Entrepreneurial innovations, market-driven intangibles and learning orientation: critical indicators for performance advantages in SMEs

Abstract

Historically, small firms and start-up ventures have been skilled in developing innovations in order to exploit profitable market opportunities but less effective at sustaining the competitive advantages that are based on distinguished firm-specific resources needed to exploit those opportunities over time. In the literature, however, several questions of whether the argument is valid or not, remain open, and the results are mixed. Drawing on the Resource-Based Theory (RBT) of the firm and entrepreneurship literature, this study aims to explore the effects of entrepreneurial innovations, market-driven intangibles and organisational learning on performance advantages in the context of Small-; to Medium-sized Enterprises (SMEs). A conceptual framework is developed, and the authors use data from 159 firms to test the hypothesised relationships. Our empirical results show that technological innovation capability and strong relationships with customers and supply chain partners are the key determinants of positional and economic performance advantages. The firm's commitment to learning strengthens its position in the marketplace. Managerial innovation, in turn, is contingent on learning orientation, customer-based and supply chain assets. The implications of these findings for theory and practice are discussed.