and micro firm performance

Abstract

The objective of this paper is to examine the determinants of strategic orientation (SO), which consist of market learning orientation (MLO) and entrepreneurial orientation (EO) and innovation capability (IC) towards small firm’s performance. According to the resource based view theory, MO and LO are significant antecedents of firm performance but many of the studies measured both as separate constructs. These two orientations are complementary in term of behavioral perspective where firm will learn and focus on market and later can help in the contribution of marketing towards business strategy. While the combination of MLO and EO is significant to proactively identify any changes related with the environment. Considerably, IC is regard as a dynamic capability approach to enable firm to sustain in this volatile market. The study is to explore the MLO, EO and IC of small and micro farmers of Malaysia using 235 respondents from Northern, Southern, Western and Eastern regions. The statistical analysis were done through scale’s reliability, factor loading determination and hypotheses testing. The testing showed that MLO and EO have positive impact to IC as well as farm performance. The contribution of this paper are on the conceptual model as well as the hypotheses development, particularly how MLO and EO give small and micro farmers’ ability to innovate and implement it towards farm’s performance.