Network Ties, Knowledge Absorptive Capacity, Entrepreneur Orientations and Innovation: Evidence from New Firms in Thai Agricultural Industry

Abstract

The purpose of this research is to investigate the mediating effects of knowledge absorptive capacity (ACAP) (i.e., potential and realized) in the relationship between network ties and innovation as well as the moderating effects of entrepreneurial orientation (E.O.) in the relationship between the two components of ACAP and innovation. Among these constructs are investigated in new firms in the Thai agricultural industry. To understand the phenomenon in the real-world context, this research used case study research based on 6 selected cases together with a survey research. A survey questionnaire was then distributed to 188 new firms in Thai agricultural industry. To analyze the data, structural equation modeling and hierarchical regression were employed to assess construct validity and test the stated hypotheses.

Case study research provides evidence for confirming the conceptual framework in the context of study. The empirical results show that the two components of ACAP (potential and realized) play different roles. Particularly, potential ACAP plays significantly a critical role not only to innovation, but also a mediator between network ties and innovation. Moreover, the relationship between potential ACAP and innovation can be strengthened when EO plays a moderating role. Realized ACAP is positively related to innovation but not significant. This reflects the low level of prior-related knowledge of the new firms that need times to accumulate their knowledge to enhance their innovation for applying the commercial end.

This research contributes to the literature of network ties, ACAP and innovation. Particularly, ACAP is a black box in the relationship between network ties and innovation by emphasizing a critical role of potential ACAP for new firms. In addition, EO can trigger potential ACAP and innovation. Accordingly, new firms from Thai agricultural industry pay attention to external knowledge by building a relationship with external sources (e.g., partners, customers, government) to achieve their desired innovation as the country moves toward Thailand 4.0.

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