Master Thesis for MSc IB&M

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Master Thesis for MSc IB&M

The association between technological orientation and firm

performance outcomes: A meta-analysis

University of Groningen

Faculty of Economics and Business

Supervisor

Dr Christopher Schlägel

Second Assessor

Prof. Dr Tilo Halaszovich

Submitted by

Andrea Trabucco

S3815277

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I

List of tables

Table 1. List of most relevant definitions encountered in TO literature ... 6

Table 2. List of most relevant measurement items encountered in TO literature... 7

Table 3. List of studies between 2015 and 2019 ... 26

Table 4. Correlation matrix ... 30

Table 5. Bivariate results from the meta-analysis ... 31

Table 6. Results of the moderator analysis concerning national economic development .. 34

Table 7. Results of the moderator analysis concerning industry sector ... 35

Table 8. Results of the moderator analysis concerning firm size ... 36

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III

List of figures

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IV

List of abbreviations

SO Strategic orientation TO technological orientation MO Market orientation EO Entrepreneurial orientation CO Customer orientation I Innovativeness C Combined performance M Market performance F Financial performance TT Technological orientation MT Market orientation CI Competitive intensity DU Demand uncertainty

RBV Resource-based view of the firm DCF Dynamic Capabilities Framework ROI Return on investment

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V

Abstract

In the last two decades, technological orientation (TO) has attracted the attention of scholar and managers since it emerged to contribute to long-term firm success. In order to investigate the relationship between TO and different firm performance outcomes, a meta-analysis that aggregates 101 studies (21.788 firms) from 28 countries was conducted. Based on prior literature, that is characterised by inconclusive empirical results about the direction and the extent of the relation, I provide a more accurate estimation of the effect size between TO and different facets of the firm performance: firm innovativeness, market performance, financial performance and combined performance. Additionally, I study how environmental variables, namely technological turbulence (TT), market turbulence (MT), competitive intensity (CI), and demand uncertainty (DU) are related to the development of a firm’s TO, as well as how TO mediate the relation between these environmental dimensions and the performance outcomes. The findings give directions for researchers and professionals concerning the relevance and the extent of the relation between TO and firm performance and offer guidance for future research.

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1

1. Introduction

Nowadays, due to higher competition and rapid changes in global markets, companies are trying to improve their organizational effectiveness through organizational metrics that could be linked to business performance. For this reason, in the past decades, scholars and managers have focused their interests in how different strategic orientations (SO) could af-fect firms’ achievements. SOs indicate a firm’s philosophy on how best to compete in the market and to achieve better performance (Gatignon & Xuereb, 1997). Thus, SOs influence management choices on which type of knowledge resource is necessary for the firm, as well as which type of knowledge to invest so as to gain competitive advantage. According to Zhou, Yim, and Tse (2005), the principal SOs are market orientation (MO), entrepreneurial orientation (EO) and technological orientation (TO).

TO has received its first attention in literature since Gatignon and Xuereb (1997) introduced the concept to the field. It has been defined as a firm’s “…ability and will to

acquire a substantial technological background and use it in the development of new products” as well as a firm’s ability “... to use its technical knowledge to build a new technical solution in order to answer and meet new needs of the users” (Gatignon & Xuereb, 1997,

p.78). To improve its technological resources and capabilities, a firm needs to stay up-to-date, constantly look for technological developments and try to adapt and integrate them into existing products/processes or create new ones. The notion that TO is related to business performance has been acknowledged by scholarly and management researches. Although the majority of the findings indicate that there is a positive relationship (e.g., Batra, Sharma, Dixit, Vohra, & Gupta, 2015; Cooper, 1985, Gatignon & Xuereb, 1997; Hamel & Prahalad, 1994; Jang, Song, & Hwang, 2013; Talke, 2007; Zhou et al., 2005), there are also studies suggesting a non-significant or a negative relationship between TO and business performance (e.g., Deshpandé, Grinstein, Kim, & Ofek, 2013; Gao, Zhou, & Yim, 2007; Kocak, Carsrud, & Oflazoglu, 2017; Talke, Salomonn, & Kock, 2011). Therefore, the understanding of the direction and the magnitude of this relationship is non-consistent and questions like how and when TO influences firm performance are still unanswered.

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2 second purpose is to provide a better understanding of how environmental variables, specifically technological turbulence (TT), market turbulence (MT), competitive intensity (CI), and demand uncertainty (DU) are associated with the development of firm TO. The third objective of the present study is to propose a model that analyses TO as the missing link in the relationship between environment and firm performance. The last objective is to systematically test a set of theoretically derived moderators, developing a conceptual framework that helps to explain under which conditions TO has a stronger or weaker effect on firm performance.

To address these objectives of the study, I refer to the two most mentioned theoretical backgrounds in the TO literature, which are the resource-based view of the firm (RBV) and the dynamic capabilities framework (DCF). The former theory is used to understand how companies could gain and maintain a competitive advantage through internal resources at their disposal (Barney, 1991). The latter, which refers to the skills and knowledge accumulated by a firm over time (Lisboa, Dionysis, & Carmen, 2011), explains how these dynamic capabilities enable a firm to integrate, build and reconfigure internal and external abilities to address a fast-changing environment (Murray, Gao, & Kobate, 2011; Teece, 2014).

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perfor-3 mance. For this reason, four different outcomes of performance, which are the most com-mon aspects that are studied across TO literature, are studied singularly and their contribu-tion to the relacontribu-tionship is analysed. These outcomes are firm innovativeness (I), market (M), financial (F) and combined (C) performance. The third contribution of this study is to analyse to what extent environmental variables, specifically TT, MT, CI and DU, are related to TO. Previous researches have suggested that positive or negative impact of TO on firm perfor-mance could be influenced by additional external variables (Gao et al., 2007). However, since studies have mainly focused on how these variables moderate the TO-performance relationship, not much is known on how they impact on firm TO. Additionally, I analyse to what extent TO mediates the relationship between environmental factors and performance outcomes. The last contribution is to examine the boundary conditions that constrain the TO-performance relationship and which may explain the heterogeneity of the findings in prior studies. Since previous research was mostly focused on the impact of TO in a single country, they neglected the moderating role of context and specific firm conditions (Hakala, 2011). Thus, by examining different contextual and specific firm characteristics, namely a country’s economic development, industry sector, and firm size, I address recent calls for future re-search on how these variables moderate TO-performance relationship.

Thus, the research questions are the following:

1) What are the strength and the direction of the relationship between TO and

busi-ness performance outcomes?

2) To what extent environmental factors are associated with the development of TO? 3) To what extent TO mediates the relationship between environmental variables

and business performance outcomes?

4) To what extent contextual and methodological factors moderate the TO-business

performance outcomes relationship?

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4 discussion of the findings and the exposition of some practical and academic implications, limitations, and suggestions for future research directions are presented.

2. Theoretical background

The conceptual framework, shown in Figure 1, reproduces the relationship between TO and different outcome measures of business performance (firm innovativeness, market, fi-nancial, and combined outcomes), as well as the relationships involving the substantive moderators on the TO–performance relationship. Moreover, from the left side of the frame-work, four environmental factors (TT, MT, CI, DU) are selected to verify to which extent they are linked to firms’ TO development. The theoretical rationale for this conceptual model is shown in the following sections in which all the effects, from external variables and not, are examined.

Figure 1. Conceptual model

2.1 Technological Orientation: definitions and measurements

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5 attention towards understanding the best SOs that a company should apply in order to im-prove its achievements. Walker and Ruekert (1987) defined the term “business strategy” as to how a company chooses to compete in a market and reach sustained competitive ad-vantages. SOs have been defined as the principles that underlying activities, processes, and strategic guidance that a firm should undertake to create conditions necessary for achieving better performance which could determine the success or the failure of a new product (Gatignon & Xuereb, 1997). The literature about firm SOs proposes several orien-tations including market, entrepreneurial, customer, competitor and technological. Each of these components has a clear focus that impacts business performance in a distinct way (Voss & Voss, 2000). Past research has focused on how these orientations and their effects influence a company’s performance. However, TO has received less attention compared to other orientations (Narver & Slater, 1990).

Due to shortening life cycle and technological advancement of goods and services, a company is forced to enhance its technological expertise to be competitive in its market (Lee et al., 2015). Technology-oriented firms have been defined by Gatignon and Xuereb (1997, p.78) as: “firm(s) with the ability and will to acquire substantial technological background and

use it in the development of new products”. Additionally, TO defines how a firm “use(s) its technical knowledge to build a new technical solution to answer and meet new needs of the users”. In other words, TO indicates a company’s philosophy of how to develop and apply

new technologies to interact with a market, through actively creating and incorporating these new technologies into products. Thus, TO guides the companies’ effort to gain superior technological capability compared to their competitors (Gatignon & Xuereb, 1997; Hakala & Kohtamӓki, 2011). Founded on the philosophical concept of the “technological push”, consumers are prone to choose products that have a superior technology (Zhou et al., 2005; Zhou & Li, 2007). To deal with these rapid changes in technologies, companies need to mordenise their technological base to enhance competitive advantages through innovation and new product development. For this reason, TO is considered a crucial SO that could lead a firm to success (Zhou & Li, 2007)

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6 not concentrate just on how a firm could gain new technologies to insert in new or existing product development. Through technology, a firm should also improve its structure as well as its processes, with the willingness to create and maintain competitive advantages, whether they come from internal or external sources. Moreover, Song (2017) stated that TO reflects what level of complicated technologies a company can obtain, adapt, and apply to its goods/services as well as operational procedures.

Throughout the literature research on TO, it was determined that most of the studies are related and refer definitions and statements on Gatignon and Xuereb (1997) study (Table 1). Besides, it stands out that most of the studies adopted and adapted the TO items measure proposed by Gatignon and Xuereb (1997), which essentially ask if a company is using sophisticated technologies during the development of a new product and if its new products are at the state of the art of technology. There are other two studies, respectively Hurley and Hult (1998) and Ettlie (1983), which are mentioned several times when it comes to TO items measure. In this regard, I wanted to specify that these two studies do not specifically deal with TO, but with “innovativeness” and “technology policy”. However, the meaning attributed to these two concepts is comparable to TO (Table 2).

Table 1. List of most relevant definitions encountered in TO literature

Study Definition Referring to

Gatignon and Xuereb, 1997, p.78

“Ability and will to acquire substantial technological background and use it in the development of new products” … “the company can use its technical knowledge to build a new technical solution to answer and meet new needs of the users.”

Zhou et al., 2005, p.45

“Technology orientation reflects the philosophy of “technological push”, which posits that consumers prefer technologically superior products and services.” … “a technology-oriented firm advocates a commitment to R&D, the acquisition of new technologies, and the application of the latest technology”

Gatignon and Xuereb 1997

Gao et al., 2007, p. 6

“Technology orientation suggests that consumers prefer products and services of technological superiority” … “Consequently, technology-oriented firms have a competitive advantage in terms of technology leadership and offering differentiated products, which can lead to superior

performance.”

-

Hamel and Prahalad, 1994

Hakala and

Kohtamӓki, 2011, p.69

A technology-oriented firm “actively develop and incorporate

new technology in products, to aspire to a superior technological capability to their competitors and find customers that value the solutions they provide”

Deshpande et al., 2013, p.232

“Technological orientation as one where firms have an R&D focus and emphasize on acquiring and incorporating new technologies in product development”

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Study Definition Referring to

Srivastava et al., 2014, p. 431

“TO involves a culture in which a firm harmonizes its structures, systems, and resources with technology and points out the willingness of the firm to use technology as a competitive element. (…) whether they obtain the technology from internal sources or external sources.”

-

Zahra and Nielsen, 2002

Song, 2017, p. 990

“Technological orientation is a guiding principle that stresses the application of technologies in products and operational procedures” (…) “reflects the degree to which an enterprise obtains and applies complicated technologies in product and operational procedures”

Han et al., 2001; Kaya and Seyrek, 2005.

Cooper, 1985;

Gatignon and Xuereb, 1997

Table 2. List of most relevant measurement items encountered in TO literature

Study Measurement - Items

Gatignon and Xuereb, 1997

 Our SBU uses sophisticated technologies in its new product development.

 Our new products are always at the state of the art of the technology.

 Our SBU is very proactive in the development of new technologies.

 Our SBU has the wilt and the capacity to build and to market a technological breakthrough.

 Our SBU has built a large and strong network of relationships with suppliers of technological equipment.

 Our SBU has an aggressive technological patent strategy.  Our SBU has better industrial methods than the competition.  We have a better competitive knowledge than our competitors.  Relative to our competitors, our new products are more ambitious.  Relative to our competitors. our R&D programs are more

ambitious.

 Our SBU is very proactive in the construction of new technical solutions to answer users' needs.

 Our firm is always the first one to use a new technology for its new product development.

Technological orientation

Hurley and Hult, 1998

 Technical innovation, based on research results, is readily accepted

 Management actively seeks innovative ideas

 Innovation is readily accepted in program/project management  People are penalized for new ideas that don't work

 Innovation in XYZ is perceived as too risky and is resisted

Innovativeness

Zhou et al., 2005

 We use sophisticated technologies in our new product development.

 Our new products always use state-of-the-art technology.

 Technological innovation based on research results is readily accepted in our organization.

 Technological innovation is readily accepted in our program/project management. Technology orientation (adopted from Gatignon and Xuereb, 1997; Hurley and Hult, 1998) Salavou et al., 2005

 The policy of this firm has been to always consider the most up-to-date production technology available.

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Study Measurement - Items

 We have a long tradition and reputation in our industry of attempting to be first to try out new methods and equipment.  We spend more than most firms in our industry on new product

development.

 We devote extra resources (i.e., time, money) to recruit the best-qualified personnel in production.

 We devote extra resources (i.e., time, money) to technological forecasting. (adopted from Ettlie, 1983) Mu and Di Benedetto, 2011

 Technical innovation based on research results is readily accepted

 Management actively seeks innovative ideas

 Innovation is readily accepted in program/project management  People are encouraged to have new ideas for new product

development Technology orientation (adopted from Gatignon and Xuereb, 1997; Hurley and Hult, 1998) Srivastava et al., 2014

 We use sophisticated technologies in our new product development.

 Technological innovation based on research results is readily accepted in our organization.

 Technological innovation is readily accepted by our program/project management.

Technological orientation (adopted from Zhou, Yim, and Tse, 2005) Ettlie, 1983  We have a long tradition and reputation in our industry of

attempting to be first to try out new methods and equipment.  We spend less than most firms in our industry on new products

development.

 We are actively engaged in a campaign to recruit the best qualified technical personnel available in engineering and production.

 We are actively engaged in a campaign to recruit the best-qualified marketing personnel available.

 We are strongly committed to technological forecasting.

Technology policy

2.2 Theoretical foundations of the relation between technological orientation and firm performance outcomes

In the following paragraph, before going into details and listing hypotheses regarding how TO is related to different economic outcomes, I would like to make a brief introduction about the two theoretical backgrounds on which most of the studies concerning TO are based, and explain the reason why I have decided to look specifically at performance outcomes like firm innovativeness, market e financial performance.

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9 idea, it did not gain a lot of attention at the time. However, it is in 1984 that the term

“Resource-based view” was coined for the first time by the Danish economist and

management theorist Birger Wernerfelt, who introduced the idea that resources could also be studied as source of a firm’s competitive advantage, referring to a resource as “anything

which could be thought of as a strength or weakness of a given firm” (Wernerfelt, 1984,

p.172). He also assumed that resources possessed by a firm could lead to higher long-term performance. Examples of those resources included capital, equipment, personnel, processes, brand names, trade contracts, and inhouse knowledge of technology. Another important aspect has been added by Barney (1991), which is considered from most scholars as the creator of the modern RBV, defining what a “sustained competitive advantage” is for a firm. There is a sustained competitive advantage when a firm implements “a value-creating

strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy” (Barney, 1991,

p.102). He identified four indicators that a resource must have to be a sustained competitive advantage. These features are valuable, rare, inimitable, and non-substitutable. Barney argued that in order to have the potential for sustained competitive advantage, a firm resource must have all four indicators (Barney, 1991). Moreover, Grant (1991) categorized capabilities and resources as views from an RBV. Resources were classified into tangible, intangible, and personal-based resources, while capabilities were defined as competencies which are made by combining different resources (Grant, 1991), including all these abilities that are essential for a firm to mutate a skill in an effective competitive advantage (Eisenhardt & Martin, 2000).

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10 as a static theory that does not clearly state how firms could integrate different capabilities and resources in a dynamic environment. Since technology-oriented firms commonly operate in fast-changing environments, it is better to go beyond the mere use of the RBV by itself. Thus, in order to have sustainable competitive advantages in markets characterized by dynamism, firms should constantly develop processes by integrating internal resources with their external networks. To face this challenge, researchers proposed that firms should develop dynamic capabilities to renew and adapt existing firm resources in response to changing environments (Teece, Pisano, & Shuen, 1997). For this reason, in addition to the RBV, I use the dynamic capabilities framework to explore the research framework.

Dynamic capabilities framework (DCF). DCF finds its origin from the presupposition that the RBV has a static nature and it does not completely explain how firm resources are improved and assimilated in environments that are characterized by rapid changes (Teece et al., 1997). According to Zollo and Winter (2002), to better understand the role that dynamic capabilities have in the firm, it is important to check the differences between dynamic capabilities and operational capabilities. The latter can be described as a capability that empowers the firm to perform their daily operational activities (Teece, 2007), while the former has been defined by Protogerou, Caloghirou, and Lioukas (2012, p.617) as what “enable a

firm to constantly renew its operational capabilities and therefore achieve long-term competitive advantage”. Moreover, Teece, who is considered as one of the founders of this

theory, has defined dynamic capabilities as “the firm’s ability to integrate, build, and

reconfigure internal and external competencies to address a rapidly changing environment”

(Teece et al., 1997, p.516). Thus, it could be said that dynamic capabilities exceed the set of features that are used from the RBV. DCF indicates the firms’ ability to continually innovate and adapt while using the fundamental of the RBV. Thus, with dynamic capabilities, a firm is enabled to adjust its resources and strategy to maintain a competitive advantage (Wade & Hulland, 2004). Researchers have underlined the important role of managerial capabilities instead of firm resources as it has been done in the RBV (Baker, Jones, Cao, & Song, 2011). Additionally, this framework focuses on the inimitable combination of resources from a different department.

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11 operational capabilities. Moreover, Wilden, Gudergan, Nielsen, and Lings (2013) described dynamic capabilities as the managerial and organizational procedures and processes that enable firms to reach and sustain a superior level of performance over time, while leading firms to explore new opportunities in new markets. Additionally, dynamic capabilities could be seen as a potential and emerging integrative approach to understanding the newer sources of competitive advantages (Augier & Teece, 2008).

From a strategical and innovative point of view, the dynamic capabilities framework has gained a lot of importance in the last decades. Teece et al. (1997) suggested a framework that refers to the methods and sources of innovation measured by several processes inside the firm, including technological, organizational, and managerial processes. These refer to routines of learning operating inside the firm that are shaped by a firm-specific assets and evolutional paths for achieving competitive advantages (Teece et al., 1997).

The relationship between internal capabilities and external resources become very significant in a firm’s success. It is crucial for a firm to understand how its specific dynamic capabilities could relate to managerial and organizational resources. For instance, some researchers focused on dynamic capabilities that are composed of specific and identifiable routines as strategic decision-making process routines and product development routines to capture product innovation under dynamic environments (Eisenhardt & Martin, 2000). Moreover, in new product development, dynamic capabilities become an extremely important source of sustained and competitive advantage (Marsh & Stock, 2003). According to Ray, Barney, and Muhanna (2004), capabilities and resources of a firm are critical components in formulating a successful strategy.

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12 share, quality, or customer satisfaction (Gonzalez-Benito & Gonzalez-Benito, 2005). As it has been reported by Day (1994), there is not a single or a best measure for business performance, this is because both financial and non-financial performance measures have their advantages and their disadvantages. On the one hand, financial measures are considered more concrete; however, they are limited in objective to financial data. On the other hand, non-financial measures are slightly abstract; however, they often provide a better description of a firm’s effectiveness compared to their competitors (Al-Ansaari et al., 2015). For this reason, researchers should take in consideration different forms of growth and measure them with different growth measures (Delmar, Davidsson, & Gartner, 2003). Thus, aiming to capture the multidimensionality of the business performance, subjective and objective performance measures are investigated in four different dimensions: firm innovativeness, market performance, financial performance and combined performance.

TO and Business Performance. The premise of TO is the ability of a company to create and develop innovative and technologically advanced products utilizing its expertise and knowledge and turn them in sustainable advantages over its competitors. Gatignon and Xuereb (1997) suggested that to out-perform competitors by using strong capabilities concerning technology, a firm should invest primarily into TO and then in other SOs.

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13 characterized by high level of competition (Hurley & Hult, 1998). Thus, it could be stated that TO contributes to the uniqueness and novelty of new products (Mu & Di Benedetto, 2011).

Researchers report that technology is a significant determining factor in opening new market opportunities and in creating competitive advantage. This is because a strong technological focus in a firm leads to the development of more innovative as well as technologically superior products or services compared to its competitors (Jeong, Pae & Zhou, 2006). Therefore, TO has a significant impact on a firm's ability to innovate. Firms considered to be innovative are those firms that dedicate and invest a larger amount of money in R&D and integrate new technologies into their business processes (Gao et al., 2007; Kim, Im, & Slater, 2013). These companies integrate into their everyday business activities new technologically advanced systems and tools to improve their efficiency (Kim et al., 2013) and consequently dedicate higher levels of profits into the development of their new products (Cooper, 1994). Companies that have innovation as a core business, tend to be both future-oriented and aggressive in learning new technologies. Also, they are inclined to use more sophisticated technologies while creating new products (Cooper, 1979). As a consequence, the more the technological competencies are advanced, the more a company’s innovativeness is advanced (Hult, Hurley, & Knight, 2004).

In order to have effective use of TO, firms need to be able to adapt TO to their strategies and their environment (Gatignon & Xuereb, 1997). When fast technological advances characterized market environment, the value and impact of previous technologies decline very fast (Srinivasan, Lilien, & Rangaswamy, 2002). For this reason, to tackle uncertainty and avoid the risk to be driven out from the market due to obsolete technology, firms should assign more resources to develop new products and experiment new technologies. Additionally, it has been suggested that customer value, as well as firm long-term performance, are better achieved through products containing new technological solutions (Grinstein, 2008). Firms that are inclined to develop new technologies could achieve not just product differentiation compared to their competitors, but also cost advantages (Gatignon & Xuereb, 1997).

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14 (2007) found that TO has a damaging effect on new product performance because it encourages risk-taking and it could lead to introducing new goods or services that are in advance compared to customers’ needs, and therefore have fewer chances to be sold and to achieve profit and sales targets.

In summary, since the importance of technology strategies are becoming more recognized, technology is considerate to be a critical factor in securing competitive advantage and creating new business opportunities. Companies that could develop new technologies and commercialize those developed technologies into goods and services have more chances of surviving extremely competitive environments. Also, since customers are generally willing to have products of technological dominance, firms utilize their capabilities and technical competencies to create innovative technological solutions to satisfy customers’ needs. According to this concept, customers will perceive the need to buy new products, deciding to buy a product with the highest level of technology within it, therefore willing to pay a premium price for it. Therefore, this mechanism may lead to the company having higher returns not only in terms of sales volumes but also in terms of profitability and firm growth. Thus, according to the evidence on the relation between TO and business performance developed above, it is hypothesized that:

Technological orientation is positively related to overall business performance (H1a), firm

innovativeness (H1b), firm combined performance (H1c), market performance (H1d), and

financial performance (H1e).

2.3 Theoretical foundations of the relation between environmental factors and technological orientation

In the following paragraph, I analyse how environmental factors, namely TT, MT, CI and DU, are related and may influence the development of TO.

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15 technological development could “raise or lower scale economies, make interrelationships

possible where they were not before, create the opportunity for advantages in timing, and influence nearly any of the other drivers of cost or uniqueness” (Porter, 1985, p.171).

Research posies that the value of TO varies with the level of TT (e.g., Gao et al., 2007; Gatignon & Xuereb, 1997; Jeong et al., 2006; Srinivasan et al., 2002). Low levels of TT enable a firm to exploit its existing technologies. However, focusing on technologies may require high initial investments (Gao et al., 2007) and may lead to a neglect of customer’s wants and needs. This might not be beneficial for firms operating in industries with low TT. In contrast, technology-oriented firms in industries with high TT may be able to remain competitive due to their ability to adapt and respond to turbulent environments more easily. Dedicating a firm’s resources on research and development is crucial as the value of existing products and technologies drastically diminishes (Srinivasan et al., 2002; Zhou et al., 2005). Studies found that environment with high level of TT have greater potential for innovations (Zhou et al., 2005). This because firms put an effort in remaining competitive under TT and therefore need to invest resources in the development of new technologies and products (Gao et al., 2007). Thus, to survive in an environment characterized by high level of TT, a firm should increase its TO. Hence, it is hypothesizing that:

Hypothesis 2: There is a positive relation between environment characterised by a high level of technological turbulence and firm technological orientation.

Market Turbulence. MT is defined as “the rate of change in the composition of customers

and their preferences” (Jaworski & Kohli, 1993, p.57). In addition to this definition, which is

one of the most used in the literature of MT, Hult et al. (2004) added that MT does not just reflect how buyers’ preferences change among time, it also represents a wider-range of customers’ needs and wants, the constant emphasis to propose to customers new products and the entrance and exit of buyers from the market.

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16 Beitelspacher, & Schillewaert, 2011; Zhou & Li, 2010; Zhou et al., 2005). Environmental turbulence, in this case, which is seen as market unpredictable activities, has a positive influence on the level of use of new business technology (Kim & Jae, 2007). Specifically, in highly turbulent markets, a firm is more incline to adjust to its competitive environment and try to achieve advantage compared to its competitors by acquiring resources earlier than them (Trainor et al., 2011). Additionally, Han and Srinivasan (1998) argued that companies could adapt to a fast-changing environment by the introduction of administrative and technical innovations which could lead to better levels of performance (Trainor et al., 2011). Moreover, researchers found that CO has a negative effect on performance in highly turbulent markets. Therefore, in highly uncertain markets it is beneficial to pursue a TO (Gatignon & Xuereb, 1997). The reasoning is that in unstable markets it is too difficult to identify and satisfy customers’ needs if they are changing at a rapid pace. Instead, firms could develop breakthrough technologies and products that customers did not even know they wanted and therefore, becoming a market leader (Zhou & Li, 2010; Zhou et al., 2005). Thus, it could be stated that when a firm operates in turbulent markets, it is more inclined to invest in TO to modify its products and, in this way, to satisfy its customers. Thus, I posit the following hypotheses:

Hypothesis 3: There is a positive relation between environment characterised by a high level of market turbulence and firm technological orientation.

Competitive intensity. CI represents the degree of competition that a company faces within an industry (Gatignon & Xuereb, 1997; Kirca, Jayachandran, & Bearden, 2005; Trainor et al., 2011). Intense competitive markets for opportunities, resources, and all the other constraints that are associated with these environments, could decrease profits and definitively limit strategic options that a company could embrace (Miller & Friesen, 1983). For this reason, a firm needs to invest in the right SO since a wrong strategic decision could endanger its survival.

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17 new markets (Reed & DeFilippi, 1990; Zahra, 1993). In the first option indicated, Porter (1985) suggests that in markets characterised by high levels of competition, firms should pay more attention to reducing costs and investments in general, given the high-cost pressure also due to the price war. Therefore, as suggested by Day and Wensley (1988), imitation should concern not only products but also production processes, since it could reduce the high production costs. Therefore, a company could try to imitate the attitude of its competitors and copy their technologies (Jaworski & Kohli, 1993), thus leading the company to invest less in TO and consequently reducing technological innovations. In the second option, instead of competing through imitation strategies, companies should try to overcome this obstacle by focusing on innovation that aims to explore new markets, satisfy new customers’ needs and allow the company to look for new ways for differentiating itself (Zahra, 1993). Important investments in R&D could increase the chances of creating new products and new technologies, which could give the possibility to overcome competitors’ existing advanced technologies, making their products obsolete, thus allowing the company to achieve a leadership position and subsequently success in the market. However, firms that engage in TO and strong innovative technology strategies under the condition of competitive intensity may fail if their new products do not meet customers demand and if buyers do not willing to pay a premium price for those products (Zahra & Bogner, 2000). Therefore, to have positive performance in competitive markets, firms should implement strategies characterised by low investments and risk-taking. Accordingly, TO could be an inefficient response to competition, but a profitable SO in a less competitive market. Thus, according to the above-listed arguments, the following hypothesis is suggested:

Hypothesis 4: There is a negative relation between markets characterised by a high level of competitive intensity and firm technological orientation.

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18 identification of new customers’ needs become difficult to satisfy but at the same time vital to the company to survive (Wind & Mahajan, 1997). In these markets, investments in R&D and development of new technologies could be the right answer to provide innovative solutions to customer needs (Hamel & Prahalad, 1994; Porter, 1985). Besides, even if DU creates difficulties when it comes to taking strategic decisions, companies that explore and invest in these environments could exploit opportunities and outperform their rivals.

Rapid changes and difficulties in predicting future trends require a high level of pro-activity, which could reverse situations of pressure and threat for the company with excellent possibilities and opening to new markets (Lumpkin & Dess, 2001), although it implies more risk and resources application (Ali, 1994). Since in these markets is not possible to foretell what customers will want, there is also the issue that the role of marketing has a limited capacity in new product development. Therefore, the optimal solution would be to invest in R&D to have several alternatives and be prepared to develop a strategy depending on future information about customer needs and scenarios that are created in the market (Workman, 1993). Thus, meanwhile, marketing still acts an important role to provide new information about customer needs, TO plays a crucial role with the ultimate goal of achieving technological superiority, making a company less vulnerable to the danger of having existing technologies and products become obsolete for its customers (Leonard-Barton, 1992). For the above-listed reasons, the following hypothesis is suggested:

Hypothesis 5: There is a positive relation between markets characterised by a high level of demand uncertainty and the firm technological orientation.

2.4 Technological orientation as a mediator between environmental factors and firm performance outcomes

Environmental factors refer to the degree of change in the external environment a firm is operating in (Danneel & Sethi, 2011). Previous researches have suggested that environmental factors, such as technological advances or uncertain markets, have a significant impact on firm performance (Jaworski & Kohli, 1993; Miller & Friesen, 1983).

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19 1997). In order to do that, firms need to be pro-active and to adopt strategies that are innovation oriented. Since TO is associated with pro-activity and innovativeness, it is legit to consider it as a good response to turbulent environments, increasing the chances of achieving competitive advantages and a better business performance. At the same time, exploiting new opportunities involve risks. Although the risk-taking dimension is always associated with threat, it is only by taking risks that firms could transform opportunities coming from the environment into competitive advantage. As mentioned by Rauch and Bausch (2011), even if “dynamic environments create difficulties for strategic

decision-making, firms that explore and exploit opportunities in such environments can outperform their rivals”. According to this idea, even if in an environment where the rate of change is

rapid and it is difficult to predict future needs, firms are required to constantly have a high degree of pro-activity and be ready to modify and adapt their strategies according to the situation that arises (Lumpkin & Dess, 2001).

Moreover, TO has a further advantage in turbulent environments. Firms that pro-actively invest in R&D and with the development of new technologies introduce new products into the market which make them less vulnerable having obsolete competencies and knowledge (March, 1991).Companies characterised by a high level of TO will constantly improve their processes, as well as their products and services, preventing the creation of rigidities within it and the danger of being suffocated by the competition (Leonard-Barton, 1992). Moreover, firms that do not anticipate the forces of the environmental factors may experience a detrimental impact on their performance (Wang & Fang, 2012).

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20

Technological orientation positively mediates the relationship between environmental variables and firm innovativeness (H6a), firm combined performance (H6b), market

performance (H6c), and financial performance (H6d).

Figure 2. Conceptual model with the hypotheses

2.5 Contextual moderators affecting the relation between technological orienta-tion and firm performance outcomes

According to several studies, it has been suggested that different variables could interact and influence the relation between TO and firm performance outcomes. For this reason, it is necessary to consider how contextual variables, in our case: the economic development of the countries where the firms are based, the industry sector where they operate and their size, effectively moderate the relationship.

Economic national development. While there have been a lot of empirical studies that examined the effect of TO on firm performance in advanced as well as emerging countries (e.g., You, Zhang, Li, & An, 2013; Zhou & Li, 2010), there has been little research comparing the impact of different levels of TO in different economies.

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21 Emerging economies undergo rapid growth due to lower labour costs, a rapid pace of development and the economic liberalization (Hoskisson, Eden, Lau, & Wright, 2000). Thus, emerging economies are not just a source for low-cost production locations anymore but are also attracting significant global R&D investments to start developing their innovative capabilities. (Li & Kozhikode, 2008).

Empirical studies conducted in emerging countries suggest that adopting a TO would improve their innovation and firm performance (Mu & Di Benedetto, 2011; Yu et al., 2013; Zhou & Li, 2010). As previously argued, in highly dynamic environments, the TO of a firm is more likely to improve their firm performance as it enables firms in rapidly changing environments to quickly initiate and implement innovations, gaining competitive advantages (Yu et al., 2013). Thus, TO may be less effective in advanced countries as its environment is more stable (Gao et al., 2007). For the reasons listed above, I suggest the following hypotheses:

Technological orientation is more strongly related to overall business performance (H7a),

firm innovativeness (H7b), firm combined performance (H7c), market performance (H7d),

and financial performance (H7e) in emerging economies compared to advanced

economies.

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22 that manufacturing companies face a higher risk than service companies (Cooper & Kleinschmidt, 1987).

However, on the other hand, the same debate could be used to display that service firms take more risks. For instance, if a company does not have much to lose, they might be more inclined to invest in risky and uncertain outcomes. However, researchers have found different indications and argumentations supporting one side or the other, therefore this matter is still unsolved. As mentioned before, proactiveness represents the willingness to anticipate new needs, changes, and face future problems. It means taking initiatives and anticipating the competitors, which could lead to creating new opportunities for new products or services as well as open to new markets (Entrialgo, Fernàndez, & Vàzquez, 2000).

Being a proactive firm, does depend on market conditions as well as how a firm decides to engage in SOs. Since there are stable and turbulent as well as established and new product and service markets, there are no solid arguments to express which manufacturing or service industry should be more proactive and technologically oriented. Therefore, it could be concluded that:

Technological orientation leads to similar levels of overall business performance (H8a), firm

innovativeness (H8b), firm combined performance (H8c), market performance (H8d), and

financial performance (H8e) in both manufacturing and service industry.

Firm size: Studies found that firm size may be related to the relationship between SO and firm performance (Laforet, 2009). Firm size is most commonly measured by the number of employees, which could give an idea about the resources available to the firm so as to maintain its technological capabilities (Hsu, Hsieh, Tsai, & Wang, 2014), about the firm’s competencies and the firm’s ability to innovate (Chandy & Tellis, 2000; Mu & Di Benedetto, 2011; Salavou, Baltas & Lioukas, 2004).

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23 Tether suggests larger firms be more innovative (Tether, 1998). Moreover, larger firms may lack creativity and flexibility, however, they benefit from better technical and adaptive capabilities as well as more human and financial resources (Chandy & Tellis, 2000). Therefore, they may use those resources and capabilities for sustaining their innovations and to introduce new products and technologies (Chandy & Tellis, 2000; Laforet, 2009; Zhou & Li, 2010). Larger firms also benefit from factors such as bigger market size, economies of scale and learning curves. Thus, a larger firm’s innovativeness is more likely to improve market and financial performance than a smaller firm’s innovativeness (Rubera & Kirca, 2012). Even though there have been no studies comparing the different impact of TO on firm performance in small and large firms, I assume the following hypotheses:

Technological orientation is more strongly related to overall business performance (H9a),

firm innovativeness (H9b), firm combined performance (H9c), market performance (H9d),

and financial performance (H9e) in larger firms as compared to small and medium-sized

firms.

3. Method

The analysis of the studies that have investigated the TO-performance relationship have shown heterogeneous results and have highlighted the prevalence of studies that reach positive results. However, the mere cataloguing and categorization of existing studies, based on the results obtained, could lead to misleading conclusions, as they compare non-homogeneous studies (Derfuss, 2009; Hunter & Schmidt, 2004). In order to go beyond this limitation, I applied the meta-analysis technique, useful in cases where the results of different studies are contradictory because it allows to quantitatively aggregate different results of heterogeneous studies (Veltri, 2011). This statistical technique allows to summarize the quantitative results of individual studies in a single estimation index: the average effect size (Hunter & Schmidt, 2004) and estimate the variability of the measure in relation to the object of study (effect size), trying to identify the factors, methodological or theoretical variables (the so-called moderators), probable causes of such variability (Derfuss, 2009; Hunter & Schmidt, 2004).

3.1 Literature search and selection criteria

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24 literature review process was divided into the following phases: collection, selection, sample determination and analysis.

In the collection phase, to ensure the representativeness and completeness of the database used in the present meta-analysis, a search for keywords was conducted in Google Scholar and several other electronic databases: EBSCO, Emerald, JSTOR, ABI/INFORM Global and Scopus. The search strings have been composed through the combination of the following keywords: "technological orientation", "technology orientation",

"strategic orientations", “technology resources” and “technology strategy”. Additionally, the

references from the TO articles were examined with the aim of identifying additional studies. Title and abstract of each search result were reviewed to identify potential studies for the present meta-analysis. This procedure was re-applied until no additional literature was found. A reference period was not chosen a priori, to include as many studies as possible.

On completion of the literature review in November 2019, began the selection phase, aimed at identifying the relevant studies which were to be included in the meta-analysis based on three selection criteria. A study was eligible for inclusion if it met the following conditions: firstly, the studies needed to assess TO and firm performance measures; secondly, the studies to be included needed to be independent, meaning that all effect sizes were reported from different samples. In the case that more than one study was found using the same sample, only the most recent one was analysed. Hence, biases caused by an overrepresentation of specific samples was avoided (Hunter & Schmidt, 2004); lastly, the present meta-analysis includes studies that report correlation coefficients. If they were not given, the studies were checked for standardized regression coefficients, path coefficients or t-values. I either used the effect size calculator as suggested by Lipsey and Wilson (2001) or the Peterson and Brown (2005) procedure to obtain the respective effect sizes. Moreover, studies were excluded in the case that no sufficient statistical information was reported that allowed the computation of a correlation coefficient with one of the procedures mentioned above.

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26

Table 3. List of studies between 2015 and 2019

Legenda "Outcomes Measured": I = Innovativeness; C = Combined Performance; M = Market Performance; F = Financial Performance. "Outcomes Details": IP = Innovation Performance; BP = Business Performance; I = Innovativeness; P = Performance; SBD = Sales and Business Development; SMP = Social Media Performance; G = Growth; FP = Financial Performance; NPP = New Product Performance; OP = Organizational Performance; PP = Product Performance; MP = Market Performance; EP = Export Performance; NVI = New Venture Innovation.

"Publication Status / Journal": JA = Journal; CP = Conference Paper; JBS = Journal of Business Research; IJMMR = International Journal of Management and Marketing Research;

JMTM = Journal of Manufacturing Technology Management; II = Industry and Innovation; JSBED = Journal of Small Business and Enterprise Development; JBR = Journal of Business Research; MD = Management Decision; AJTI = Asian Journal of Technology Innovation; JMO = Journal of Management & Organization; BIJ = Benchmarking: An International Journal; SMQ = Strategic Management Quarterly; JBIM = Journal of Business & Industrial Marketing; IEMJ = International Entrepreneurship and Management Journal; IS = Innovation & Strategy; MRR = Management Research Review

# Study N Year Country Outcomes _Measured Outcome _details r correct Publication Status _Journal

81 Adams, Bodas Freitasb, & Fontana (2018) 1603 2004 France I IP 0.013 JA - JBS

82 Al-Ansaari, Bederr, & Chen (2015) 200 2012 UAE C BP 0.069 JA - MD

83 Ali, Leifu, & Rehman (2016) 158 2013 China C BP 0.388 JA - IJMMR

84 Batra, Sharma, Dixit, Vohra, & Gupta (2015) 162 2012 India I & C I & P 0.447 JA - JMTM

85 Choi & Williams (2016) a 284 2013 South Korea C BP 0.504 JA - II

86 Choi & Williams (2016) b 205 2013 South Korea C BP 0.387 JA - II

87 Dutot & Bergeron (2016) 257 2011 France M SBD & SMP 0.127 JA - JSBED

88 Frambach, Fiss, & Ingenbleek (2015) 126 2012 Netherlands F G 0.187 JA - JBR

89 Ho, Plewa, & Lu (2015) 766 2012 Germany F P 0.090 JA - JBR

90 Kocak, Carsrud, & Oflazoglu (2017) 818 2014 Turkey C BP -0.290 JA - MD

91 Lee, Dedahanov, & Rhee (2016) 352 2013 South Korea I & F IP & FP 0.637 JA - AJTI

92 Leng, Liu, Tan, & Pang (2015) 360 2012 China I NPP 0.369 JA - MD

93 Liu & Chen (2015) 118 2012 Taiwan I NPP 0.474 JA - JMO

94 Masa'deh, Al-Henzab, Tarhini, & Obeidat (2018) 252 2015 Jordan C OP 0.284 JA - BIJ

95 Ozkaya, Hult, Calantone, & Droge (2014) a 288 2011 US C & M PP & FP 0.675 CP

96 Ozkaya, Hult, Calantone, & Droge (2014) b 386 2011 China C & M PP & FP 0.395 CP

97 Rezazadeh, H. Karami, & A. Karami (2016) 154 2012 Iran C FP 0.586 JA - SMQ

98 Salojärvi, Ritala, Sainio, & Saarenketo (2015) 209 2008 Finland C MP 0.241 JA - JBIM

99 Song & Jing (2017) 199 2004 China M EP 0.599 JA - IEMJ

100 Srinivasan, & Lilien (2018) 252 2011 US I NPP 0.781 JA - IS

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27 3.2 Coding and measures

First, a coding sheet including necessary information that was aggregated from the detailed descriptions of the samples and methods reported in the studies was prepared. From each study information on effects size, sample size, as well as measurement reliability of TO and performance, were collected. To capture the multidimensionality of business performance, subjective and objective performance measures are investigated, which are expressed in the following dimensions: overall firm performance, firm innovativeness, market performance, financial performance and combined performance.

Additionally, following the study by Jaworski and Kohli (1993), I collected data on TT, MT, CI and DU to analyse the environmental conditions in different study settings. I collected the respective means to measure its effect on the TO-firm performance relationship. To enable a comparison of the means, I used the minimum and the maximum value of the studies’ respective Likert scale to rescale the means.

Moreover, to uncover control and moderating variables, information from each study on the following variables was extracted: outcome details, publication status, year of study, country of the sample (divided per nationality and later also between “western” and

“no-western”), national economic development (“developed” or “emerging”), sector and type of

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28 3.3 Bivariate meta-analysis

After deciding on what or what not to code and obtaining all the necessary information, the next step was to calculate the average effect size of TO on firm performance. This step included correcting for sampling and measurement error. Thus, I used the sample size of each study as weights and then compensated for the measurement error by adjusting the effect size estimates with the help of reliabilities of the measures. Following Nunnally (1967) recommendation, I took into consideration studies with a minimum of 0.6 as the reliability of the measure (the average of reliabilities between the variables is 0.806). In the case that information on the reliability of a TO or firm performance measure was not given, the mean reliability value was derived from the reliability of all other studies. Once the corrected mean sizes were obtained, to detect whether correlations between two variables were significant, I calculated a 95% confidence interval (CI). When the confidence interval does not include zero, it indicates that it is statistically significant (Ellis, 2010).

In order to test the mediating role of TO in the relationship between environmental factors and performance outcomes, I used the structural equation modeling (SEM), which is a mul-tivariate statistical technique that analyses the structural relation between variables and la-tent constructs. This technique is suggested by researchers because it permits the estima-tion of multiple and interrelated dependence both in a single analysis (Colquitt, LePine, & Noe, 2000). Two types of variables are used: endogenous variables that are the equivalent of dependent variables and the exogenous variables that are equal to independent variables. Using the above-mentioned bivariate techniques, a meta-analytical inter-correlation matrix including all variables was created. Every cell of this matrix was obtained from a separate meta-analysis. The following step was to analyse path-analytically the intercorrelation matrix using maximum-likelihood estimation. Since for one of the environmental dimensions the sample size was not provided, I calculated the mean of the overall sample size and used that one. The SEM enables the comparison of the hypothesized model with other models, specifically full mediation vs. partial mediation vs. non-mediation. The model fit was evalu-ated by calculating the root-mean-square error of approximation (RMSEA) and the compar-ative fit index (CFI) along with the standard chi-square statistic (Bentler, 1990). After testing those three models, the partial mediation showed a better fit compared to the other models. Using this method, I was not only able to test the mediating role of TO, but also to analyse the direct effects that the environmental dimensions have on firm performance.

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29 exceeds the chi-square value at a five per cent level. If so, the hypothesis of population homogeneity was rejected (Ellis, 2010). In that case, the distribution of effect sizes is heter-ogeneous, requiring to check for moderators by splitting the data into subgroups and ana-lyzing the Q between groups. Finally, the Q was compared between groups with the chi-square value to analyze whether the subgroups moderate the TO and firm performance relationship or not.

Additionally, to check the trustworthiness and robustness of our meta-analysis, I checked through our study sample for outliers, which are considered one of the most relevant sources of bias when it comes to meta-analysis (Fanelli, Costas, & Ioannudus, 2017). Outliers threaten the accuracy of meta-analytic conclusions and results as well as the cumulative scientific knowledge. An outlier has been defined as an observation that seems “to deviate

markedly from other members of the sample in which it occurs” (Grubbs, 1969, p.1). There

are different potential causes of outliers that could affect a meta-analysis and those are differentiated in sample-level and outcome-level causes. About the latter cause, I identified that in our dataset, there were two studies (respectively, study number 61 and 90) with an effect size that diverged from all the other samples (specifically it was much larger compared to the other samples). For this reason, I decided to remove those two studies before performing the moderator analysis since they might introduce residual heterogeneity that could threaten the results (Kepes & McDaniel, 2015).

4. Results

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30

Table 4. Correlation matrix

Variables 1 2 3 4 5 6 7 8 9 1 TO 0.831 2862 (14) 1580 (7) 2291 (8) 1264 (4) 10623 (45) 9515 (44) 3173 (17) 5307 (27) 2 TT 0.35 0.817 691 (4) 1517 (5) 1138 (3) 1312 (6) 1452 (6) 922 (4) 1136 (5) 3 MT 0.25 0.46 0.701 522 (1) 813 (-) 514 (3) 577 (3) 199 (1) 754 (2) 4 CI 0.04 0.42 0.35 0.720 1264 (4) 758 (2) 928 (3) 606 (2) 1561 (6) 5 DU 0.07 0.15 0.22 0.40 0.733 758 (2) 730 (2) 408 (1) 534 (2) 6 I 0.39 0.18 0.19 -0.22 -0.03 0.867 - - - 7 C 0.29 0.08 0.09 -0.14 -0.01 - 0.851 - - 8 M 0.32 0.26 0.40 -0.12 -0.10 - - 0.864 - 9 F 0.25 0.15 -0.01 -0.03 -0.11 - - - 0.867

Notes: Sample size weighted meta-analytic correlation coefficients are presented below the diagonal. The number of studies (total sample size in parentheses) is presented above the diagonal. Construct reliability values are presented on the diagona l. TO: technological orientation; TT: technological turbulence; MT: market turbulence; CI: competitive intensity; DU: demand uncertainty; I: innovativeness; C: combined performance; M: market performance; F: financial performance.

4.1 Results of the direct meta-analysis

The bivariate results of the meta-analysis are presented in Table 5. Results show a statistically significant and positive (rn,α = 0.39; p < 0.001) relationship between TO and

overall firm performance, therefore supporting Hypothesis 1a. Moreover, the significant

Q-statistic (Q= 2675.91) of the TO-performance relationship indicates heterogeneity of the effect sizes, implying that there are different effect sizes in different groups. The high heterogeneity of the effect sizes could be explained by moderators influencing the overall effect size.

Also, between TO and the performance outcomes, there are positive and statistically significant relations, just with a slight difference in the magnitude of the effect size. TO has the strongest effect on firm innovativeness with a reliability-corrected mean effect size of rn,α

= 0.47 (p < 0.001), which is in line with the concept argued in the literature review that TO has a better influence on the innovativeness of a company. Additionally, market, combined and financial performance denote a positive relation with TO, respectively with a rn,α = 0.37,

rn,α = 0.35, and rn,α = 0.33 (p < 0.001). Therefore, also Hypotheses 1 b,c,d,e are supported.

Concerning the environmental factors, the bivariate results show that the TO-TT relationship is the only one to be positive and statistically significant (rn,α = 0.46; p < 0.001).

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31 Therefore, Hypothesis 3 and Hypothesis 4 are rejected. Also, TO-DU relation is positive, however the probability value (p-value) is high and exceeds the limits set (rn,α = 0.09; n.s.),

thus the relationship is not statistically significant. Therefore Hypothesis 5 is rejected.

Table 5. Bivariate results from the meta-analysis

95% CI 95% PI k N r r correct LL LL LL LL Q PQ I 2 TO – TT 14 2862 0.35 0.46 0.24 0.63 -0.4 0.89 446.37 0 97.09% TO – MT 7 1580 0.25 0.38 -0.09 0.71 -0.76 0.95 359.65 0 98.33% TO – CI 8 2291 0.04 0.05 -0.06 0.16 -0.19 0.28 23.2 0.002 69.83% TO - DU 4 5307 0.07 0.09 0.01 0.17 0.01 0.17 2.46 0.483 0.00% TO – I 45 10623 0.39 0.47 0.39 0.54 -0.23 0.85 1379.83 0 96.81% TO – C 44 9515 0.29 0.35 0.28 0.41 -0.22 0.74 808.29 0 94.68% TO – M 17 3173 0.32 0.37 0.23 0.5 -0.22 0.76 243.64 0 93.43% TO – F 27 5307 0.25 0.33 0.14 0.49 -0.34 0.78 551.43 0 95.29% TO – P overall 101 21788 0.32 0.39 0.33 0.45 -0.28 0.8 2675.91 0 96.26% Note: p < 0.05; p < 0.01; p < 0.001

4.2 Results of the mediating role of technological orientation

The results of the bivariate meta-analysis in MASEM on the mediating role of TO and direct effects of environmental variables on performance are presented in Figure 3. In order to test the mediator hypothesis, the direct and indirect effects are calculated (Brown, 1997). The direct effects are the effects of the environmental variables on firm performance outcomes unmediated by TO. The indirect effects are calculated as the product of the paths from the environment to TO and from TO to each performance outcomes. Results from every variable are listed below.

The path coefficients of the mediation model demonstrate that TT is significantly and positively related with TO (β = 0.354; p < 0.001). Analysing the direct effect of TT on performance it could be stated that it has a general positive relation with minimal variations between the different performances (firm innovativeness, β = 0.143; p < 0.001; market performance, β= 0.142; p < 0.001; financial performance rn,α = 0.138; p < 0.001). Only the

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32 Moving on, results also show that MT is positively and statistically associated with TO (β = 0.137; p < 0.001). Regarding the direct effects on performance, MT has the strongest and positive relation with market performance (β= 0.413; p < 0.001). Also, firm innovativeness has been found to have a significant and positive relation with MT (β= 0.167; p < 0.001), unlike financial performance, which has a negative relation (β= -0.101; p < 0.05). Regarding the combined performance, the result is positive but not significant (β= 0.072; n.s.).

Results on CI reveal a significant but negative relation with TO (β= -0.180; p < 0.001). In addition, direct effects of CI on performance have shown negative results. To be precise, firm innovativeness has the lowest relation with CI (β= -0.365; p < 0.001), followed by market (β = -0.288; p < 0.001) and combined performance (β= -0.203; p < 0.001). The result of CI directly influencing financial performance is been found not to be statistically relevant (β= -0.014; n.s.).

Lastly, a high level of DU has been found to be slightly positive with a firm TO, however it is not statistically significant (β= 0.059; n.s.). Moreover, a direct relation with both firm innovativeness and combined performance have been slightly positive but not significant (respectively, β = 0.036; n.s.; β = 0.032; n.s.), instead results for market and financial performance are significant and negative (respectively, β= -0.110; p < 0.01; β= -0.119; p < 0.01).

Master Thesis for MSc IB&M