Firm-specific orientations and manufacturing capability under institutional voids

Abstract

ABSTRACT Manufacturing capability (MC) is widely considered to depend on a strategic orientation of firms and institutional support. Remarkably, little is known about the influence of firm-specific orientations on manufacturing capability under institutional voids. This study examines the extent to which learning orientation (LO) and entrepreneurial orientation (EO) influence institutional support to enhance firms’ MC. While EO prompts effective responses to institutional voids, institutional support reduces them and LO allows a firm to continuously learn in response to such voids. Drawing insights from the resource-based view (RBV) and institutional theory, this study tests this argument using partial least squares path modeling on a sample of 105 surveyed export manufacturers from Tanzania and Kenya. Findings indicate that although both LO and EO are the major antecedents of MC, firms must be entrepreneurially oriented in order to significantly influence the institutional support. Even though the literature states that institutional support plays a great role in enhancing MC, research findings suggest otherwise. Thus, focusing on the novel constructs relationship and importance-performance analysis, this study contributes to the RBV and institutional theory by providing theoretical and practical implications of the research findings for the contexts where national institutions facilitating business activities are inefficient.