Strategic sustainable competitive advantage of Thai SMEs: roles of learning orientation and innovation capability.

• Author: Phromket, Chanthima
• Position: Small and medium-sized enterprises

INTRODUCTION

Small and Medium-Sized Enterprises (SMEs) play a very important role in critically promoting and supporting economic development, growth, and survival (Vachani, 2005). Many SMEs presently evolve in a complex business environment characterized by the need for greater efficiency effectiveness and competitiveness based on innovation and knowledge (Raymond and St-Pierre 2005). In today's learning orientation and innovation are key capabilities that enable the firm to identify, create, exploit, renew, and apply knowledge flows in new ways to create the essential competences for improvement in organizational performance (Nonaka and Takeuchi, 1995). Managing these capabilities effectively can provide firms with opportunities for sustainable competitive advantage, whereas capabilities are usually valuable, rare and costly to imitate for competitors (Barney, 1991; Grant, 1996). After acquiring learning, it is crucial that SMEs use the learning to their advantage. Unless the collected learning is used, it does not provide any tangible benefit. Firms with high levels of learning orientation tend to constantly scan and monitor their operating environment in order to find new opportunities and strengthen their competitive positions.

There has been significant interest in the success of industrial firms in the extent of their innovation capability. Innovation capability relates to the firm's capacity to engage in innovation; that is, the introduction of new processes, products, or ideas in the organization (Hult, Hurley and Knight 2004). Thompson (1965) defines innovation as the generation, acceptance, and implementation of new ideas, processes, products, or services. Amabile et al. (1996) define innovation as the successful implementation of creative ideas within an organization. The innovation process includes the acquisition, dissemination, and use of new knowledge (Damanpour, 1991). Furthermore, some researchers have examined the influence of factors that really drives the effect of competitive intensity on innovation, which is a central strategy role to innovation in a firm's efforts to gaining positional advantages in competitive markets (e.g. Cooper, 2000).

High technological turbulence, change, and uncertainty might increase the environmental instability have forced organizations to embrace innovation as an integral part of their corporate strategy. Innovation is an important force in creating and sustaining organizational growth. Thus, extensive research has been conducted to understand learning orientation, have pointed out the direct influence of learning orientation on innovation capability (Chaveerug and Ussahawanitchakit, 2008). Innovation capability is closely related to learning orientation. In particular, definitions of innovation from Thompson (1965), Damanpour (1991), and Amabile et al. (1996) converge with the ontology of learning orientation as indicated by Hurley and Hult (1998). Accordingly, there exists both empirical and theoretical studies investigating the linear or causal relationships among learning orientation, innovation capability, and, thereby, their combined impact on sustainable competitive advantage. Nevertheless, most of the empirical studies focused on the large-scale organizations in western/developed countries, while few study the SMEs in general and SMEs in developing countries in particular. We seek to confirm that these capabilities are necessary in SMEs. Because large-firm management is fundamentally different from that of SMEs, conclusions drawn from many studies cannot be applied to SMEs without empirical confirmation. Other problems arise concerning the accurate measurement of learning orientation, innovation capability and sustainable competitive advantage in SMEs.

The purpose of this research is to examine the relationships learning orientation (commitment to learning shared vision, open-mindedness, intra-organizational knowledge sharing), sustainable competitive advantage by using technological turbulence as a moderator and innovation capability as a mediator. In this study, the key research questions for the paper are as follows: Firstly, how learning orientation affects the innovation capability and influences the sustainable competitive advantage? Secondly, how innovation capability affects sustainable competitive advantage. Thirdly, how technological turbulence moderates the effect of learning orientation on sustainable competitive advantage?

This article is organized as follows. In the next section, we review the relevant literature and develop the research statement. Then, we detail the methodology used to design the empirical study. Finally the results are presented and we conclude by discussing the findings, noting the contributions to innovation capability literature and practice and suggesting future research opportunities.

2. THEORETICAL FRAMEWORK AND RESEARCH HYPOTHESES

   The characteristics, applications of learning orientation have been examined extensively, but there are relatively few studies that have attempted to link the concepts of learning orientation, innovation capability, sustainable competitive advantage and technological turbulence to the SMEs aspect. The types of primary strategy, particularly innovation capability, require effective learning, and in effect, learning acts as a key antecedent of innovation capability and even the performance of a firm's sustainable competitive advantage. In this context, learning orientation may provide a meaningful foundation to explore the SMEs effects on SMEs specific innovation capability and sustainable competitive advantage. Thus, our conceptual model presents the relationship between learning orientation and sustainable competitive advantage by innovation capability as a mediator and technological turbulence as a moderator, as shown in Figure 1.

   2.1 Learning Orientation

   Learning orientation refers to organization-wide activity of creating and using knowledge to enhance competitive advantage. This includes obtaining and sharing information about customer needs, market changes, and competitor actions, as well as development of new technologies to create new products that are superior to those of competitors (Hurley and Hult, 1998; Moorman and Miner, 1998; McKinley, Barker and Mone 1998). A learning orientation values the role that learning can play in developing organizational effectiveness. Learning orientation consist of commitment to learning, shared vision, open-mindedness, and intraorganizational knowledge sharing (Hurley and Hult, 1998; Hult and Ferrell, 1997; Hult, 1998). Commitment to learning, or the degree to which an organization values, invests in, and promotes learning (Sinkula, Baker and Noordewier, 1997), is likely to foster a learning climate. Shared vision refers to an organization-wide focus on learning (Sinkula, Baker and Noordewier, 1997). Open-mindedness is the willingness to critically evaluate the organization's operational routine and to accept new ideas (Sinkula, Baker and Noordewier, 1997). Intraorganizational knowledge sharing refers to collective beliefs or behavioral routines related to the spread of learning among different units within an organization (Moorman and Miner, 1998).

   SMEs's learning capabilities play a crucial role in generating innovations (Sinkula, Baker and Noordewier, 1997). Thus, learning orientations are prerequisites for innovation capability, it is argued above that fundamentally, firms operating within a competitive SMEs environment undertake greater learning through a broader set of learning orientations. What one may see as drivers of the innovation capability within firms is their learning, and the point emphasized here is that such learning can be market focused, internally focused and/or relationally focused. We would extend this view here and argue that all four forms of learning have an influence on innovation capability. Thus,

   Hypothesis 1a: The stronger the SMEs' commitment to learning, the more likely that they will achieve greater innovation capability.

   Hypothesis 1 b: The stronger the SMEs' shared vision, the more likely that they will achieve greater innovation capability.

   Hypothesis 1c: The stronger the SMEs' open-mindedness, the more likely that they will achieve greater innovation capability.

   Hypothesis...