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JSMA
14,4 Strategic orientations, firm
performance and the moderating
effect of absorptive capacity
582 Manuel-Alejandro Ibarra-Cisneros
Faculty of Administrative Sciences, Autonomous University of Baja California,
Received 18 May 2020
Revised 5 August 2020
Mexicali, Mexico
23 October 2020
10 December 2020
Mar
ıa del Rosario Demuner-Flores
8 January 2021 Faculty of Accounting and Administration, Autonomous University of Mexico State,
Accepted 14 February 2021 Toluca, Mexico, and
Felipe Hern
andez-Perlines
Department of Business Administration, University of Castilla-La Mancha,
Toledo, Spain

Abstract
Purpose – The purpose of this article is to study the moderating effect of absorptive capacity, defined as the
set of organizational routines and processes through which companies acquire, assimilate, transform and
exploit knowledge to produce a dynamic organizational capacity (Zahra and George, 2002), in three strategic
orientations: market orientation; technology orientation and entrepreneurial orientation and their positive
relationship in the performance of the medium and large Mexican manufacturing firms. Likewise, it is
determined whether these three combined SOs influence firm performance.
Design/methodology/approach – The data was collected from 171 medium and large-sized Mexican
manufacturing firms. The proposed hypotheses are tested using partial least square structural equation
modeling (PLS-SEM).
Findings – Despite the importance of knowledge for the development of firms, the results indicate that the
moderating effect of absorptive capacity is only present in the relationship between entrepreneurial orientation
and firm performance. That is, firms cannot take advantage of knowledge simultaneously between the three
strategic orientations. For their part, market orientation and entrepreneurial orientation exert a positive
influence on firm performance.
Practical implications – The main practical implication for the manufacturing industry is that they must
develop mechanisms to detect what kind of knowledge affects each strategic orientation, in this way it can
make the absorptive capacity influence the relationships between SO and FP.
Originality/value – The main contribution consists of studying the moderating effect of the absorptive
capacity on the relationship between three strategic orientations and firm performance, and not concentrating
solely on the simultaneous use of these strategies as is commonly done.
Keywords Absorptive capacity, Firm performance, Entrepreneurial orientation, Market orientation, Strategy
Paper type Research paper

1. Introduction
In recent years, significant progress has been made in the study of the multiple factors that
affect firm performance (FP). Among these, absorptive capacity (ACAP) stands out.
Absorptive capacity is fundamental in the generation of new knowledge, which is integrated
into the organizational structure, allows for the incorporation of the products and services
that are developed, resulting in higher firm competitiveness (Zahra and George, 2002) In this
sense, vast literature has been developed on the relevant role of ACAP in firm performance
Journal of Strategy and
Management (Cohen and Levinthal, 1990; Flatten et al., 2011; Kostopoulos et al., 2011; Wales et al., 2013).
Vol. 14 No. 4, 2021
pp. 582-611
This widely studied relationship has been approached from diverse standpoints, from
© Emerald Publishing Limited
1755-425X
traditional – direct relationship with FP –, to other less common. In this case, ACAP concurs
DOI 10.1108/JSMA-05-2020-0121 with an element that moderates various factors that influence firm performance (Herath and
Mahmood, 2014; Lee et al., 2014). Strategic orientations (SO) are some of such factors. SO aim Strategic
to find out the consumers’ behavior and take actions to develop products and services that orientations,
satisfy their present and future needs in advance of competitors (Hakala, 2010; Miles and
Snow, 1978). Among the breadth of studies and lines of research, the ones that combine
firm
several strategic orientations stand out (Aloulou, 2019; Kocak et al., 2017; Laukkanen et al., performance
2013; Long, 2013; Lonial and Carter, 2015; Masa’deh et al., 2018), which synchronously
interact to positively influence the financial or market firm performance (Deshpand
e and
Farley, 2004). From this perspective, SO are considered complementary and each affects 583
certain aspects of the firms (Hakala, 2011). One of such SO is market orientation (MO), which
is defined as the use of strategies to identify the clients’ present and future needs and generate
the conditions to satisfy them (Kohli et al., 1993).
In this sense, MO allows firms to come closer to their customers and help them find what they
need. A second strategic orientation is called entrepreneurial orientation (EO) (Wiklund and
Shepherd, 2005); it is in charge of generating an innovation-based organizational culture, makes
the firms search for new markets and needs, and turns them into the main drivers as well.
Besides, firms also develop a technological orientation (TO) (Kocak et al., 2017), which
focuses on implementing information technologies, developing patents to offer better quality
products, suited to the particular needs of the clients. It is worth mentioning that owing to its
characteristics, ACAP must enrich and influence the design of the various strategic
orientations that firms set up in order to improve the financial and market environment,
especially in the manufacturing sector, which is deemed a source of constant innovation, via
its flexible production systems (Oke, 2013), always searching for new products that adapt to
changes in demand patterns (Gunasekaran, 1998).
This research attempts to bridge the gap between theoretical arguments and the empirical
evidence thus far developed regarding absorptive capacity, strategic orientations and their
effects on firm performance (Aloulou, 2019; Choo, 1996; Hakala, 2010; Hamel and Prahalad,
1994) in a combined manner. Therefore, the results must be analyzed considering the context
in which manufacturing industry develops. A characteristic of manufacturing is its greater
degree of innovation and intensive use of capital, though in developing countries, this sector
focuses mainly on assembling and generating products with a medium-to-low level of
innovation. In this sense, the context must be addressed with a view to understanding why
the evidence generated so far is contradictory.
The main goal of this research is to analyze the moderating effect of absorptive capacity
on the relation between market orientation, technology orientation and entrepreneurial
orientation, and the performance of medium and large Mexican manufacturing firms. A
second objective is to verify whether each of the three SO – including ACAP as a direct
relationship – have a positive influence on FP. To achieve these objectives a 38-item survey
was designed and applied to 171 manufacturing firms in Baja California, Mexico. To test the
research hypotheses, partial least square structural equation modeling (PLS-SEM) was used
through statistical software Adanco 2.1.1 (Dijkstra and Henseler, 2015), and Processmarco v.3
(Hayes, 2012), to analyze the moderating effect.
The results obtained add new evidence on the moderating effect ACAP has on the
relationship between three strategic orientations and firm performance. This study
contributes to emerging research on the topic by testing theory in a specific context.
Furthermore, the results of the direct relationships of each SO and FP partially support the
existing theoretical arguments.

2. Theoretical framework
2.1 Strategic orientation
Strategic orientation can be defined as a series of processes, activities and leadership
practices that enable companies to have a positive performance and consolidate themselves
JSMA over the years, satisfying the clients’ needs (Hakala, 2010). Explanations for its scope and
14,4 applications differ depending on if SO is based upon the resource-based view or the industrial
organization theory (Zhang et al., 2015). In any case, SO must be a process that establishes
how an organization interacts with its surroundings (Miles and Snow, 1978) to accomplish
better performance, satisfaction and competitive advantage. These strategies, which as a set
manage to transform resources into performance, are resorted to on the basis of the firm’s
resources and behavior patterns (Hakala, 2010). At once, SO allows expanding the
584 organizational capacity to produce the desired results (Choo, 1996).
It is considered that SO comprises several orientations; however, there is no consensus in
this regard. According to Hakala (2010), SO is composed of entrepreneurial orientation,
market orientation, technology orientation and learning orientation, whereas Lin et al. (2019)
divide it into customer, service and learning orientations. Although most authors use this
type of classification, studies that resorted to other dimensions to measure SO were carried
out in past decades. Levinthal and March (1993) divide it into exploitation strategy, based on
being operationally efficient and improving the firm’s financial performance, and exploration
strategy, focused on innovation.
Regardless of the typology used, a firm with a well-defined strategy must obtain the
expected results and performance. Following previous studies on the same topic (Kocak et al.,
2017; Masa’ deh et al., 2018; Renko et al., 2009), Li’s classification (2005) was chosen for this
research, as it comprised market, technological and entrepreneurial orientations. The studies
which simultaneously analyze these three dimensions are of recent origin (Aloulou, 2019).
Formerly, such dimensions were not related to one another, though recently, they have been
used together because they are not mutually exclusive (Li, 2005). In this regard, Shin and Lee
(2016) mention the need to use multiple orientations to generate competitive advantages and
prevail in a continually evolving environment.
This research starts with the analysis of multiple strategic orientations as complementary
patterns (Hakala, 2011). That is, under this approach, it is considered that different strategic
orientations may be complementary, non-exclusive or sequential, while they can be used on
the basis of the firms’ needs, in certain periods and with varying intensities or priorities.
Consequently, a certain strategy could have a heavier influence on firm performance and not
necessarily behave in the same way all the times.
2.1.1 Market orientation. MO can be explained from the resource-based vision
(RBV) (Barney, 1991); its purpose is to obtain a sustainable competitive advantage
through the efficient use of firm resources. Significant contributions (Jaworski and Kohli,
1993; Kohli et al., 1993; Narver and Slater, 1990; Slater and Narver, 1995) have allowed
developing this strategic orientation, which is defined from the marketing approach as “a
culture at an organizational level which includes values and beliefs that place the customer
first in business planning” (Renko et al., 2009, p. 335). Following this argument, MO is also
defined as a culture that generates behaviors that motivate the creation of value for
customers, consequently improving the companies’ results (Narver and Slater, 1990).
Finally, another widely used definition mentions that MO refers to the “creation of market
intelligence organization, related to the customers’ current and future needs, the
dissemination of intelligence within the company and the ability to respond to it” (Kohli
et al., 1993, p. 468).
Narver and Slater (1990) divide MO into three components: customer orientation,
competence orientation and cross-functional coordination. This is a combined and
coordinated way to detect needs and create products and services to satisfy them.
The literature produced up to this moment emphasizes the importance of MO as a
creator of added value for the customer (Leng et al., 2015; Li, 2005; Penco et al., 2019);
nevertheless, combining other types of orientations may be necessary in order to reach such
added value (Ferraresi et al., 2012), as it is the case of some studies (Ramachandran et al., 2019;
Shin and Lee, 2016). Moreover, firms have to develop a culture that identifies and generates Strategic
internal mechanisms that lead to customer satisfaction (Narver and Slater, 1990). orientations,
MO can also be responsive – exclusively centered on the satisfaction of needs – or
proactive – centered on latent needs – (Narver et al., 2004). Such are the needs that lead firms
firm
to generate new consumer goods, create new market opportunities and prepare for future performance
needs (Kocak et al., 2017). MO is an essential marketing tool to identify present and future
needs and gather the information that satisfies those needs.
As regards the accomplishment of all these tasks, firms have to absorb knowledge from 585
the environment and gain learning that satisfies needs (Slater and Narver, 1995). It is essential
to mention that MO allows industrial companies to find innovative solutions to problems
(Hult et al., 2004); therefore, this strategy is fundamental for the manufacturing sector.
2.1.2 Technology orientation. Out of the approaches derived from RBV, TO is defined as
“the ability and will to acquire substantial technological background and use it in the
development of new products” (Gatignon and Xuereb, 1997, p. 78), which later will satisfy
customer needs (Li, 2005). In consequence, investment on R&D is essential for the generation
of products with leading technology. It is essential to mention that Zhang et al. (2015) use
innovation orientation instead of TO; however, TO is the most widely used.
Firms that plan and adapt their internal culture on the basis of TO are able to attain
technological leadership (Hamel and Prahalad, 1994) before their competitors, and also
achieve better performance and better customer satisfaction.
In like manner, Ko et al. (2020) comment that technology-oriented firms are more willing to
allot sizeable resources to develop new products. The purpose of the firms that adopt this
strategy is to devise and incorporate new technologies into their products, and also look for
leadership in the market (Hakala and Kohtam€aki, 2011). In this sense, Yousaf et al. (2020) state
that firms which implement TO have create a technology-oriented environment that transfers
benefits to new product development. Hence, the importance of R&D is to encourage
investors to decide on a technology-based strategy (Kocak et al., 2017).
For their part, Ko et al. (2020) mention that evidence hints at a correlation of TO with
technology-based innovation, which improves FP and satisfies customer demands (Yousaf
et al., 2020). Also, TO enables developing e-marketing capabilities and firm performance
(Trainor et al., 2011). Finally, by introducing EO and MO into management innovation
strategies, better performance will be accomplished (Renko et al., 2009).
2.1.3 Entrepreneurial orientation. The earliest studies on EO were conducted in the
eighties; back then Miller (1983) defined the concept and what it was composed of. Miller’s
analysis focused on studying how firms entered new markets and businesses through a
series of strategies that fostered an organizational culture prone to innovate. As a result, the
study of EO has experienced significant growth in recent years.
There are various definitions for entrepreneurial orientation (Engelen et al., 2014;
Hernandez-Perlines, 2018; Lumpkin and Dess, 1996; Rauch et al., 2009) as it has been
thoroughly studied given its contribution to the development and performance of
organizations. In this work EO, is defined as the firms’ capacity to perform any activity
that promotes innovation, assuming risks and executing actions for the first time.
This type of orientation motivates the firm to create an organizational culture in which
innovation is the central concern. It is necessary to be open to take risks in the economic
sphere as well as in image and relationships to obtain a competitive advantage no other firm
can match; therefore, business practices are essential for the firms (Chaudhary and
Batra, 2018).
For a firm to have EO, it is necessary to follow three principles. The first one is called
proactiveness. A firm is proactive when it seeks to find new market opportunities, identifies
latent needs, i.e., those that have not been met, and finds new ways or methods to carry out its
activities, achieving thus competitive advantages and influencing its environment or creating
JSMA a new one (Covin and Slevin, 1988; Engelen et al., 2014; Lumpkin and Dess, 1996). That is to
14,4 say, these firms are unafraid of changing or rejecting the status quo; this enables them to act
before their competitors. The second principle is risk-taking, which consists in facing the
unknown, carrying out actions that have a high risk of failure, but which undoubtedly will
produce worthy rewards. Although the existence of benefits is not guaranteed (Lumpkin and
Dess, 1996), business spirit (Lee et al., 2019) and non-risk-averse management (Eshima and
Anderson, 2017) are vital for this type of firms. The third principle is innovativeness, which is
586 based on the development of new products and services from R&D investment. It also
consists in innovating the terms of business strategies and processes as well as the
relationships of the company with its environment (Covin and Slevin, 1988; Lumpkin and
Dess, 1996). Traditional firms tend to turn away from innovation, while disruptive ones
integrate it into their organizational culture. Despite experience is essential when
implementing innovation, firms must be prepared to deal with the learning curve and the
costs derived from lack of expertise (Engelen et al., 2014). In the long term, the benefits will be
more significant, and as an outcome the financial and non-financial performance of the
company will also increase.
2.1.4 Absorptive capacity. Even though many people have used the term absorptive
capacity, Tilton (1971) is considered one of the forerunners of this concept. However,
extensive analysis of absorptive capacity is mainly related to Cohen and Levinthal (1990,
p. 128), who define ACAP as “the firm’s capacity to recognize the value of new external
information, acquire it, assimilate it, and apply it for commercial purposes.” For these
authors, previous knowledge allows assimilating and exploiting new knowledge that must be
related (Chang et al., 2014; Cohen and Levinthal, 1990). Nevertheless, it should be kept in mind
that the new knowledge to be acquired will be defined in terms of the type of existing
knowledge within a company (Lenox and King, 2004).
Subsequently, Zahra and George (2002, p. 186) added a transformation stage, defining
ACAP as a “set of organizational routines and processes by means of which firms acquire,
assimilate, transform, and exploit knowledge to produce a dynamic organizational capability.”
This perspective concurs with Fransen and Helmsing (2017, p. 740), who mention that one of the
goals of developing absorptive capacity is that “companies exploit the transformed knowledge
to sell innovative products at competitive prices in niche markets” to obtain competitive
advantages (Garc
ıa-Morales et al., 2014; Kostopoulos et al., 2011) by means of external
knowledge management (Camis
on and For
es, 2010). It is essential to mention that companies
have varying degrees of ability to create value out of absorptive capacity (Newey and Shulman,
2004); thus, a higher ACAP entails better firm performance (Tsai and Yang, 2017).
The first stage of absorptive capacity is acquisition, defined as the firm’s capacity to
identify and obtain externally generated knowledge (Raymond et al., 2015; Zahra and George,
2002). At this stage, the relationship with the surrounding environment is fundamental to
acquire the knowledge needed (Gonz
alez-Campo and Hurtado-Ayala, 2014). Assimilation
consists of routines and processes that allow a firm to analyze, interpret and understand the
information obtained from external sources (Kim, 1997; Raymond et al., 2015). Although not
every piece of new knowledge can be assimilated (Garz
on, 2015), external knowledge
sometimes exceeds the firm’s capacity to assimilate it. For that reason, experience also
impacts the process of assimilation. Transformation is the firm’s capacity to develop routines
and activities that integrate existing internal and external knowledge as well as newly
assimilated knowledge (Raymond et al., 2015; Zahra and George, 2002). Finally, Garz
on (2015)
and Zahra and George (2002) state that exploitation is based on routines that enable a firm to
reconsider, extend and exploit the existing competences or create new ones via the knowledge
generated and transformed during operations at earlier stages. In like manner, Limaj and
Bernroider (2019, p. 139) assure that “as companies commit to acquiring and assimilating
knowledge, they are likely to develop new, relevant knowledge over exploitation.”
3. Strategic orientations and firm performance Strategic
3.1 Market orientation and firm performance orientations,
The goal of MO is to provide the offered products or services with added value (Kohli and
Jaworski, 1990) as a strategy to generate better performance (Slater and Narver, 1994).
firm
However, this goal cannot always be empirically demonstrated. Some studies fail to verify performance
such a relation (Hilal, 2019; Ho et al., 2018; Hussain et al., 2016; Kirca et al., 2005; Kocak et al.,
2017). One explanation for this type of results is that many firms do not develop a clear
customer-centered strategy because they do not know their needs. Sometimes an environment 587
of economic instability keeps MO from influencing FP (Beliaeva et al., 2020), while after
economic crises, a negative influence may be even noticed on firms (Grewal and Tansuhaj,
2001); this is explained because in spite of the strategies carried out by companies, consumers
cannot demand their products, and such strategies consume resources that reduce the firms’
performance. On the other hand, other studies use various SO and their results have been
disparate. For example, Tahir et al. (2018) did not find a direct relationship between MO and
FP, even though there was a relationship between EO and FP. Narsa (2019) presented a similar
case, neither were MO nor innovation positively related, but once again, EO relates with FP.
In the cases above, simultaneously including several SO mitigated the positive effects of OM,
probably because there was no planning on how to use those strategies together.
Analyzing firms with an international orientation, Solano-Acosta et al. (2018) found that
international firm performance was only influenced by international entrepreneurial
orientation, not by international market orientation. In this case, the combination of
strategies does not have a positive relation.
Despite this empirical evidence, the vast majority of studies go in the direction established
by the theory, MO positively influences firm performance, owing to the following reasons: (1)
market orientation aims to increase market participation, improving the firms’ reputation and
image, positioning them as leaders, offering products with value for the client; and, (2)
financial performance explained by activities related to the firms’ economic growth, namely:
increasing sales, generating more profits, increasing the firms’ value, among others, as
demonstrated by Al-Ansaari et al. (2015), Dabrowski et al. (2019), Herath and Mahmood
(2014), and Nikraftar and Momeni (2017). All in all, it is worth pointing out that exporting
performance is influenced by MO (He et al., 2018).
Therefore, it is necessary to verify whether in the context of the Mexican manufacturing
industry, MO positively associates with FP because so far there is no conclusive evidence of
an actual relationship between both variables in this sector. This way, hypothesis H1 is stated
as follows:
H1. Market orientation is positively associated with firm performance

3.2 Technology orientation and firm performance

Unlike MO and EO, the relationship between TO and FP has not been comprehensively
studied. In spite of the existence of literature in this regard, there is not enough evidence to
categorically state that TO influences FP. Either individually or combining TO and other
SO (Al-Ansaariv et al., 2015; Narsa, 2019), studies have failed to establish this relation (Chae
et al., 2014; Prajogo et al., 2013; Tahir et al., 2018). This evinces that theoretical approaches
still have a substantial gap regarding the facts, making it necessary to define if TO
positively influences manufacturing firms. One possible explanation lies in the fact that
many studies focus on innovation rather than technology (Kumar et al., 2012). On the other
hand, the use of technologies is sometimes implicit in the firms’ activities and thereby, it is
not considered an SO.
On the contrary, several studies verify the positive relation TO has on FP (Ali et al., 2016;
Daghman and Ghadeer, 2018; Gatignon and Xuereb, 1997; Lee et al., 2014; Masa’ deh et al., 2018).
JSMA An organization that invests on new technologies to improve its processes, monitors clients and
14,4 suppliers, increases R&D resources, files patents and produces innovative products to increase
its performance. In the manufacturing sector, in principle, a relationship between TO and FP is
expected due to its more intensive use of IT than other industries. Thereby, the following
hypothesis is proposed:
H2. Technology orientation is positively associated with firm performance
588
3.3 Entrepreneurial orientation and firm performance
The theoretical framework on strategic orientation indicates that EO positively impacts FP
(Wiklund and Sheperd, 2005). Despite studies in favor of this argumentation, it has been
demonstrated that they do not always associate positively (Boohene, 2018; Matsuno et al.,
2002; Nikraftar and Momeni, 2017). On occasions, there is only an association with some EO
dimensions, as in Filser and Eggers (2014), who found evidence that innovativeness and risk-
taking did influence FP, not proactiveness though. Similar cases are Rezaei and Ortt (2018), in
which only risk-taking did not influence FP, and the study by Hern
andez-Linares et al. (2019),
in which proactiveness was the only variable that kept a relation with FP. Occasionally, EO
moderates MO and FP’s relation, but only the dimensions of innovativeness and
proactiveness (Li et al., 2008). However, considerable empirical evidence (Engelen et al.,
2015; Masa’ deh et al., 2018; Rauch et al., 2009; Tahir et al., 2018; Wiklund and Shepherd, 2005)
points out that EO positively associates with firm performance; hence, the more in-depth the
EO strategies, the greater the increment in financial or market performance.
Heterogeneous evidence suggests one reason for EO not to always positively influence FP
is the lack of integration of EO’s three dimensions into the organization (Boohene, 2018).
A firm can focus on its proactiveness and risk-taking strategies, though it will not have a
roadmap that generates innovativeness. Another reason points that if MO is well developed
in the firm, EO is no longer necessary (Matsuno et al., 2002). Therefore, the following
hypothesis is formulated:
H3. Entrepreneurial orientation is positively associated with firm performance

3.4 Absorptive capacity and firm performance

There is plenty of evidence that ACAP positively influences firm performance (Fernhaber
and Patel, 2012; Jansen et al., 2005; Lane et al., 2006; Todorova and Durisin, 2007; Tsai, 2001,
2009; Zahra and George, 2002). It is understood because when knowledge is absorbed,
assimilated, and exploited, it allows the firms to better harness their resources and generate
products and services focused on the satisfaction of needs (Flatten et al., 2011), which makes
more buyers acquire them, resulting into better financial and market performance. Therefore,
firms with high ACAP levels can have a better performance, especially in combination with
high levels of SO (Herath and Mahmood, 2014), which gives them a better competitive
position.
Conversely, Da Costa et al. (2018) did not manage to find a positive relation between ACAP
and FP; this way, in our case, it is crucial to find out if ACAP and FP are associated. Hence, the
following hypothesis is proposed:
H4. Absorptive capacity is positively associated with firm performance

3.5 The moderating effect of absorptive capacity

Unlike other sectors engaged in providing customer services, the main characteristics of
manufacturing industry are the design and development of new products. From this
standpoint, absorptive capacity is responsible for the accumulation of internal and external
knowledge to be used in product development (Calantone et al., 2004) through strategic Strategic
orientations that positively influence FP. That is, there is a moderating effect. In this sense, we orientations,
concur with Curseu and Pluut (2018) by pointing out that ACAP is a body of knowledge
acquired via experiences, which enriches the relationship between SO and FP.
firm
The use of ACAP as a moderating variable focuses on the arguments of the dynamic performance
capabilities perspective, which seeks that organizations acquire a sustainable competitive
advantage. In this way, ACAP enables organizations to take advantage of the acquired and
transformed knowledge by using it for the firms’ strategic planning and drive for better 589
performance.
Several research works have used ACAP as a moderating variable (Gong et al., 2013;
Herath and Mahmood, 2014; Nieto and Quevedo, 2005; Wang and Han, 2011; Yeoh, 2009) and
have produced positive and significant results in firm performance. In this sense, according to
Herath and Mahmood (2014), the existence of ACAP as a moderator in the relationship
between SO and FP allows exploiting organizational resources to make this relationship
stronger and directional. Similarly, evidence from Gong et al. (2013) indicates that realized
absorptive capacity allows knowledge to be transformed and used, resulting in new ideas
that increase firm performance after being incorporated into strategic orientations. For their
part, Wang and Han (2011) also agree that knowledge increases firm performance. To sum
up, the evidence shows that ACAP used as a moderating variable –it is not exclusive to SO–
enables the activities carried out by an organization to be nourished with ideas and solutions,
thus generating better performance.
Specifically, ACAP’s contribution to the relationship between market orientation and firm
performance is justified by pointing out (Najafi-Tavani et al., 2016, p. 5061) that MO should
contribute to the success of the firm by introducing new products, providing both the
required intelligence and capacity for assimilating and applying the absorbed knowledge.
Likewise, from a customer-centered vision, ACAP allows collecting relevant information on
the behavior of customers, changes in their composition, tastes and needs, which are
transmitted to decision-makers who will more effectively define market orientation, giving as
a result an increase in firm performance.
Therefore, it is interesting to measure whether ACAP allows outlining better market
orientations that support the performance of manufacturing companies. Hence, the following
hypothesis is formulated:
H5. ACAP moderates the relationship between MO and FP
There is evidence that ACAP moderates the relationship between supplier innovation and PF
(Azadegan, 2011), but no information that enables us to find out if it also moderates the
relationship between technology orientation and firm performance.
This research is based on the idea that ACAP allows gathering knowledge regarding new
technologies used by the industry, new trends and customer needs that can be satisfied with
technological products. Besides, ACAP can offer information for the organization to quickly
develop a technological orientation that allows it to generate a competitive advantage or at
least counter its competitors’ actions. In this sense, as there is no evidence of the moderating
role of ACAP in the relationship between OT and FP, it is important to corroborate this
argument, so the following is established as a hypothesis:
H6. ACAP moderates the relationship between TO and FP
On the other hand, empirical evidence points that ACAP, as a moderator, intensifies the
effects from EO (Kohtam€aki et al., 2019; Liao et al., 2003). This relationship also allows for the
better exchange of ideas and builds the firm’s capacity to assess opportunities and reduce
risks (Kohtam€aki et al., 2020).
JSMA According to Engelen et al. (2014), as a moderator between EO and FP, ACAP allows
14,4 creating a knowledge base in the firm that helps detect possible errors or failures in the
realization of an innovative product or service. It also makes it possible a better assessment of
proactive actions and risk-taking, which reduces failure rates and therefore, enables higher
firm performance. On the contrary, these authors argue that entrepreneurial firms that do not
develop ACAP may overlook flaws or fails in their proactive and innovative actions due to
lack of adequate knowledge. The same idea is shared by Hernandez-Perlines (2018).
590 Therefore:
H7. ACAP moderates the relationship between EO and FP
Figure 1 shows the proposed model where a positive relationship between the three strategic
orientations studied and firm performance is assumed. Plus, the positive effect of ACAP on
FP and the moderating effect of ACAP between SO and FP.

4. Method
4.1 Data collection and sample
The research was carried out in the region of Baja California, Mexico, as it is one of the states
with significant participation in the Mexican economy; it hosts firms integrated into large
supply chains; it is the main cluster of the aerospace industry, distinguishable are electronic
and medical devices firms. Being at the United States border, it faces large competitors in
supply chains tightly integrated into the United States, Canada, China, Japan, Germany and
Taiwan. Baja California’s manufacturing sector was chosen because of its importance in the
economy; it accounts for 20% of the state GDP and produces 46% of the job posts (Ibarra-
Cisneros and Hern
andez-Perlines, 2019). The recommendations by Dess et al. (1990) are
considered; they state that this industry explains variation in performance more than any
other variable. Their study aims to generate ideas to build up the firms’ strengths and

Figure 1.
Proposed model
decrease their weaknesses in learning and anticipating their clients’ needs while using Strategic
feedback from them to create additional value in the products/services (MO), look for valuable orientations,
information on the environment, capitalize it for their benefit, prevent risks (ACAP), generate
strategies, be proactive and at the forefront (EO and TO). Considering these elements will
firm
improve their performance. performance
A total of 888 medium and large-sized firms were identified in the manufacturing sector of
the Baja California region (Instituto Nacional de Estad
ıstica and Geograf
ıa, 2018) resorting to
data from Directorio Estad
ıstico Nacional de Unidades Econ
omicas, DENUE [National 591
Statistic Directory of Economic Units]. These two firm sizes were selected because they have
organizational structure and culture that enable them to implement various SO and ACAP
with greater intensity.
After eliminating all inconsistencies – firms that were not found or did not exist anymore –,
the population consisted of 712 firms; a 250-firm sample was defined considering an error
margin of 5% and a reliability of 95%. At first, all the manufacturing activities were
considered, but since not all of them are representative of the regional economy, the research
finally focused on the activities that significantly impact the economy such as food industry,
metal-made, computer and electronic products, transportation and electrical equipment,
appliances, machinery and miscellaneous manufacturing. The basis for firm selection was
convenience sampling due to the difficulty of accessing information.
A survey consisting of 38 items (see Appendix), divided into five sections, one for each
construct –MO, TO, EO, ACAP, and FP– was designed. Each item of the survey was
answered on a five-point Likert scale. Questions to identify the size, age, activity and name of
the firms were included. The survey was applied to the CEO or Manager of each selected firm,
for they are the ones who comprehensively know the functioning of the organization. In total,
171 individuals were sent an email and the response rate was 68.4%. This number of
validated surveys is considered sufficient for this research. The application of the surveys
was carried out between March and June, 2019.
To minimize non-sampling error, the following strategies were followed: (1) the wording of
the sentences and the answers was analyzed; (2) an appointment was made in order to apply
the survey face to face; (3) only CEOs and managers answered the survey; (4) the interviewers
were trained to support the respondent in case of doubt; (5) a short survey was designed to
prevent the respondents from answering under the pressure of time; (6) the anonymity of
subjects and firms was ensured; (7) a pilot test was applied. Unfortunately, it was impossible
to suppress the nonresponse bias owing to restrictions of time and resources, though it was
reduced as much as possible by surveying around 70% of the sample. The entrepreneurial
chambers were resorted to disseminating the project and asking for their members’ support.
Plus, since several survey appointments were canceled with no prior notice, some CEOs and
managers were contacted on a number of occasions to make new appointments; this made it
possible to recover about 20% of the surveys.
Additionally, before the application of the survey, the validity of content and construct
was analyzed and improved by experts. The application was aimed at removing the common
method variance (CMV) from the data obtained (Tehseen et al., 2017). Harman’s single factor
test was utilized to verify if a single factor is responsible for all the data variation; the result of
this test was positive, since one factor explained 39.35% of the variance. However, this
method was not sufficient, and a partial correlation procedure called partial out of the general
factor was applied (Podsakoff and Todor, 1985). By comparing the results of R2 in the original
model –including all the items– regarding the new latent variable created, the difference
surpassed 18%, which became a CMV problem. However, after adjusting the model using
convergent validity and discriminant validity (see Results), 15 items were eliminated, as they
neither passed VIF nor factor loadings. The test was run again and this time R2 was
significantly reduced to a 6-percent difference; thereby, the CMV problem was solved.
JSMA 4.2 Variables and measures
14,4 4.2.1 Independent variables. Market orientation comprises seven items, based on the studies of
Liao et al. (2011), Kohli et al. (1993), Narver and Slater (1990), Solano-Acosta et al. (2018) and
Venkatraman (1989). The items focus on product quality, reduced costs, market trends,
communication with and fast response to clients. Entrepreneurial orientation is composed of
eight items that measure risk-taking, proactiveness and innovativeness, based on
contributions from Covin and Slevin (1988), Engelen et al. (2014), Hern
andez-Perlines et al.
592 (2017), Lumpkin and Dess (1996), Wiklund and Sheperd (2005). Technology orientation has
seven items that measure innovation, technologies, policies and routines regarding IT and
their use, budget for IT (and R&D) as well as resources to train on IT (Gatignon and Xuereb,
1997; Li, 2005; Renko et al., 2009). This item measurement was designed on a five-point Likert
scale from 1 (never) to 5 (always).
4.2.2 Dependent variables. Firm performance was designed on the basis of contributions
from Brettel et al. (2011), Kellermanns et al. (2012), Mahnke et al. (2005) and Wiklund and
Sheperd (2005). Six items were included to measure firm performance in comparison with the
rest of the competitors. The aspects considered were profit growth and market share growth,
sales growth, positioning of the firm v. competitors, industry leadership and return on capital.
Every item was measured using a five-point Likert scale, in which 1 means “well below
competitors” and 5 “well above competitors.”
4.2.3 Moderating variable. Absorptive capacity comprises 10 items and was answered on a
five-point Likert scale, 1 means “never” and 5 “always”, following the contributions of Cohen
and Levinthal (1990), and Zahra and George (2002) (see Figure 2).

5. Results
The information contained in the surveys was entered into the software SPSS 21 (IBM, 2012).
All inaccurate data were corrected (entry errors found in the information were rectified by
cross-checking surveys and database), then several analyses were run to validate the
information before the structural equation modeling. The subsequent step was to apply
partial least square structural equation modeling (PLS-SEM) using Adanco 2.1.1. This
technique was selected because it allows for non-normal data and small samples (Hair et al.,
2014). The model was built integrating reflective indicators for each construct, while model
adjustment exercises were performed up to reaching the final model. After eliminating the

Absorptive
Capacity

Market H4
Orientation H5
H1

H6

Technology Firm Performance

Orientation H2
H7

Figure 2. Entrepreneurial
Research design Orientation H3
items that did not comply with the established parameters, the resulting model comprised Strategic
twenty-three (4 for TO, 4 for EO, 4 for MO, 6 for ACAP, and 5 for FP). orientations,
The analysis and interpretation of the model were carried out in two stages. First, the
analysis of the measurement model was run, followed by a structural model analysis. In the
firm
measurement model analysis, the parameters corresponding to reliability and convergent performance
validity were estimated through the following indicators: J€oreskog’s rho (ρc) – composite
reliability –, Dijkstra-Henseler’s rho (ρA), Cronbach’s alpha (α) and average variance
extracted (AVE). Cronbach’s alpha results (Table 1) were positive because all the constructs 593
had a reliability level higher than 0.700 (Fornell and Larcker, 1981). Similarly, ρc and ρA
exceeded the established threshold of 0.800 (Nunnally and Bernstein, 1995). AVE results were
satisfactory, higher than 0.500 (Fornell and Larcker, 1981). On the other hand, according to
SRMR – residual standardized mean square root –, the model’s goodness of fit was 0.072,
which is slightly below the maximum (0.080) suggested by Hu and Bentler (1998) (see
Table 1).
The factor loading results (Table 2) were above the minimum value of 0.707 (Carmines and
Zeller, 1979), except for items ACAP7 and ACAP10, which were slightly below the

Construct Dijkstra-Henseler’s rho (ρA) J€oreskog’s rho (ρc) Cronbach’s alpha (α) AVE

MO 0.8412 0.8928 0.8399 0.6758

TO 0.8686 0.9056 0.8589 0.7071
EO 0.8562 0.9026 0.8552 0.6993 Table 1.
Firm performance 0.8639 0.9024 0.8637 0.6503 Reliability and
ACAP 0.8445 0.8817 0.8389 0.5548 convergent validity

ITEM MO TO EO FP ACAP

MO1 0.8448
MO2 0.8294
MO3 0.7896
MO4 0.8235
TO1 0.9564
TO2 0.7938
TO3 0.8146
TO4 0.7875
EO1 0.8658
EO2 0.8788
EO3 0.8422
EO5 0.7525
FP1 0.7400
FP3 0.7561
FP4 0.8752
FP5 0.8697
FP6 0.7808
ACAP5 0.7716
ACAP6 0.7279
ACAP7 0.7026
ACAP8 0.8252
ACAP9 0.7281 Table 2.
ACAP10 0.7064 Factor loadings
JSMA established limit; however, neither did the model improve when they were eliminated, nor was
14,4 there any affectation. Then, it was decided to keep them in the model.
Discriminant validity (DV) was also estimated. According to Barclay et al. (1995), in order
to perform this verification, the variance that a construct shares with its indicators must be
greater than the variance it shares with the other constructs of the model. In this case, all the
constructs meet this condition (Table 3). The heterotrait-monotrait ratio of correlations
(HTMT), whose values should be below 0.90, was estimated too (Gold et al., 2001). In this case,
594 all of them are within the indicated range (Table 4).
Next, the structural model was analyzed, and data were assessed to detect
multicollinearity. Variance Inflation Factor (VIF) was measured in items and constructs.
The values were within range, below 10 (Meyers et al., 2006), 1.553 minimum and 5.773
maximum.
The coefficient of determination (R2) was calculated to find out the model’s predictive
analysis, which was 0.647, regarding FP. According to Hair et al. (2011), the predictive level is
moderate (0.75 5 substantial; 0.50 5 moderate; 0.25 5 weak). This way, the variables MO,
TO, EO and ACAP explain 65% of the relationship regarding FP. Effect sizes (f2) were also
analyzed; they have the following range of values: small effect, between 0.02< and <0.15,
moderate effect, between 0.15< and <0.35, and large effect >0.35 (Cohen, 1988). The results
show that relationships between TO-FP, EO-FP and ACAP-FP have small effects as
compared with the relationship between MO-FP, which has large effects (Table 5).
Then, the research hypotheses were tested, demonstrating the relationships between the
analyzed variables. H1 verifies the relationship between MO and FP (β 5 0.500, p 5 0.000),

Construct MO TO EO FP ACAP

MO 0.6758
TO 0.3553 0.7071
EO 0.2977 0.4967 0.6993
FP 0.5764 0.3799 0.3514 0.6503
Table 3. ACAP 0.4115 0.3365 0.3041 0.4111 0.5548
Discriminant validity Note(s): The values in “italic” corroborate that the constructs are not highly correlated with each other

Construct MO TO EO FP ACAP

MO
Table 4. TO 0.7003
Heterotrait-monotrait EO 0.6430 0.8165
ratio of FP 0.8871 0.7157 0.6858
correlations (HTMT) ACAP 0.7557 0.6760 0.6403 0.7459

Hypothesis Path Path coefficient (β) T statistics p values Cohen’s f2 Support

H1 MO—>FP 0.500 7.2663 0.000** 0.3588 Yes

H2 TO—>FP 0.118 1.5669 0.058* 0.0168 No
Table 5. H3 EO—>FP 0.141 1.9619 0.0249* 0.0261 Yes
Model’s direct effects H4 ACAP—>FP 0.174 2.369 0.0089** 0.0442 Yes
results Note(s): *p < 0.05; **p < 0.01
though the relationship between TO and FP was not found (β 5 0.118, p 5 0.058), for that Strategic
reason, H2 was not supported. On the other hand, H3 proved that EO positively impacts FP, orientations,
even though this impact is moderate (β 5 0.141, p 5 0.0249). Finally, the relationship between
ACAP and FP (β 5 0.174, p 5 0.0089) was positive; therefore, H4 was accepted (Table 5).
firm
Continuing with the validation of the hypotheses, the moderating effect of ACAP on MO, performance
EO and TO was analyzed using Process macro version 3 (Hayes, 2012). The results of the
moderation analysis (Table 6) showed that ACAP just moderates the relationship between
EO and FP, though it is slightly weak (β 5 0.134, p 5 0.0138); for that reason, H6 was 595
accepted. However, H4 and H5 were rejected, ACAP does not moderate the relationship
between MO-FP or TO-FP.

6. Discussion and conclusions

Unlike Aloulou’s (2019) results, ours were heterogeneous. The first hypothesis formulated –
market orientation is positively associated with firm performance – was accepted. This result
agrees with extensive empirical evidence (Agarwal et al., 2003; Al-Ansaari et al., 2015; Buli,
2017; Dabrowski et al., 2019; Greenley, 1995; Masa’ deh et al., 2018; Nikraftar and
Momeni, 2017).
This indicates that MO influences FP because firms offer quality products as long as they
are available, analyze the market trends, and keep close communication with their clients to
identify their needs (Kocak et al., 2017). Also, as suggested by Narver and Slater (1990), they
address any complaint as fast as possible and focus on meeting their clients’ present and
future demands, not only to attain satisfaction but also to provide their products and services
with added value. It is important to stress that this analysis was carried out over a period of
economic stability (Mahmoud, 2011), so the results could have been different in a context of
crisis (Beliaeva et al., 2020; Grewal and Tansuhaj, 2001).
The second hypothesis formulated – Technology orientation is positively associated with
firm performance – was rejected. In this sense, our findings are in line with those of
Al-Ansaarivet al. (2015), Chae et al. (2014), Narsa (2019), Tahir et al. (2018), in which this
variable was not relevant to improve FP, though it differs from the result of Masa ’deh et al.
(2018). One explanation is that firms pay closer attention to IT adoption than to innovation,
hence, all in all, technological intensity is low (Prajogo et al., 2013). Another explanation is the
managements’ lack of interest and strategy to correctly harness TO as a performance
catalyst, for it is seen merely as an instrument to improve processes. Descriptive evidence
underscores the little inclination of the surveyed firms to invest on R&D, develop their
employees’ technological capabilities, adapt or imitate advanced technologies, exploit IT to
find out their clients’ needs. These activities are justified by the confidence managers display
after noticing increases in returns on investment and revenues, more clients and a rise in
market position once they accomplish the desired results. This way, their efforts are only
aimed at using TO in order to improve routines, document their innovation processes and
speed them up, and IT to offer better quality products and services.
Regarding the hypothesis – Entrepreneurial orientation is positively associated with
firm performance – the results remain in line with those of Engelen et al. (2015),

Coefficient T p
Hypothesis Path (β) Se statistics values LLCI UPCI Support

H5 ACAP moderates MO - FP 0.0096 0.0654 0.1474 0.883 0.138 0.119 No

H6 ACAP moderates TO - FP 0.0604 0.0615 0.9824 0.327 0.182 0.061 No Table 6.
H7 ACAP moderates EO - FP 0.1348 0.0542 2.489 0.0138 0.2417 0.0279 Yes Moderation effects
JSMA Hernandez-Perlines (2018), Rauch et al. (2009), Wiklund and Shepherd (2005), who establish a
14,4 relationship between EO and FP.
Manufacturing firms create an environment that allows them to undertake new projects,
to take advantage of new market opportunities, gradually increasing their commitment of
resources, being cautious to minimize the chances of making costly decisions, and partially
concurring with Eshima and Anderson (2017), who affirm that EO implies not being afraid of
risk; that is to say, they take moderate risks. Similarly, the fourth hypothesis – Absorptive
596 capacity is positively associated with firm performance – was also accepted (Fernhaber and
Patel, 2012; Tsai, 2001; Zahra and George, 2002). In this sense, firms explore their
environments searching for valuable information, which then they combine with the
knowledge and experience generated within to come up with new knowledge that enables
developing products for commercial purposes (Cohen and Levinthal, 1990). In like manner,
the more they develop their absorption capacity, the higher the performance of the company
(Tsai and Yang, 2017).
At this point, it is noticed that the combination of 3 SO does not positively impact FP,
which agrees with most of the empirical evidence so far disclosed (Filser and Eggers, 2014;
Nikraftar and Momeni, 2017; Tahir et al., 2018). However, this result is contrary to that
obtained by Masa ’deh et al. (2018), where the 3 strategic orientations influence
pharmaceutical firm performance. This result may be due to the technological nature of
this sector, which is a priority regardless of the context.
The second part of the paper includes the essence of the hypotheses that verify possible
ACAP moderations in SO relations with FP. The hypothesis ACAP moderates the
relationship between MO and FP was rejected; this result differs from Najafi-Tavani et al.
(2016). The importance of MO for firm performance is recognized (Hern
andez-Linares et al.,
2020); however, this relationship is not fruitful if ACAP is involved. In our case, it is evident
that the knowledge absorbed by manufacturing firms does not influence the strengthening
of strategies aimed at improving products that customers need, and does not lead to better
FP. One explanation may be that by simultaneously combining different SOs, the
knowledge acquired and transformed cannot be effectively channeled to each strategy;
knowledge is not separate and focused on each type of strategy. Another explanation is that
according to the strategy of complementarity approach (Hakala, 2011), if knowledge is not
well assimilated, it is mostly transferred to a certain strategy at a given time, while the rest
do not receive the benefits of ACAP, even though such strategies continue to directly
influence performance. In this regard, it is necessary to delve into this result in further
research.
There is no evidence that supports ACAP moderates the relationship between TO and FP.
The result seems consistent with the lack of relationship between TO and FP, which indicates
that manufacturing firms are not adopting the IT necessary to improve their performance; it
has no relevant effects on FP.
Therefore, as mentioned above, it is better to specifically focus on innovation and not on
technology in a general way; this entails an update of the theory. Alternatively, the specific
technology utilized by each industry could be analyzed to find out if the behavior of this
variable on FP and ACAP is positive.
Finally, ACAP moderates the relationship between EO and FP was the only hypothesis
accepted. Evidence provided by various studies (Herath and Mahmood, 2014; Hernandez-
Perlines, 2018; Kohtam€aki et al., 2019; Patel et al., 2015; Zhai et al., 2018) indicates that firms
have experience using knowledge to improve their position in taking risks and generate a
culture oriented toward entrepreneurship. We agree with the findings of Engelen et al. (2014),
in the sense that firms use ACAP to reduce risks and errors, and make decisions with more
information, which allows generating successful innovation. Besides, a business culture
oriented toward innovativeness, proactivity and risk-taking is noticeably present in this type
of industries, which permits using ACAP to improve actions conducive to reducing decision- Strategic
making errors. orientations,
In conclusion, the implementation of MO and EO in the manufacturing sector turns into
better firm performance. It means that firms focus their efforts on the satisfaction of their
firm
clients, create a culture for themselves, look for new business opportunities and risk resources performance
to keep and attract new customers, and leave the technological aspect aside. Unfortunately, as
the theory suggests, ACAP is not advantageously utilized, this is maybe an indication that
firms cannot combine three strategic orientations and differentiate which knowledge can 597
specifically impact each of them.

6.1 Contributions and implications

This paper’s main contribution was to analyze the moderating effect of absorptive capacity
between three strategic orientations and firm performance. We found no prior studies that
tested the relationships we studied in the present research, so this research opens a space for
dialogue.
The second contribution was to verify the direct relationships between three SO and FP. In
the same way, the results partially agreed with the theory.
Our findings imply that context may be a key factor in the efficiency of strategic
orientations (Sahi et al., 2020; Wales et al., 2020). For example, industry (Hern
andez-Linares
and L
opez-Fern
andez, 2020; Wales et al., 2020), culture (Al-Ansaari et al., 2015; Ali et al., 2016;
Boohene, 2018) and economic stage of development (Beliaeva et al., 2020; Gao et al., 2007;
Kocak et al., 2017) are factors that contribute to a greater or lesser impact of SO on firm
performance.
This study makes several theoretical contributions. First, the results obtained differ
partially. In the relationship between TO and FP, it is considered necessary to update the
theory regarding the importance of technological factors as sources of competitive
advantage. Second, technology was once vital to achieve better performance, but today it
is an essential requirement; therefore, it does not necessarily allow for better performance
(Tsai and Wang, 2007). Third, the innovation factor must replace the technological one, since
SO allows increasing FP. Fourth, concerning the moderating effect of ACAP on SO and FP,
the theory of dynamic capabilities (Teece et al., 1997) must prioritize the costs of using these
capabilities –ACAP– (Ambrosini and Bowman, 2009) as an obstacle owing to which firms
cannot adequately develop their strategies. Likewise, we agree with Wang and Ahmed (2007)
that many firms have not identified their core capabilities. Finally, it is undeniable that all the
theories must be supported on the context they are produced. On occasion, theories on
organizations are generalized, leaving aside different contexts (Zhang et al., 2015) that
influence the firms’ behavior. Thereby, the theoretical analysis must be holistic, considering
the organization as an open system that adapts to the environment, and in function of this, it
decides the actions and obtains results.
The methodological implications from the results obtained in this research put forward
introducing variables that measure the context, trying to find out how it affects the variables
under analysis (Ferraresi et al., 2012). It is necessary to deepen into cultural topics of the origin
and destination country, organizational culture, degree of commercial aperture and labor
force specialization, and some others that may modify the results.
The application of surveys answered on a Likert scale allows responders to feel
more confident in providing information. In order to strengthen the answers’ veracity,
it is recommended introducing the Correlation Marker Technique (Lindell and Whitney,
2001) as an a priori stage, and post hoc with the Unmeasured Latent Marker Construct
technique (Podsakoff and Todor, 1985). In this way, the validity of the information is
guaranteed.
JSMA Furthermore, this study makes the following practical implications. First, the main for
14,4 the manufacturing industry is to make the implemented SO and the parameters to measure
its performance converge, which will lead to performance improvement; it is also
applicable to ACAP, for it is not known how it supports the relationship SO-ACAP. Second,
as stated by Ko et al. (2020), manufacturing firms, especially in the Mexican industry, must
use IT intensively to improve their business processes; this will enable them to fully grasp
how to be more efficient. Albeit, as mentioned above, focusing strategies on innovation
598 can become better performance. Furthermore, ACAP applied to IT will allow better use
(Ko et al., 2020).
Third, Tian and Soo (2018) mention that the workers’ ACAP enables a greater firm
performance at personal level. Thereby, not only as a firm but also as a person, it is vital to
potentiate ACAP so that it contributes to the development of SO and FP.
Fourth, it is also important to mention that the type of strategic orientation an
organization pursues should define the structure the organization is interested in (Sahi et al.,
2020). Not all Mexican manufacturing firms pursue the same SO, which resulted in the
rejection of some of the research hypotheses proposed.
Finally, developing greater ACAP enables companies to gain the necessary external
knowledge to better understand and evaluate environmental signals (Garc
ıa-Villaverde et al.,
2018). In this way, manufacturing companies can attain an ACAP that moderates the
relationship between SO and FP.

6.2 Future directions and limitations

The following future research lines are proposed. First, resort to longitudinal studies,
applying the survey to the same firms periodically and obtain results that can be contrasted
over time, and analyzing the behavior of the same variables. Will TO and ACAP as a
moderator now have a relation with FP? Second, the inclusion of leadership will also permit
observing if the two main management leadership styles –transformational v. transactional–
influence the correct planning and setting up of strategic orientations and absorptive
capacity. Is there any difference in SO according to leadership style? Third, adding two SO to
the analysis – customer and learning orientation – or replacing TO with innovation
orientation will aid to deeply understand the most important SO in the literature, which would
be a significant contribution to state of the art.
Fourth, adding organizational culture (Limaj and Bernroider, 2019) will allow
comprehending how culture influences the design and setting into motion of SO and verify
if culture also reflects on performance. Fifth, comparing manufacturing enterprises in Mexico
and the United States – each at the national level, not regional – and enquire if different
contexts produce different results. It would be a milestone in the study of SO and ACAP in
countries with disparate economies, at once related in their productive sectors via the existing
production chains, at first derived from NAFTA (North America Free Trade Agreement) and
USMCA (US-MEXICO-CANADA Agreement) at present.
Sixth, another research line may be to analyze SO individually and jointly, but starting
from the analysis of the common and shared variance attributable to each orientation and
using a specific dependent variable, which may be sales growth, profit margins or income, as
proposed by Wales et al. (2020). According to the authors, analyzing the variance of SO and
sales growth – if it is the case – lets us understand each SO contribution better. This research
line provides a foundation for further comprehension as regards which strategic directions
are more likely to influence key business results (Zheng Zhou et al., 2005).
To sum up, and motivated by the COVID-19 pandemic, in the future, the survey may be
applied once again and verify if SO changed after new production modes and changes in
demand.
 The first limitation of this research is its cross-sectional nature (Deutscher et al., 2016; Strategic
Solano-Acosta et al., 2018), which prevents us from observing these variables’ behavior over orientations,
time; this allows enquiring if SO and ACAP as a moderator have an influence on FP at a
particular time. Furthermore, over this period, firms can change their behavior, while others
firm
may even disappear (Rauch et al., 2009). The second limitation is its regional context, which performance
enables inferring, though not ensuring, the same behavior at a national scale (Hern
andez-
Linares and L
opez-Fern
andez, 2020). Another limitation is not including other variables in the
study such as the type of leadership of CEOs, managers, which may influence the 599
implementation degree of various SO; as well, it is not including learning and customer
orientation to broaden the horizon of SO and contrast evidence and theory starkly.

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Appendix Strategic
Survey
orientations,
firm
performance
I. Firm data

Sector or manufacturing activity: ______________________________________________

609
Position of the respondent: ______________________________

Number of workers in the firm: __________

The questions are answered on a Likert scale from 1 to 5, where 1 = “never” and 5 = “always”

II. Market orientation

Items were designed based on the theoretical approaches from:
Liao et al. (2011); Kohli et al. (1993); Narver and Slater (1990); Solano-Acosta et al.
(2018), and Venkatraman (1989)
1 Our firm offers quality products based on an analysis of the clients’ present
and future needs.
2 Our firm invests sizable resources to develop new products and services.
3 Our firm intends to offer products that meet needs and are always available
to the clients.
4 Our firm analyzes the latest market trends to develop them and offer new
products.
5 Our firm focuses on reducing costs and prices to support our clients in
maintaining high-quality products.

6 We have close communication with our clients to find out their necessities.

7 Our firm sets up actions to quickly respond to customers’ complaints.

III. Technology orientation

Items were designed based on the theoretical approaches from:
(Gatignon and Xuereb, 1997; Li, 2005; Renko et al. 2009).
1 In our firm, there is a culture based on innovation and investment in R&D.
2 In our firm, we implement the most advanced technologies in the industry.
3 There are policies, routines, and procedures in line with the implementation
of information technologies in our firm.
4 The firm uses IT to find out its clients’ needs.
5 There is an annual budget for R&D.
6 There is a budget to acquire IT.
7 There is an annual budget to train the employees’ IT skills.

(continued )
JSMA IV. Entrepreneurial orientation
Hernández-Perlines et al., (2017), using theoretical contributions from Covin and
14,4 Slevin (1988); Engelen et al. (2014); Lumpkin and Dess (1996), Wiklund and
Sheperd (2005).
1 My company favors a strong emphasis on R&D, technological development,
and innovation.
2 My company has often made dramatic changes to products and services.
3 My company typically responds to the actions initiated by competitors and
610 rarely initiates changes in the sector.
4 My organization is often the first business to introduce new products or
services, administrative techniques, operating technologies, Etc.
5 My organization typically seeks to avoid competitive clashes, preferring a
“live-and-let-live” posture.
6 My company prefers to engage in investment projects with moderate risk
because expectations for returns are better.
7 Given the dynamic environment, my company prefers to engage in
investments that show incremental behavior, starting with small investments
and gradually increasing resources' commitment.
8 When faced with decision-making situations involving uncertainty, my firm
typically adopts a cautious, "wait-and-see" posture to minimize the odds of
making costly decisions.

V. Absorptive capacity
Items were designed based on the theoretical approaches from:
Cohen and Levinthal (1990); Zahra and George (2002).

1 The firm frequently carries out market research to understand and identify
the clients’ needs.
2 We look for information on new products, processes, cutting-edge
technology with like-minded suppliers and industries.
3 The information obtained outside is disseminated and receives feedback
from the organization.
4 We relate the new knowledge we assimilate with our workers' know-how
and experience.
5 Customarily, we document information, create databases, manuals, tutorials,
Etc., to use new developments.
6 Our employees can structure and use collected knowledge.
7 Our employees successfully link existing knowledge with new insights.
8 Our employees can apply new knowledge in their practical work.
9 Our company regularly reconsiders technologies and adapts them in
accordance with new knowledge.
10 Our company can work more effectively by adopting new
technologies.

VI. Firm performance

The following questions are on the firm performance of its competitors in the
industry over the last three years, being 1 = well below competitors, and
5 = well above competitors.
1 How do you rank your firm in comparison with competitors?
2 Industry leadership
3 Growth of return on capital
4 Sales growth
5 Increase in profit
6 Growth of market share over the last year
Note(s): Items were designed based on the theoretical approaches from: Brettel et al. (2011);
Kellermanns et al. (2012); Mahnke et al. (2005); Wiklund and Sheperd (2005)
About the authors Strategic
Manuel-Alejandro Ibarra-Cisneros is PhD in Economics and Labor Relations. He is professor in the
Faculty of Administrative Sciences in the Autonomous University of Baja California, Mexico. His orientations,
research topics are absorptive capacity, intellectual capital, entrepreneurial orientation, IT adoption, firm
Human resources, labor flexibility, international economics. Author of articles, book chapters, and performance
master’s and doctoral thesis director. Manuel-Alejandro Ibarra-Cisneros is the corresponding author and
can be contacted at: [email protected]
Mar
ıa del Rosario Demuner-Flores is PhD in Administrative Economic Sciences. Research professor 611
in the Faculty of Accounting and Administration at the Autonomous University of the State of Mexico.
Director of RECAI Journal of Studies in Accounting Administration and Information Technology.
Research lines: Strategic management and intellectual capital and business competitiveness.
Felipe Hern
andez-Perlines is PhD in Economics and Business. He is a professor of Strategic
Management in the Department of Business Administration at the University of Castilla-La Mancha
(Spain). His research has focused on agri-food cooperatives, family businesses and the tourism sector.
His work has been published in journals such as Journal Business Research, R&D Management,
European Journal of International Management, European Journal of International Management,
International Journal of Contemporary Hospitality Management and International Journal of Hospitality
Management.

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