Feeling torn? The conflicting effects of market and entrepreneurial orientations on manufacturing SMEs' innovation performance

Purpose: This study focuses on how a small and medium-sized enterprise's (SME's) main strategic orientation can affect SMEs' approach to innovation. The authors aim to answer the following simple yet important questions: how do SMEs with market orientation (MO) and those with entrepreneurial orientation (EO) differ in terms of innovation performance? Do MO and EO have conflicting effects on the process of innovation at SMEs? If so, how does this conflict affect the innovation performance of SMEs? Design/methodology/approach: This study explores the effects of MO and EO on different types of technological innovation among SMEs using data collected from 124 INNOBIZ-certified manufacturing SMEs in South Korea. Logistic regression analysis and moderated regression analysis were conducted to test the hypotheses. Findings: The empirical results demonstrate that MO and EO engender different kinds of technological innovations. MO stimulates “new-to-the-firm” product innovation, while EO drives “new-to-the-industry” innovation in processes and products. Furthermore, SMEs' overall innovation performance will suffer from the conflicting interplay between MO and EO. Originality/value: The findings of this study encourage SMEs to concentrate SMEs' resources and learning efforts on one specific innovation orientation and only then to develop SMEs' ambidextrous managerial capabilities. This study offers academic contributions in that the study overcomes the limitations of past studies on the strategic orientation of SMEs by empirically confirming the dilemmas faced by SMEs and expands the theoretical understanding of the relationship between MO and EO.