1
The role of common and unique effects
of strategic orientations for firm
innovativeness: A meta-analytic
comparison between East and West.
Simon Tom Schoenfeld
S3187799
Supervisor: A. Kuiken
2 Abstract
This study analyses the relationship effect of the strategic orientations of market orientation, entrepreneurial orientation, learning orientation, and technology
orientation on firm innovativeness. This study has three intentions. First, determine the effect strengths of the different strategic orientations on firm innovativeness. Second, to analyse whether the strategic orientations are constant across the regions of East and West. And third, examine the presents of potential unique and common effects among the strategic orientations and firm innovativeness. This study utilizes meta-analytic procedures and commonality analysis. Various key results have been found. First, market, learning, and entrepreneurial orientation have been found to have a moderate positive association with firm innovativeness, while technology orientation showed a strong positive association. Second, no statistically differences have been found between the regions of East and West for the orientations of market and learning. Entrepreneurial and technology orientation did not have enough
3
Content
1. Introduction ... 4
2. Literature review and hypothesis development ... 7
2.1 Strategic orientations, organizational culture, and firm innovativeness... 7
2.2 Market orientation ... 9 2.3 Entrepreneurial orientation ... 12 2.4 Learning Orientation ... 13 2.5 Technology orientation ... 14 2.6 Regional differences ... 16 2.7 Common effects ... 19 3. Method ... 20
3.1 Literature search, selection criteria, and sample ... 20
3.2 Coding ... 24
3.3 Meta-analytical procedures ... 25
4. Results ... 25
4.1 Results of the bivariate meta-analysis and moderator analysis ... 25
4.2 Results of the commonality analysis ... 28
5. Discussion ... 30
5.1 Implications for theory and future research ... 32
5.2 Limitations and future research ... 33
6. Conclusion ... 34
4
1. Introduction
In today's rapidly evolving market environment, competitive advantages are the one key essential that distinguishes successful firms from their competitors. Firms and managers have to constantly monitor their respective markets for business
opportunities, respond to changing customer demands, and adjust their strategies, practices, and routines in order to provide superior value through innovation. The strategic orientation of organizations is a way how firms develop their
competitive advantages and guide managers on how to strategically react to changes in the market. The four major strategic orientations that received the most research attention are entrepreneurial orientation, market orientation, learning orientation, and technology orientation (Hakala 2011). Entrepreneurial orientation is characterized by a firm's willingness to take risks, and actively seek innovation and change within their organisation and their market offering ( Covin and Slevin 1989). In contrast, market orientation focuses on the customers present in the market and their respective needs and wants in order to continually and long-term provide superior value in comparison to their competitors (Narver and Slater 1990). Learning orientation describes the organizational effort to gather, create, and utilize knowledge to maintain a firm‘s competitive advantage (Hult et al 2004). Finally, technology
orientation represents a firm’s desire to acquire and utilize technical knowledge, new technologies, and innovations to develop new products and services (Gatignon and Xuereb, 1997).
Many other strategic orientations have emerged over time, but the majority of the literature has been published on the strategic orientations of market, entrepreneurial, learning, and technology. The focus of this study will be on these four strategic
5 derived from innovation and confirmed a strong linkage between innovation and performance. Their results show that the effect of innovation on performance is comparable and even exceeds the performance influence of other factors, such as strategic resources, ambidextrous capabilities, and governance mechanisms.
Therefore, investigating the influence of strategic orientations on firm innovativeness could further the understanding of the effect of strategic orientations on firm
performance. Firm innovativeness is the capacity and ability to introduce a new and innovative process, product, service or idea in the organization (Hurley and Hult 1998).
Many studies examine strategic orientations and their effect on firm innovativeness individually or as a sequence (e.g. Erdil et al 2003, Dibrill et al 2011, Yang et al 2019). However, Hakala (2011) argued that the complementary perspective of the strategic orientations is the most productive to enhance the understanding of strategic orientations as principles and activities of adaptation that support firm performance and innovation. The complementary perspective discusses the complementarities of the different strategic orientations and its superior combined interaction effect on specific outcome variables (Schweiger et al 2019, Hakala 2011). The strategic orientations can be considered as complementary as their combination delivers a superior effect on performance (Tanriverdi and Venkatraman 2005). A previous meta-analysis by Schweiger et al (2019) examined the complementarities of market, entrepreneurial, and learning orientation on firm performance, and confirmed the interrelatedness and complementarities between the strategic orientations. Their study indicated that firms can receive superior value from their ability to aligning their strategic orientations within the firm.
6 the effect of market orientation and performance and provided evidence that the effect of market orientation is significantly influenced by various cultural and
economic characteristics present in different host country environments. Based on the availability of data, two regions were selected in order to analyze whether
potential cultural characteristics could influence the effect of the strategic orientations on firm innovativeness. Hofstede (2010) suggests that national cultural differences can affect the value, beliefs, and desired behaviours within an organizational culture. Thus, the data were separated into either the subgroup of East or West.
Moreover, the conduction of a meta-analysis further provides the opportunity to examine a potential complementary effect of strategic orientations on firm
innovativeness. The results of the meta-analysis can be used within a commonality analysis to disintegrate the unique and common effects of the strategic orientations on firm innovativeness, allowing us to draw a conclusion on their complementary effects. A unique effect indicates the amount of variance in innovativeness that can be explained by an individual strategic orientation. On the other hand, a common effect indicates the amount of variance in innovativeness that can be jointly explained by sets of strategic orientations.
Therefore, this study intends to address the previously discussed literature gaps through addressing the following three central research questions:
1) What is the effect strength of the individual strategic orientations on firm innovativeness?
2) Is the effect of strategic orientation constant across different regions? 3) What are the common and unique effects of strategic orientation on firm
innovativeness?
This study intends to contribute relevant information to the current literature and enhance theoretical understand of strategic orientations. First, this study aims to contribute a more accurate effect size estimation for the relationship of strategic orientations and innovation. Moreover, the determination of potential regional
differences could provide direction for future research. Additionally, this study intends to further add evidence to the discussion of the complementary effects of strategic orientations.
7 indications on how to positively influence their firms’ innovativeness through the coordination between different areas of strategic orientations.
This paper is structured as followed: first, the literature review on current research on strategic orientations is introduced, on which basis multiple hypotheses are
developed. Afterwards, the methodology and results section is presented. This is followed by the discussion of the results, limitations, implications and future research recommendation. Finally, a short conclusion is provided.
2. Literature review and hypothesis development
2.1 Strategic orientations, organizational culture, and firm innovativeness.
In the current academic literature strategic orientations are considered the underlying foundation and strategy that directs and guides a firm’s activities and foster desired behaviours in order positively influence a firm’s performance (Narver and Slater 1990, Gatignon and Xuereb 1997, Hakala 2011). Managing this underlying foundation allows to actively influence a firm and its employees’ behaviour. The different strategic orientations are a part of a firm’s culture (Day 1990, Narver and Slater 1990, Slater and Narver 1995). Moreover, strategic orientations are considered as an expression of an organization's adaptive culture and are embedded within a firm, in order to respond to environmental influences (Nobel et al 2002). Organisation culture has been defined as “the pattern of shared values and beliefs that help
individuals understand organizational functioning and thus provide them norms for behaviour in the organization” (Despandé and Webster 1989, p.4). Therefore, culture is embedded within all members of the firm and establishes consistent behaviour among them.
8 appropriate to achieve the desired behaviour. Moreover, the strategy describes what a firm intends to do in order to achieve its objectives and tasks, while a firm structural system reflects how values and beliefs develop norms and rules that define
behaviour. Again, the strategic orientations provide a strategy that enables this development of desired behaviours, for example, a customer and competitor focus within the market orientation. This influence of the strategic orientation on an organization’s culture is visible through its operations, in term of observable
behaviour of a firm and its employee’s. Finally, the external environment represents the influence that a strategic orientation intends to react to.
Therefore, within this study strategic orientations are considered part of an organization’s culture, as well as an observable expression of a firm’s culture. Firm innovativeness can be defined as the capacity and ability to introduce a new and innovative process, product, service or idea to the organization and the market (Hurley and Hult 1998). Moreover, innovativeness reflects a firm’s propensity to capture and support novel ideas, creative solutions, and experimentation that may lead to the development of new products, services, or processes (Lumpkin and Dess, 1996). Furthermore, innovativeness is often considered part of the organisational culture (Auh and Menguc 2005), as well as representing a firm’s cultural ability and willingness to perceive and incorporate innovation (Calantone et al 2002). Hult et al. (2004) identified three dimensions of firm innovativeness, namely product, process, and administrative innovation. Therefore, within this study firm innovativeness is considered as part of an organization’s culture.
According to Loewe and Dominiquini (2006), culture and values are one of the four main root causes of an effective systematic innovation capability, among leadership and organization, processes and tools, and people and skills. Organisational culture is able to effectively nurture innovation through cooperation, exchange of knowledge, experience, and ideas. Moreover, Dobni (2008) identified four dimensions of
9 to innovate. It intends to provide its employees with the knowledge, skills, and
authority to act innovatively. Innovation influence describes a firm’s market and value orientation. Employees should focus on gathering and collecting knowledge around customers, competitors and the market environments in order to understand what creates value for the customer. Finally, innovation implementation describes a firm’s ability to execute innovative ideas and respond to changes within its environment. Dobni’s (2008) framework indicates that innovation implementation has the largest effect on innovation culture, followed by innovation intention, innovation
infrastructure, and finally innovation influences.
Figure 1: Dimensions of innovation culture by Dobni (2008).
In the following section, each strategic orientation is discussed, individual. First, the strategic orientation is present and a subsequent hypothesis is developed.
2.2 Market orientation
10 organisational behaviour and processes that enable the firm to generate and
maintain a competitive advantage (Kohli and Jaworski 1990; Narver and Slater 1990). Over time two major perspectives have emerged in regards to market
orientation. First, market orientation is considered actions which collect, analyse and respond to the market and the present information (Kohli and Jaworski 1990). Kohli and Jaworski (1990) describe these as organisation-wide generation of market intelligence of current and potential customer needs, dissemination of intelligence across business parts, and organisation-wide responsiveness. Moreover, it can be described as a distinctive set of behaviours that drive a firm's market sensing and customer linking capabilities in order to create superior value (Day 1994).
Additionally, market orientation has been described as the activities of satisfying customer demands through means of higher customer value compared to
competitors (Martin and Grbac 2001). The second perspective takes a step into a different direction and describes market orientation as organizational culture. It further divides market orientations into components of customer and competitor orientation, and interfunctional coordination of information and knowledge (Narver and Slater 1990). Here, market orientation is assumed to be part of a firm’s culture that guide and creates its employees’ behaviours and actions allowing the entire firm to explore and exploit market information (Narver and Slater 1990; Mavondo et al 2005). This study follows the second understanding of market orientation as part of an organization’s culture. The major behavioural elements that are considered part of market orientation are customer and competitor orientation, and interfunctional
coordination (Narver and Slater 1990).
Market orientation can influence a firm’s innovativeness in multiple different ways. Day (1994) identified that market oriented firms need to develop processes that allow the collecting and integrating of market intelligence in order to influence decision – making and gain a deeper understanding of what provides value to its customers. Moreover, Hult et al (2004) suggest that it is essential for a firm to understand what and how value is created for its target customers. A market orientation allows firms to influence the values within the firm’s culture to encourage its employees to focus on understanding its customers’ needs, what provides value to them, nurture
proactive satisfaction of customer demands. A close and proactive connection to its customer base of market oriented firms has shown to positively affect firm
11 focus allows a firm to learn what competitor considers important to its customer base and potentially allow a firm to imitate certain actions and innovations. Furthermore, a firm’s interfunctional coordination establishes processes to distribute knowledge and information related to customers and competitors within the firm in order to enhance its innovation influences. Interfunctional coordination has been shown to positively influence innovativeness (Grimstein 2006, Tajeddini et al 2006). Thus, market orientation should positively influence a firm’s innovativeness through providing essential market information and knowledge allowing the creating of relevant customer value. Researchers found that market orientation positively promotes development activities concerning new product development and new product success (Baker and Sinkula 2009, Henard and Szymanski 2001). Moreover, a previous meta-analysis by Grinstein (2006) examined the relationship between
market orientation and general innovation consequences and provided evidence for a positive effect between these two variables.
Previous research on the relationship between market orientation and firm innovativeness found a positive effect. However, the effect sizes found in these studies varies from a weak association (e.g. Keskin 2006; Micheels and Gow 2015; Dibrell et al 2012) to a moderate association (e.g. Lado et al 2001, Mamum et al 2018; Acar and Ozsahin 2017). Within this study, effect sizes below 0.3 are
considered weak associations, effect sizes between 0.31 and 0.69 are considered moderate associations, and effect sizes above 0.7 are considered strong
associations.
Despite market orientation being a critical part of a firm’s innovative culture, its focus is primarily on collecting market intelligence around customer needs, competitor actions, and distributing this knowledge within the firm, thus enforcing a firm’s
innovation influence and innovation intention. Therefore, market orientation assumes a rather supportive role with the firm’s innovation process.
Thus, the following hypothesis is proposed:
12 2.3 Entrepreneurial orientation
According to Lumpkin and Dess (1996), it is essential to distinguish entrepreneurship from entrepreneurial orientations. Entrepreneurship deals with a new entry in regards to entering and serving new markets, developing and marketing new products and services, and launching new businesses. The entrepreneurial orientation, on the other hand, refers to actions, decisions, and processes that precede new market entry (Lumpkin and Dess 1996). A more refined definition is presented by Covin and Slevin (1989), in that firms are willing to take bold risks to actively seek new business opportunities. Moreover, firms that focus on product innovations engage in highly risky ventures in order to develop competitive advantages through proactive and more radical innovation (Miller 1983). This is achieved by the entrepreneurial orientation guiding a firm‘s strategic-decision making process as a basis for their innovative action and a more radically innovative customer-problem solution
development (Rauch et al 2009). Entrepreneurial orientation can be characterized by the components of risk-taking, and proactiveness (Covin and Slevin 1989). Thus, Nasution and Mavondo (2008) suggest that an entrepreneurial oriented culture embodies values that enable a firm’s members to be more proactive in fulfilling customer needs and more keen to accept risk when creating customer value.
Entrepreneurial orientation represents three dimensions of Dobni’s (2008) innovative culture. First, innovation intention is generated through the values of proactive
behaviour towards generating customer value through innovation, and constantly searching for problems and new opportunities. Moreover, the belief that raking risk in order to exploit market opportunities is a desired behaviour emphasizes a firm’s willingness to innovate. Entrepreneurial orientation influences innovation
infrastructure by allowing individuals to pursue the generation novel and express their creativity, reinforcing the cultural value of proactive behaviours. Finally, a firm’s
entrepreneurial orientation emphasizes innovation implementation through
13 Previous research on the relationship between market orientation and firm
innovativeness found a positive effect. Nonetheless, the effect sizes found in these studies vary from a weak association (Tajeddini 2010; Liu et al 2012) to a moderate association (e.g. Lee et al 2014; Lin et al 2008; Rhee et al 2010) to a strong
association (Mamun et al 2018).
While entrepreneurial orientation focuses on active innovation behaviour, it lacks cultural empathize on learning and distributing market knowledge. Previous research has shown that entrepreneurial orientation influences innovativeness through
learning and market orientation (Rhee et al 2010). Thus, the following hypothesis is proposed:
H2: Entrepreneurial orientation is moderate positively related to firm innovativeness.
2.4 Learning Orientation
Learning orientation can be defined as the ability to develop or acquire new knowledge with the potential to influence behaviours through values and beliefs (Huber 1991). Moreover, these values influence a firm’s satisfaction with its theories and assumptions in use and thus it is proactive learning for more relevant and satisfying knowledge (Sinkula et al 1997). Learning orientation and innovativeness have been described as sovereign elements that are interconnected with each other (Hult et al 2004). Thus, learning orientation allows firms to develop and explore relevant customer, market, and competitor information in order to deploy this knowledge to create superior customer value, and develop and maintain a competitive advantage through firm innovativeness. Rhee et al (2010) found that learning orientation influences firm innovativeness not only directly, but by further nurturing innovative behaviours within the market and entrepreneurial orientation. Thus learning orientation has various impacts on innovativeness directly as well as indirectly; through aspects such as knowledge sharing that will complement a firm’s innovation activities. Firm characteristics belong to learning orientation are
14 value of knowledge and is willing to learn. Moreover, open-mindedness emphasizes the willingness to evaluate current processes and accept new novel ideas. Therefore, learning orientation intends to introduce values that nurture and develop an
innovation culture that consequently affects firm innovativeness (Calantone et al 2002; Hult et al 2004). Moreover, innovation infrastructure is created through organizational learning processes that coordinate learning focus and allow
communication to share knowledge, with the intention to increase firm innovative behaviour.
Previous research on the relationship between learning orientation and firm
innovativeness found a positive effect. Nevertheless, the effect sizes found in these studies varies from a weak association (Li et al 2010) to a majority of moderate associations (e.g. Lee et al 2014; Keskin 2006; Calantone t al 2002) to a strong association (Rhee et al 2010).
Overall, learning orientation intends to provide the innovation culture of a firm with a higher commitment towards innovation, and gathering the necessary knowledge in order to have the ability to create customer value within identified opportunities. This satisfies the dimensions of innovation intention and innovation infrastructure, but learning orientation lacks active innovation behaviours in terms of innovation implementation and innovation influences. Thus, the following hypothesis is proposed:
H3: Learning orientation is moderate positively related to firm innovativeness.
2.5 Technology orientation
15 Technology orientation represents three dimensions of Dobni’s (2008) innovative culture. Investments into R&D and constant search for new technology highlights a firm’s innovation intention and aims at establishing cultural values focused on innovativeness. Lee et al (2014) showed that this investment into R&D and new technologies reinforce innovativeness as a cultural and strategic priority within the firm. Moreover, technology orientation embodies innovation influences by focusing on creating values for customer and further assisting innovation processes and new product development through the application of new technology. Finally, technology orientation creates cultural behaviours that represent innovation implementation. In order for a firm to respond to changes in its environment and capitalize on
opportunities, technology orientation generates behaviours to actively develop, acquire, and utilize technology, thus positively affecting a firm’s innovativeness. Lee et al (2014) found that technology orientation is the strongest overall driver of
innovation among the four strategic orientations within SMEs in emerging markets. Previous research on the relationship between technology orientation and firm innovativeness found a positive effect. However, the effect sizes found in these studies varies from a moderate effect
(Lee et al 2014) to a strong effect (Acar and Oszahin 2017).
Overall, technology orientation positively affects three dimensions of an innovative culture and is primarily focused on developing value adding technology or directly creating customer value. Thus, the following hypothesis is proposed:
16 Figure 2: Strategic orientation and firm innovativeness.
2.6 Regional differences
Studies within the analysis are spread into two different subgroups, namely East and West. Included in the West region are European countries, the United States,
Canada, Australia, and New Zealand. The East region includes all countries located on the Asian continent. These regions are purposefully kept inclusive and broad due to restrictions in the available data. However, key distinctions can be found between East and West.
Utilizing Hofstede’s (2011) cultural dimensions of power distance and individualism vs. collectivism, assumptions can be made about cultural differences that affect the strategic orientation’s dimensions, and thus the effect of the strategic orientation on innovativeness. These two cultural dimensions were chosen, as they are the most constant across the regions. Dimensions such as uncertainty avoidance have been excluded due to high variation within the regions. Generally, we can characterize the Eastern region as collectivistic with higher power distance, and the Western region can be characterized as individualistic with lower power distance.
Considering market orientation, the difference in power distance between East and West could affect the strength of the association to firm innovativeness. East
17 formal procedures (Jones and Davis 2000), that could reduce the efficiency of
interfunctional coordination, and therefore could reduce the effect of market
orientation on firm innovativeness. On the other hand, the West is considered to have higher information-processing capabilities, informal information vertical
communication, and less structure, which is associated with innovation success (Shane 1993, Jones and Davis 2000). Collectivism within the East could also have positive benefits on firm innovativeness, as good relationships with the public sector, as well as strong family and information networks (Haley and Tan 1999), could positively affect the customer and competitor aspects of market orientation.
Moreover, the presents of social business networks and political connections could provide additional benefits and resources could positively benefit market orientation (Hoskisson et al 2013). Therefore, it is argued that while the West region has better information- processing capabilities, the East has a larger source of market
intelligence through networks and public relations. Thus, the following hypothesis is proposed:
H5a: The effect of market orientation on firm innovativeness is larger in the East compared to the West region.
Turning the attention towards the entrepreneurial orientation, again power distance could influence the effect size of the firm innovativeness association. In the East, the decision-making is done through hierarchical authority, which could reduce the ability of an individual to take risk on opportunities in order to create innovation. Moreover, formal vertical communication flows and formal procedures (Jones and Davis 2000), could also reduce the proactiveness of an individual. Compared to the West, where decentralized decision-making and trust based control is common (Efrat 2013), could increase an individual’s ability to take risks in order to innovate. Additionally, trust, openness, and autonomy (Hofstede 2001) could positively influence proactiveness in individuals. Therefore, it is argued that while the Eastern culture rather discourages risk-taking and proactiveness, Western culture promotes those factors of
entrepreneurial orientation. Thus, the following hypothesis is proposed:
18 Regarding learning orientation, individualism vs. Collectivism might provide cultural influences that differentiate the effect on firm innovativeness. Learning behaviour in the East is considered to be centred around copying, memorizing, and attention to detail (Chang et al 2010), which could be reduced innovativeness. Moreover, the previously mentioned formal vertical communication flows and formal procedures, and resistance to change (Jones and Davis 2000), could negatively affect open-mindedness. On the other hand, in the West creativity, innovativeness, and critical thinking are qualities of individual learning (Chang et al 2010). Thus, the following hypothesis is proposed:
H5c: The effect of learning orientation on firm innovativeness is larger in the West than in the East region.
Finally, technology orientation within East and West could differ due to cultural influences. As previously discussed, formal vertical communication and flows, formal procedures and resistance to change (Jones and Davis 2000), could reduce open towards new technologies in the East. Moreover, centralized decision-making in the East could reduce the adoption rate and development of new innovative technologies due to slower decision-making. Thus, the following hypothesis is proposed:
H5d: The effect of technology orientation on firm innovativeness is larger in the West than in the East region.
In the field of strategic orientation research, the majority of cross-national and
regional research has been conducted on firm performance. A meta-analysis by Ellis (2006) on market orientation on firm performance found that market orientation has universal importance on firm performance. However, it was found that its effect strength is significantly influenced by the present cultural and economic aspects of the host country. Moreover, Cano et al (2004) found in a cross-nation comparison that the relationship between market orientation and business performance is positive and significant, and not impacted by several aspects of socioeconomic development and national cultures. Furthermore, Kirca et al (2005) found that cultural context influenced the effect of market orientation on firm performance, namely cultures low in power distance and uncertainty avoidance appeared to positively impact the correlation between market orientation and firm performance.
19 2.7 Common effects
Hakala (2011) discussed the complementary effect in his summary of the strategic orientation literature. Based on a comprehensive literature review, Hakala argues that future research should be focused on determining the potential complementary effect and potential configurations between strategic orientations. It was found that the majority of literature reports a correlation between the strategic orientations and various interactions between strategic orientations has been found (e.g. Grinstein 2008; Baker and Sinkula 2009). Moreover, if firms exploit complementary sets of related knowledge resources across business units, a positive effect on firm
performance can be created (Tanriverdi and Venktraman 2005). Furthermore, Baker and Sinkula (2009) found a complementary effect of market orientation and
entrepreneurial orientation on profitability in small businesses. It is argued that these orientations are highly interrelated yet distinct concepts jointly creating an effect on profitability. Additionally, Grinstein (2008) found that market orientation is strongly correlated with a learning orientation, entrepreneurial orientation, and employee orientation and positively moderated the relationship with innovation orientation. Rhee et al (2010) showed that entrepreneurial orientation and market orientation affect firm innovativeness through learning orientation, and suggested that learning orientation might be crucial to incorporate key innovative factors.
As previously discussed, the four strategic orientations each represent a combination of the four dimensions of innovation culture proposed by Dobni (2008). Thus, multiple strategic orientations represent and influence the same dimensions. While there are different values and beliefs present within the dimensions of innovation culture, the previously found results that the strategic orientations are correlated with each other (e.g. Lee et al 2014; Lin et al 2008; Nasution et al 2011), can allow us to assume that strategic orientation might share some fundamental common cultural beliefs and values. Therefore, two potential possibilities might be present on how strategic
20 more complete innovation culture, and therefore might create a potential superior effect on firm innovativeness. Thus, the following hypothesis is proposed:
H6: There are relevant common effects of market orientation, entrepreneurial orientation, learning orientation and technology orientation that explain variance in firm innovativeness.
3. Method
As previously mentioned a meta-analysis will be conducted within this study. First, the literature search and selection will be discussed. Afterwards, the coding scheme is presented, and finally, the meta-analytical procedure is presented.
3.1 Literature search, selection criteria, and sample
The present thesis focuses on studies that examine the relationship of either one or multiple strategy orientations with firm innovativeness. Relevant studies were
identified and collected through multiple different steps. First, the references of relevant previous related articles (e.g. Hakala, 2011; Lee et al, 2014) and meta-analysis have been examined (Ejdys, 2014; Schweiger et al, 2019). Second, various electronic databases such as EBSCOhost, Web of Science, Google, and Google Scholar have been searched. Diverse keywords and search terms in different
variations and combinations have been utilized in order to detect the relevant articles. Keywords such as strategic orientations, entrepreneurial orientation, market
orientation, learning orientation, technology orientation, firm innovativeness,
innovation, organizational innovation were included. The literature search was limited to articles in the English language. The literature search was the focus around papers developed after 2004 in order to ensure that the measurements for firm
innovativeness by Hult et al (2004) are used. Selected papers before that time have been included if their measurement of firm innovativeness can be considered similar to Hult et al’s measurements. (2004)
Multiple criteria guided the selection of articles and studies included in the dataset. First, the studies have to investigate the relationship at least one of the four
21 to ensure conceptual comparability within these studies, all papers must derive their concept measurements for the strategic orientations and firm innovativeness from the same set of basic dimensions (Lipsey and Wilson, 2001). Studies that used
adjustments and further developments of these basic dimensions used in the original measurements have been included. Studies that investigated market orientation must utilize measurements that have been originally derived from Narver and Slater
(1990), and encompass the dimensions of competitor orientation, customer orientation, and interfucnctional coordination. Entrepreneurial orientation focused studies should have their measurements originated from Covin and Slevin (1989), and should be comprised of the dimensions of risk-taking and proactiveness. Learning orientation should be based on Calantone et al. (2002) or Sinkula and Baker (1997), and contain the dimensions of commitment to learning, shared vision and open-mindedness. Technology orientation should be originally derived from Gatignon and Xuereb (1997), and measure a firm’s ability to develop and utilize new technologies, processes, and products. Firm innovativeness should be based on Hult et al. (2004), and consist of the dimensions of product, process, and administrative innovation. To be included, studies had to utilize the majority of the dimensions to measure their concepts. Studies that used measures that were based on different dimensions were excluded. If the dimensions were named differently but were measured with similar items, these studies were included. Third, in order to allow coding the studies into the dataset, studies have to include their sample size, the country where the sample data has been collected, correlation coefficients between the relevant variables, and the Cronbach’s alpha. If the correlation coefficient was not provided, the standardized regression coefficient was collected and adjusted utilizing the Peterson and Brown (2005) procedure. Studies missing this relevant information have been excluded. Finally, in order to allow a regional comparison between East and West, data collected within the literature have to fall within either of these two regions. Data origins included in West are Europe, the United States, Canada, Australia, Turkey and New Zealand. Studies included for East have to provide data collected within the Asian Continent. These regions have been purposefully kept inclusive due to the lack of primary studies to allow national comparison or a smaller regional comparison.
22 twice as it provides data from Europe and the United States. In total, the included studies represented 5270 study participants. The timeframe covered by the dataset ranges from 2001 to 2019. The final dataset included 15 studies examining market orientation, two studies investigating technology orientation, eleven studies analysing learning orientation, and finally eight studies discussing entrepreneurial orientation. The literature included data collected from 12 different countries (namely: South Korea (3), Turkey (3), Australia (1), Taiwan (2), Indonesia (1), USA (4), China (4), Japan (1), Europe (1), Spain (1), Malaysia (1), and Switzerland (1).
Figure 3: Flow diagram of the selection process
Note: The numbers of articles in the section of identification and screening are rough estimations. The number of articles for eligibility and included are precise numbers.
23 orientation within this study can be considered to be statistical replications of one another.
This final list of papers is presented below in table 1.
Reference k N Country Region Strategic
orientation included Lee, Choi, Kwak
(2014)
1 374 South Korea East MO, TO, LO, EO
Acar, Ozsahin (2017)
1 161 Turkey West MO, TO
Mavondo, Chimhanzi, Stewart (2005)
1 227 Australia West MO, LO
Keskin (2006) 1 157 Turkey West MO, LO
Lin, Peng, Kao (2008)
1 333 Taiwan East MO, LO,EO
Nasution, Mavondo, Matanda, Ndubisi (2011)
1 231 Indonesia East MO, LO, EO
Micheels, Gow (2015)
1 347 USA West MO, LO
Calantone, Cavusgil, Zhao (2002)
1 187 USA West LO
Rhee, Park, Lee (2010)
1 333 South Korea East LO,EO
Li, Guo, Yi, Liu (2010)
1 351 China East LO
Park, Hoon Oh, Kasim (2017)
24 Tajeddini, Altinay, Ratten (2017) 1 178 Japan East LO Lado, Maydeu-Olivares (2001) 2 137 74 Europe USA West West MO Vazquez, Santos, Alvarez (2001) 1 174 Spain West MO Erdil, Erdil, Keskin (2003) 1 55 Turkey West MO Zhang, Duan (2010) 1 227 China East MO Dibrell, Craig, Hansen (2011) 1 338 USA West MO Mamun, Fazal, Mohiuddin, Su (2018)
1 360 Malaysia East MO, EO
Yang, Wei, Shi, Zhao (2019)
1 204 China East MO
Wu, Chang, Chen (2008)
1 159 Taiwan East EO
Tajeddini (2010) 1 156 Switzerland West EO
Liu, Ding, Guo, Luo (2012)
1 308 China East EO
Notes: k = number of independent samples per study; N = total sample size per
study; MO = market orientation; EO = entrepreneurial orientation; LO = learning orientation; TO = technology orientation.
3.2 Coding
25 3.3 Meta-analytical procedures
In order to assess the direct association between the four strategic orientations and firm innovativeness, a bivariate meta-analysis has been applied using the Meta-Essentials Excel tool provided by the Erasmus Research Institute of Management. The tool developed by Suurmond et al (2017) is used to meta-analytically examine the correlation coefficients obtained from the previously discussed primary studies. The collected correlations were corrected for sample error and measurement unreliability utilizing the Cronbach’s alpha coefficients. If studies did not provide a value, the average of the reliabilities across all studies was used (Lipsey and Wilson, 2001). Moreover, the number of studies (k) included in the strategic orientation, the total number of observations in identified studies (N), the sample size weighted correlation (r), the sample size weighted and measurements error corrected
correlations, as well as standard deviations are reported. To test the homogeneity of variance and determine whether a moderator analysis is necessary, the Q-statistic and I-Squared were calculated.
Furthermore, the “trim-and-fill” procedure was used in order to test for a potential publication bias. A funnel plot is utilized to determine whether studies are missing, and studies need to be imputed.
Moreover, a moderator analysis was performed to test for the potential moderation of the East or West region. The subgroup function of the Meta-Essential Excel tool by Suurmond et al (2017) has been used in order to test this potential moderation. If the sample size was insufficient in order to conduct a subgroup analysis, the relationship was excluded.
Finally, a commonality analysis has been performed in order to separate the common and unique effects of the different strategic orientations on firm innovativeness.
4. Results
4.1 Results of the bivariate meta-analysis and moderator analysis
26 Table 2: Meta-analytic results
Relationship k N r p SD(p) 95% CI Q I² #TF Side P TF MO-Inno 15 3399 0.47 0.53 0.21 0,45/0,61 148,81*** 91 0 Left 0.61 Moderator West 9 0.48 0.02 0,38/0,56 32,80*** 76 East 6 0.6 0.05 0,42/0,73 67,71*** 93 EO-Inno 8 2254 0.47 0.53 0.32 0,31/0,70 209,4*** 96 0 Left 0.66 LO-Inno 11 2917 0.46 0.59 0.49 0,36/0,75 625,78*** 98 0 Left 0.71 Moderator West 4 0.52 0.09 0,37/0,65 8,50*** 65 East 7 0.63 0.59 0,21/0,85 593,90*** 99 TO-Inno 2 535 0.73 0.78 0.08 0,13/0,96 2.39 58 0 Left 1.04
Note: k = number of independent samples; N = aggregated sample size; r = observed average effect size; p = reliability adjusted and sample size weighted average effect size; SD(p) = standard deviation of p; 95% CI = 95 percent confidence interval; Q = heterogeneity of effect size test; I² = percentage of variation due to heterogeneity; #TF = number of imputed studies.
Hypothesis 1 examines the effect of market orientation on firm innovativeness. As expected, the results show that market orientation is moderate positively associated with firm innovativeness with a sample size weighted and measurement error correct correlation of 0.53. The 95 percent confidence interval of 0.45-0.61, which does not contain the zero value and possesses a p-value of 0.000, indicates that the meta-analytic effect is statistically significant. Thus, hypothesis 1 is supported.
Furthermore, the results show a standard deviation of 0.21, which can be considered as medium sized. A standard deviation around 0.1 can be considered small, around 0.2 indicates a medium standard deviation, and around 0.4 can be considered high. Moreover, the Q-statistic (148.81) and the I-squared statistic (91%) indicate the presents of potential moderators with a p-value of 0.000.
Hypothesis 2 investigates the effect of entrepreneurial orientation on firm innovativeness. The results show that entrepreneurial orientation is moderate positively associated with firm innovativeness with a weighted and corrected
meta-27 analytic effect is statistically significant. Therefore, hypothesis 2 is supported. A standard deviation of 0.32 is reported, which can be considered medium sized. The Q-statistic (209.04) and I-squared statistic (96%) confirm the presence of potential moderators with a p-value of 0.000.
Hypothesis 3 focused on the effect of learning orientation on firm innovativeness. The results reveal that learning orientation is moderate positively associated with firm innovativeness with a correlation of 0.59. The 95 percent confidence interval ranges from 0.36-0.75, which does not contain the zero value and possesses a p-value of 0.000, indicates that the meta-analytic effect is statistically significant. Consequently, hypothesis 3 is supported. The Q-statistic (625.78) and I-squared statistic (98%) indicate the presence of potential moderators with a p-value of 0.000.
Hypothesis 4 examines the effect of technology orientation on firm innovativeness. The results show that technology orientation is strong positively associated with firm innovativeness with a correlation of 0.78. The 95 percent confidence interval ranges from 0.13-0.96, which does not contain the zero value and possesses a p-value of 0.000, indicates a statistically significant meta-analytic effect. While the Q-statistic (2.39) is insignificant with a p-value of 0.122, the I-squared (58%) is still rather large and therefore a potential moderator could still be present.
Table 2also presents the results of the publication bias analysis. As there were no imputed data points, the funnel plot indicated that there is no asymmetry in the distribution of effect sizes in any of the four strategic orientations.
28
4.2 Results of the commonality analysis
In table 3 the results of the regression analysis and additional information related to the relative importance of the respective strategic orientations are illustrated. Table 3:
Regression results and relative importance analysis b Beta r rs rs2 Unique Common GenDo
m Pratt RLW MO 0.031 0.031 0.50 0.667 0.445 0.000 0.250 0.076 0.015 0.074 EO 0.160 0.160 0.53 0.707 0.500 0.016 0.265 0.102 0.085 0.105 LO 0.231 0.231 0.57 0.760 0.578 0.027 0.297 0.124 0.131 0.124 TO 0.480 0.480 0.69 0.920 0.847 0.148 0.329 0.260 0.331 0.260 Total NA NA NA NA 2,370 0.191 1,141 0.562 0.562 0.563
The regression results in table 3indicate that technology orientation had the largest contribution to the regression equation (b=0.480). Moreover, technology orientation explained the largest amount of the variance (85%) in firm innovativeness and also provided the largest unique effect (0.148) on firm innovativeness. On the other hand, table 3 shows through the beta that market orientation (b=0.031) is not relevant for innovativeness, while entrepreneurial (b=0.160) and learning orientation (b=0.231) only have small effects on innovativeness. Furthermore, market orientation (0.000) has no unique effect on firm innovativeness, while entrepreneurial (0.016) and
learning orientation (0.027) showed to have only a very small effect. However, market orientation (0.250), entrepreneurial orientation (0.265), and learning orientation
29 Table 4: Commonality analysis Commonality % MO 0.000 0.001 EO 0.016 0.029 LO 0.027 0.049 TO 0.148 0.262 MO, EO 0.002 0.003 MO, LO 0.013 0.022 EO, LO 0.010 0.018 MO, TO 0.009 0.016 EO, TO 0.044 0.079 LO, TO 0.033 0.058 MO, EO, LO 0.017 0.031 MO, EO, TO 0.017 0.031 MO, LO, TO 0.051 0.091 EO, LO, TO 0.033 0.060 MO, EO, LO, TO 0.140 0.249
Total 0.562 1,000
Note: % = amount of total variance explained in dependent variable.
Table 4provides the detail results of the commonality analysis. The overall common effects of table 4 are decomposed into the specific parts of individual effects of
strategic orientations, as well as sets of strategic orientations and a combination of all orientations. There are four unique effects and eleven common effects present. The common effects including six second-order commonalities, four third-order
commonalities, and one fourth-order commonality. The most notable results here are that learning orientation has a small unique effect size explaining 5 percent of the variance in innovativeness, while technology orientation has a large unique effect size explaining 26 percent of the overall variance in firm innovativeness. Moreover, the combination of entrepreneurial and technology orientation explained 8 percent of the variance, while learning orientation and technology orientation explained 6
percent of the overall variance in firm innovativeness. Additionally, the combination of market orientation, learning orientation, and technology orientation explained 9
30 variance. Finally, a combination of all four orientations explained 25 percent of the total variance in firm innovativeness.
One result that needs to be highlighted is that as presented in the results of the regression analysis above, the final conclusion could be made that market orientation is not relevant for innovativeness, while entrepreneurial orientation and learning orientation are only minorly relevant. The commonality analysis indicates that this result is not true, as all three strategic orientations are show to contribute to the variance in innovation through common effect and through the combined effect of all four strategic orientations.
Based on the presented results, hypothesis 6 is supported.
5. Discussion
The main objectives of the present studies are to meta-analytically determine the effect size of the associations between the four strategic orientations and firm innovativeness, examine whether the effect of these strategic orientations are constant across different regions, and finally disintegrate the common and unique effects of these strategic orientations and firm innovativeness.
In this study market orientation, learning orientation, and entrepreneurial orientation have all shown to be moderate positively associated with firm innovativeness. This result supports previous findings that the strategic orientations are relevant factors influencing a firm’s innovativeness. Moreover, this result supports the assumptions made based framework of Dobni’s (2008), by showing how strategic orientation contribute to building an organisational innovation culture. Furthermore, this study showed that technology orientation is strong positively associated with firm
innovativeness. Again, these results support the assumptions made based on the four dimensions of innovation culture. Additionally, this result supports the suggestion made by Lee et al (2014) that technology orientation could be the strongest overall driver of firm innovativeness.
This study showed that not enough primary studies are currently available in order to analyse the regional differences for entrepreneurial orientation and technology
31 orientations.
Interestingly, while for both market orientation and learning orientation the East reports a higher effect size than West, neither of the differences are statistically significant. Thus, based on the broad regions of East and West, no regional
differences based on culture can be determined. This result represents the findings of Ellis (2006), thus market orientation and learning orientation are universal important factors for firm innovativeness. Moreover, this finding represents the results of Cano et al (2004) in that market and learning orientation is not effect by national cultures. These results stand contrast to Kirca et al (2005), as it cannot be confirmed that lower power distance and uncertainty avoidance positively impacted the relationship between the strategic orientation and firm innovativeness.
The commonality analysis revealed various relevant unique and common effects on firm innovativeness. First of all, market orientation appears to have no unique effect on innovativeness, indicating that a market orientation by itself does not create an innovation culture, or a complete set of desired behaviour to influence firm
innovativeness. Moreover, similar results are shown for entrepreneurial orientation with a minor unique effect. Once more, indicating that entrepreneurial orientation by itself does not create an innovative culture or generate the comprehensive sets of innovative behaviours to drive innovativeness. Learning orientation, on the other hand, has shown to have a small unique effect on firm innovativeness, indicating that a commitment to learning and open-mindedness creates a small effect within an innovation culture. Finally, technology orientation has a large unique effect on firm innovativeness, suggesting that technology orientation is the single most important strategic orientation to influence firm innovativeness. Acquisition and development of new technologies allow for value creation within the firm, and this should be
emphasized as an essential part of a firm’s culture. Once, again this result supports the suggestions made by Lee et al (2014).
While the unique effects suggest that market orientation and entrepreneurial orientation do not relevantly influence firm innovativeness, the common effects of these two orientations suggest the opposite. Market orientation and entrepreneurial orientation strongly contribute to firm innovativeness in combination with other strategic orientations.
32 effect on firm innovativeness, supporting the argument that a combination of strategic orientations that satisfy all four dimensions of an innovation culture, create a
successful innovation culture. Moreover, this result is supported by the pairings of entrepreneurial orientation and technology orientation; market orientation, learning orientation and technology orientation; and entrepreneurial orientation, learning orientation, and technology orientation; who all show a strong common effect on firm innovativeness. On the other hand, pairings that did not influence all four dimensions of an innovation culture showed to have minimal common effects on firm
innovativeness. Therefore, this could imply that the satisfaction of all four dimensions of an innovation culture is essential before an innovation culture within the firm can develop.
Interestingly, while market orientation and entrepreneurial orientation influence all four dimensions of an innovation culture, only a minimal common effect of pairing containing these two strategic orientations (excluding the combination of all four strategic orientations) on firm innovativeness are present. This could suggest that market orientation and entrepreneurial orientation might not complement each other, and thus the inclusion of learning orientation and technology orientation is necessary in order to access the common effects of these two orientations.
By far the largest common effect within the commonality analysis is provided by the combination of all four strategic orientations. This combination influences all four dimensions of an innovation culture, and could furthermore suggest that within an individual dimension, cultural values and beliefs provided by different strategic orientations could facilitate the generate of desired behaviours and contribute to the common effects.
5.1 Implications for theory and future research
33 providing additional evidence for the potential leading role that technology orientation plays in relation to firm innovativeness.
Second, this study showed no significant differences between the regions of the East and West for the dimensions of market orientation and learning orientation. As the regions have been purposefully kept rather inclusive and broad, future research should focus on analysing smaller regions or even on a national level. Moreover, a lack of primary studies of entrepreneurial orientation in the region of West, as well as only a minimal number of primary studies available for the technology orientation, suggest that these orientations should receive more attention in future research. Third, this study contributes to the existing literature by providing evidence for
complementary effects of strategic orientations. Various unique and common effects of these strategic orientations are presented. Furthermore, this study provides evidence for potential combinations and pairings that could yield positive effects on firm innovativeness. Therefore, as most studies focus on individual strategic
orientations in isolation (e.g. Tajeddini et al 2017; Yang et al 2019), future research should focus on multiple strategic orientations in interaction and view them as interrelated strategies and concepts.
5.2 Limitations and future research
The results of the present study should be interpreted with respect to the following limitations, which can also be considered as future research objectives. This meta-analysis is based on secondary data collected from a primary research study.
Therefore, this study is constrained by the literature contained in it. First, only studies were included in the meta-analysis that provided the necessary information, were based on the same measurements, fell within the regions of East and West, and were accessible during the literature search. Moreover, a more inclusive and wider literature search could provide more precise and reliable results. Additionally, as only literature in the English language has been considered, the possibility of language bias is present. Future research should extend the search radius for literature by including additional journals, databases, and other tools of literature search.
34 Moreover, this study utilized homogenous measurements for innovativeness. Future research could consider heterogeneous measurements in order to include additional aspects of innovativeness and innovation. Second, learning orientation and
entrepreneurial orientation research studies have been primarily conducted in Asian countries, and therefore future research should focus on collecting data from western countries to allow more accurate comparison between regions. Moreover, future research could focus on reducing the size of the regions, potentially even focus on cross-country comparison in order to determine the specific effects of cultural and institutions effects on the relationship between strategic orientation and firm innovativeness.
6. Conclusion
The present study utilized meta-analytic procedures in order to determine and provide precise effect sizes for the effect of the four strategic orientations on firm innovativeness. Furthermore, this study shows that there are no regional differences present for market orientation and learning orientation with the regions of East and West. Additionally, unique and common effects of the strategic orientation have been presented, and potentially benefits combinations and pairings have been presented. This study intends to provide a basis for future research endeavours.
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