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Strategic orientations and firm Strategic

orientations
performance: the role of and firm
performance
information technology
adoption capability
Arif Nugroho, Ruslan Prijadi and Ratih Dyah Kusumastuti Received 17 June 2021
Revised 10 November 2021
Departement of Management, Faculty of Economics and Business, 18 January 2022
Universitas Indonesia, Depok, Indonesia Accepted 24 January 2022

Abstract
Purpose – This study aims to investigate the multiple entrepreneurial, technology and marketing orientations
effects on education service firm performance (FP) and the mediating role of information technology (IT)
adoption capability.
Design/methodology/approach – Empirical research based on 535 education service small and medium
enterprises (SMEs) in Indonesia and Singapore. Various validity and reliability tests were carried on before the
actual analysis was conducted using structural equation modeling.
Findings – The results conclude that IT adoption capability is crucial for entrepreneurial and technology
orientation (TO) to produce higher FP. This finding supports that IT capability is effective at helping firms
implement their strategic orientations (SOs). In addition, market orientation (MO) influence on FP is more direct
than other orientations under investigation.
Practical implications – This study suggests that SOs, particularly entrepreneurial and technology, enable
managers to improve FP via the development of IT adoption capability. The result shows that firms with
multiple SOs would be able to respond to market challenges, utilize new technology and become more
innovative, which eventually yields higher performance.
Originality/value – This study extends the understanding of multiple SOs influence on FP using the
mechanism of IT adoption capability.
Keywords Entrepreneurial orientation, Technology orientation, Market orientation, Information technology
adoption capability, Firm performance
Paper type Research paper

1. Introduction
The firm’s strategic orientations (SOs) have drawn plenty of interest from the scholarly
community since the seminal study by Venkatraman (1989) that conceptualized valid
measurements and dimensions of the particular strategy construct. SOs represent the firm’s
philosophy as reflected by the firm’s actions and values in doing business by building various
capabilities to achieve exceptional performance (Gatignon and Xuereb, 1997). SO is a higher-
order construct developed by extant literature to represent other orientations representing
different philosophies such as entrepreneurial, market, learning, technology, etc.
Entrepreneurial orientation (EO) is firm-level entrepreneurship shown in a set of distinct
but related behaviors with the qualities of innovativeness, proactiveness and risk-taking
(Covin and Slevin, 1991). Technology orientation (TO) represents a “technology push”
philosophy, which suggests that products or services with more advanced and current
technology are more superior and preferred by the customers (Gatignon and Xuereb, 1997).
In contrast, market orientation (MO) refers to a “market pull” philosophy where it is
impetuous for an organization to comprehend and appease customers’ needs and wants. MO
is conceptualized as organizational behaviors in addressing both the expressed needs of Journal of Strategy and
Management
customers and the latent or emerging needs of customers through generating, disseminating © Emerald Publishing Limited
1755-425X
and responding to market intelligence (Kohli and Jaworski, 1990; Narver et al., 2004). DOI 10.1108/JSMA-06-2021-0133
JSMA In today’s market, the importance of information technology (IT) has shifted its role from
organizational support to enabler. The importance of IT capability has transformed how
businesses should be operated and how firms could win the competition even when they are
small (Molinillo and Japutra, 2017). The gravity of IT at the organizational level is as
important as ever (Lehner and Sundby, 2018). From a resource-based view (RBV) perspective,
IT capability reflects the pursuit of competitive advantage by mobilizing and deploying the
various type of IT resources (i.e. tangible, intangible and human-based resources) in
combination with other firm resources, both assets and capabilities (Bharadwaj, 2000;
Elia et al., 2021). Current challenges and environments require firms to expand the RBV that
focuses on identifying and selecting firm-specific resources to achieve competitive advantage
(Barney, 1991; Wibbens, 2021). Dynamic capabilities (DC) emphasize identifying, developing
and preserving internal and external resources in response to rapid change in the
environment to achieve competitive survival (Teece et al., 1997). Selecting the appropriate
SOs and building IT capability may enable firms to adapt to current changes to survive
and grow.
This research would contribute to the extant literature. Although SOs have attracted
broad interest from the scholarly community, several theoretical gaps still need further
examination. Han and Zhang (2021) have suggested that multiple strategic orientations
(MSO) are rarely examined simultaneously, with only limited studies investigating their
relationships. Prior studies on the topic of multiple SOs contribute differently, such as
complementarity of SOs (Ho et al., 2016), their role on big data capability (Lin and Kunnathur,
2019) and their effects on product innovation (Han and Zhang, 2021). Schweiger et al. (2019)
further recommend that multiple SOs research is still crucial to be explored as the alignment
of SOs and firm resources are vital.
A literature review of the concepts also discovers potential research gaps in the firm
performance (FP) and IT adoption capability concept. Empirical research examining the
impact of IT capability on FP has generated equivocal results (Kohli and Devaraj, 2003;
Sabherwal and Jeyaraj, 2015). A study by Uwizeyemungu et al. (2018) calls for more future
studies extending resource configuration in IT capability with non-IT-related resources.
Similarly, IT adoption capability may be seen as a potential strategic capability to facilitate
firms in new product development (Mu et al., 2017). Current research attempts to answer this
call by proposing SO configurations with IT adoption capability and FP from RBV and DC
perspectives. Since this research is conducted in Indonesia and Singapore’s non-formal
education (NFE) industry SME firms, it also addresses contextual gaps in prior literature.
Scarce limited resources are causing exploiting the current opportunity while exploring new
ones to become more challenging so that small firms must act differently than large
corporations (Andriopoulos and Lewis, 2009).
Complementing formal education, NFE firms provide vocational and non-vocational
education services for all age groups of students. Students enroll in vocational programs
mainly to secure jobs pertaining to the skills afterward, such as electricians, tailors,
accountants, makeup artists, etc. The latter that is the non-vocational type of program deals
with the kind of education related to skills and knowledge that were not meant for job seeking
in that particular area. For example, foreign language, enrichment courses, or other interests
such as music or art. NFE has the characteristics of less structure, a more flexible schedule,
a shorter program with a more updated learning outcome.
There is also a geographical gap of SO and IT capabilities studies. Masa’deh et al. (2018)
suggest that most SO studies are conducted in the western world, such as SO and digital
marketing tactics in 20 European countries (Goldman et al., 2021), SO in the UK’s social
entrepreneurship organizations (L€ uckenbach et al., 2019) and SO configurations for Russia’s
SME performance (Beliaeva et al., 2020). To complement the studies above, this study
observes SO in the eastern hemisphere. More studies on IT capabilities in emerging nations
are also required (Aydiner et al., 2019). This study would enrich the understanding of IT’s Strategic
effect in emerging economies as preceded by prior studies. For example, IT capability as part orientations
of internal capabilities effects on Pakistan’s SMEs (Khan et al., 2019), information system in
small and medium enterprises (SMEs) internationalization in India (Rajendran, 2015) and IT
and firm
capability for family business in Ghana (Donkor et al., 2017). It examines FP generated from performance
IT capability and SOs in firms categorized as SMEs in Indonesia and Singapore. In addition,
the education services industry is selected as it is an IT-enabled information-intensive service
(Lim and Kim, 2015). IT is instrumental in handling communication, collaboration and
establishing relationships (Adeniran and Johnston, 2016). Since IT capabilities and
innovation are more commonly associated with the product-generating industry
(Raymond et al., 2018), research on NFE as a service industry would also bridge
a sizeable gap.
This study analyses the direct influence of SOs comprised of entrepreneurial, technology,
and MOs on FP. It also examines the intervening role of IT adoption capability between SOs
and FP. The main research question are: What is the relationship between SOs comprise
entrepreneurial, technology, and MO and FP? What is the relationship between SOs and IT
adoption capability? What is the relationship between IT adoption capability and FP? This
research would investigate direct relationships of individual entrepreneurial, technology and
MOs to FP. It would also examine the mediation effect of IT adoption capability on these
relationships.

2. Theoretical background and hypotheses development

The sequential positioning of SOs (entrepreneurial, technology and MO) followed by
intervening IT adoption capability that results in FP is plausible according to the prominent
resource-conduct-performance paradigm based on RBV theory (Barney, 1991; D’Oria et al.,
2021). This paradigm by RBV highlights the dissimilarities of firms’ performances that could
be explained by their specific behaviors and resources (Dagnino and Cinici, 2016; Oyewobi
et al., 2019). It is fundamental to examine how firms manage their resources to gain
competitive advantage (Zahra, 2021). Both EO and MO are organizational cultures
represented by specific sets of behaviors (Covin and Slevin, 1991; Meekaewkunchorn et al.,
2021; Narver and Slater, 1990). Similarly, TO is also a unique set of behaviors in accepting
new technology (Zhou et al., 2005). Hence, applying the behavioralist perspective, all
orientations could be perceived as resources (Day, 1994; Ibarra-Cisneros et al., 2021).
DC’ role is to sense, seize and reconfigure the resources the firm endowed (Teece, 2018;
Teece et al., 1997). Firms exposed to changing environments must alter their diverse
resources and capabilities to remain competitive (Baden-Fuller and Teece, 2020). In this
research proposed model, the dynamic capability is incorporated as MO as it is applied to
sense the change in customer needs and wants (Randhawa et al., 2021). In contrast, TO is
employed to sense the available technological advancements (Guo et al., 2020). In other words,
MO senses market pulls while TO senses the technology push. Both market and TOs are
crucial in sensing and seizing opportunities arising in the current environment in the
educational service SME context. EO represents corporate entrepreneurship acting as a
critical driver for organizational and strategic transformation through the conception and
combination of resources (Choi et al., 2020; Dess et al., 1999) by providing groundwork in
building new competencies or revitalizing existing ones (Zahra et al., 1999). Strategic
directions provided by firms’ SOs would be congruent with their DC (Teece, 2016). Firms may
develop or acquire a capability or set of capabilities to alter their resources in building
competitive advantages (Correia et al., 2021, 2021). This research utilizes IT adoption
capability as potentially the capability necessary to transform other firm resources.
JSMA IT capability act as a suitable mediator between organizational resources and FP (Bhatt
and Grover, 2005). IT capability is the driving mechanism of business strategies resulting in
higher firm efficiency (Wang et al., 2020). Due to its ability to sense, seize and reconfigure
other resources, IT adoption capability is central for firm dynamic capability (Pan et al., 2015).
Utilizing DC lens, SOs represented by firm behaviors to be more entrepreneurial (i.e. EO),
responding to market changes (i.e. MO) and openness to exploit new technology (i.e. TO) are
strategic capabilities in sensing and seizing opportunities with IT adoption capability as a
strategic action to transform themselves in pursuing higher performance. This research
developed hypotheses with IT adoption capability partially mediated SOs (entrepreneurial,
technological and market) and FP relationships.

2.1 Strategic orientations (SO) and firm performance (FP)

Acknowledging that there are researches on SO using the strategic choice theory, such as
Yu et al. (2018), this research selects RBV perspective as the underlying theory for SOs.
Utilizing RBV, Mu and Di Benedetto (2011) discover that SOs consist of entrepreneurial,
market, technology and networking help facilitate a match between strategy and both
resource endowment and market condition. There is similar extant literature adopting this
view, such as Ibarra-Cisneros et al. (2021), Schweiger et al. (2019), etc. Tanriverdi and
Venkatraman (2005) found that entrepreneurial, market and learning orientations to be
complementary, and their combination has an extraordinary impact on FP. Mahrous et al.
(2020) discovered that the combination of entrepreneurship and marketing resulting in
entrepreneurship marketing (EM) would significantly benefit FP in emerging economies. On
the other hand, firms with a single mode of SO may find themselves at disadvantages facing
too many “blind spots” to handle and suffering from biases (Hart, 1992).
FP, measured through financial performance, operational performance and organizational
effectiveness (Venkatraman and Grant, 1986), is the ultimate strategic management objective.
As each firm may have different missions and goals, FP is known to be subjected to
stakeholders’ interests (Richard et al., 2009). It includes firms with other purposes other than
economic measurements, such as social performance in the education industry (Santos and
Brito, 2012). Barney (1991) and Rumelt (1991) agree that managing internal resources would
build a competitive advantage to improve FP.
2.1.1 Entrepreneurial orientation (EO) and FP. Morris and Kuratko (2002) have identified
EO as a major construct within the strategic management and entrepreneurship literature
over the years. EO could be conceptualized as a strategic choice taken as a key decision to
pursue more entrepreneurial activities to produce sustained competitive advantage in
achieving a firm’s visions and purposes (Rauch et al., 2009). EO also posited the extent that the
firm prioritizes recognizing and exploiting market opportunities (Shane and Venkataraman,
2000). In short, the construct of EO represents what it means for a firm to be entrepreneurial at
the most fundamental level (Anderson et al., 2015).
EO dimensions and measurements arguably introduced by Miller (1983) and later
developed by Covin and Slevin (1989), who define EO as three distinct and different
dimensions, which are innovativeness, proactiveness and risk-taking. Innovativeness refers
to an organization’s proclivity toward accepting, employing and supporting new novel ideas
to find new solutions to specific obstacles and needs (Lumpkin and Dess, 1996, 2001).
Risk-taking represents the organization’s propensity to implement, employ and support
high-risk solutions, reflecting the manager’s preferences and risk level acceptance in
pursuing objectives (Miller, 1983, 2011). Proactiveness represents the organizational
tendencies to pursue processes and actions-seeking opportunities to anticipate the
maturity and decline of current products or services by addressing future needs (Lumpkin
and Dess, 2001).
 The empirical researches provided plenty alternatives for examining EO-performance Strategic
relationship as they are not just differing in terms of firm size (SMEs, medium and large) and orientations
types of industries (e.g. Kantur, 2016; Keh et al., 2007), but the diverse nations and regions
would cater for cultural diversity as well (e.g. Tang et al., 2008). Although generally, EO
and firm
positively influenced performance (e.g. Keh et al., 2007; Lechner and Vidar, 2014; Wiklund and performance
Shepherd, 2005), careful attention should be taken to avoid potentially harmful effect of EO on
performance (e.g. Kreiser et al., 2013; Rauch et al., 2004). The significant impact of EO on
performance extends to the education sector (Abou-Warda, 2015; Phelan et al., 2013). As the
NFE is the least regulated stream of education, the NFE firms must be more innovative,
proactive and risk-taking to build their competitive advantage. Based on the explanation, we
derive the following hypothesis.
H1. EO positively influences FP.
2.1.2 Technology orientation (TO) and FP. TO refers to the firm’s ability and acceptance of
new technology so that the firm could utilize it to build various technical solutions to answer
and meet the new needs of customers (Gatignon and Xuereb, 1997). It represents the firm’s
openness to novel ideas and proclivity to acquire new technologies during a product’s
development (Hurley and Hult, 1998).
Hyung and Dedahanov (2014) empirically prove the positive effect of TO on FP. In a
similar vein, Masa’deh et al. (2018) also discover the significance of TO on organizational
performance. Besides focusing on growth, TO also helps firm survive by building the
competitive advantage necessary to improve their performance through new product or
service development (Panda, 2014). Hakala (2011) posits that firms with high TO would
address changing customer needs and wants by introducing a new process, new products
and services to build a competitive advantage over competitors. Cooper and Kleinschmidt
(2000) underline that high technology-oriented firms would have the ability to develop and
launch a new product or service as one of the indicators of FP.
TO would also promote openness to new ideas and encourage risk-taking that would not
just create a new untapped market but also shape the behavior of customers (Deshpande et al.,
2013). Firms’ TO could be viewed as a source of competitive advantage when seen from the
RBV and DC perspective (Coombs and Bierly, 2001). A recent report by the World Bank (2019)
highlights technology in education as a potentially problem-solving mechanism. In addition,
UNCTAD (2018) report agrees that education technology development has been encouraging
making it more widely available and affordable. Thus, the education industry is an appropriate
industry to observe TO as firms would be more receptive to new technological advancement.
Based on the above elaboration, this research advances the following hypothesis.
H2. TO positively influences FP.
2.1.3 Market orientation (MO) and FP. MO is essential for the organization to comprehend
and appease customers’ needs and wants. Narver and Slater (1990) conceptualize MO as a
construct consisting of three behavioral characteristics, namely customer orientation,
competitor orientation and inter-functional coordination. Customer orientation involves
activities delivering superior values to the buyer by understanding their needs and
preferences. Competitor orientation focuses on understanding competitors’ capabilities and
strategies which determine their strengths and weaknesses. Inter-functional coordination
utilized all the information gathered by the previous two activities by combining firm
resources to generate superior value. With this orientation, firms would gather critical
intelligence, disperse the information and build necessary skills and resources (Kohli and
Jaworski, 1990).
Firstly enunciated by Kohli and Jaworski (1990), MO and FP’s direct relationship has been
studied in various contexts (Herhausen, 2016; Narver and Slater, 1990), including service firms
JSMA (Matear et al., 2002), manufacturing SME (Udriyah et al., 2019), social enterprises (Bhattarai et al.,
2019), hospitals (Bhuian et al., 2005) and international context (Gruber-Muecke and Maria Hofer,
2015). Most studies support the notion that MO is one of the critical components of SOs which
would positively affect organization performance directly (Jaworski and Kohli, 1993; Masa’deh
et al., 2018; Narver et al., 2004; Narver and Slater, 1990; Sarker and Palit, 2015). This includes
several meta-analysis studies such as Ellis (2006) and Kirca et al. (2005). In the education
industry, MO has been found to improve FP through more innovative courses, delivery methods
and support services (Vaikunthavasan et al., 2019). MO roles in sensing the change in customer
needs and wants would be more prevalent in the NFE industry since its nature is less structured,
with a more flexible schedule and updated to market demand (Latchem, 2014). Based on the
discussion above, this research suggests the following hypothesis.
H3. MO positively influences FP.

2.2 Strategic orientations (SO) and information technology adoption capability (ITAC)
Firms’ orientations effect to enhance performance may require a specific capabilities
development mechanism. Through IT capability adoption, SMEs implement their DC to build
competitive advantage (Adeniran and Johnston, 2016) and increase operating efficiency for
business growth (Bhaskaran and Gligorovska, 2009). IT capability refers to the pursuit of
competitive advantage by mobilizing and deploying various types of IT resources (i.e.
tangible, intangible and human-based resources) in combination with other firm resources,
both assets and capabilities (Bharadwaj, 2000). By adopting IT capability, firms would be
able to manage and utilize IT for various operational support for the benefit of decision
making, improve effectivity and efficiency (Perez-Lopez and Alegre, 2012). Levy et al. (2001)
suggest that innovativeness and customer relationships are among the top factors
determining SMEs’ adoption of IT. Market pull and technology push are some of the
factors affecting IT adoption in SMEs (Nguyen et al., 2015). SOs are also known to leads to
formation of IT-related capability such as big data capability (Lin and Kunnathur, 2019).
Since Bharadwaj (2000) introduced IT capabilities, other researchers have developed
similar concepts to improve FP. Tippins and Sohi (2003) conceptualization of IT competency
focuses on IT operation, IT knowledge and IT objects as dimensions. Bhatt and Grover (2005)
identify only IT business expertise and relationship infrastructure that benefit competitive
advantage. From various terms of IT capability, information communication technology
(ICT) utilization by Adeniran and Johnston (2016) may be the closest similarities with ITAC.
However, ITAC and ICT utilization has a different perspective that is observable through
their indicators. While ICT utilization is understood to be firm ability to use ICT applications
shown by their ability to collaborate, communicate, handle transaction and cost saving made,
ITAC is reflected through the extent firm able to adopt IT reflected through the availability of
IT infrastructure, IT and business strategic alignment, organizational structure and learning
ability to adopt IT applications.
2.2.1 EO and ITAC. Innovativeness and proactiveness would facilitate the adoption of
new technology to give rise to new ideas and creative processes (Lumpkin and Dess, 1996).
The basic of entrepreneurship may be derived from the innovation which transforms the
market generated by small firms leveraging on their scarce resources (Steensma et al., 1995).
Innovation itself is a result of firm innovativeness (Hurley and Hult, 1998). The degree of
products and services innovations arguably corresponds to the extent of IT utilization
(Janson and Wrycza, 1999). Capacity building as a strategic action explained by strategic
choice theory is a consequence of strategic initiative made by firms’ decision-makers (Child,
1972). Building IT capability would improve the firm’s competitiveness in a world where
everyone is shifting into digital. It could only be plausible with the firm’s strategic intent in
particular EO. Previous research by Naman and Slevin (1993) has shown that firms with
higher EO would be more likely to embrace IT innovations. These firms are distinguished by Strategic
innovativeness, responsiveness and change initiatives (Naman and Slevin, 1993). orientations
IT enables businesses to be more competitive (Tse and Soufani, 2003) and allows SMEs to
improve operating efficiency and encourage growth (Bhaskaran, 2013). Yoon and George
and firm
(2013) summarize that firm’s proactiveness and internal needs are some of the organizational performance
factors prominent for IT adoption. Firms’ proclivity to behave entrepreneurially would
facilitate new technology adoption (Gupta et al., 2016). To target goals, formulate strategy
and plan to improve performance and exploit the opportunity, entrepreneurial firms would
actively seek new capabilities, including IT capabilities (e.g. Choi and Shepherd, 2004; Zahra
et al., 2000). This study proposes the following hypothesis.
H4. EO positively influences ITAC.
2.2.2 TO and ITAC. Understanding that TO deals with the propensity of firms toward new
ideas and technologies (Hurley and Hult, 1998), its relationship with technology capability
could be clarified as follows. Research and development process invested by
technology-oriented firms (Jeong et al., 2006) would require various traits benefitted from
IT capability under examination, such as IT supported operation and IT knowledge and
budget (Soto-Acosta et al., 2018; Tippins and Sohi, 2003). For example, Grover (1993) found
that a proactive technological orientation strongly enhances supply chain industry-specific
IT capability called a customer-based inter-organizational system (CIOS). Other research by
Haro-Domınguez et al. (2010) confirmed the influence of TO on IT capability by explaining
that technology-oriented firm’s managers would facilitate holistic strategy planning as they
are exposed to plenty of new technologies.
Prior researches also provide support and explanations on TO and ITAC relationship. Wade
and Hulland (2004) categorized IT capability as inside-out, outside-in and spanning capabilities.
TO positively influences outside-in, inside out and spanning IT capabilities relationship to
tourism supply chain agility and resilience (Mandal, 2019). Moreover, Mohamed et al. (2006)
found that firm with higher TO has more success with IT implementation. Classified as
technological innovation, IT capability would be positively affected by TO (Zhou and Li, 2010).
Accordingly, this research suggests the following hypothesis.
H5. TO positively influences ITAC.
2.2.3 MO and ITAC. The size and depth of intelligence generated from the customers and
competitors would be determined by the degree of firms’ MO. However, the overwhelming
amount of information gathered may startle and curb down the management that may even
lead to paralysis. Hence, for intelligence to be sorted and analyzed, organizational capabilities
are required. MO emphasizes information management process starting from acquiring
process, disseminating, and ends with the responding (Baker and Sinkula, 1999). The vast
intelligence gathered may cause high information intensity that would further encourage
organizational commitment and advancement of its IT capability. Information intensity
reflects the extent of information products/services specific firms dealt with (Kearns and
Lederer, 2003). Firms operating in high information-intensive industries would require
substantially higher information-processing capacity (King and Teo, 1997; Teo and King,
1997). From the above analysis, this research advances the following hypothesis.
H6. MO positively influences ITAC.

2.3 ITAC and firm performance (FP)

Preexisting literature has established that IT capability would directly influence FP
positively. Bharadwaj (2000) arguably provides the cornerstone of IT and FP relationship by
empirically demonstrating that firms with high IT capability outperform their peers in profit
JSMA and cost-effectiveness. In a similar vein, Santhanam and Hartono (2003) have tested and
proven that sustained FP, even with the adjustment of the “halo” effect, could be achieved by
implementing superior IT capability. Similar positive results are also exhibited by several
meta-analysis studies focusing on IT capability payoff by Kohli and Devaraj (2003) and
Sabherwal and Jeyaraj (2015). IT business value literature review concluded that the positive
role of IT in coherence with the abovementioned literature (Pintaric and Bronzin, 2013;
Schryen, 2013). Technology in education in Southeast Asia, especially Indonesia, is still
considered at an early stage, with vast room for development in the future (Google-Temasek,
2018). With the education industry as potentially one of the primary benefactors of IT
advancement in the world (WEF, 2016), the examination of ITAC’s role in education would be
pertinent. Accordingly, this research proposes the following hypothesis.
H7. ITAC positively influences FP.
Figure 1 depicts the conceptual framework of the research.

3. Research methodology
3.1 Data collection
The research was based on primary data gathered from education service SMEs in Indonesia
and Singapore. While both countries are geographically adjacent to each other in the eastern
hemisphere, Singapore would be considered as a developed nation and Indonesia as an
emerging economy. Education service firms were studied because the research focused on
bridging the literature gap on IT adoption capability and SOs in SME service industries. IT is
the most commonly used technology in SMEs (Barba-Sanchez et al., 2007). Perceived
measurement is adopted in this study as it is proven to be the solution for the reluctance of
small firms in developing countries to disclose their archival data impossible (Alegre and
Chiva, 2013; Tang and Tang, 2012) and challenging nature of interpreting the objective data if
any (Fiorito and LaForge, 1986; Sapienza et al., 1988). The respondents to the questionnaire
were all executive members of the firms such as CEO or Center Manager. To be eligible for the
study, the education firms must be considered as SMEs operating in Indonesia or Singapore
for more than three years and able to devise their strategic plan.
The study started with face validity interviews with several industry players and
associations in both countries to ensure that the questionnaires are valid and well understood.
After designing the questionnaire, a pilot test with 32 respondents was carried out further to
ensure the validity and reliability of the questionnaires. After the pilot test result was

Figure 1.
Conceptual model
confirmed to be acceptable, a field survey was conducted. The sample was retrieved through Strategic
the Indonesian Ministry of Education and association database containing approximately orientations
3,400 individual unique firms. Singapore sample was retrieved from Singapore GeBiz data
and confirmed by enumerators include approximately 55 unique firms. Firms with multiple
and firm
education centers would only be counted as one respondent. All the firms in the database performance
were contacted, and the top management was briefed on the research objectives and later
asked to fill the online survey through the Google Form platform. The collected data were
screened and validated, resulting in 535 final respondents, with 495 respondents from
Indonesia and 40 from Singapore making the response rate in Indonesia approximately
15.7% and Singapore 72.7%.

3.2 Measurement
EO in this study is measured by the thirteen-item scale by Covin and Slevin (1991) adopted in
Roxas et al. (2017) and Basco et al. (2020). TO adopts a simplified six-item measurement and
indicators originally developed by Gatignon and Xuereb (1997) and became more established
by Zhou et al. (2005) research. MO is measured using MKTOR scale (Narver and Slater, 1990).
This study utilizes twelve-items to measure MO further developed by Ho et al. (2016) and
He et al. (2018). ITAC is measured using a seventeen-item scale by Chiu and Yang (2019),
developed by the infamous Bharadwaj (2000). FP has been measured in a variety of ways in
different studies, with recent literature evaluate multidimensional measurement
incorporating social performance on top of ordinarily economic performance (Bhattarai
et al., 2019; Santos and Brito, 2012). FP is measured by a nine-item scale of Gruber-Muecke
and Maria Hofer (2015) and Liu et al. (2015). All the items were measured using a five-point
Likert scale with 1 (one) means strongly disagree and 5 (five) represents strongly agree.

4. Results and analysis

4.1 Measurement model
Before structural relationships examination, confirmatory factor analysis (CFA) utilizing
AMOS (v24) was conducted to ensure the measurement model fit. Model fit requirements
based on Hair et al. (2010) and Hu and Bentler (1999) are CMIN/DF less than 3, a significant
p-value is expected, GFI is larger than 0.8, CFI is at least 0.9, RMSEA and RMR are expected to
be less than 0.07. Table 1 fit indices show that the results are within these thresholds. The
standardized estimates of each indicator used to measure the variables are also acceptable.

4.2 Construct validity and reliability

The constructs’ reliability and validity were also examined through CFA. Only items with
acceptable loadings are maintained. Overall loadings of second-order constructs or
dimensions are sufficient, as presented in Table 2. The result, the computation also results
in validity and reliability measurements represented by Cronbach’s alpha (CA), composite
reliability (CR) and average variance extracted (AVE) as presented in Table 3. Threshold
values of CR and AVE are evaluated based on Fornell and Larcker (1981). Hair et al. (2010)
described an acceptable consistency is reached when 0.60<CR < 0.80 with CR > 0.80 is
considered good. Henseler et al. (2015) assess discriminant validity based on a comparison of
AVE with maximum shared variance (MSV). It is good when MSV < AVE. Table 5 indicates
there is no significant correlation between constructs under examination. The data in Table 3
conclude that the internal consistency of multiple indicators in each variable is sound, with
convergent validity, discriminant validity and reliability are all achieved. The correlations
between constructs are also examined in Table 4, which shows that they are below 0.8 for
strict discriminant validity (Gaskin and James, 2019; Henseler et al., 2015).
JSMA Fit indices CMIN/DF 5 1.822; p-value 5 0.000; GFI 5 0.901; CFI 5 0.932; RMSEA 5 0.039; RMR 5 0.019
Standard Standardized
Entrepreneurial orientation Estimate error estimate

Innovativeness
1 We consider ourselves an innovative company 1 –
2 Our business is often the first to market with new 1.232 0.083 0.717
programs and educational services
3 We actively introduce improvements in our educational 1.133 0.067 0.692
firms
4 Competitors in this market recognize us as leaders in 1.256 0.081 0.782
innovation
Risk-taking
1 Our firm encourages people in our company to take risks 1 – 0.716
with new ideas
2 Our firm values new changes if we are not certain that 1.079 0.066 0.762
they will always work
3 Our firm is willing to accept a moderate risk of losses to 1.094 0.067 0.787
make effective changes to our offering
4 Our firm engages in risky investments (e.g. hiring 1.188 0.076 0.738
employees with new skills, new facilities, new activities
and new methods) to stimulate future growth
Proactiveness
1 Our firm always seeks initiatives and opportunities 1 – 0.762
whenever possible in our target market
2 Our marketing efforts try to lead customers rather than 1.050 0.062 0.713
respond to them
3 Our firm works to find new businesses or markets to 1.048 0.058 0.724
target
4 Our firm incorporates solutions to unarticulated 1.079 0.060 0.789
customer needs in our education program and services
5 Our firm continuously tries to discover the additional 1.030 0.063 0.730
needs of our customers of which they are unaware

Standard Standardized
Technology orientation Estimate error estimate

1 Our firm actively seeks information on technological 1 – 0.689

changes in the environment that are likely to affect our
business
2 New technologies are adopted to develop new 1.180 0.081 0.732
educational services and learning methods in our firm
3 New technologies are integrated into our firm’s business 1.266 0.084 0.766
operation rapidly
4 Our educational programs and services include 1.269 0.085 0.753
technology items to support them
5 Our firm readily accepted technological innovation based 1.253 0.087 0.723
on research results
6 Our staff members are encouraged to have new 1.162 0.080 0.733
Table 1. technology ideas for new educational programs or
Construct service development
measurement (CFA
model results) (continued )
 Strategic
Standard Standardized orientations
Market orientation Estimate error estimate and firm
Customer orientation performance
1 Our firm’s strategies are driven to create greater value 1 – 0.651
for customers
2 Our firm’s strategy for competitive advantage is based 1.050 0.091 0.758
on our understanding of customers’ needs
3 Our business objectives are driven to achieve customer 0.972 0.089 0.753
satisfaction
4 We measure customer satisfaction regularly 1.086 0.056 0.714
Competitor orientation
1 Our marketing and customer service officers share 1 – 0.747
competitor information frequently
2 We respond to competitor actions that may threaten our 0.897 0.073 0.740
firm
3 Our firm’s strategies always allow us to target 0.898 0.069 0.687
opportunities
Inter-functional coordination
1 Our firm opens communication access for our customers 1 – 0.657
to call us
2 Our firm communicates customer experience 1.288 0.098 0.754
information across all business functions
3 Our firm’s strategies integrate all our business functions 1.276 0.094 0.692
to serve the needs of our target market
4 All our firm’s functions understand how to contribute to 1.268 0.090 0.722
creating customer value
5 Our firm’s strategies allow our business functions to 1.244 0.089 0.709
share resources and support each other

Standard Standardized
Information technology adoption capability Estimate error estimate

Information technology infrastructure

1 Our firm allocates a sufficient budget for purchasing 1 – 0.695
information technology hardware
2 Our firm allocates a sufficient budget for purchasing 0.973 0.049 0.702
information technology software
3 Our firm emphasizes the importance of information 0.931 0.067 0.724
technology in staffing
4 Our firm implements new information technology 0.994 0.071 0.761
applications
Strategic alignment
1 Our firm aligns information technology implementations 1 – 0.787
with business strategies
2 Our firm develops information technology projects to 0.982 0.055 0.729
support business strategies
3 Our firm utilizes information technology applications to 1.075 0.051 0.843
support business strategies in improving process
management
4 Our firm utilizes information technology applications to 0.924 0.050 0.751
support business strategies in improving education
service offerings

(continued ) Table 1.
JSMA Standard Standardized
Information technology adoption capability Estimate error estimate

Organizational structure
1 Our firm promotes employee empowerment 1 – 0.671
2 Our firm encourages business function integration to 1.265 0.083 0.776
accommodate changes
3 Our firm strengthens work activities coordination 1.287 0.070 0.803
4 Our firm encourages quick response decision-making 1.121 0.079 0.701
Individual learning
1 Our firm provides sufficient training while implementing 1 0.738
new information technology applications
2 Our employees have been able to learn new information 1.089 0.059 0.810
technology applications quickly
3 Our employees have been able to adopt new information 1.041 0.056 0.808
technology applications for their work
4 Our employees have been able to innovate new ideas and 1.050 0.057 0.804
approaches to work effectively by adopting new
information technology applications
5 Our employees easily adopt new information systems 1.095 0.059 0.813
and applications

Standard Standardized
Firm performance Estimate error estimate

Social performance
1 The education firm has succeeded in improving a 1 – 0.790
student’s skills
2 The education firm has succeeded in improving student’s 1.052 0.050 0.823
knowledge
3 Our graduates could easily find a job or pursue the 0.952 0.068 0.685
desired career
4 The education firm has contributed to enlighten the lives 0.995 0.057 0.791
of the nation
Economic performance
1 The education firm has generated a high number of sales 1 – 0.717
in terms of student intake and other projects for the last 3
(three) years
2 The education firm’s revenue has been growing for the 1.018 0.059 0.715
last 3 (three) years
3 The quality of our education program and services has 0.841 0.063 0.740
been very satisfactory for the customers
4 The education firm’s reputation has been steadily 1.038 0.064 0.856
increasing for the last 3 (three) years
5 The education firm has an increasing market share 1.072 0.068 0.811
Table 1. growth for the last 3 (three) years

4.3 Structural relationships

The structural model could be investigated after the validity and reliability of the
measurement model have been demonstrated powerfully. To test the relationships between
constructs, i.e. the hypotheses representing direct and indirect effects of the conceptual model
in Figure 1 simultaneously, structural equation modeling was applied. The goodness of fit
statistics presented in Table 4 shows that the overall structural model fit statistics are within
the recommended fit indices, which are CMIN/DF < 3, CFI > 0.90, RMSEA < 0.05 and
Variable Estimate Standard error Standardized estimate
Strategic
orientations
Entrepreneurial orientation and firm
Innovativeness 1 – 0.942
Risk taking 0.979 0.075 0.841 performance
Proactiveness 1.031 0.069 0.944
Market orientation
Customer orientation 1 – 0.932
Competitor orientation 1.725 0.071 0.950
Inter-functional coordination 1.267 0.081 0.954
Information technology adoption capability
Information technology infrastructure 1 – 0.906
Strategic alignment 1.013 0.073 0.941
Organizational structure 0.777 0.064 0.920
Individual learning 0.909 0.071 0.881
Table 2.
Firm performance Second-order factor
Social performance 1 – 0.842 models (estimates of
Economic performance 1.183 0.093 0.858 factor loadings)

Variable Items CA CR AVE MSV

Entrepreneurial orientation 13 0.923 0.935 0.829 0.785

Technology orientation 6 0.870 0.870 0.728 0.704
Market orientation 12 0.884 0.962 0.894 0.646 Table 3.
Information technology adoption capability 17 0.942 0.952 0.832 0.785 Reliability and validity
Firm performance 9 0.894 0.839 0.783 0.730 of the constructs

TO EO MO FP ITAC

TO
EO 0.793
MO 0.799 0.728
FP 0.686 0.725 0.689
ITAC 0.786 0.741 0.691 0.769 Table 4.
Note(s): Significance of Correlations: yp < 0.100; *p < 0.050;**p < 0.010;***p < 0.001 Correlation table

Fit indices CMIN/DF 5 1.949; p-value 5 0.000; GFI 5 0.889; CFI 5 0.921; RMSEA 5 0.042; RMR 5 0.021
Constructs IT adoption capability Firm performance

Entrepreneurial orientation H4: 0.693*** (0.693, 0.090) H1: 0.007 (0.07, 0.131)
Technology orientation H5: 0.228* (0.215, 0.086) H2: 0.175 (0.173, 0.108)
Market orientation H6: 0.004 (0.06, 0.102) H3: 0.315*** (0.500, 0.135) Table 5.
IT adoption capability H7: 0.799*** (0.831, 0.124) Estimated coefficients
Note(s): ***p < 0.001, **p < 0.01, *p < 0.05. Between parenthesis (non-standardized estimate, standard error) of the structural model
JSMA RMR < 0.05 (Hu and Bentler, 1999). GFI > 0.8 is also acceptable (Ato Sarsah et al., 2020;
Baumgartner and Homberg, 1996).
Table 5 also summarizes the structural model coefficients and their significance. The
model initially examined the SOs’ relationships with FP. The result concluded that only MO
directly influences FP (H3 confirmed) as EO and TO relationships on FP are insignificant
(H1 and H2 not supported). Then, the influence of SOs’ on IT adoption capability as a potential
mediator to the FP is investigated. The result shows that EO influences ITAC (H4 confirmed).
TO is also concluded to affect ITAC (H5 confirmed), while MO relationship to ITAC is proven
to be insignificant (H6 not supported). Finally, the influence of ITAC on FP is explored. The
result inferred that ITAC significantly influences FP (H7 confirmed). ITAC is proven to be an
excellent mediator between SOs and FP relations, as it fully mediates the EO–FP relationship
and the TO–FP relationship. The result of the model could be viewed in Figure 2.
Indirect effect of SOs (EO, TO and MO) to FP is further investigated to ensure the
mediation of ITAC would result on significant relationship. The test was carried out using
AMOS user define estimand developed based on the bootstrap method by Preacher and
Hayes (2004). Table 6 concludes that only EO and TO have indirect effects on FP with the
mediation of ITAC. This result confirms the findings in Table 5.

5. Discussions
This study aimed to examine multiple relationships between SOs comprising EO, TO and MO
with ITAC and FP. The result concludes that ITAC fully mediated EO and TO relationships
with FP, while ITAC seems to have no role in MO and FP relationships. The mediation effects
of ITAC to both EO and TO relationships with FP are achieved as their indirect effects are
statistically significant (Preacher and Hayes, 2004). This implies that to improve FP, service
SMEs which emphasized innovativeness, proactiveness and risk-taking would be required to
develop IT adoption capability by providing appropriate IT infrastructure, adapting
organization structure, aligning strategy and providing learning opportunities. To target

Figure 2.
Results of the model

Parameter Estimate Lower Upper p

Table 6. EO–ITAC 3 ITAC–FP 0.576 0.374 0.849 0.001

Indirect effect TO–ITAC 3 ITAC–FP 0.179 0.043 0.359 0.033
examination MO–ITAC 3 ITAC–FP 0.005 0.177 0.149 0.997
goals, formulate strategy and set the plan in improving performance and exploit the Strategic
opportunity, entrepreneurial firms would actively seek new capabilities, including IT orientations
capabilities (e.g. Zahra et al., 2000).
In our research context, the benefit of EO to improve FP could only be achieved through
and firm
the advancement of ITAC as EO’s direct influence on FP is insignificant. Strategic intent like performance
EO would enable firms to build resources to execute the digital shift required in today’s
business. EO influence on FP would be best observed by building forms of organizational
capabilities instead of directly affecting performance (Rauch et al., 2009). Furthermore, Covin
et al. (2006) conclude that entrepreneurship and performance relationship is dependent on
external and internal factors with organizational capabilities as one of them. Slater and
Narver (2000) explain the plausibility insignificant of EO–FP relationship may be due to the
indirect effect of EO or the delay effect of EO to the performance measurement. This research
result concludes that EO effect on FP in this particular research context where IT has shifted
from “support function” to “enabling” would have to go through the development of IT
adoption capability. Firm entrepreneurial characteristics would be expressed by adopting
technology information (Martınez-Roman and Romero, 2017). In education service firms,
adopting IT capability would enable firms to express their innovativeness, proactiveness and
risk-taking.
IT adoption capability would also be crucial for technology-oriented service SMEs to
improve their FP. Firms’ managers with higher TO would have better commitments to invest
and allocate resources to research and development in search of new technological solutions
(Deshpande et al., 2013; Gao et al., 2007). IT capability enables firms to generate a competitive
advantage by assembling and disposing of appropriate IT resources in combination with
other firm resources, both assets and capabilities (Bharadwaj, 2000). It differs from
digitalization which is loosely defined as the use of information and digital technology to
develop a new business model in pursuing new opportunities to provide new revenue streams
(Kohtam€aki et al., 2019). While digitalization requires a holistic and extended use of advanced
IT to innovate the business model (Arias-Perez et al., 2020), IT adoption capability focuses on
how firms build their capability to utilize IT resources in optimizing other assets and
resources. IT adoption capability or other digital-related capabilities are an essential
precondition for firms to secure competitive advantage (Annarelli et al., 2021).
Classified as technological innovation, IT capability would be positively affected by TO
(Zhou and Li, 2010). ITAC fully mediated TO–FP relationship is a noteworthy extension to
RBV and DC discussions. The accumulated technological knowledge and know-how could
explain the positive relationship between TO and ITAC. By optimizing ITAC, technology-
oriented firms gained and stored from previous experience and process, such as extensive
research and development, scanning for nascent and rapid acquisition desired technologies.
The knowledge and expertise would further enable the firm to implement successful IT
capabilities. In the end, these unique capabilities would improve the FP. Since education
would be one of the most potential benefactors of IT development (WEF, 2016), education
firms’ willingness to adopt technology to improve performance would most likely be in the
form of IT capability. Education firms are exposed to a high amount of data information that
need to be processed reflected through information intensity (Kearns and Lederer, 2003).
Hence, they would substantially require higher information-processing capability (Teo and
King, 1997).
The research findings in education firms in Indonesia and Singapore may be rationalized
as follows. NFE firms’ openness to technology would depend mainly on IT as it would be the
stream of technology that would affect the world with education as potentially as the
benefactor (WEF, 2016). They would make a conscious strategic choice to adopt the available
IT as their source of sustainable competitive advantage and to what extent. By adopting IT
JSMA capability, education firms are more adept at accepting and integrating technological
innovations in their operations.
Education firms’ propensity to innovate is enabled by IT advancements that permit them
to implement various new learning methods such as hybrid, blended and provide a different
learning experience. Without adopting IT, entrepreneurial-oriented education firms would
have difficulties being proactive in seeking new opportunities and discovering the needs of
the students. Education firms are also known to risk hiring and developing new IT facilities to
stimulate future growth and achieve higher performance. The insignificance of the TO–FP
relationship is supported because TO orientation is a planned strategy instead of realized
strategy (Chan et al., 1997), which means that TO directs a firm’s management activities
(Gatignon and Xuereb, 1997).
Prior literature explain MO mechanism effect on FP. Talaja et al. (2017) posit that MO
would result in a competitive advantage that would improve FP consequently. The emphasis
on behaviors to create and maintain customer value while staying mindful of other
stakeholders’ interests help MO in improving FP (Deshpande et al., 2013). Research
proposition by Guo (2002) explains how MO would affect FP by addressing service gaps in
both new customer acquisition and existing customer retention. Guo et al. (2019) further posit
that MO strengthens customer loyalty and customer satisfaction in an emerging market
under various environmental factors. By investigating market information, market-oriented
firms would address customers’ wants and need better through better value and superior
performance (Morgan et al., 2009). These unique sets of behaviors are valuable organizational
resources that help firms match the demands of their environment (Barney, 1991) and
improve customer loyalty (Wang et al., 2013). MO’s direct influence on FP in the NFE industry
may be due to the industry’s unique characteristics. The fragmented market requires
education firms to offer various programs tailored to the customer’s requirements.
Furthermore, since NFE is the least regulated stream of education, the service providers
would respond to competitors’ information more rapidly by communicating it across
business functions. Understanding customers and competitors would improve education
firms’ ability to target opportunities and eventually enhance their performance.
The result shows that MO relationship with FP is direct without partial mediation of
ITAC. Surprisingly, MO does not add to the explanatory power to ITAC in the model. The
statistical insignificance of MO–ITAC relationship may be explained as follows. While
Molinillo and Japutra (2017) postulate that SMEs willingness to adopt IT is a function of their
strategy and market position, the type of IT capabilities affected by MO may be in the
different form of ITAC. If that is the case, measures of IT capability such as e-commerce
capabilities (Trainor et al., 2011) or e-business adoption (Voola et al., 2012) would be more
likely to be directly affected by MO than a measure of ITAC. It is also possible that MO has a
delayed effect on ITAC, which this study with cross-sectional design may not detect.

6. Theoretical and managerial implications

The key findings of this study come from the examinations of EO’s and TO’s indirect effects
on FP and MO’s direct effect on FP. This study addresses the need for empirical research
employing multiple SOs suggested by Hakala (2011) and Schweiger et al. (2019). EO, MO and
TO are intangible strategic resources that provide firms with unique capabilities (Barney,
1991). Our results suggest that technology adoption is necessary for the effects of EO and TO
to translate into superior performance. Without it, firms cannot realize performance benefits
from these SOs. Both EO and TO are proven to enhance FP only through ITAC and not
directly. Despite being valuable resources identified in RBV, EO and TO would only benefit
performance when the firm develops ITAC as the required capabilities in the current
environment. In line with DC, the firm must identify, develop and preserve internal and
external resources, including capabilities in response to environmental change to achieve Strategic
competitive survival (Teece et al., 1997). On the other hand, MO would be beneficial for FP orientations
directly. In this respect, firms adopting multiple orientations are proven to have better
performance. This study also contributed to the literature on the relationship between ITAC
and firm
and FP as prior researches have generated more equivocal result (Sabherwal and Jeyaraj, performance
2015). The confirmation of ITAC and FP relationship highlights the importance of ITAC to
enable a cultural mindset in the firms such as EO and TO to lead to higher performance. This
research also answer Aydiner et al. (2019) recommendation for a better understanding of
ITAC in emerging regions such as South East Asia. Similar to literature findings in the
Western area, ITAC proved to contribute to better FP significantly.
This study also offers management some implications through the understanding of the
NFE industry under examination. First, management must combine several SOs to adapt to
the environment and grow. As SOs, EO, MO and TO combination has an extraordinary
impact on performance. Multiple SOs would widen management perspectives and take
necessary risks in responding to market change and technological advancement. Second,
managers seeking to achieve higher performance in a similar context must note the
significant role of ITAC. They must therefore seek time not just to develop multiple SOs but
also to foster ITAC. While specific SOs such as MO may influence FP directly, other
orientations such as EO and TO as valuable resources require firms to develop capabilities
such as ITAC to affect performance indirectly. Understanding the importance of IT adoption,
this study would be helpful for the policy-makers in promoting digitalization for SMEs in
general and educational SMEs in particular.

7. Limitations and suggestions

Similar to prior empirical studies, limitations in this study need to be stated so future studies
may be built on them. This study is cross-sectional as the relationships investigated are only
measured in a snapshot of time. A longitudinal study with special care of the measurement
reliability would complement our current findings. Further, this study focuses on EO, TO and
MO as the type of SOs examined. Future studies may complete the research on SOs by
selecting other orientations that may be more suitable in different contexts and timing.
Similarly, scholars may wish to investigate other capabilities required to mediate SOs and
performance relationships. Although the validity and reliability of this study is sound,
another limitation would be the potential endogeneity issue of ITAC as elaborated in other
studies (e.g. Chatterjee et al., 2020; Wang et al., 2013). In addition, different measurements of
FP may enrich the literature. This research also has a limited scope of the sample as
respondents. Different types of industries and nations may contribute more to the
understanding of similar concepts under other circumstances. Although this study is
carried in two different countries, due to the disparity of respondents in Singapore compared
to Indonesia, no comparison was made. Future researchers should conduct contrasting
research on how the concepts would benefit SMEs in different countries in different stages of
development. Future research may also distinct SO and ITAC to individual economic and
social performance.

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Corresponding author
Arif Nugroho can be contacted at: arif.nugroho@pertiwi.ac.id

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