Journal of Innovation
& Knowledge
https://www.journals.elsevier.com/journal-of-innovation-and-knowledge
Regular article
Market-sensing capability, knowledge creation and innovation: The moderating role of entrepreneurial-orientation
Abdallah Mohammad Alshanty
∗, Okechukwu Lawrence Emeagwali
FacultyofBusiness&Economics,TheAmericanUniversity,Girne,Cyprus
a r t i c l e i n f o
Articlehistory:
Received6December2018 Accepted16February2019 Availableonline8March2019
Keywords:
Market-sensing Innovations
Knowledgemanagement
Strategicentrepreneurial-orientation
a b s t r a c t
This articleexamines the nexusbetweenmarket-sensing capability,knowledge creation,strategic entrepreneurial-orientationandinnovationinsmallandmediumsizedenterprises(SME).Datawasgar- neredfrom(n=255)SMEsoperatinginJordanandacovariance-basedstructuralequationmodelling (CB-SEM)wasappliedtoanalyzethedata.SEMresultillustratesapositiveeffectofmarket-sensing capabilityon(1)knowledgecreation,and(2)firminnovation.Knowledgecreationprocesshaspositive effecton(3)firminnovation.Knowledgecreationprocess(4)mediatedthelinkbetweenmarket-sensing capabilityandfirminnovation.Strategicentrepreneurial-orientationmoderatesthelinkbetween(5) knowledgecreationandfirminnovation,suchthatthepositiverelationshipbecameweakerwhenstrate- gicentrepreneurial-orientationishigh.Theoreticallyandempiricallythisstudyhascontributedtothe existinginconsistentfindings,andalsoofferusefulmanagerialinsights.
©2019JournalofInnovation&Knowledge.PublishedbyElsevierEspa ˜na,S.L.U.Thisisanopenaccess articleundertheCCBY-NC-NDlicense(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Introduction
SMEsareresponsibleforthepreponderanceofemploymentin mostemergingeconomiessincetheymakeupmostofthebusiness inthosecountries(Lin,1998).Although,largerfirmshavemate- rial,financial andtechnologicaladvantages over SMEs(Verhees
&Meulenberg,2004).SMEsareflexible,lessbureaucratic,employ informalstrategiesanddecisionmakingismorefluidbecausepri- vateandbusinessobjectivesareoftenentwinedcomparedtolarger businesses.Asidefromtheseentrepreneurialbehaviouraladvan- tages andinformality, SMEs’information systemis alsounique andadvantageous.SMEsarepurviewtodirectandindirect,formal andinformal,internalandexternalsourcesofinformationwhich are useful in business operations,innovation, performance and growth(Rosenbusch,Brinckmann,&Bausch,2011).EffectiveSMEs arethosethatpaymuchattentiontoinnovation(Ireland&Webb, 2007),forthereasonthatinnovationenhancestheperformance andprofit(Keskin,2006).
Theabilitytosenseandreacttothemarketenvironmentand changes in terms of technologyadvancement, consumer tastes and demands, innovation and thevalue offering is calledmar- ket sensing (Likoum, Shamout, Harazneh & Abubakar, 2018).
However,oneofthemajordifficultiesfacingSMEsistheidenti-
∗Correspondingauthor.
E-mailaddress:[email protected](A.M.Alshanty).
fication,seizing,stockpiling,mapping,distributing,and creation of knowledge (Sołek-Borowska, 2017).These stages leading up toknowledgecreation.Sołek-Borowska(2017)foundthatknowl- edgecreationisessentialforSMEs.ShereportedthatSMEsdoes what largerbusinessesare unabletodo;whichis tousejoint- effort,face-to-facecommunicationandcultofownerstocreatean environmentencouragingthecreationofknowledge.Competition coupledwithconsumers’sophisticateddemands,makesitexpe- dientforSMEstoembraceanentrepreneurialorientationsoasto remainrelevant,enhanceperformanceandinactualfactstayin business(Kraus,Rigtering,Hughes,&Hosman,2012).
In previous studies, innovation has been reported to occur as a result of the ability to sense the market (Ardyan, 2016), anticipate business environment changes (Fang, Chang, Ou, &
Chou, 2014), processes and knowledgemanagement (Quintane, MitchCasselman,SebastianReiche,&Nylund,2011).Innovation alsoappearsthroughentrepreneurialorientation(Ardyan,2016).
SMEs have been reported to respond more rapidly and flexi- blyto intelligencegleanedfromthe marketbecausemakingof decisioninSMEsisnon-bureaucratic(Carson,Cromie,McGowan,
& Hill, 1995). Thismakes enterprises more capableof exploit- ingthechangesinthebusinessandsocialenvironment,aswell as trends in the market. Because of its disruptive tendencies, firms withweakentrepreneurialorientation willhardly under- takeinnovativeactivities.Therelationshipsbetweeninnovation strategy,knowledgemanagementandinnovationperformanceis mixed.Moreover,thereisascarcityoftheoreticalresearchonhow
https://doi.org/10.1016/j.jik.2019.02.002
2444-569X/©2019JournalofInnovation&Knowledge.PublishedbyElsevierEspa ˜na,S.L.U.ThisisanopenaccessarticleundertheCCBY-NC-NDlicense(http://
creativecommons.org/licenses/by-nc-nd/4.0/).
SMEsmarket-sensing capabilityleveragesthefirms’outcome to achieveinnovativeness(Jajja,Kannan,Brah,&Hassan,2017).This studyasaresultinvestigatestheinter-relationshipandimpactof SMEs,market-sensingcapabilities,knowledgecreationprocessand strategicorientationonitsproduct/processinnovation.
Theoreticalbackgroundandhypotheses
Marketsensingcapabilityandknowledgecreation
Market-sensingis“abroadgenerationofmarketintelligenceby anorganizationrelatingtopresentandfutureneedsofcustomers, distributionof these knowledge acrosstheorganisation’s func- tionalunit,andtheorganization’sresponsiveness/reactiontothe market”(Jaworski&Kohli,1993).MarketSensingisatoolfordevel- opinganorganizationwhichisskilfulatlearning,perceiving,and respondingtomarketdynamics(Likoum,Shamout,Harazneh,&
Abubakar,2018).Thecapabilityofafirmtoassessandapplyexter- nalknowledgedependsonpreviousrelatedknowledge(Likoum etal.,2018).Thus,previouslyacquiredknowledgeinfersacapabil- itytoidentifytheworthofnewinformation,integrateitandmake useofitcommercially(Cohen&Levinthal,1990a).Researchshows thatmanagersemphasizedthesignificanceofinformationregard- ingcustomers,competitor,distributionchannels,and thelarger environsin a venture’s targetmarket (Morgan, Zou, Vorhies, &
Katsikeas,2003).Informationaboutfirm’scustomers,competitors, suppliersandothermarketfactorsmakesupatreasuredportion ofthatfirm’sknowledgebase.Knowledgeisfundamentalinthe searchofopportunities(Abubakar,Elrehail,Alatailat,&Elc¸i,2017;
Nonaka,2007).marketsensingabilitycangeneratehighmarket knowledge,whichisspeculatedtobekeenforanyactivecapability (Teece,2007,2012).Accordingly,afirm’smarketsensingcapabili- tieshaveapositiveinfluenceonknowledgecreationoffirms.
H1. Firm market sensing capability hasa positive impact on knowledgecreationprocess.
Market-sensingcapability,processandproductinnovation
Innovativenessisthedevelopmentofnovel,appropriate,and uniqueproductsorservicesbya firm.It’salsoa firmopenness toembracingnewconcepts,products,andprocedures,consistof thefirm’sreadinesstotransformandadoptlatesttechnologyand markettrends(Rakthin,Calantone,&Wang,2016).Toachievethis, marketintelligenceisrequired,sinceproductinnovationprocess canbeimprovedthroughmarketknowledge(Luca&Atuahene- Gima, 2007).Sensing ability encourages firm to exerteffort in acquiringmarketfacts,operatingonvaryingcircumstancestoout- smartcompetitors, creatingand sustainingcordial relationships withstaffsandcustomers,andinvolvinginnerstrengthsincon- formitywithexternalenvironments(Desarbo,DiBenedetto,Song,
&Sinha,2005;Likoumetal.,2018).Thetendencytoprocureexter- nalmarketinformation,oranideaofcustomerdesires,needs,and serviceprocedures,isidentifiedasimperativefornewinnovation (Johan&Anna,2018;Rakthinetal.,2016).Thus,
H2. Market-sensingcapabilityhasapositiveimpactonprocess andproductinnovation.
Knowledgecreation,andprocessandproductinnovation
Theknowledge-basedideaoffirmexplainsitasauniquesum ofdiverseknowledgewhosemajorpurposeistoestablish,incor- porate,andapplyknowledge,aswellascommunicateitwithin andoutsidethefirm;hencemakingfirm typically“achannelof knowledgeflow”(Abubakaretal.,2017;Grant,1996a).Knowledge is central for assumingtechnological innovation (Lichtenthaler, 2016). Knowledge is generally considered as a key strategic means to enhance innovation and improve a firm’s operation (Alegre,Sengupta,&Lapiedra,2013;Elrehail,Emeagwali,Alsaad,
& Alzghoul,2018).Mahr, Lievens,and Blazevic(2014) debated thatabusinessqualifiedfordevelopingknowledgecancontinually generate the knowledge reserves needed to advance its prod- uctsand improvesitsprocesses. Thus,knowledge basepermits afirmtoenhanceitsproductivity,cutcosts,orupgradeitsprod- ucts,enhancestheabilitytodevelopinnovativepractices,products and services(Shu, Page,Gao,&Jiang,2012).Similarly,strategic knowledgeformationpossessesthetendencytoreachnoveltyand processdevelopments(Sankowska,2013;Quintaneetal.,2011).
Thus,
H3. Knowledge creationhasapositive impactonprocessand productinnovation.
Mediatingroleofknowledgecreationprocess
Market-sensinggrantsfirms’uniquecompetence,whichisthe sourceofcreatinga viablecompetitiveadvantage.Valuedcom- petences, like marketing capabilities, cannot be imitated with ease,replaced,orconveyedwithinrivals;therefore,thesecapa- bilitiesmakethebaseforviablecompetitiveedge(Grant,1996b).
Lankinen and Tuominen (2007)and Olavarrietaand Friedmann (2008)institutedthatmarket-sensingabilityisawayofgaining marketknowledge fordecision-making process.Marketsensing abilities promote a firm’s tendency to recognize opportunities, improvetheircustomer’sexperienceandknowledge(Reinartz&
Kumar,2000).Businessescaninnovatebetterwhencurrentknowl- edgewithinthesystemisemployedalongsidewellinternalized knowledgefromexternalsources(Shuetal.,2012).Followingthe proceedingproposition thata firm’smarketing sensingabilities ispositivelyconnectedtothefirm’sknowledgecreationprocess, whichsubsequentlyhaspositiveinfluencesonthefirm’sinnova- tiveness.Thus,
H4. Knowledgecreationprocessmediatesthepositiverelation- shipbetweenmarket-sensingcapabilityandprocessandproduct innovation.
Moderatingroleofstrategicentrepreneurial-orientation
Strategic entrepreneurial orientation explicitly covers the entrepreneurial phases of firms’ strategies. Lumpkin and Dess (2001) established five scopes of entrepreneurial orientation, which includes;innovativeness;taking therisk;pro-activeness;
assertiveness;andautonomy.Entrepreneurialorientationisknown asanorganizationalresourcethatallowsfirmstodistinguishthem- selvesfrom theirrivals via innovation(Ireland, Hitt, &Sirmon, 2003). Knowledge distribution within a firm turns to knowl- edge creation and the circulation of knowledge throughout a businessfirm.Theknowledgeisthentransformedtoinnovation intendedatexploitingmarketopportunities.Vidic(2013)argued thatarelationshipexistsbetweenentrepreneurialorientationand knowledgeformulation.SMEshighwithstrategicentrepreneurial orientationarealsoverylikelytobehighlyproactive;displaying ahigherpredispositiontolookfor,andseizeopportunitiesinthe market(Jantunen,Puumalainen,Saarenketo,&Kyläheiko,2005).
Theyarelikelytobereliantontheirknowledgecapacity.Thisiswhy researcherproposethatentrepreneurialorientationfirmusually maintainproductivelearningbyfindingandexploringvalue-added opportunities(Chaston&Scott,2012).Thus,
H5. Strategic entrepreneurial-orientation moderates the link betweenknowledgecreationandprocessandproductinnovation, suchthattheimpactofknowledgecreationonProcessandproduct innovationwillbehigherwhenstrategicentrepreneurialorienta- tionishigher.
Theproposedhypothesesare illustrateddiagrammaticallyin Fig.1.
H1
H4
H2
H5
H3 Process and product innovation Knowledge creation
Market sensing capability
Strategic entrepreneurial
orientation
Fig.1. Researchmodel.
Method
Researchmeasures
Marketsensingcapabilityisthecapabilitytogatherandusethe informationrequiredtocommercializepatentedinnovationsfrom markets.Afiveitemsscalewasadoptedfrom(Cohen&Levinthal, 1990b;Teece, 2007).Knowledgecreationprocesswascaptured using19itemsvalidatedbyNonaka,Byosiere,andKonno(1994).
Strategicentrepreneurialorientationwascapturedusingnine5- pointLikert-typequestionstakenfromCovinandSlevin(1991)and LumpkinandDess(1996)andJantunenetal.(2005)whichinves- tigatetheareasofinnovativeness,Proactiveness,andrisk-taking.
Productandprocessinnovationweremodelledandcapturedwith 13itemsutilizedbyˇSkerlavaj,Song,andLee(2010).Alltheitems wereformulatedona5-pointresponsescale.Where1standsfor (stronglydisagree)and5(stronglyagree).
Researchdesignandsampling
Thedevelopedquestionnairewasback-translatedtoArabicand toEnglishbytranslators(Perrewe etal.,2002).About98%ofall firmsinJordanareSMEs.Basedontheinformationobtainedfrom theministry,1400registeredSMEsareoperatinginAmman,Jordan (http://www.jordanyp.com/category/Smallbusiness/city:Amman).
Simple random sampling (SRS) are “unbiased and sometimes approximatelyunbiasedestimationoftheproportionsofpeople bearing undesirable features in human communities and also total/meansofrealvaluesofsensitivevariablesofsocialinterest”.
Because everyonehasequal chance ofbeing selectedand each individualcanbesampled.Tocatapulttheaccuracyandpredict theoutcomewithhighreliabilityand validity,SRSwasadopted andinsteadofsampling225SMEs,theauthorsampled300SMEs.
First,severalSMESkeypeoplewerecontactedandtheyagreedto participantinthestudy.Theparticipantswerekeyrepresentatives oftheselectedSMEs.
Dataanalysisandresults
Demographicinformation
Table1presentsthedemographicfeaturesoftheJordanianSMEs investigated.
Modelfitindices,validityandreliabilityofscales
IBM-SPSS AMOS programme v21 wasused to conduct con- firmatory factoranalysis(CFA). AccordingtoHarrington (2008),
“assessingthemeasurementmodelvalidityoccurswhenthethe- oreticalmeasurementmodeliscomparedwiththerealitymodel to see how well the data fits”. Measurement model validity
Table1
Demographicdata(n=255).
Frequency %
Numberofemployees
Lessthan50 93 36.5
51–100 150 58.8
Above100 12 4.7
Total 255 100.0
Industrytype
Manufacturingfirm 69 27.1
Servicefirm 186 72.9
Total 255 100.0
R&Dintensity–how manyemployeeswork intheR&Ddepartment havethefollowing diplomas
Highschool 0 0.0
Somecollegedegree 36 14.1
Bachelor’sdegree 134 52.5
Higherdegree 85 33.3
Total 255 100.0
Table2
Goodness-of-fitindices.
Model Measurementmodelindices Benchmark
Chi-square =1320.658 –
degreeoffreedom =983 –
RelativeChi-square =1.343 <5
GFI =.822 Near1isperfect
NFI =.907 Near1isperfect
CFI =.974 Near1isperfect
TLI =.973 Near1isperfect
IFI =.975 Near1isperfect
RMR =.021 <.06
RMSEA =.037 <.08
PCLOSE =.000 <.05
can be determinedwith a severaltools and indicators such as standardizedthefactorloadings,t-statistics,Chi-squaretestand popular goodness-of-fit indices namely: Goodness of Fit Index (GFI), Normed Fit Index (NFI), the comparative fit index (CFI), theTucker–LewisIndex(TLI),Bollen’sIncrementalFitIndex(IFI), Root meansquare residual(RMR),and RootMean SquareError of Approximation(RMSEA) etc.Themodelfitinthis studysug- gest that thedataset fits wellwith the theoreticalfactors. See Table2.
Commonmethodbias(CMB)arebiasesintroducedbyinstru- ments; which makes research findings to be contaminated by the ‘noise’ stemming from the biased instruments” (Jahmani, Fadiya, Abubakar, & Elrehail, 2018; MacKenzie, Podsakoff, &
Podsakoff, 2011). The authors proposedstratagem and mathe- maticalapproaches,theformerincludes:ensuringanonymityand confidentiality of theparticipantsand thelatter involvesseries ofstatisticalmethodapplicationse.g.,Harmansinglefactortest, where scale items are forced to load on a single factor rather thantheirtheoreticalfactors.Bothapproacheswereutilizedinthis study.
The menace of non-responsebias wasassessed by compar- ing thevariables means, then demographicsprofileof the first 25% responses was compared with the last 25% responses, no significant difference was found (Collier & Bienstock, 2007).
Construct validity is defined by convergent validity and diver- gent validity. Convergent validity is used to corroborate the theoreticalcorrelation claimbetweenitems ofa construct;and divergent validity is used to corroborate theoretical diver- gence between items of individual construct and with that
Table3
Descriptivestatisticsofthesurveyitems.
Variablesanditems SFL t-Value
Market-sensingcapability(˛=.918,CR=.918,AVE=.692)
“Ourcompanyacquireandusemarketinformation” .806 -
“Ourcompanyanticipaterivals’actions” .832 15.974
“Ourcompanypredictconsumerdemand” .848 16.420
“Ourcompanyestablishdatabasetoservecustomers” .828 15.860
“Ourcompanyintegratemarketandtechnologyinformation” .845 16.345
Strategicentrepreneurialorientation(˛=.958,CR=.958,AVE=.716)
“Weareamongthefirstonestoimplementprogressiveandinnovativeproductionprocessesandpractices” .857 18.043
“Themanagementofourcompanysupportstheprojectsthatareassociatedwithrisksandexpectationsfor returnshigherthanaverage”
.843 17.537
“Weactivelyobserveandadoptthebestpracticesinoursector” .856 17.994
“Weactivelyobservethenewpracticesdevelopedinothersectorsandexploittheminourownbusiness” .842 17.483
“Werecognizeearlyonsuchtechnologicalchangesthatmayhaveaneffectonourbusiness” .837 17.319
“Weareabletotakeonunexpectedopportunities” .858 18.092
“Wesearchfornewpracticesallthetime” .854 17.943
“Inuncertaindecision-makingsituationswepreferboldactionsastomakesurethatpossibilitiesareexploited” .827 16.969
“Weallocateourresourcescontinuouslytonewpromisingoperationareas” .842 –
Knowledgecreationprocess(˛=.978,CR=.978,AVE=.700)
“Ourcompanystressesgatheringinformationfromsalesandproductionsites” .841 –
“Ourcompanystressessharingexperiencewithsuppliersandcustomers” .840 17.376
“Ourcompanystressesengagingindialoguewithcompetitors” .826 16.914
“Ourcompanystressesfindingnewstrategiesandmarket” .844 17.515
“Ourcompanystressescreatingaworkenvironmentthatallowspeerstounderstandthecraftsmanshipand expertise”
.835 17.219
“Ourcompanystressescreativeandessentialdialogues” .843 17.497
“Ourcompanystressestheuseofdeductiveandinductivethinking” .839 17.342
“Ourcompanystressestheuseofmetaphorsindialogueforconceptcreation” .830 17.042
“Ourcompanystressesexchangingvariousideasanddialogues” .824 16.823
“Ourcompanystressessubjectiveopinions” .810 16.363
“Ourcompanystressesenactiveliaisoningactivitieswithfunctional(knowledgeacquisitiondepartmentsby cross-functionaldevelopmentformrealworld)teams”
.819 16.655
“Ourcompanystressesformingteamsasamodelandconductingacquisitionfromvirtualworld)experiments, andsharingresultswithentiredepartments”
.841 17.409
“Ourcompanystressessearchingandsharingnewvaluesandthoughts” .842 17.445
“Ourcompanystressessharingandtryingtounderstandmanagementvisionsthroughcommunicationswith fellows”
.826 16.896
“Ourcompanystressesplanningstrategiesbyusingpublishedliterature,computersimulationandforecasting” .832 17.112
“Ourcompanystressescreatingmanualsanddocumentsonproductsandservices” .848 17.679
“Ourcompanystressesbuildingdatabasesonproductsandservice” .847 17.634
“Ourcompanystressesbuildingupmaterialsbygatheringmanagementfigures&technicalinformation” .853 17.839
“Ourcompanystressestransmittingnewlycreatedconcepts” .850 17.758
ProductandProcessInnovation(˛=.967,CR=.968,AVE=.699) Productandservice(technical)innovations
“Innewproductandserviceintroduction,ourcompanyisoftenfirst-to-market” .860 17.312
“Ournewproductsandservicesareoftenperceivedasverynovelbycustomers” .843 16.776
“Newproductsandservicesinourcompanyoftentakeusupagainstnewcompetitors” .840 16.680
“Incomparisonwithcompetitors,ourcompanyhasintroducedmoreinnovativeproductsandservicesduring past5years”
.814 15.888
“Weconstantlyemphasizedevelopmentofparticularandpatentproducts” .850 17.001
“Wemanagetocopewithmarketdemandsanddevelopnewproductsquickly” .844 16.824
“Wecontinuouslymodifydesignofourproductsandrapidlyenternewemergingmarkets” .857 17.243
“Ourfirmmanagestodeliverspecialproductsflexiblyaccordingtocustomers’orders” .829 16.351
“Wecontinuouslyimproveoldproductsandraisequalityofnewproducts” .801 15.515
Process(administrative)innovations
“Developmentofnewchannels forproductsandservicesofourcorporationisanon-goingprocess” .846 16.868
“Wedealwithcustomers’suggestionsorcomplaintsurgentlyandwithutmostcare” .816 15.973
“Inmarketinginnovations(enteringnewmarkets,newpricingmethods,newdistributionmethods,etc.)our companyisbetterthancompetitors”
.846 16.881
“Weconstantlyemphasizeandintroducemanagerialinnovations(e.g.computer-basedadministrative innovations,newemployeereward/trainingschemes,newdepartmentsorprojectteams,etc.)”
.820 –
Note:CR,constructreliability;AVE,averagevarianceextracted;˛,Cronbach’salpha;SFL,standardizedfactorloadings;–*discardeditemsduringconfirmatoryfactoranalysis.
of other constructs. To assess convergent and divergent validity, we assess standardized factor loadings (SFL), t- values, composite reliability (CR) and average variance extract (AVE).
Table 3 presentsthe SFL values of the measurement model which were all above the threshold of .50 (Bagozzi & Yi, 1988), SFL coefficients were between .801 and .860, and the t-statistics of the respective items were between 15.515 and 18.092.Table 3 alsopresents the CRvalues, allof which were
alsoabovethethresholdof.70 (Hair, Black,Babin, &Anderson, 2010), similarly, the AVE coefficients explained by each con- structwerealsoabovethethresholdof.50(Anderson&Gerbing, 1988; Fornell & Larcker, 1981), and Cronbach alpha coeffi- cients also exceededthe threshold of .70 (Cronbach, 1951). So far, the resultant values delineate that construct validity has been achieved, thus, we concluded that the constructs in the measurement model exhibit convergent and divergent proper- ties.
Table4 ResultsfromSEM.
Independentvariables Independentvariables Beta() S.E t p
Market-sensingcapability Knowledgecreationprocess .938(.947) .020 46.990 ***
Market-sensingcapability Productandprocessinnovation .126(.140) .038 3.305 ***
Knowledgecreationprocess Productandprocessinnovation .561(.620) .038 14.610 ***
Strategicentrepreneurialorientation Productandprocessinnovation .504(.573) .012 42.019 ***
Interactioneffectinthemodel
(Knowledgecreationprocess×Strategicentrepreneurialorientation) Productandprocessinnovation −.031(−.234) .002 −17.128 ***
Note:Beta,unstandardizedestimates,ˇ,standardizedestimates;S.E,standarderror;t,t-value;*Significancelevelp<0.05;***significancelevelp<0.01.
Table5
Effectsbreakdown(standardized).
Independentvariables Independentvariables Total Direct Indirect CI[L-U]
Market-sensingcapability Knowledgecreationprocess .947 .947 .000 ***
Market-sensingcapability Productandprocessinnovation .728 .140 .588 [.471–.710] ***
Knowledgecreationprocess Productandprocessinnovation .620 .620 .000 ***
Strategicentrepreneurialorientation Productandprocessinnovation .573 .573 .000 ***
Interactioneffectinthemodel
(Knowledgecreationprocess×Strategicentrepreneurialorientation) Productandprocessinnovation −.234 −.234 .000 ***
Note:Total,Totaleffects,Direct,Directeffects,Indirect,Indirecteffects,CI,ConfidenceInterval;L,lowerbound;U,upperbound.
Strategic entrepreneurial
orientation
Market sensing
capability .947*** Knowledge creation
-.234***
.620***
.140***
Process and product innovation
Fig.2. PictorialstandardizedestimatesgeneratedfromSEM.
Directandindirecteffects
Results from SEM illustrates that the direct path between market-sensing capability and knowledge creation process (ˇ=.947, p<.001) is positive and significant, in support of H1.
Correspondingly,thedirectpath betweenmarket-sensing capa- bility and product and process innovation(ˇ=.140, p<.001) is positiveandsignificant,insupportofH2.Inregardtotherelation- ship betweentheknowledge creationprocess and productand processinnovation,estimationresultsshowthattherelationship is positive and significant (ˇ=.620, p<.001), in support of H3.
Hypothesis 4, results show that market-sensing capability has apositive andsignificantindirecteffectonproductandprocess innovationthroughknowledgecreationprocess(ˇ=.588,p<.01).
ProminentscholarslikeHayes(2013)andHayes(2015)argued that“oneofthebeautiesofbootstrappingisthattheinferenceis basedonanestimateoftheindirecteffectitself, butunlikethe Sobeltest,itmakesnoassumptionsabouttheshapeofthesam- plingdistributionoftheindirecteffect,therebygettingaroundthis problemthatplaguestheSobeltest”.Basedonthisclaim,thecur- rentstudyemployedbootstrappinganalysistotestthemediation effect.Thebias-correctedestimate(n=5000)suggestedapartical mediationasfollows(95%confidenceinterval:.471and.710).Fol- lowing(Shrout&Bolger,2002)suggestions.Thisoutcomelends supporttoH4.SeeTables4and5.Further,theresearcherspresent theeffectsizeofeachlinkdiagrammticallyinFig.2.
Interactioneffect(moderation)
To test moderation effect, we followed (e.g., Aiken et al., 1991) suggestions.We foundthat strategicentrepreneurial ori- entation had a direct positive impact on product and process innovation(ˇ=.573,p<.001).Conversely,knowledgecreationpro- cess×strategic entrepreneurial orientation interaction suggests that strategic entrepreneurial orientation dampens thepositive relationshipbetweenknowledgecreationprocessandproductand processinnovation(ˇ=−.234,p<.001).SeeFig.3,Tables4and5.
Thus,hypothesis5wasrejected.
Discussion
Morenumbersofbusinessandmanagementresearcharecar- ried out on larger firms than on SMEs. Yet SMEs are a huge contributor to the economic and social development of most economies; developing and developed alike (Lin, 1998). Thus, empiricallysupportingtheories,practices,andmethodologiesof SMEsarevitalforpractitionersaswellasacademicians.Wefound thatSMEsthatpossessesgoodmarket-sensingcapabilitieswould beable tocreateknowledge.Thisis inagreementwithArdyan (2016)suggestionthatwhenSMEssensesthemarket,theirprimary goalisnotenterpriseprofitorgrowthbuttopossesstheknowledge ofwhattheirconsumersneedandthenusetheknowledgetooffer appropriateproductandservicesbasedonthecustomer’sneed.
Two, SMEs that possesses good market-sensing capabilities wouldbemoreinnovativemorethanthosethatdonot.Thisout- comeis similartothose obtainedbypreviousresearch(Keskin, 2006), where theresultsrevealed thatthehigher theabilityof anenterprisetosensethemarketthebetterandmoreeffective itbecomesatbeinginnovative.
Three,knowledgecreationprocess hasasubstantialpositive association with product/process innovation. Previous studies (Binbin, Jiangstao,Mingxing, &Tongjian,2012), have identified theroletheknowledgecreationprocessofafirmplaysinitsinno- vativeness.NonakaandTakeuchi(1995)particularlyhighlighted knowledge creationprocessasthefacilitatorfor innovativeness in a firm. The contribution that makes our finding distinct is the Arabian and SMEs context, as little has been done. Four, knowledge creation mediatedthe linkbetweenmarket-sensing capabilitiesandproduct/processinnovation.Knowledgeobtained from market sensing becomes theresource that SMEscan use
Low Knowledge creation process High Knowledge creation process
Product and process innovation
Low Strategic entrepreneurial orientation
High Strategic entrepreneurial orientation
Moderator 4.5
3.5
2.5
1.5 4
3
2
1 5
Fig.3.Moderationeffect.
toensurecontinuousinnovation.InLindblom,Olkkonen,Kajalo, andMitronen(2008)studyofretailentrepreneurs,itwasfound thatthecapabilitytosensethemarketandbusinessperformance suchasinnovationhasaratherweakrelation.Theyexplainedthat thiscouldbesobecauseotherfactorsinfluencingtheassociation betweenmarket-sensingandperformancesuchasinnovationwas notconsideredintheirmodel/analysisandoneofsuchfactorcould betheprocessofknowledgecreation.
Five,thisstudy’sresultsdidnotconfirmthataconnectedness existamongproduct/processinnovation,strategicentrepreneurial orientation and knowledge creation process. In particular, the resultsshowthatstrategicentrepreneurialorientationdoesmod- eratestherelationshipbetweenknowledgecreationprocessand process/productinnovation,but insteadofamplifyingtheeffect ofknowledgecreationoninnovation.Wefoundthatitlowersthe positiveeffect.PriorstudiessuchasWeerawardena(2003)argued thatfirm’suniquecapabilitiesliketheknowledgecreationprocess, entrepreneurshiporientationandinnovationarestronglyrelated.
Afirm’sinnovativenessisessentiallytheoutcomeofitsknowl- edgecreationprocess.GleaningfromtheRBV(Barney,1991),firms havingsuperiorstrategicentrepreneurialorientation,profitmore fromtheirknowledgecreationprocessbecausetheseenterprises can effectively exploitthe knowledge stockpileand knowledge resourcesavailablefromtheknowledgecreation processofthe firm(Wiklund&Shepherd,2003).Ontheotherhand,firmswith lowstrategicentrepreneurialorientation,althoughtheymayalso benefit meagerly fromthe knowledgecreation process of their organization,innovativenessandrisk-takingbehavioursarerare, thus, resulting tolow innovation capabilities. Given the extant claimintheliteratureandthecurrentfinding,weopinedthatcul- turalandotherenvironmentforcesmightbethereasonstrategic entrepreneurialorientationlowerstheimpactofknowledgecre- ationoninnovation.Moreresearchisrequiredtosolvethepresent dilemma.
Implicationsfortheory
Smallandmediumenterprisescovermajoremployment,nov- elty,socialandfinancialgrowthintheadvancedandlessadvanced nation.Thus,enhancingentrepreneurialbasedinvestigation,pro- cedure,anapproachisessentialforbothresearchersandspecialists.
Followingthehigher levelof concernbetweenresearchers and specialistsinaninnovativefirm,researchexertionswhichincor- poratethemarketrecognitionplannedentrepreneurialorientation andinventionwillbeenormouslyvalued,sincestrategicmarketing
researchhascontributedasomewhatlittleportiontoexperimental studyinlinewithplannedentrepreneurialorientation.
Knowledgeformationphenomenalisreproductive,inthesense thatthemodelandprojectedinteractionscanbeappliedintotal orinpartstoproducevariousdevelopmentinmanagingandfirm’s theory.Theideaofknowledgeasameansinafirmisasignificant matterthatdeservesmanyconceptsinconstructingandresearch.
The furtherexperimentalexpansionis instantly desired onthe interrelationshipamong“knowledgemodel”:astheabilityandas aresourceinknowledgeformationconceptamongsmallmedium enterprises.
Capturinginsights from studies and hypotheses testing, our experimentproducesthefirstanalysisofcertainhypotheticallink thoseindependentvariablesofthestudy.Whereas,marketinglit- eratureproposedthesignificanceofmarket-centredinformational knowledge that supports knowledgeformation theory,through spreadingandrelatingthetheorytomarketsensingcompetence factors, product and methodinnovative variable together with deliberateentrepreneurialpositioning.Thefindingsproduceprac- tical backingfor knowledgeformationconcept,thetendencyto reconciletheassociationamongstmarketsensingabilitiesandnov- elty;italsoexertsastraightinfluenceonafirm’sinnovation.
Implicationsforpractice
Drawinginsightfromthehypotheses,ithasbeenrecognized thatinformationiskeyforeveryorganization,alsoforSME’soper- ation.Experimentalresultsrevealedthatmarketsensingabilities ofanenterpriseareimportantforSME’simprovement.However, marketsensingisrequiredforactivelearning-positioninginSMEs.
Furthermore,marketsensingisadoptedwithlearning-positioning for firm effectiveness. InformationFinanciers obtainfrom, con- sumers, rivals, and majorly from themarket, affects how they explore,howtheyattendto,andhowtheyrelatetheresultforthe innovativeandoverallfunctionofknowledge.
SMEperformancehypothesizedasproductandprocessinnova- tionwhichemanatefromtherelationshipbetweenmarketsensing, information andstrategic entrepreneurialpositioning.However, showsthatbothdirectandindirectimpactsareessentialforSMEs operation. It is suggestedthat SMEs managers needto harmo- nize their procedure concerning market sensing, learning and entrepreneurialorientation.Theexistenceofanexigencyfitwell withtheseresearchparadigmsthatmakefirmfunctionperfectly.
Therefore,itlooksrealistictonotethatmarketsensingactions andopennessaremotivatedbyandfoundontheentrepreneurial orientationthatpromotesreactiveness,innovation,andrisk-taking
whichprioritizeeveryaspectingoodtimes.Thus,SMEmanagers aredirectedtobebothentrepreneurialandpossessmarketintel- ligence.Itisworthyofnotethatentrepreneurialpositioningonly isinadequate;theinabilitytoidentifymarketneedsviasensing actionsandequatethemwithproperknow-howcouldstuntSMEs growthrate.
The focus point of market information handling embedded in organizational learning hasincredible ability to make SMEs financiers and managers set to utilize opportunities whenever it surfaces, alsoto pursueinnovative thoughts that meet mar- ketneeds.Marketsensingabilityacquiredthroughinstabilityand ambiguityisprincipalforfirm’soperation,irrespectiveofhowper- formanceis operationalized.A financieror anorganizationthat tendstoavoidsuchactiononaconstantbasisiscourtingforadetri- mentalend,dependingonthecomplexityofthebusinessenvirons.
Researchexplicitlypositedthatknowledgetransmissionisan additionalessentialphaseofknowledgeformationmodelinthe organization.Marketingconsultantsandentrepreneursarepaci- fiedtosharemarketknowledgeacquiredfromsensingactionwith other organizations.This confirms that theirknowledge source is handy with treasured information and that each personnel are endowed to perform. Business owners and managers can stronglyincreasetheircapabilitytoactivelyemployfundamental innovationoftheirserviceandproductsimprovement,tofoster competitiveadvantage. Themain findings had beenof concern sincetheyinfermethodofimprovingfirm’slevelofperformance.
SMEsmanagementshouldstrivetoexpandthetotallevelofmarket knowledge,althoughresidualabilityabletoreserveaknowledge andbusinessorientationasmarketcircumstancesensue.
Limitationsandfutureresearchdirections
Applicabletomostempiricalstudies,thepresentstudyinher- itsseverallimitations.One,thesampleislimitedtoJordanasmall Arabnationwithlimitedresources.Although,proceduralandsta- tisticalapproachesweredeployedtogaugeforpotentialthreatsof CMB.Thedatausedinthisstudyisself-reportedinnature,and thedesign is cross-sectional;these limitsand/orinterfere with causalityamongthevariablesunderinvestigation.Theauthor(s) suggestthatfutureresearchcanemploylongitudinaldesignand multi-sourcedatatovalidatethepresentfindingsandabateCMB.
Furtherinsightscanbeacquiredbyexploringindepththeimpact ofenvironmentalfactorssurroundingstrategicentrepreneurialori- entation. Big Data analytics has emerged as powerful tool for marketintelligence,itwillbeimperativetodiagnosehowBigData analyticscanboostmarket-sensingcapabilityandhowthesecould betranslatedintoknowledgepoolforthepurposeofinnovation.
Theauthor(s)believethatsuchresearchendeavourswouldcon- tributetotheexistingliterature.
Conflictofinterest
Theauthorshavenoconflictofinterest,andthisresearchdid notreceiveanygrants.
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