The moderating effect of technology orientaiton on the relationship between product innovation, process innovation, organizational learning capability and sme performance

Tamoor Ali Tariq


Small and medium enterprises (SMEs) are the backbone of economy therefore play a critical role for socio-economic development of a country. Prior studies have discussed several factors to explain how SMEs performance can be improved such as product innovation (PDI), process innovation (PCI), organizational learning capability (OLC). However, literature indicated inconsistent relationship between PDI, PCI, OLC and SMEs performance. Thus, this study proposed technology orientation as a potential moderator to strengthen their existing relationship. Moreover, this unique framework is supported by two theories namely, resource-based view (RBV) and dynamic capability view (DVC). Hence, this study recommends empirical testing of the proposed conceptual model across various industries.


Product innovation; process innovation; organizational learning capability; technology orientation; SMEs performance ;

Full Text:



Abdelaziz, F. B., Alaya, H., & Dey, P. K. (2018). A multi-objective particle swarm optimization algorithm for business sustainability analysis of small and medium sized enterprises. Annals of Operations Research, 1-30.

Adner, R., & Levinthal, D. (2001). Demand heterogeneity and technology evolution: implications for product and process innovation. Management science, 47(5), 611-628.

Akhtar, N., Khan, R. A., & Mujtaba, B. G. (2013). Exploring and measuring organizational learning capability and competitive advantage of petroleum industry firms. International Business and Management, 6(1), 89-103.

Al-Ansari, Y., Altalib, M., & Sardoh, M. (2013). Technology orientation, innovation and business performance: A study of Dubai SMEs. The International Technology Management Review, 3(1), 1-11.

Altinay, L., Madanoglu, M., De Vita, G., Arasli, H., & Ekinci, Y. (2016). The interface between organizational learning capability, entrepreneurial orientation, and SME growth. Journal of Small Business Management, 54(3), 871-891.

Álvarez Jaramillo, J., Zartha Sossa, J. W., & Orozco Mendoza, G. L. (2019). Barriers to sustainability for small and medium enterprises in the framework of sustainable development—L iterature review. Business Strategy and the Environment, 28(4), 512-524.

Aminu, M. I., Mahmood, R., & Muharram, F. M. (2015). The Intangible Resources and Small Firms' Multilevel Performance: A Partial Least Squares Approach. Asian Social Science, 11(16), 187.

Aragón-Correa, J. A., García-Morales, V. J., & Cordón-Pozo, E. (2007). Leadership and organizational learning's role on innovation and performance: Lessons from Spain. Industrial Marketing Management, 36(3), 349-359.

Arrighetti, A. (1994). Entry, growth and survival of manufacturing firms. Small Business Economics, 6(2), 127-137.

Atalay, M., Anafarta, N., & Sarvan, F. (2013). The relationship between innovation and firm performance: An empirical evidence from Turkish automotive supplier industry. Procedia-Social and Behavioral Sciences, 75, 226-235.

Avermaete, T., Viaene, J., Morgan, E. J., Pitts, E., Crawford, N., & Mahon, D. (2004). Determinants of product and process innovation in small food manufacturing firms. Trends in food science & technology, 15(10), 474-483.

Berends, H., Jelinek, M., Reymen, I., & Stultiëns, R. (2014).

Product innovation processes in small firms: Combining entrepreneurial effectuation and managerial causation. Journal of

Product Innovation Management, 31(3), 616-635.

Bhatnagar, J. (2006). Measuring organizational learning capability in Indian managers and establishing firm performance linkage: An empirical analysis. The Learning Organization, 13(5), 416-433.

Bhatt, N. J. (2014). Productivity in small and medium enterprises of India: A Cobb-Douglas production function approach. IUP Journal of Management Research, 13(1), 29.

Boardman, C. M., Bartley, J. W., & Ratliff, R. L. (1981). Small business growth characteristics. American Journal of Small Business, 5(3), 33-43.

Bolat, T., & Yılmaz, Ö. (2009). The relationship between outsourcing and organizational performance: is it myth or reality for the hotel sector? International Journal of Contemporary Hospitality Management, 21(1), 7-23.

Camps, J., Oltra, V., Aldás‐Manzano, J., Buenaventura‐Vera, G., & Torres‐Carballo, F. (2016). Individual performance in turbulent environments: the role of organizational learning capability and employee flexibility. Human Resource Management, 55(3), 363-383.

Capon, N., Farley, J. U., Lehmann, D. R., & Hulbert, J. M. (1992). Profiles of product innovators among large US manufacturers. Management science, 38(2), 157-169.

Chennell, A., Dransfield, S., Field, J., Fisher, N., Saunders, I., & Shaw, D. (2000). OPM: a system for organisational performance measurement. Paper presented at the Proceedings of the performance measurement–past, present and future conference, Cambridge.

Cohen, W. M., & Levin, R. C. (1989). Empirical studies of innovation and market structure. Handbook of industrial organization, 2, 1059-1107.

Cooper, R. G. (2001). Winning at New Products, Accelerating the Process from Idea to Launch, 2001. Cambridge, Perseus.

Damanpour, F., & Evan, W. M. (1984). Organizational innovation and performance: the problem of" organizational lag". Administrative Science Quarterly, 392-409.

Danneels, E. (2002). The dynamics of product innovation and firm competences. Strategic management journal, 23(12), 1095-1121.

Darroch, J. (2005). Knowledge management, innovation and firm performance. Journal of knowledge management, 9(3), 101-115.

Davenport, T. H. (1993). Process innovation: reengineering work through information technology: Harvard Business Press.

Davenport, T. H. (2013). Process innovation: reengineering work through information technology: Harvard Business Press.

Davidsson, P., & Wiklund, J. (2006). Conceptual and empirical challenges in the study of firm growth. Entrepreneurship and the Growth of Firms, 1(1), 39-61.

DiBella, A. J., Nevis, E. C., & Gould, J. M. (1996). Understanding organizational learning capability. Journal of management studies, 33(3), 361-379.

Dixon, N. M. (2017). The organizational learning cycle: How we can learn collectively: Routledge.

Dunk, A. S. (2011). Product innovation, budgetary control, and the financial performance of firms. The British Accounting Review, 43(2), 102-111.

Duranton, G., & Puga, D. (2001). Nursery cities: Urban diversity, process innovation, and the life cycle of products. American Economic Review, 1454-1477.

Eggert, A., Hogreve, J., Ulaga, W., & Muenkhoff, E. (2011). Industrial services, product innovations, and firm profitability: A multiple-group latent growth curve analysis. Industrial Marketing Management, 40(5), 661-670.

Ettlie, J. E., & Reza, E. M. (1992). Organizational integration and process innovation. Academy of management journal, 35(4), 795-827.

Foo, G., & Friedman, D. J. (1992). Variability and capability: The foundation of competitive operations performance. AT&T Technical Journal, 71(4), 2-9.

Fritsch, M., & Meschede, M. (2001). Product innovation, process innovation, and size. Review of Industrial Organization, 19(3), 335-350.

Gao, G. Y., Zhou, K. Z., & Yim, C. K. B. (2007). On what should firms focus in transitional economies? A study of the contingent value of strategic orientations in China. International journal of Research in Marketing, 24(1), 3-15.

García-Morales, V. J., Lloréns-Montes, F. J., & Verdú-Jover, A. J. (2007). Influence of personal mastery on organizational performance through organizational learning and innovation in large firms and SMEs. Technovation, 27(9), 547-568.

Gardiner, P., & Whiting, P. (1997). Success factors in learning organizations: an empirical study. Industrial and Commercial Training, 29(2), 41-48.

Gatignon, H., & Xuereb, J.-M. (1997). Strategic orientation of the firm and new product performance. Journal of marketing research, 77-90.

Gibb, A., & Davies, L. (1990). In pursuit of frameworks for the development of growth models of the small business. International small business journal, 9(1), 15-31.

Gill, J. (1985). Factors affecting the survival and growth of the smaller company (Vol. 3): Gower Publishing Company, Limited.

Gunday, G., Ulusoy, G., Kilic, K., & Alpkan, L. (2011). Effects of innovation types on firm performance. International Journal of Production Economics, 133(2), 662-676.

Gupta, A. K. (1987). SBU strategies, corporate-SBU relations, and SBU effectiveness in strategy implementation. Academy of management journal, 30(3), 477-500.

Gupta, A. K., & Govindarajan, V. (1984). Business unit strategy, managerial characteristics, and business unit effectiveness at strategy implementation. Academy of management journal, 27(1), 25-41.

Hafeez, M. H. (2014). Moderating effects of organizational learning capability on the relationship between innovation, branding and SMEs performance in sports industry of Pakistan. Universiti Utara Malaysia.

Hafeez, M. H., Shariff, M. N. M., & bin Mad Lazim, H. (2012). Relationship between Entrepreneurial Orientation, Firm Resources, SME Branding and Firm’s Performance: Is Innovation the Missing Link? American Journal of Industrial and Business Management, 2(04), 153.

Hafeez, M. H., Shariff, M. N. M., & bin Mad Lazim, H. (2013). Does Innovation and Relational Learning Influence SME Performance? An Empirical Evidence from Pakistan. Asian Social Science, 9(15), p204.

Hall, G., & Adams, G. (1996). Factors associated with the performance of small firms-the case of electrical instrumentation. Small Enterprise Research, 4(1-2), 95-107.

Han, J. K., Kim, N., & Srivastava, R. K. (1998). Market orientation and organizational performance: is innovation a missing link? The Journal of marketing, 30-45.

Hanif, A., & Manarvi, I. A. (2009). Influence of quality, innovation and new product/services design on small and medium enterprises. Paper presented at the Proceedings of the World Congress on Engineering, London, UK.

Hassan, M. U., Shaukat, S., Nawaz, M. S., & Naz, S. (2013). Effects of innovation types on firm performance: an empirical study on Pakistan’s manufacturing sector. Pakistan Journal of Commerce and Social Sciences, 7(2), 243-262.

Henard, D. H., & Szymanski, D. M. (2001). Why some new products are more successful than others. Journal of marketing research, 38(3), 362-375.

Hoy, F., McDougall, P. P., & Dsouza, D. E. (1992). Strategies and environments of high growth firms. The state of the art of entrepreneurship(1), 341-357.

Hurley, R. F., & Hult, G. T. M. (1998). Innovation, market orientation, and organizational learning: an integration and empirical examination. The Journal of marketing, 42-54.

Im, S., & Workman Jr, J. P. (2004). Market orientation, creativity, and new product performance in high-technology firms. Journal of marketing, 68(2), 114-132.

Karabulut, A. T. (2015). Effects of innovation types on performance of manufacturing firms in Turkey. Procedia-Social and Behavioral Sciences, 195, 1355-1364.

Khalique, M., Isa, A. H. B. M., Shaari, N., & Abdul, J. (2011). Challenges for Pakistani SMEs in a knowledge-based economy. Indus Journal of Management & Social Sciences, 5(2).

Khan, I. A., & Ghouri, A. M. (2011). Managerial skills and organizational learning in SMEs of Pakistan. Indian Journal of Commerce & Management Studies, 2(4), 61-69.

Kofman, F., & Senge, P. M. (1993). Communities of commitment: The heart of learning organizations. Organizational dynamics, 22(2), 5-23.

Kruis, A.-M., & Widener, S. K. (2014). Managerial Influence in Performance Measurement System Design: A Recipe for Failure? Behavioral Research in Accounting, 26(2), 1-34.

Laitinen, E. K., Länsiluoto, A., & Salonen, S. (2016). Interactive budgeting, product innovation, and firm performance: empirical evidence from Finnish firms. Journal of Management Control, 1-30.

Lee, D. H., Choi, S. B., & Kwak, W. J. (2014). The effects of four dimensions of strategic orientation on firm innovativeness and performance in emerging market small-and medium-size enterprises. Emerging Markets Finance and Trade, 50(5), 78-96.

Lee, H., & Choi, B. (2003). Knowledge management enablers, processes, and organizational performance: An integrative view and empirical examination. Journal of management information systems, 20(1), 179-228.

Li, H., & Atuahene-Gima, K. (2001). Product innovation strategy and the performance of new technology ventures in China. Academy of management journal, 44(6), 1123-1134.

Lin, C. (1998). Success factors of small-and medium-sized enterprises in Taiwan: An analysis of cases. Journal of Small Business Management, 36(4), 43-56.

Mallén, F., Chiva, R., Alegre, J., & Guinot, J. (2015). Are altruistic leaders worthy? The role of organizational learning capability. International Journal of Manpower, 36(3), 271-295.

Mallén, F., Chiva, R., Alegre, J., & Guinot, J. (2016). Organicity and performance in excellent HRM organizations: the importance of organizational learning capability. Review of Managerial Science, 10(3), 463-485.

Maltz, A. C., Shenhar, A. J., & Reilly, R. R. (2003). Beyond the balanced scorecard:: Refining the search for organizational success measures. Long Range Planning, 36(2), 187-204.

Manual, O. (2005). Guidelines for Collecting and Interpreting Innovation Data (3rd ed.). Paris: Joint Publication of the OECD and the Statistical Office of the European Communities.

Mu, J., & Di Benedetto, C. A. (2011). Strategic orientations and new product commercialization: mediator, moderator, and interplay. R&D Management, 41(4), 337-359.

Murat Ar, I., & Baki, B. (2011). Antecedents and performance impacts of product versus process innovation: Empirical evidence from SMEs located in Turkish science and technology parks.

European Journal of Innovation Management, 14(2), 172-206.

Murphy, G. B., & Callaway, S. K. (2004). Doing well and happy about it? Explaining variance in entrepreneurs' stated satisfaction with performance. New England Journal of Entrepreneurship, 7(2), 15.

Murphy, G. B., Trailer, J. W., & Hill, R. C. (1996). Measuring performance in entrepreneurship research. Journal of business research, 36(1), 15-23.

Ndumanya, N. (2013). Why SMEs’ contribution to the nation’s GDP is poor. Business Day. Lagos Nigeria.

Nguyen, Q. V., Tate, M., Calvert, P., & Aubert, B. (2016). Leveraging ERP Implementation to Create Intellectual Capital: the Role of Organizational Learning Capability. arXiv preprint arXiv:1606.01431.

Nguyen, T. V., Phan, A. T., & Nguyen, M. T. (2016). Knowledge Creation, Innovation and Financial Performance of Firms: Evidence from Vietnam. International Journal of Business and Management, 11(6), 95.

Odondo, M. O., Okibo, W. B., & Odhiambo, R. (2016). Effect of Technology Orientation on Performance of Micro, Small and Medium-Scale Agro-Food Processing Enterprises in Nairobi County, Kenya. Imperial Journal of Interdisciplinary Research, 3(1).

OECD. (2016). Financing SMEs and Entrepreneurs OECD Publishing.

Olson, E. M., Walker Jr, O. C., & Ruekert, R. W. (1995). Organizing for effective new product development: The moderating role of product innovativeness. The Journal of marketing, 48-62.

Oslo, M. (2005). Guidelines for collecting and interpreting innovation data: Paris: OECD Publishing.

Otache, I., & Mahmood, R. (2015). Corporate entrepreneurship and business performance: the role of external environment and organizational culture: A proposed framework. Mediterranean Journal of Social Sciences, 6(4), 524.

Polder, M., Leeuwen, G. v., Mohnen, P., & Raymond, W. (2010). Product, process and organizational innovation: drivers, complementarity and productivity effects. CIRANO-Scientific Publications 2010s-28.

Rajala, R., & Westerlund, M. (2012). The effects of service orientation, technology orientation and open innovation on the performance of software-intensive service businesses. Paper presented at the System Science (HICSS), 2012 45th Hawaii International Conference on.

Rivas, A. A. A., Quyen, P. T. P., & Rivas, J. L. A. (2017). ANTECEDENTS OF EXISTING AND NEW PRODUCTS SELLING: A JOB DEMANDS-RESOURCES (JD-R) CONCEPTUAL MODEL. Paper presented at the 13th Annual International Bata Conference for Ph. D. Students and Young Researchers.

Roberts, P. W. (1999). Product innovation, product-market competition and persistent profitability in the US pharmaceutical industry. Strategic management journal, 20(7), 655-670.

Salavou, H. (2002). Profitability in market-oriented SMEs: does product innovation matter? European Journal of Innovation Management, 5(3), 164-171.

Sandvik, I. L., & Sandvik, K. (2003). The impact of market orientation on product innovativeness and business performance. International journal of Research in Marketing, 20(4), 355-376.

Santos-Vijande, M. L., López-Sánchez, J. Á., & Trespalacios, J. A. (2012). How organizational learning affects a firm's flexibility, competitive strategy, and performance. Journal of business research, 65(8), 1079-1089.

Senge, P. M. (1990). The Fifth Discipline: the art and purpose of the learning organization: New York: Doubleday/Currency.

Sethi, R., Smith, D. C., & Park, C. W. (2001). Cross-functional product development teams, creativity, and the innovativeness of new consumer products. Journal of marketing research, 38(1), 73-85.

Spanjol, J., Qualls, W. J., & Rosa, J. A. (2011). How many and what kind? The role of strategic orientation in new product ideation. Journal of Product Innovation Management, 28(2), 236-250.

Stam, E., & Wennberg, K. (2009). The roles of R&D in new firm growth. Small Business Economics, 33(1), 77-89.

Subhan, Q. A., Mehmood, M. R., & Sattar, A. (2013). Innovation in Small and Medium Enterprises (SME’s) and its impact on Economic Development in Pakistan. Paper presented at the Proceedings of 6th International Business and Social Sciences Research Conference.

Tajeddini, K. (2016). Financial Orientation, Product Innovation and Firm Performance: An Empirical Study in the Japanese SMEs. International Journal of Innovation and Technology Management, 1640005.

Teece, D. J. (2007). Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance. Strategic management journal, 28(13), 1319-1350.

Tenhunen, J., Rantanen, H., & Ukko, J. (2001). SME-oriented implementation of a performance measurement system. Lahti, Finland: Department of Industrial Engineering and Management, Lappeenranta University of Technology.

Tippins, M. J., & Sohi, R. S. (2003). IT competency and firm performance: is organizational learning a missing link? Strategic management journal, 24(8), 745-761.

Tseng, S.-M., & Lee, P.-S. (2014). The effect of knowledge management capability and dynamic capability on organizational performance. Journal of Enterprise Information Management, 27(2), 158-179.

Visnjic, I., Wiengarten, F., & Neely, A. (2016). Only the brave: Product innovation, service business model innovation, and their impact on performance. Journal of Product Innovation Management, 33(1), 36-52.

Voss, G. B., & Voss, Z. G. (2000). Strategic orientation and firm performance in an artistic environment. Journal of marketing, 64(1), 67-83.

Wang, C. L., & Ahmed, P. K. (2004). The development and validation of the organisational innovativeness construct using confirmatory factor analysis. European Journal of Innovation Management, 7(4), 303-313.

Weerawardena, J., O'Cass, A., & Julian, C. (2006). Does industry matter? Examining the role of industry structure and organizational learning in innovation and brand performance. Journal of business research, 59(1), 37-45.

Weiss, B., & Welsh, D. H. (2013). Entrepreneurship and small business in Eastern Europe: overcoming challenges, sustaining growth. International Journal of Globalisation and Small Business, 5(3), 148-169.

Weiss, P. (2003). Adoption of product and process innovations in differentiated markets: The impact of competition. Review of Industrial Organization, 23(3-4), 301-314.

Zali, M. (2006). Building the Learning Organization: Mastering the 5 elements for corporate learning. Marquardt MJ,(Author). Tehran: University of Tehran Entrepreneurship Center.

Zhu, Y., Wittmann, X., & Peng, M. W. (2012). Institution-based barriers to innovation in SMEs in China. Asia Pacific Journal of Management, 29(4), 1131-1142.


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.