Entrepreneurial Orientation, Knowledge Absorptive Capacity and Firm Performance: An Empirical Study from the Medical Device Industry in Thailand

Abstract

This research responds to calls for research exploring the relationships among entrepreneurial orientation (EO), knowledge absorptive capacity (ACAP) and firm performance particularly in the unexplored context of medical device industry. This research aims to answer research questions; how and why do key characteristics of EO contribute to firm performance in the medical device industry? What does the extent of the characteristics of EO influence firm performance; particularly, when investigated their knowledge ACAP as a moderating role. This research conducts mixed methods to answer these specific questions.

Based on case study research from five selected medical device companies, the crucial characteristics of EO are proactiveness and competitive aggressiveness that affect firm performance. In addition, for the survey data based on 74 medical device firms, the results indicate that the proactiveness of EO has a significant positive effect on firm performance while the EO competitive aggressiveness was no significance. Moreover, knowledge ACAP, as a moderator, plays a significantly negative effect on the relationship between the EO proactiveness and firm performance. To explain these phenomenon based on mixed methods, the findings show: (1) EO proactively find a new market through exporting in order to gain new sale by increasing the exploitation rate of firm’s existing resources and avoiding making price war in the current market that can be destroyed their profitability in the near future, and (2) the characteristic of EO competitive aggressiveness totally differs from other hi-tech industries (e.g., slow rate of obsolescence products and incrementally changes of new product development).

This research contributes to the literature of EO and Knowledge ACAP particularly in the context of the medical device industry. This research points out the different roles of EO proactiveness and competitive aggressiveness on firm performance; when knowledge ACAP plays a moderator role. For managerial implication, entrepreneurs and managers in the medical device industry can boost their firm performance by developing their proactive skills such as participating in medical seminars domestically and internationally and exporting their products overseas. In addition, medical device firms should better exploit external knowledge (e.g., R&D in overseas) to expand their potential sales and return on investments in different markets.

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