The impact of Strategic Orientation mediated by Absorptive Capacity on Firm Performance

Edi Komara; Willy  Arafah; Wahyuningsih Santosa

doi:10.55927/eajmr.v4i4.130

Authors

Edi Komara Trisakti University
Willy Arafah Trisakti University
Wahyuningsih Santosa Trisakti University

DOI:

https://doi.org/10.55927/eajmr.v4i4.130

Keywords:

Orientation Strategic, Absorptive Capacity, Firm Performance

Abstract

This study analyzes the impact of Strategic Orientation; (Entrepreneurial Orientation (EO), Market Orientation (MO), Learning Orientation (LO), and Innovation Orientation (IO)) on Firm Performance (FP) mediated by Absorptive Capacity (AC). Employing a descriptive approach and collecting data from a sample of Top Management of Rural Banks (BPR). Data analysis was conducted using Partial Least Square with SmartPLS 4.0 software. The research results indicate that strategic orientations have a direct positive influence on both AC and FP. Indirectly, EO has a positive influence on FP mediated by AC, and IO has a positive influence on FP mediated by AC. Meanwhile, MO and LO have no influence on FP mediated by AC. The research results provide recommendations for banks to utilize AC to drive increased FP.

References

Abbas, J.; Hussain, I.; Hussain, S.; Akram, S.; Shaheen, I.; Niu, B. (2019). The Impact of Knowledge Sharing and Innovation on Sustainable Performance in Islamic Banks: A Mediation Analysis through a SEM Approach. Sustainability, 11, 4049. https://doi.org/10.3390/su11154049.

Adiguzel, Z., & Sonmez Cakir, F. (2022). Examining the effects of strategic orientation and motivation on performance and innovation in the production sector of automobile spare parts. European Journal of Management Studies, 27(2), 131–153.

Aftab, J., Veneziani, M., Sarwar, H., & Ishaq, M. I, (2022), Entrepreneurial orientation and firm performance in SMEs: the mediating role of entrepreneurial competencies and moderating role of environmental dynamism, International Journal of Emerging Markets. ahead-of-print.

Alshahrani. M.A, Salam. M.A, (2023), Entrepreneurial orientation and SMEs performance in an emerging economy: the mediating role of absorptive capacity, Journal of Research in Marketing, and Entrepreneurship, 1471-5201.

Anwar, M., & shah, s. Z. a. (2021). Entrepreneurial Orientation and Generic Competitive Strategies for Emerging SMEs: Financial and nonfinancial performance perspective. Journal of Public Affairs, 21(1), e2125.

Arief, M. Y., & Nisak, M. (2022). Pengaruh Prosedur Kerja, Kompetensi, Dan Kepuasan Kerja Terhadap Produktivitas Kerja Karyawan. Jurnal Manajemen dan Sains, 7(1)

Beliaeva, Shirokova, Wales, and Gafforova, (2020), “Benefiting from the economic crisis? Strategic orientation effects, trade-offs, and configurations with resource availability on SME performance”, International Entrepreneurship and Management Journal, Vol. 16 No. 1, pp. 165-194, doi: 10.1007/s11365-018-0499-2.

Bıçakcıoĝlu-Peynirci, N. and _Ipek, _I. (2020), “Export market orientation and its consequences: a metaanalytic review and assessment of contextual and measurement moderators”, Journal of Business and Industrial Marketing, pp. 939-954, doi: 10.1108/JBIM-04-2019-0147.

Cho and Lee, (2020), A Study on the Efects of Entrepreneurial Orientation and Learning Orientation on Financial Performance: Focusing on Mediating Efects of Market Orientation, Sustainability 2020, 12, 4594.

Dutta, D. K., Gupta, V. K., & Chen, X. (2016). A tale of three strategic orientations: A moderated-mediation framework of the impact of entrepreneurial orientation, market orientation and learning orientation on firm performance. Journal of Enterprising Culture, 24(3), 313–348.

Fan, M., Qalati, S. A., Khan, M. A. S., Shah, S. M. M., Ramzan, M., & Khan, R. S. (2021). Effects of Entrepreneurial Orientation on Social Media Adoption and SME Performance: the moderating role of innovation capabilities. PloS One, 16(4), 1-24. https://doi.org/10.1371/journal.pone.0247320.

Farooq. R, Vij. S and Kaur. J, (2021), Innovation orientation and its relationship with business performance: moderating role of ﬁrm size, Measuring business excellenc, VOL. 25 NO. 3 2021, pp. 328-345, Emerald Publishing Limited, ISSN 1368-3047, DOI 10.1108/MBE-08-2020-0117

Fatima.T & Bilal. AR, (2020), Achieving SME performance through individual entrepreneurial orientation. Journal of Entrepreneurship in Emerging Economies. Vol. 12 No. 3, 2020 pp. 399-411 © Emerald Publishing Limited 2053-4604.

Gajere M.C (2022), Strategic orientation and performance of SMEs in Nigeria: moderating role of competitive intensity, Journal of Global Entrepreneurship Research (2023) 13:7.

Groza, M.D., Zmich, L.J. and Rajabi, R. (2021), “Organizational innovativeness and firm performance: does sales management matter?”, Industrial Marketing Management, Vol. 97, pp. 10-20.

Hernandez. F, Perlines (2018), Moderating effect of absorptive capacity on the entrepreneurial orientation of international performance of family businesses, Journal of Family Business Management, Vol. 8 No. 1, 2018.

Hosseini, S. A., Rafiee, M., Huoshyar, V., & Bazvand, S. B. (2019). Designing a competency model for managers of Resalat Qard Al-Hasan bank (with social banking approach). Journal of Economic and Social Research, 18(2).

Huo, M., & Li, C. (2022). Impact of managerial power on enterprise innovation performance: The mediating roles of financing constraints and strategic orientation. Chinese Management Studies, 17(3), 637–659.

Ibarra-Cisneros, M.-A., Demuner-Flores, M.d.R., & Hernández-Perlines, F. (2021). Strategic orientations, firm performance and the moderating effect of absorptive capacity. Journal of Strategy and Management, Vol 14 No. 4, pp. 582–611. https://doi.org/10. 1108/JSMA-05-2020-0121

Jarosław Karpacz and Anna Wojcik-Karpacz, (2023), The relationship between learning orientation, firm performance and market dynamism in MSMEs operating in technology parks in Poland: an empirical analysis, Central European Management Journal Vol. 32 No. 2, 2024 pp. 216-232

Kohtamåki, M., Heimonen, J. and Parida, V. (2019), “The nonlinear relationship between entrepreneurial orientation and sales growth: the moderating effects of slack resources and absorptive capacity”, Journal of Business Research, Vol. 100, pp. 100-110, doi: 10.1016/j.jbusres.2019.03.018.

Makhloufi, Laghouag, dan Sahli, (2024), Mediating eﬀect of absorptive capacity on the relationship between knowledge sharing and entrepreneurial orientation and the moderating role of opportunity recognition, Journal of Research in Marketing and Entrepreneurship, Vol. 26 No. 2, 2024.

Marzouk, J., & El Ebrashi, R. (2023), The Interplay among green absorptive capacity, green entrepreneurial, and learning ori entations and their effect on triple bottom line performance. Business Strategy and the Environment. https://doi.org/10.1002/bse.3588

Navodera, F.A., & Kinyuru, R.N. (2020). Strategic planning process and competitive positioning of deposit taking SACCOS in Nairobi City Country, Kenya. Int. Journal of Social Sciences Management and Entrepreneurship, 4(1), 1-19.

Nawi, Mamun. A.A, Daud. R.R.R, Nasir. N.A, (2020), Strategic Orientations and Absorptive Capacity on Economic and Environmental Sustainability: A Study among the Batik Small and Medium Enterprises in Malaysia, Sustainability 2020, 12, 8957; doi:10.3390/su12218957.

Nourallah, M., Strandberg, C, and Öhman, P. (2021), “Mobile bank applications: loyalty of young bank customers”, Financial Services Review, Vol. 29 No. 2, pp. 147-167.

Purwianti, L. (2021). Pengaruh market orientation, entrepreneurial orientation, terhadap kinerja perusahaan dengan mediasi absorptive capacity. Jurnal Ilmiah Bisnis Dan Ekonomi Asia, 15(2), 126-142.

Rahman, M., Hack-Polay, D., Shafique, S. and Igwe, P.A. (2021), “Dynamic capability of the firm: analysis of the impact of internationalisation on SME performance in an emerging economy”, International Journal of Emerging Markets, doi: 10.1108/ IJOEM-02-2021-0236

Raisal. I, Oluvil, Tarofder. A.K, Ilmudeen. A, (2021), The nexus between entrepreneurial orientation and performance: enabling roles of absorptive capacity, World Journal of Entrepreneurship, Management and Sustainable Development, Vol. 17 No. 2, 2021, pp. 153-166.

Reimann, C.K., Carvalho, F.M.P.D.O. and Duarte, M.P. (2023), “Adaptive marketing capabilities, market orientation, and international performance: the moderation effect of competitive intensity”, Journal of Business and Industrial Marketing, Vol. 37 No. 12, pp. 2533-2543.

Seepana C., Huq F.A and Paulraj A..(2021). Performance effects of entrepreneurial orientation, strategic intent and absorptive capacity within coopetitive relationships. International Journal of Operations & Production Management Vol. 41 No. 3, 2021 pp. 227-250.

Shah, Moawad, Bhatti, Abdelwahed, Soomro, (2024), Orientation and absorptive capacity towards sustainability missing link between sustainability and performance, International Journal of Productivity and Performance Management Vol. 73 No. 5, 2024 pp. 1535-1562

Soomro, B.A., Ghumro, I.A. and Shah, N. (2020), “Green entrepreneurship inclination among younger generation: an avenue towards a green economy”, Sustainable Development, Vol. 28 No. 4, pp. 585-594.

Stelmaszczyk, M. (2020). How Absorptive Capacity and Organisational Learning Orientation Interact to Enable Innovation Capability? An Empirical Examination. Entrepreneurial Business and Economics Review, 8(1), 7-32. https://doi.org/10.15678/EBER.2020.080101

Uzoamaka O.P, Ndubuis, Ifeoma A.R, Nosike C.J (2020), Strategic Orientation Dimensions: A Critical Review, International Journal of Research and Innovation in Social Science, Vol. IV, Issue IX, ISSN 2454-6186.

Vlasic, G. (2022). Comparative analysis of the role of strategic orientation, strategic performance metric focus and strategic audacity in driving firm performance: Family businesses vs nonfamily businesses. Owusu, D., Mensah, I., Amenumey, E. K., & Mensah, R. D. Journal of Family Business Management, 13(1), 7–25. https://doi.org/10.1108/JFBM-03-2022-0048.

Zahra, S.A. and George, G. (2002), “Absorptive capacity: a review, reconceptualization, and extension”, Academy of Management Review, Vol. 27 No. 2, pp. 185-203.