The contingent effects of strategic orientations and strategic capabilities on competitive performance: Evidence from Ethiopian manufacturing enterprises

Abstract

While there are several studies that examine the performance implications of different strategic orientations, little is known regarding the complex interplay between the two prominent strategic orientations and strategic capabilities in impacting firm performance. Notably, it is ambiguous how a firm's strategic orientations are aligned with different strategic capabilities to maintain competitive performance. To address this gap, the study employs a moderated mediation analysis to investigate the mediating role of strategic capabilities in the relationship between market, technology orientations, and firm performance. It also examines the moderating effect of environmental dynamism in shaping the mediated association between strategic orientations and performance. Based on the survey results of 205 large Ethiopian manufacturing firms, our findings confirm that market orientation exerts a positive and significant influence on both marketing and market-linking capabilities, while only marketing capabilities mediate the relationship between market orientation and firm performance. Likewise, there is a strong association between technology orientation and strategic capabilities (i.e., technology and information technology capabilities), mediating the relationship with firm performance. Meanwhile, environmental dynamism influences the indirect relationship that exists between market, technology, and firm performance through their corresponding strategic capabilities. Our study sheds light on strategic management literature by showing the unique relationship and interdependency between strategic orientations and capabilities in attaining superior performance. This study also forwarded some practical implications of the findings.