The relationship between market orientation, competitive advantage and market performance of manufacturing SMEs in Malaysia

• Main Author: Manivannan, Rethinam
• Format: Thesis
• Language: English; English; English
• Published: 2023
• Subjects: HD60 Small Business.
• Online Access: https://etd.uum.edu.my/10912/1/permission%20to%20deposit-embargo%2024%20months-s94230.pdf; https://etd.uum.edu.my/10912/2/s94230_01.pdf; https://etd.uum.edu.my/10912/3/s94230_02.pdf; https://etd.uum.edu.my/10912/
• Institution: Universiti Utara Malaysia

Small and medium enterprises (SMEs) are recognised as a strategic pillar of the Malaysian economy and contribute to economic growth. However, there is limited research on understanding market orientation and the mediating role of competitive advantage on market performance in the manufacturing sector of Malaysian SMEs. The objective of this study is threefold: to examine (i) the influence of market orientation on SMEs' market performance and competitive advantage, (ii) the influence of competitive advantage on SMEs' market performance, and (iii) the mediating role of competitive advantage in this relationship. This cross-sectional study uses convenience sampling as the method of data collection. Data from 386 employees of manufacturing SMEs in Klang Valley, Malaysia, were analysed using partial least squares-structural equation modeling (PLS-SEM) via SmartPLS 3.0. The findings reveal that market orientation positively impacts SMEs' market performance, with competitive advantage as a mediator in this relationship. This shows the importance of SMEs' orientation to market trends and competitor dynamics in enhancing their performance. Further analysis reveals that sustained competitive advantage improves market performance over time. Additionally, innovation differentiation, a key component of competitive advantage, positively influences market performance. By applying the Resource-Based View Theory (RBV) and the Dynamic Capabilities Theory (DC), this study examines the key factors that influence the market performance of SMEs in Malaysia, where market orientation is a prerequisite for achieving competitive advantage. These findings add to the body of knowledge by empirically examining the relationship between market orientation, competitive advantage, and market performance in the context of Malaysian manufacturing SMEs. Manufacturing SMEs should emphasize the critical role of market orientation in discerning customer needs and tailoring strategies accordingly.