Market and Supply Chain Orientation; Dynamic Capabilities Leading to Innovation and Operational Capabilities

Abstract

SMEs always need survival tools or strategies such as orientation and capabilities to survive in the competitive market, as they can help in improving performance. Therefore, this research has highlighted important capabilities and orientations influencing SMEs’ performance in Oman. It has examined the effect of supply chain orientation and market orientation on SMEs’ performance with mediating role of innovation capabilities and operational capabilities. Moreover, it investigated the role of strategic flexibility as a moderator between innovation capabilities and SMEs’ performance in Oman. The survey method was used to collect primary data from managers and supervisors of SMEs functional in Oman. Data analysis was done using AMOS, and structural equation modeling (SEM) was conducted. The moderation was examined by using the Hayes process macro on SPSS. The results revealed that market orientation and SC orientation positively influence SMEs’ innovation capabilities, operational capabilities, and performance. These capabilities also help in enhancing performance. Moreover, they mediate the relationship between “supply chain orientation and SMEs’ performance” and “market orientation and SMEs’ performance.” Furthermore, strategic flexibility does not moderate the effect of innovation capabilities on SMEs’ performance.