This study responds to the call for research on the relationships between entrepreneurial orientation (EO), knowledge absorptive capacity (ACAP), and firm performance, especially in the unexplored context of the medical device industry. This study aims to answer research questions; how and why do the key features of EO contribute to the performance of companies in the medical device sector.
INTRODUCTION
- Background and Rationale of the Study
- Problem Statement
- Research Questions
- Objectives of the Study
- Significance of the Study
- Scope of the Research
- Organization of the Dissertation
This research answers this question by examining the importance of ACAP knowledge of EO and why it contributes to performance within the medical device industry. It increases understanding of multiple dimensions of EO and knowledge ACAP and why they are critical to firm performance.
LITERATURE REVIEW
Overview of the Medical Device Industry in Thailand
Although the EO construct has been studied by researchers over the past 20 years (Runyan, Droge, & Swinney, 2008; Richard, Wu, & Chadwick, 2009; (Dai, Maksimov, Gilbert, & Fernhaber, 2014), there are still some areas that are underdeveloped; little attention has been paid to EO in the context of the medical device industry. As a result, some issues have not been investigated, such as the EO nature of the medical device industry, the effect of EO on firm performance and factors, that stimulates the EO company's performance relationship.
Firm Performance of Medical Firm
Therefore, firm performance indicators should capture various aspects of the firm, including growth, efficiency and profit (Murphy et al., 1996). For growth, this study measures three elements: sales growth, net profit growth, and market share growth (Murphy et al., 1996).
Entrepreneurial Orientation and Firm Performance
For example, Lee (2018) adopted profitability indicators (gross margins, sales revenue and earnings) and efficiency indicators (ROE, ROA) to reflect the degree of firm performance. Assessed relationships between cultural diversity and firm performance within the context of firm-level entrepreneurial orientation.
Knowledge Absorptive Capacity, Entrepreneurial Orientation and Firm
Wiklund and Shepherd (2003) Knowledge-based EO resources Firm performance-EO increases the positive relationship between knowledge-based resources and firm performance. However, the connection chain between ACAP knowledge and firm performance is not clear in the context of medical devices.
Research Questions
Figure 2 shows that the relationship between variables has no clear boundaries as to how each variable in this context is related in an unexplored context; medical device industry.
RESEARCH METHODOLOGYS
Research Paradigm
Accordingly, researchers who adopt a social constructivist paradigm engage in various forms of participatory research to grasp the subjective meanings of social actions, as it is assumed that the complex properties of the human mind or the known can be unpacked through these processes (Brymman and Bell , 2007; Easterby-Smith and Thorpe, 2002; Guba, 1990). Accordingly, researchers who adopt a social constructivist paradigm engage in various forms of participatory research to grasp the subjective meanings of social actions, as it is assumed that the complex properties of the human mind or the known can be unpacked through these processes (Brymman and Bell , 2007; Easterby-Smith and Thorpe, 2002; Guba, 1990). Therefore, researchers are involved in what is being studied and the interpretations of the observations come from the actors themselves.
Case Study Research
Therefore, the researcher has adopted the case study research design to answer the research question (2) and then developed theoretical hypotheses for the future research agenda. Therefore, the case and its limits are considered in what type of case study will be conducted. Descriptive According to Campbell and Ahrens (1998), a multiple case study enables the researcher to explore differences within and between cases.
Case Selection
Case D has built long-standing customer relationships that help advance our research and development efforts in introducing new products and. In the new markets area, case E has built up a portfolio of products in the field of cell biology. To date, case E has been very satisfied with the results of the digital innovation, which has proven itself by one measure in the market.
Data Sources of Case Study
Semi-Structural Interview
Please provide your opinion on your firm's competitive position relative to your competitors in your industry. How the firm uses new external knowledge for the innovative outcome of new product development. What are your thoughts on how the firm develops a new product between improving from an existing product or introducing new knowledge and technology into a new product.
Case Study Data Analysis
Before conducting the first round of interviews, the researcher sent the semi-structured questions by e-mail and shared the research objectives over the phone. In this research, the researcher relied on both within-case and correlational analyses. The researcher looked for similarities and differences within and across cases to gain detailed knowledge research objectives.
Case Study Transcript
Coding Through Reading
Within Case and Cross Case Analysis
Lumpkin and Dess, (2001) found that competitive proactivity and aggressiveness can have different effects on firm performance. Dess and Lumpkin (2001) found that competitive aggressiveness is associated with higher performance in more mature stages of the industry. Innovation in the medical device industry discusses process innovation in their products as the literature discusses.
Knowledge Absorptive Capacity
For example, case B argued that "firms should update the new medical trend to create the fit between their product quality and the need of worldwide customers". Case C also showed that "the firm used new knowledge to develop new products that have never been produced before, such as life science technology products." In addition, ACAP knowledge improves the way to do new things, such as increasing the ability to. For example, case B indicated that "the new knowledge makes it easier for B to work with researchers from the university to develop diagnostic test kits to look forward to future export." However, all cases argued that the success rate of new medical devices is a challenge. In the literature, ACAP knowledge refers to a firm's ability to recognize the value of new external information, assimilate it, and apply it to commercial purposes (Cohen and Levinthal 1990).
Conceptual Framework
Based on Hair et al. 2011), hypothesis testing is the path coefficient test of the internal model (the independent variable affects the dependent variable). First, this research adopts a constructivist paradigm to understand multidimensional EO as entrepreneurial processes that determine firm performance in the context of the medical device industry in Thailand. This study confirms that the degree of independent effects of proactiveness and competitive aggressiveness affecting firm performance and applied in studies varies depending on internal factors, i.e. knowledge of the ACAP firm.
QUANTITATIVE METHOD
Survey Research
Further, the technique ensured a relatively low response bias, as it did not involve a third party, eg, the interviewer administering the questionnaire, but the potential problem of low response rates still had to be managed. First, the entrepreneurial characteristics of medical device manufacturing firms are appropriate to discuss in relation to EO. We distributed the first round of survey packets to 313 medical device manufacturing firms in September 2018.
Analytical Strategy
Therefore, knowledge absorptive capacity can be conceptualized as a moderator of the relationship between proactivity, competitive aggressiveness, and firm performance. PLS-SEM can investigate the moderator analysis of the formative model if the theory supports the existence of a moderated relationship (Hair et al., 2011). This step verifies the fit of the hypotheses by comparing the observed variance in the dependent constructs.
Measurement Model Evaluation
Content validity is the extent to which the items of the scales adequately reflect the interrelated theoretical domains (Green, Tull, & Albaum, 1988). By comparing the square root of the average variance extract (AVE) of each latent construct-related to other constructs. To examine the internal consistency or reliability of the constructs, Cronbach's alpha is widely used to evaluate questionnaire reliability (Hair et al., 2010).
Structural Model Assessment
Composite reliability values of 0.60 to 0.70 in exploratory research and values of 0.70 to 0.90 in more advanced stages of research are considered satisfactory (Nunnally and Bernstein, 1994), while values below 0.60 indicate a lack of reliability. Likewise, the reliability of each indicator should be taken into account, with the absolute standardized loading of each indicator should be higher than 0.70. In general, indicators with loadings between 0.40 and 0.70 should only be considered for removal from the scale if removing this indicator results in an increase in composite reliability above the proposed threshold.
Descriptive characteristics
Because the purpose of the prediction-oriented PLS-SEM approach is to explain the variance of endogenous latent variables, the R² level of the main target constructs should be high. Considering the path coefficient, the value represents the relationship between the latent variables according to the set of hypotheses. For work experience or related prior knowledge, approximately 51.4 percent have more than 15 years of work experience.
Testing Validity of Observed Variable
Therefore, it can be concluded that the size of the company and the turnover of the company have no influence on the performance of the company.
Descriptive Statistics of Variables in this Research
According to Hair et al. 2012) and Cohen (1992) use PLS-SEM when the data are not normally distributed and the sample size is small. The Shapiro-Wilk test is based on the correlation between the data and the corresponding normal scores (Peat and Barton, 2008) and provides better power or ability to detect whether the sample comes from a non-normal distribution. In small samples, values greater or less than 1.96 are sufficient to determine the normality of the data (Ghasemi and Zahediasl, 2012).
Correlation Analysis
According to Table 33, an absolute value of the result is significant at the P < 0.05 level in the construct PRO, COM and ACAP. In this research, the bivariate correlation procedure is scaled to a two-tailed test with statistical significance as p < 0.05 and p < 0.10. First, proactivity is positively and significantly related to firm performance (r = 0.418, p < 0.01), and has a positive significant correlation with competitive aggressiveness (r = 0.404, p < 0.01).
Measurement of Model Assessment
Small values (less than 0.05) of the significance level indicate that factor analysis can be useful with your data. Exploratory factor analysis (EFA) is a statistical method used to reveal the underlying structure of a relatively large set of variables (Norris and Lecavalier, 2010). As suggested by (Hair et al., 2011), the factor loading of the items can be used to confirm the content validity of the measurement model.
The Discriminant Validity
After establishing the validity and reliability of the measurement model, the next step was to test the hypothesized relationship by implementing the PLS algorithm and the Bootstrapping algorithm in Smart-PLS 3.0-PLS 3.0.
Model Fit Index
As noted by Wetzels and Odekerkenr (2009), the AVE for each latent variable is equal to the corresponding communality index. The average AVE for the model can therefore be used instead of the average community index for the model. According to Wetzels and Odekerkenr (2009), the goodness of fit index equal to 0.43 indicates the large threshold for the GoF.
Hypotheses Testing
Thus, proactivity and competitive aggressiveness were selected to investigate their relationship with ACAP knowledge and firm performance. Second, this research found that ACAP knowledge moderates the positive relationship between proactiveness and firm performance. Based on the results of the research, a lower level of ACAP knowledge is a more effective strategy for increasing company performance.
CONCLUSION AND DISCUSSION
Conclusion
A case study approach and in-depth interviews were adopted to understand what and how EO and ACAP knowledge contribute to firm performance. These two questions are addressed by referring to empirical findings from case study research, more specifically, to what extent competitive proactivity and aggressiveness affect firm performance (research question 3 and 4), to what extent ACAP recognition moderates the relationship between proactivity and firm performance (research question 5), and to what extent ACAP knowledge moderates the relationship between competitive aggressiveness and firm performance (research question 6). The objectives of this concluding chapter are to synthesize the main findings of the study and draw their implications in a broader context of the main areas of EO literature, ACAP knowledge and firm performance.
Discussion
Third, too much ACAP knowledge hurts financial results because the cost of developing new knowledge until the company can reap the commercial benefits is a challenge. This study found that a low level of ACAP knowledge strengthens the relationship between proactiveness and firm performance better than a high level. Furthermore, this study here argues that early investment in ACAP knowledge makes it more expensive to develop a certain level of it in the subsequent period.
Theoretical Contributions
This research points to the importance of ACAP knowledge in explaining how ACAP knowledge reduces firm performance. This study supports the arguments of Huges and Morgan (2007) and argues that the individual influence of proactiveness and competitive aggressiveness affect firm performance in different ways. Finally, this research shows that entrepreneurial proactivity and competitive aggressiveness can have different effects on firm performance.
Agenda for Future Research
These contingencies have been studied in various study contexts other than the medical device industry. The relationships explored may vary across countries because EO constructs and knowledge The ACAP constructs explored in this study are related to cultural contingencies (Hayton, George and Zahra, 2018) Therefore, future research should confirm these findings in the appliance industry medical in other countries. The author of this study hopes that articulating and developing a further understanding of the effectiveness of EO in the medical device industry will stimulate future research on this more complex issue.
Managerial Contributions
Thus, managers of medical device companies must track new medical trends related to their medical field, find opportunities to improve their products. In addition, the public authority should also assist the process of approval of medical devices. Finally, based on the case studies, this study suggests that managers of medical device companies should conduct trials before commercializing their products.
Letter to Experts
