The role of entrepreneurial orientation and social capital toward technology innovation among SMEs in Kurdistan

Authors

  • Kheder Omar Lawa Othman Yeop Abdullah Graduate School of Business (OYAGSB), Universiti Utara Malaysia, Malaysia
  • Sahar E-Vahdati Othman Yeop Abdullah Graduate School of Business (OYAGSB), Universiti Utara Malaysia, Malaysia

DOI:

https://doi.org/10.32890/gbmr2022.14.2.3

Keywords:

SME, Technological innovation, Entrepreneurial orientation, Social capital

Abstract

The emergence of the fourth industrial revolution has made fundamental changes to technology, industries, and societal patterns and processes. SMEs are familiarizing themselves with new technological innovations to adapt to the current shifts. SMEs significantly contribute to economic progress by creating jobs, generating revenue, reducing poverty, and launching new ventures, especially in developing economies. However, the contribution of the SMEs in Kurdistan is limited due to the weak capacity to produce technological innovations and the inability to execute manufacturing processes effectively. So, the study aims to investigate the impact of Entrepreneurial Orientation (EC) and Social Capital (SO) on the Technological Innovation (TI) of Kurdistan SMEs in the Kurdistan region of Iraq. This study used the resource-based theory as the underlying theory for its presumptions, and its model was constructed using self-administered questionnaires. Three hundred forty-four business owners participated in this study, yielding a response rate of 68%. The results of the current study showed that social capital and entrepreneurial orientation both significantly and positively affect technological innovation. The study will contribute to technology innovation adoption among small industrial companies in Kurdistan and reduce potential setbacks for technology adoption, highlighting externally generated knowledge of entrepreneurial orientation and social capital.

Author Biographies

Kheder Omar Lawa, Othman Yeop Abdullah Graduate School of Business (OYAGSB), Universiti Utara Malaysia, Malaysia

Othman Yeop Abdullah Graduate School of Business (OYAGSB)

Universiti Utara Malaysia, Kuala Lumpur, Malaysia

Sahar E-Vahdati, Othman Yeop Abdullah Graduate School of Business (OYAGSB), Universiti Utara Malaysia, Malaysia

Othman Yeop Abdullah Graduate School of Business (OYAGSB)

Universiti Utara Malaysia

Kuala Lumpur, Malaysia

References

Abdullah, D. H. (2016). The role of government in supporting small projects for youth of Kurdistan region/Iraq (Master's thesis, social balmier iEnstitüsü).

Adler, P., & Shenhar, A. (1990). Adapting Your Technological Base: The Organizational Challenge. Sloan Management Review, 32(1), 25–37.

Al-Henzab, J., Tarhini, A., & Obeidat, B. Y. (2018). The associations among market orientation, technology orientation, entrepreneurial orientation, and organizational performance. Benchmarking: An International Journal.

Ali, N. W. (2020). An assessment of the Impact of Leadership and Management on Performance of SMEs in Kurdistan, 17, 201-209.‎

Aljanabi, A. R. A. (2017). The mediating role of absorptive capacity on the relationship between entrepreneurial orientation and technological innovation capabilities. International Journal of Entrepreneurial Behavior & Research, 24(4), 818-841.

Aljanabi, A. R. A., & Mohd Noor, N. A. (2015). The mediating role of market orientation on entrepreneurial orientation, absorptive capacity, and technological innovation capabilities. Asian Social Science, 11(5), 219-234.

Al‐Jinini, D. K., Dahiyat, S. E., & Bontis, N. (2019). Intellectual capital, entrepreneurial orientation, and technical innovation in small and medium‐sized enterprises. Knowledge and Process Management, 26(2), 69-85.

Atuahene‐Gima, K. (1995). An exploratory analysis of the impact of market orientation on new product performance: a contingency approach. Journal of Product Innovation Management: an international publication of the product development & management association, 12(4), 275-293.

Bakar, L. J. A., & Ahmad, H. (2010). Assessing the relationship between firm resources and product innovation performance: A resource‐based view. Business Process Management Journal, 16(3), 420-435.

Baker, W. E., & Sinkula, J. M. (2009). The complementary effects of market orientation and entrepreneurial orientation on profitability in small business. Journal of Small Business Management, 47(4), 443-464.

Bontis, N. (1998). Intellectual capital: an exploratory study that develops measures and models. Management decision, 36(2), 63-76.

Boohene, R., Gyimah, R. A., & Osei, M. B. (2019). Social capital and SME performance: the moderating role of emotional intelligence. Journal of Entrepreneurship in Emerging Economies, 12(1), 79-99.

Boso, N., Cadogan, J. W., & Story, V. M. (2012). A complementary effect of entrepreneurial and market orientations on export new product success under differing levels of competitive intensity and financial capital. International Business Review, 21(4), 667-681.

Boso, N., Story, V. M., & Cadogan, J. W. (2013). Entrepreneurial orientation, market orientation, network ties, and performance: Study of entrepreneurial firms in a developing economy. Journal of Business Venturing, 28(6), 708-727.

Brunswicker, S., & Vanhaverbeke, W. (2015). Open innovation in small and medium‐sized enterprises (SMEs): External knowledge sourcing strategies and internal organizational facilitators. Journal of small business management, 53(4), 1241-1263.

Camps, S. and Marques, P. (2014). Exploring how social capital facilitates innovation: the role of innovation enablers. Technological Forecasting and Social Change, Vol. 88, pp. 325-348.

Chen, J. S., & Tsou, H. T. (2012). Performance effects of IT capability, service process innovation, and the mediating role of customer service. Journal of Engineering and Technology Management, 29(1), 71-94.

Chen, Y. (2012). Risk in the integrated leapfrogging mode of technological innovation. Kybernetes, Vol. 41 No. 10, pp. 1423-1439.

Cheng, C. F., Chang, M. L., & Li, C. S. (2013). Configural paths to successful product innovation. Journal of Business Research, 66(12), 2561-2573.

Chetty, S., & Campbell-Hunt, C. (2003). Explosive international growth and problems of success amongst small to medium-sized firms. International Small Business Journal, 21(5), 5−27.

Chisholm, A. M., & Nielsen, K. (2009). Social capital and the resource-based view of the firm. International Studies of Management & Organization, 39(2), 7-32.

Chong, P., Ong, T., Abdullah, A., & Choo, W. (2019). Internationalization and innovation on balanced scorecard (BSC) among Malaysian small and medium enterprises (SMEs). Management Science Letters, 9(10), 1617-1632.

CIPE. (2020). Kurdistan Business Agenda. Kurdistan Business Agenda (Vol. 28). Washington DC. doi:10.1093/her/cyt035

Cohen, W., & Levinthal, D. (1990). absorptive Capacity : A New Perspective on Learning and Innovation Wesley M Cohen ; daniel in Levinthal Absorptive Capacity A New Perspective on Learning and Innovation. Administrative Science Quarterly, 35(1), 128–152.

Covin, J. G., & Miller, D. (2014). International Entrepreneurial Orientation: Conceptual Considerations, Research Themes, Measurement Issues, and Future Research Directions. Entrepreneurship Theory and Practice, 38(1), 11–44.

Covin, J. G., & Wales, W. J. (2012). The measurement of entrepreneurial orientation. Entrepreneurship theory and practice, 36(4), 677-702.

Cross, R., Borgatti, S. P., & Parker, A. (2002). Using social network analysis to support strategic collaboration. California Management Review, 44(2), 25−46.

Demmer, W. A., Vickery, S. K., & Calantone, R. (2011). Engendering resilience in small-and medium-sized enterprises (SMEs): a case study of Demmer Corporation. International journal of production research, 49(18), 5395-5413.

Donbesuur, F., Ampong, G. O. A., Owusu-Yirenkyi, D., & Chu, I. (2020). Technological innovation, organizational innovation and international performance of SMEs: The moderating role of domestic institutional environment. Technological Forecasting and Social Change, 161, 120252.

Dyllick, T., & Rost, Z. (2017). Towards true product sustainability. Journal of Cleaner Production, 162, 346-360.

Elfring, T., & Hulsink, W. (2003). Networks in entrepreneurship: The case of high-technology firms. Small Business Economics, 21, 409−422.

Engelen, A., Gupta, V., Strenger, L., & Brettel, M. (2015). Entrepreneurial orientation, firm performance, and the moderating role of transformational leadership behaviors. Journal of Management, 41(4), 1069-1097.

Florin, J., Lubatkin, M., & Schulze, W. (2003). A social capital model of high-growth ventures. Academy of Management Journal, 46(3), 374-384.

Fornell, C., & Larcker, D. F. (1981). Structural equation models with unobservable variables and measurement error: Algebra and statistics. Journal of Marketing Research, 18(3).

Gao, Y., Ge, B., Lang, X., & Xu, X. (2018). Impacts of proactive orientation and entrepreneurial strategy on entrepreneurial performance: An empirical research. Technological Forecasting and Social Change, 135, 178-187.

Gold, A. H., Malhotra, A., & Segars, A. H. (2001). Knowledge management: An organizational capabilities perspective. Journal of management information systems, 18(1), 185-214.

Grande, J., Madsen, E. L., & Borch, O. J. (2011). The relationship between resources, entrepreneurial orientation, and performance in farm-based ventures. Entrepreneurship and Regional Development, 23(3-4), 89-111.

Guan, J. C., Yam, R. C. M., Mok, C. K., & Ma, N. (2013). A study of the relationship between competitiveness and technological innovation capability based on DEA models. European Journal of Operational Research, 170(3), 971–986.

Guerrero, S., Cayrat, C., & Cossette, M. (2021). Human resource professionals’ human and social capital in SMEs: small firm, big impact. The International Journal of Human Resource Management, 1-23.

Gupta, V. K., Huang, R., & Yayla, A. A. (2011). Social capital, collective transformational leadership, and performance: A resource-based view of self-managed teams. Journal of Managerial Issues, 31-45.

Hair, J. F., Sarstedt, M., Hopkins, L., & Kuppelwieser, V. G. (2014). Partial least squares structural equation modeling (PLS-SEM): An emerging tool in business research. European business review, 26(2), 106-121.

Hair, J. F., Sarstedt, M., Ringle, C. M., & Gudergan, S. P. (2017). Advanced issues in partial least squares structural equation modeling. Sage publications.

Henseler, J., & Sarstedt, M. (2013). Goodness-of-fit indices for partial least squares path modeling. Computational Statistics, 28(2), 565-580.

Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the academy of marketing science, 43(1), 115-135.

Hervas-Oliver, J. L., Sempere-Ripoll, F., & Boronat-Moll, C. (2021). Technological innovation typologies and open innovation in SMEs: Beyond internal and external sources of knowledge. Technological Forecasting and Social Change, 162, 120338.

Hoang, H., & Antonic, B. (2003). Network-based research in entrepreneurship — A critical review. Journal of Business Venturing, 18, 165−187.

Huang, S.K. and Wang, Y.-L. (2011), “Entrepreneurial orientation, learning orientation, and innovation in small and medium enterprises”, Procedia – Social and Behavioral Sciences, Vol. 24, pp. 563-570.

Hung, H. (2006). Formation and survival of new ventures — A path from interpersonal to inter-organizational networks. International Small Business Journal, 24(4), 359−378.

Hussain, S., Sandhu, M. R. S., & Zaheer, M. (2021). Entrepreneurial Orientation of Internationalized Firms and Their Export Performance: Evidence from Surgical Instruments Industry of Sialkot. Journal of Asian Development Studies, 10(2), 58-65.

Jalali, A., Jaafar, M., & Thurasamy, R. (2013). Influence of entrepreneurial orientation on the financial performance: evidence from SMEs in Iran. Middle East Journal of Management, 1(2), 168-185.

Jin, B., & Cho, H. J. (2018). Examining the role of international entrepreneurial orientation, domestic market competition, and technological and marketing capabilities on SME’s export performance. Journal of Business & Industrial Marketing.

Jin, B., & Cho, H. J. (2018). Examining the role of international entrepreneurial orientation, domestic market competition, and technological and marketing capabilities on SME’s export performance. Journal of Business & Industrial Marketing.

Kasim, R., Alhammadi, E. M. A., & Lohana, S. (2022). Structural Equation Model of Knowledge Management Factors Affecting Construction Project Performance. International Journal of Sustainable Construction Engineering and Technology, 13(1), 149-158.

Kline, R. B. (2005). Principles and Practice of Structural Equation Modeling. New York: The Guilford Press

Kocak, A., Carsrud, A., & Oflazoglu, S. (2017). Market, entrepreneurial, and technology orientations: impact on innovation and firm performance. Management Decision, 55(2), 248-270.

Kraus, S., Rigtering, J. C., Hughes, M., & Hosman, V. (2012). Entrepreneurial orientation and the business performance of SMEs: a quantitative study from the Netherlands. Review of Managerial Science, 6(2), 161-182.

Krejcie, R. V., & Morgan, D. W. (1970). Determining sample size for research activities. Educational and psychological measurement, 30(3), 607-610.

Lin, N. (2017). Building a network theory of social capital. Social capital, 3-28.

Lohana, S., Rashid, U. K. B., Nasuredin, J., & Kumar, V. (2019). Determinants of Financial Sustainability and Access to Finance among SMEs in Malaysia: A Pilot Study: Management and Business Research Quarterly, 10, 1-8.

Marques, J. B. V., & de Freitas, D. (2018). The delphi method: characterization and potentialities for educational research. Pro-Posições, 29(2), 389.

Martín-de Castro, G., Delgado-Verde, M., Navas-López, J. E., & Cruz-González, J. (2013). The moderating role of innovation culture in the relationship between knowledge assets and product innovation. Technological Forecasting and Social Change, 80(2), 351-363.

Massa, F. G., Helms, W. S., Voronov, M., & Wang, L. (2017). Emotions uncorked: Inspiring evangelism for the emerging practice of cool-climate winemaking in Ontario. Academy of Management Journal, 60(2), 461-499.

Messersmith, J. G., & Wales, W. J. (2013). Entrepreneurial orientation and performance in young firms: The role of human resource management. International small business journal, 31(2), 115-136.

Meyer, J. P. (2022). Social capital is the main driver of organizationally valuable innovation. European Journal of Innovation Management.

Morgan, T., Anokhin, S., Kretinin, A. and Frishammar, J. (2015). The dark side of the entrepreneurial orientation and market orientation interplay: a new product development perspective. International Small Business Journal, Vol. 33 No. 7, pp. 731-751.

MTIKRG. (2020). Industrial Factories Directory. Kurdistan Region of Iraq - Erbil: Ministry of Trade and Industry Kurdistan Region of Iraq.

Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of management review, 23(2), 242-266.

Omar, N. A., Aris, H. M., & Nazri, M. A. (2016). The effect of entrepreneurial orientation, innovation capability and knowledge creation on firm performance: A perspective on small scale entrepreneurs. Jurnal Pengurusan (UKM Journal of Management), 48.

Otero-Neira, C., Arias, M. J. F., & Lindman, M. T. (2013). Market orientation and entrepreneurial proclivity: Antecedents of innovation. Global Business Review, 14(3).

Manual, O. (2005). The measurement of scientific and technological activities. Proposed Guidelines for Collecting an Interpreting Technological Innovation Data, 30, 162. 385-395.

Purwati, A., Budiyanto, B., Suhermin, S., & Hamzah, M. (2021). The effect of innovation capability ion business performance: the role of social capital and entrepreneurial leadership ion SMEs in Indonesia. Accounting, 7(2), 323-330.

Radicic, D., Douglas, D., Pugh, G., & Jackson, I. (2019). Cooperation for innovation and its impact ion technological and non-technological innovations: empirical evidence for European SMEs in traditional manufacturing industries. International Journal of Innovation Management, 23(05), 1950046.

RAND. (2020). Strategies for Private-Sector Development and Civil-Service Reform in the Kurdistan Region—Iraq. Arlington. Retrieved from www.rand.org

Rauch, A., Wiklund, J., Lumpkin, G., & Frese, M. (2009). Entrepreneurial orientation and business performance: An assessment of past research and suggestions for the future. Entrepreneurship Theory and Practice, 33(3), 761–787.

Saha, K., Kumar, R., Dutta, S. K., & Dutta, T. (2017). A content adequate five‐dimensional Entrepreneurial Orientation scale. Journal of Business Venturing Insights, 8 December, 41–49.

Serageldin, I., & Grootaert, C. (2017). Defining social capital: an integrating view 1. In Evaluation & Development (pp. 201-217). Routledge.

Singh, D., Khamba, J. S., & Nanda, T. (2017). Influence of technological innovation on the performance of small manufacturing companies. International Journal of Productivity and Performance Management, 66(7), 838-856.

Siyamtinah, H. S. (2016). Innovation capability of SMEs through entrepreneurship, marketing capability, relational capital and empowerment. Asia Pac. Manag. Rev, 21(4), 196-203.

Subramaniam, M., & Youndt, M. A. (2005). The influence of intellectual capital on the types of innovative capabilities. Academy of Management journal, 48(3), 450-463.

Sukoco, B.M., Hardi, H. and Qomariyah, A. (2018). Social capital, relational learning, and performance of supplier. Asia Pacific Journal of Marketing and Logistics, Vol. 30 No. 2, pp. 417-437.

Tsai, K. H., & Yang, S. Y. (2013). Firm innovativeness and business performance: The joint moderating effects of market turbulence and competition. Industrial Marketing Management, 42(8), 1279-1294.

Vora, D., Vora, J., & Polley, D. (2012). Applying entrepreneurial orientation to a medium-sized firm. International Journal of Entrepreneurial Behavior and Research, 18(3), 352–379.

Wu, W.-K., Wu, H.-C. and Lai, C.-S. (2021). The role of buyer-seller guanxi facets and positions in social commerce: an analysis of the buyer’s perspective in Taiwan. Asia-Pacific Journal of Marketing and Logistics, 34(6), 1266-1284.

Yacob, P., Wong, L. S., & Khor, S. C. (2018). An empirical investigation of green initiatives and environmental sustainability for manufacturing SMEs. Journal of Manufacturing Technology Management, 30(1), 2-25.

Yun, J. J., Park, K., Kim, J., & Yang, J. (2016). Open innovation effort, entrepreneurship orientation and their synergies onto innovation performance in SMEs of Korea. Science, Technology and Society, 21(3), 366-390.

Zahra, S. A., & George, G. (2017). Absorptive capacity: A review, reconceptualization, and extension. Academy of management review, 27(2), 185-203.

Zeffane, R. (2014). Does collectivism necessarily negate the spirit of entrepreneurship? International Journal of Entrepreneurial Behaviour & Research, Vol. 20 No. 3, pp. 278-296.

Zhai, Y. M., Sun, W. Q., Tsai, S. B., Wang, Z., Zhao, Y., & Chen, Q. (2018). An empirical study on entrepreneurial orientation, absorptive capacity, and SMEs’ innovation performance: A sustainable perspective. Sustainability, 10(2), 314. https://doi.org/10.3390/su10020314

Zhang, Y., Guo, C. S., Xu, J., Tian, Y. Z., Shi, G. L., & Feng, Y. C. (2012). Potential source contributions and risk assessment of PAHs in sediments from Taihu Lake, China: comparison of three receptor models. Water Research, 46(9), 3065-3073.

Zhou, L., W.P. Wu, and X. Luo (2020). Internationalization and the Performance of Born Global SMEs: The Mediating Role of Social Networks. Journal of International Business Studies, 38(4), 673-690.

Downloads

Published

30-12-2022

How to Cite

Lawa, K. O., & E-Vahdati, S. (2022). The role of entrepreneurial orientation and social capital toward technology innovation among SMEs in Kurdistan. Global Business Management Review (GBMR), 14(2), 37–55. https://doi.org/10.32890/gbmr2022.14.2.3