Networking capability and firm performance:

the mediating role of market orientation and

business process agility
Randy Kurniawan
Bina Nusantara University, Jakarta, Indonesia, and
Dyah Budiastuti, Mohammad Hamsal and Wibowo Kosasih
Management Department, BINUS Business School, Bina Nusantara University, Jakarta, Indonesia

Abstract
Purpose – This study aims to examine the effect of networking capability through market orientation and business process agility on the firm
performance of medium and large telecommunication technology providers in Indonesia.
Design/methodology/approach – Research data was collected from the executive management of telecommunication technology providers in
Indonesia via a questionnaire survey to obtain 150 valid questionnaires for analysis. This study analysed the overall model fit and hypotheses
through confirmatory factor analysis and structural equation modelling.
Findings – The results reveal that networking capability has a positive and significant effect on market orientation. However, networking capability
does not have a significant direct effect on business process agility. The results also indicate that market orientation does not have a significant
direct effect on firm performance but through the mediating role of business process agility.
Practical implications – The findings provide a practical foundation for the organisation’s networking capability to be framed by market
orientation and business process agility to enhance firm performance.
Originality/value – The results indicate that market orientation mediates the relationship between networking capability and business process
agility. The findings also reveal that business process agility mediates the relationship between market orientation and firm performance. This study
also reconceptualises market orientation to embody the inter-partner coordination dimension and reconceptualise business process agility to
embody business partner switching capability.
Keywords Networking capability, Market orientation, Business process agility, Firm performance, Telecommunication
Paper type Research paper

Introduction are replaced with cloud-based architecture, which relies on

In Indonesia, the information and communication sector has
become the fourth largest growth sector with 9.15% year-on-
year growth of sectoral gross domestic product in the third
quarter of 2019 (Indonesia Central Bureau of Statistics, 2019).
However, this does not mean that telecommunication
organisations are freed up from contemporary organisational
challenges. The telecommunication industry today is in the
fourth phase of development, known as Telecommunication
4.0 after having undergone three development waves: the first
analogue telecommunication revolution in the 19th century;
the second digital telecommunication revolution in 1937; and
the third Internet Protocol-based communication system
revolution in 1969 (Li, 2018). Telecommunication 4.0 is
triggered by the complex intertwinement of information
technology (IT), and computer and telecommunication (CT),
where traditional hardware- and appliance-based approaches
software to manage all network functionality. Two disruptive
technologies underlie this transformation: software-defined
networking (SDN) and network function virtualisation (NFV),
which have the capability to virtualise on-demand network
functions with high flexibility and agility (Bajpai et al., 2015).
The shift towards SDN/NFV-based network architecture
requires technology providers (vendors) to improve their
capability to satisfy dynamic requirements on demand (Aguirre
et al., 2019). Because proprietary hardware and software
oligopoly market structure has become diminished and the
entry barrier becomes lower because of commodity off-the-
shelf (COTS) hardware and open SDN standards, technology
providers need to respond and adapt quickly to provide a
solution to operators (Aguirre et al., 2019; Bajpai et al., 2015).
In the new market with much lower entry barriers, technology
providers are required to respond to customers’ requirements
with speed (IHS Markit, 2018).

The current issue and full text archive of this journal is available on Emerald The authors would like to thank reviewers and the editor-in-chief, who
Insight at: https://www.emerald.com/insight/0885-8624.htm have enhanced the quality of the paper. The authors would also like to
thank Editage (www.editage.com) for English language editing.

Journal of Business & Industrial Marketing

Received 15 January 2020
36/9 (2021) 1646–1664 Revised 18 April 2020
© Emerald Publishing Limited [ISSN 0885-8624] 26 May 2020
[DOI 10.1108/JBIM-01-2020-0023] Accepted 15 June 2020

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 Market orientation and business process agility
Randy Kurniawan et al.
Furthermore, when the entry barriers decrease, this new
market allows competitors to develop network solutions with
convenience and promote the emergence of new network
equipment and software ecosystems (Aguirre et al., 2019; Duan
et al., 2016). For example, in 2011, prominent information and
communication technology companies, including Google,
Microsoft and Facebook pioneered the Open Networking
Foundation, a non-profit organisation to accelerate the
development and adoption of open SDN. Integration
challenges are also highlighted in a report by McKinsey &
Company (Kunal et al., 2017) as a collaboration with third-
party content and platform providers; original equipment
manufacturers and emerging cloud-based application providers
are increasingly required. The capability of organisations to
cooperate with new partners such as suppliers, distributors and
channels and complementary solution providers is crucial
(Aguirre et al., 2019; Duan et al., 2016).
The second challenge associated with responsiveness in
satisfying customer requirements is the capability to develop
inter-function and inter-partner coordination to address specific
and on-demand requirements. Technology providers must be
able to integrate the existing and new infrastructure, focusing on
the fastest path to deliver business value by enabling service
providers to launch new services faster and in a more responsive
manner to their customer and market demands (Haveman and
Vochteloo, 2016). There is no more standard box that can meet
requirements from diverse operators and across countries, as
each has its priorities in terms of launching new services (Aguirre
et al., 2019; Bajpai et al., 2015). The ability of telecommunication
vendors to deliver flexible, customised and secure network
solutions that satisfy specific operators’ business challenges is the
key to successful growth in today’s developed and emerging
markets (Haveman and Vochteloo, 2016). It is also highlighted
that to compete in the global market, equipment vendors are
required to have the capability to localise and personalise their
product offerings. The offered solutions must be able to
accommodate the cultural, political and legal-specific
requirements of targeted customers in their functional properties
(Haveman and Vochteloo, 2016).
Previous studies validate the positive relationship between
networking capability and agility because such capability allows
firms to gain flexibility in leveraging essential resources from
business partners and working across boundaries (Battistella
et al., 2017; Liu and Yang, 2019; Rezazadeh and Nobari, 2018;
Yusuf et al., 2014). However, there is still debate concerning
the dark side of networking with partners. Previous studies
highlight that partnerships can cause unbalanced outflow of
firms’ specific assets (Yang et al., 2018), dependency on the
external capability of network partners (Anderson and Jap,
2005; Yang et al., 2018) and opportunistic behaviour in dealing
with specific resources (David and Han, 2004; Lui et al., 2009).
Furthermore, the relationship between networking capability
and business agility with market orientation as a predominant
strategic orientation has not been analysed and tested
empirically based on an extensive survey. Previous research
positions alliance as the mediating variable in the market
orientation–firm performance relationship (Nakos et al., 2018).
A similar study by Peng et al. (2018) verified that market
orientation has a positive relationship with network
relationships. Yang and Liu (2012) investigated 250 companies
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in Taiwan’s glass industry and found that network structure
partially mediates the agility-firm performance relationship.
However, they also suggest that firms should put more effort
into developing and maintaining their network structures to
capture external resources as boosters of enterprise agility. In
contrast, the current study argues that market orientation as the
extent to which an organisation generates, disseminates and
responds to market intelligence (Jaworski and Kohli, 1993;
Kohli, 2017; Kohli and Jaworski, 1990), is considered to be
impacted by an organisation’s capability to develop networking
with partners. To the best of our knowledge, this relationship
has never been examined extensively, and an empirical
examination is therefore required. Furthermore, the impact of
networking capability on firm performance through market
orientation and business process agility has not yet been
developed. Therefore, further examination of the relationship
between these constructs is required.
The remainder of this paper is organised as follows. We first
discuss the theoretical background that leads to our hypotheses.
Then, we outline the research method and how to develop the
conceptual framework, followed by a discussion of the results.
We conclude with the limitations of our study and the
theoretical and managerial implications of our results.
Literature review
Firm performance
Firm performance has become the primary interest for strategic
management scholars as the main objective of this discipline is
to achieve performance improvement (Venkatraman and
Ramanujam, 1986). However, its definition and terminology
are still being debated in the academic community (Behrman
and Perreault, 1982; Lee et al., 2015; Simon et al., 2015).
Venkatraman and Ramanujam (1986) proposed a well-known
two-dimensional scheme based on financial criteria and
broader operational criteria as the first dimension, and two
alternative data sources, primary versus secondary, as the
second dimension. Financial performance includes indicators
such as sales growth, profitability and earnings per share.
However, broader operational performance (i.e. non-financial)
includes measures such as market share, product quality, new
product introduction, marketing effectiveness, manufacturing
value-added and other technological efficiency measures. The
second dimension reflects the sources of performance data and
can be classified as primary, where data are collected directly
from organisations or secondary, where data are gathered from
publicly available records.
In the context of the financial services industry, Morgan and
Turnell (2003) argue that market performance must include
market share, customer satisfaction, competitive position,
customer retention and sales growth. Le Meunier-FitzHugh
et al. (2007, 2009, 2011) define business performance in a
business-to-business (B2B) context . It includes items such as
how successful the organisation is at generating high market
share, generating a high level of sales revenue, selling products
with the highest profit margins, exceeding all sales targets and
objectives during the year, generating sales of new products and
producing sales with long-term profitability. In relation to the
telecommunication manufacturing company, other studies
propose that business performance is measured as
 Market orientation and business process agility
Randy Kurniawan et al.
organisational revenue (Li Sun, 2009; Yan et al., 2017) and
increase in capital values or market capitalisation (Curwen,
2002, 2005, 2016; Curwen et al., 2015).
This study follows Venkatraman and Ramanujam (1986),
Lee et al. (2015) and Simon et al. (2015) and classifies firm
performance as a two-dimensional construct focusing on the
B2B and telecommunication industry context. It is defined as
the extent of the organisation’s success in generating a high
level of financial and non-financial performance that consists of
sales revenue, profit margins, cash flow, market share, product
and service quality improvement and customer satisfaction.
The definitions of the two dimensions, financial and non-
financial performance, are presented in Table 1.
Business process agility
Business process agility has recently become one of the primary
research interests of scholars and practitioners (Chen et al.,
2014; Tallon, 2008; Tallon and Pinsonneault, 2011) because
the ability to respond appropriately to a dynamically changing
environment is essential to firm survival (Dove, 2001; Kale
et al., 2019; Vagnoni and Khoddami, 2016; Vickery et al.,
2010). The concept of agility has received growing attention as
it addresses the challenge of a highly dynamic business
environment by swiftly adjusting the business (Oosterhout
et al., 2006). The ability to respond to changes rapidly and
appropriately, to become flexible and adaptable to changes and
to control uncertainty are essential to organisational survival in
a highly dynamic business environment (Dove, 2001;
Sambamurthy et al., 2003; Sherehiy et al., 2007).
Business process agility is essential for firms to anticipate or
respond to changes promptly and with ease (Oosterhout et al.,
2006). With the ability to swiftly and efficiently adapt to the
market environment, an agile business process is expected to
contribute to the organisation achieving cost economies (Chen
et al., 2014) and enable an organisation to exploit opportunities
for innovation and competitive action (Sambamurthy et al.,
2003). Previous studies define business process agility as firms’
responsiveness to changes in demand, new product
development, change in product mix, product pricing, market
expansion, supplier selection, IT adoption and diffusion
(Tallon, 2008; Tallon and Pinsonneault, 2011). It is the
organisation’s flexibility to easily and quickly retool their
business to adapt to the market environment.
The antecedents of agility and flexibility have also been
discussed in previous studies and cover diverse strategic
approaches. Han et al. (1998) and Lin (2004) argue that
market orientation enables the organisation to respond to
market requirements effectively. Other studies argue that
product innovation strategy is crucial in satisfying customers’
requirements (Arnett et al., 2018; Brown and Eisenhardt,
1997; Carbonell et al., 2012; Ravichandran, 2018; Yan et al.,
Table 1 Firm performance dimensions
Dimension Concept
Financial Business performance that is quantifiable with generally accepted accounting principles’
performance standardisation and includes measures such as sales revenue, profit margins and cash flow
Non-financial Business performance that is non-financial in nature and includes measures such as market
performance share, products and services quality improvement and customer satisfaction
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2017). From an internal organisational perspective,
interdepartmental collaboration is crucial for the organisation
to adapt to and satisfy market dynamics (Hult, 2011;
Keszey et al., 2017; Le Meunier-FitzHugh and Piercy, 2007;
Le Meunier-FitzHugh and Lane, 2009; Lyus et al., 2011;
Rouziès et al., 2005; Swink and Song, 2007; Turkulainen and
Ketokivi, 2012). However, Chen et al. (2014), Oosterhout et al.
(2006), Ravichandran (2018), Sambamurthy et al. (2003),
Tallon (2008) and Tallon and Pinsonneault (2011) examine
the effect of IT capability and competency on business agility
and firm performance. Other studies by Battistella et al. (2017)
and Liu and Yang (2019) suggest that the firm needs to develop
the capability to gain resources and knowledge from
partnerships with other organisations. When the broadness and
scalability of products go beyond the scope of a single company
working with a closed proprietary platform, partnership with
the supplier, logistic partner and complementary solution
partner is crucial (Aguirre et al., 2019; Kunal et al., 2017).
As previously highlighted, Telecommunication 4.0 is
characterised by the emergence of SDN and the shifting towards
COTS hardware and open software that create much lower entry
barriers for technology providers (Aguirre et al., 2019; Bajpai
et al., 2015). To achieve agility, vendors are obligated to
overcome two critical challenges. First, to improve their current
expertise with the additional capability of developing technology
solutions in the new open software ecosystem through partnering
(Aguirre et al., 2019) to acquire competitive resources from
outside because a single organisation cannot provide all resources
(De Leeuw et al., 2014). Second, to address customised and
localised operator’s requirements to integrate the existing and
new infrastructure focusing on the fastest path to deliver business
value to their customers and meet market demands (Cloudify
Platform Ltd., 2018; Haveman and Vochteloo, 2016).
This study defines business process agility as organisations’
responsiveness to address changes in customer demand, new
product development requirements, change in product mix,
competitor’s action, product pricing, market expansion,
supplier and business partner selection, technology adoption
and diffusion. It has nine measures, as listed in Appendix 1, and
is a reconceptualisation of previous research by Tallon (Tallon,
2008; Tallon and Pinsonneault, 2011). These items emphasise
firms’ responsiveness in terms of taking key business actions.
Role of business process agility in firm performance
Oosterhout et al. (2006) argue that business agility enables
organisations to respond to the dynamics in the market easily and
swiftly. Therefore, business agility is considered one of the main
contributors to achieving superior organisational performance
(Sambamurthy et al., 2003). Tallon and Pinsonneault (2011)
emphasise that a robust business process agility enables
organisations to customise a product or service to suit customer
Source
(Lee et al., 2015; Simon et al., 2015;
Venkatraman and Ramanujam, 1986)
(Lee et al., 2015; Simon et al., 2015;
Venkatraman and Ramanujam, 1986)
 Market orientation and business process agility
Randy Kurniawan et al.
requirements, adopt new technologies to produce better and
cheaper products and services and respond swiftly to changes in
competitors’ prices, which ultimately improves customer
retention. Furthermore, the ability to switch suppliers to benefit
from lower costs, better quality or improved delivery times,
enables organisations to improve their profitability and revenue
(Tallon, 2008).
Tallon and Pinsonneault (2011) empirically find a positive
relationship between agility and firm performance in the IT
industry. Vickery et al. (2010) find a positive relationship
between agility and firm performance in the manufacturing
industry. Teoh et al. (2017) empirically demonstrate that
strategic agility positively mediates corporate risk management
practices and firm performance.
Kale et al. (2019) find that agility mediates the relationship
between absorptive capacity and firm performance. The
acquisition and use dimensions of absorptive capacity have a
positive effect on strategic agility, and strategic agility positively
affects firm performance. A positive impact of agility on firm
performance is also found in manufacturing firms (Vickery
et al., 2010). In the manufacturing industry, a positive
relationship between agile manufacturing and financial and
operational performance is demonstrated by Inman et al.
(2011). In addition, Swafford et al. (2006) reveal a positive
impact of value chain agility on business performance.
Roberts and Grover (2012) examine the relationship
between customer agility (sensing and responding) and firm
performance. The study also examines the alignment between
these capabilities and their impact on performance. The results
show that customer agility is in general significantly related to
firm performance when both customer sensing and responding
capabilities are aligned and high. In terms of independent
effects, firm performance is highest when customer responding
capability is at a medium level and customer sensing capability
is at a high level. Shin et al. (2015) find that strategic agility has
a positive effect on operational performance and customer
retention, but not on financial performance.
Organisational agility mediates the pursuit of valuable
knowledge and allows organisations to develop innovative products
and services or respond to competitors’ manoeuvres appropriately,
resulting in superior organisational performance (Cegarra-Navarro
et al., 2016). An organisation’s agility is a critical source of
competitive strategy to achieve superior organisational
performance, as it enables the organisation to react effectively to
unpredictable changes (Liu and Yang, 2019; Ofoegbu and Akanbi,
2012; Yang and Liu, 2012). Furthermore, a high degree of
business process agility reflects the organisation’s swiftness to adapt
to market change, and therefore will improve product
customisation capability, improve delivery performance and reduce
reaction time (Chen et al., 2014). Based on the above arguments,
we therefore formulate the following hypothesis (Figure 1):
H1: Business process agility has a positive and direct impact
on firm performance.
Market orientation
Market orientation has been considered to play a dominant and
critical role that has been proven to positively influence
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organisational performance, such as among B2B service
organisations (Frösén et al., 2016) and strategic business units
in the manufacturing and service industries (Herhausen, 2016).
Therefore, it is of considerable interest in academic research as
well as in a practical business domain (Masa’deh et al., 2018;
Zebal and Saber, 2014). Market orientation is considered to
have the most impact on organisational performance compared
to other strategic orientations such as entrepreneurial, learning,
and innovation orientation (Grinstein, 2008).
Market orientation is initially conceptualised as a set of
fundamental processes, including market intelligence generation
associated with current and future customer needs,
dissemination of that intelligence across functional departments
and coordinated action as the organisation-wide response
(Jaworski and Kohli, 1993; Kohli and Jaworski, 1990). It is the
implementation of the marketing concept (Jaworski and Kohli,
1993; Morgan et al., 2015). Meanwhile, Narver and Slater
(1990), Li (2005) and Grawe et al. (2009) conceptualise market
orientation as the integration of customer orientation, competitor
orientation and inter-functional coordination. Since then, market
orientation has become one of the pillars of the marketing and
strategic management literature (Hakala, 2011; Hernandez-
Linares et al., 2019). This study adapts Deshpandé and Farley’s
(1998) definition of market orientation and defines it as the set of
inter-functional processes and activities consisting of intelligence
generation, intelligence dissemination, and coordinated action
directed at creating and satisfying customers through continuous
needs-assessment.
Organisations that implement market orientation value
customers the most and dedicate themselves to operating in a
market economy (Li, 2005; Panda, 2014). Market-oriented
organisations focus on profit creation and emphasise superior
customer value creation (Narver and Slater, 1990; Zhou et al.,
2005). Market orientation concentrates on delivering products
and services through market monitoring and external idea
generation (Alpkan et al., 2007). By implementing this strategic
orientation, organisations expect to reduce the level of risk
associated with new product development as insight during the
generation of market intelligence comes from the customer
(Berthon et al., 1999; Morgan et al., 2015). Furthermore,
market-oriented organisations can minimise research and
development (R&D) expenditure during product development
by using available resources during market orientation activities
(Morgan et al., 2015).
This study argues that market orientation will provide the
maximum benefit for telecommunication vendors in today’s
hypercompetitive environment. Even though Morgan et al.
(2015) emphasise that the entrepreneurial orientation is
positively associated with new product development
performance and degree of product newness, it also reminds us
that radical product development and a high degree of product
newness may limit the performance of new products because of
the riskiness of trial. Market orientation focuses on external
idea generation and delivering products and services by
monitoring marketing conditions and intelligence gathering
(Alpkan et al., 2007; Deshpandé and Farley, 1998; Jaworski
and Kohli, 1993; Narver and Slater, 1990). Atuahene-Gima
(1995) also shows a positive relationship between market
orientation and new product development performance.
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Randy Kurniawan et al. Volume 36 · Number 9 · 2021 · 1646–1664

Figure 1 Research model and hypotheses

Market
H5 orientation H2

Networking H3
Firm business
capability performance

H4 Business process H1
agility

Market orientation is defined herein as the set of inter-functional Role of market orientation in firm performance
and inter-partner processes and activities consisting of intelligence Wilson et al. (2014) conducted a study in the medical subsector
generation, intelligence dissemination and coordinated action of the Canadian biotechnology industry and revealed a positive
directed at creating and satisfying customers through continuous and significant impact of market orientation on business
needs-assessment. This study reconceptualises market orientation performance. In the telecommunications industry, Yan et al.
defined by Narver and Slater (1990), Slater and Narver (2000), (2017) qualitatively demonstrate through comparative case
Panda (2014), Masa’deh et al. (2018) and Yan et al. (2017) into studies that the implementation of complete market orientation
four dimensions. In addition to customer orientation, competitor has a positive impact on firm growth compared with a partial
orientation and inter-functional coordination, this study adds market orientation that combines market orientation with
inter-partner coordination as the fourth dimension. Inter-partner technology-leading orientation. Laukkanen et al. (2013) show
coordination is derived from previous studies by Diaz-Foncea and that market orientation has a positive effect on business growth
Marcuello (2013), Rezazadeh and Nobari (2018), Ribeiro- in SMEs in both Hungary and Finland through brand and
Soriano and Urbano (2009), Rocha and Miles (2009) and market performance.
Tajeddini and Ratten (2017) and is defined as the coordinated and Masa’deh et al. (2018) empirically demonstrate that market
collective utilisation of partner resources in creating superior value orientation contributes the most to organisational performance
for target customers. This study considers this dimension an compared to entrepreneurship orientation and technology
inseparable part of the market orientation variable in an orientation in the Jordanian pharmaceutical sector. Market-
increasingly open telecommunication ecosystem (Table 2). oriented organisations effectively centralise their activities to
create superior value for customers and thus achieve superior
business performance (Kohli and Jaworski, 1990; Narver and
Table 2 Market orientation dimensions Slater, 1990; Wilson et al., 2014). Sarker and Palit (2015) also
Dimension Concept Source find that CTO and IFC significantly affect SMEs’ performance
in Bangladesh.
Customer The sufficient understanding (Masa’deh et al., 2018;
Mahrous and Genedy (2019) find that market orientation
orientation of one’s target buyers to be Narver and Slater, 1990;
mediates the relationship between entrepreneurial orientation
able to continuously create Panda, 2014)
and organisational performance in large-sized manufacturing
superior value for them
firms working in seven industries in Egypt. Market orientation
Competitor The sufficient understanding (Masa’deh et al., 2018;
also fully mediates the effect of family culture and partially
orientation of the short-term strengths Narver and Slater, 1990;
mediates the effect of organisational systems on financial
and weaknesses and long- Panda, 2014)
term capabilities and
performance among family wineries in Australia, Germany and
strategies of both the key Italy. Guo et al. (2019) showed that dynamic market conditions
current and the key potential and turbulence promote market orientation adoption, which
competitors further positively influences customer satisfaction and
Inter- The coordinated utilisation of (Masa’deh et al., 2018; customer loyalty. Deshpandé et al. (2013) argue that market
functional company resources in creating Narver and Slater, 1990; orientation encourages organisations to develop responsiveness
coordination superior value for target Panda, 2014) to market information and thus enhances business
customers performance. With this orientation, organisations will be able
Inter-partner The coordinated and collective (Diaz-Foncea and to anticipate the change in customers’ requirements and
coordination utilisation of partner resources Marcuello, 2013; demand and, thus, will be able to provide the anticipated
in creating superior value for Rezazadeh and Nobari, solution in the form of innovative products and services
target customers 2018; Ribeiro-Soriano and (Laukkanen et al., 2013). We therefore formulate the following
Urbano, 2009; Rocha and hypothesis:
Miles, 2009; Tajeddini and
Ratten, 2017) H2: Market orientation has a positive and direct impact on
firm performance.

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Randy Kurniawan et al.
Role of market orientation in business process agility
Mandal and Saravanan (2019) argue that market orientation
enables the organisation to rapidly comprehend market
dynamics and perform coordinated action to address these
dynamics appropriately. Their study empirically demonstrates
that market orientation positively influences agility in the
tourism industry. Zelbst et al.’s (2010) study of the
manufacturing industry demonstrates that market orientation
directly and positively impacts agile manufacturing.
Gligor et al. (2016) demonstrate that market orientation has
a direct impact on a firm’s supply chain agility. Furthermore,
they argue that market orientation allows the organisation to
respond quickly to changes, rapidly address opportunities, and
swiftly deal with threats in the business environment. To
achieve business agility, the organisation needs to develop the
capability to discern market demand, generate and disseminate
intelligence and perform inter-functional coordinated actions
(Brusset, 2016; Gligor et al., 2016; Lu and Ramamurthy, 2011;
Tseng and Lin, 2011; Zhang, 2011).
Lin (2004) finds that market orientation positively influences
network innovation agility. Braunscheidel and Suresh (2009)
demonstrate an indirect influence of market orientation on
supply chain agility through internal and external supply chain
integration, along with the two elements of external flexibility.
Market orientation positively affects supply chain agility, and
the latter is considered as an organisation’s capability to provide
a fast supply response to customers’ changing requirements
(Christopher, 2000; Gligor et al., 2016). Furthermore, Gligor
et al. (2016) and Taghian (2010) argue that market orientation
is a strategic orientation that promotes the organisation to
respond swiftly to customers’ requirements, both expressed
and latent (Narver and Slater, 1990; Slater and Narver, 2000).
Based on the above explanation of the relationship between
successful implementation of market orientation and business
process agility, we therefore formulate the following hypothesis:
H3: Market orientation has a positive and direct impact on
business process agility.
Networking capability
In today’s business environment, characterised by high
uncertainty and dynamic socioeconomic conditions, firms
undertake networking activities to acquire competitive
resources from outside, and to overcome these challenges as a
single relationship cannot provide all required resources (De
Leeuw et al., 2014). Therefore, building networking between
firms has recently gained momentum in strategic practice
(Yang et al., 2018).
Partnering capability has been highlighted as a crucial
capability for technology, media and telecommunications
companies in Industry 4.0 to substantiate their own business
and technical competency (Hupfer et al., 2018). Specific to the
telecommunications industry, the presence of SDN/NFV
suggests telecommunication vendors as technology providers to
expand the partnership with new components and
complementary technology suppliers in designing technology
platforms to keep pace with rapidly changing technology
(Aguirre et al., 2019).
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Networking capability is considered to have its roots in
dynamic capability theory (Mu et al., 2016; Teece et al., 1997)
and relational views (Capaldo, 2007; Dyer and Nobeoka, 2000;
Dyer and Singh, 1998; Lorenzoni and Lipparini, 1999).
Dynamic capability theory suggests an organisation should
develop the capability to adapt, consolidate renew and
reconfigure resources to gain the advantage of seizing and
capitalising opportunities produced by the changing business
environment (Teece et al., 1997). The resource configuration
should come not only from the internal interface mechanism
but also from the external interface embedded in business
partners (Teece et al., 1997). Relational theory argues that
networking capability assists organisations in acquiring and
exploiting critical resources that span organisational
boundaries for product development that aligns with customers
and the market’s needs (Dyer and Singh, 1998; Mu and Di
Benedetto, 2012; Parida et al., 2017; Vesalainen and Hakala,
2014).
It is argued that one of the reasons an organisation can
outperform others is its capability to discover, manage and
leverage a partnership with the correct organisations (Dyer and
Nobeoka, 2000). By harnessing networking capability,
organisations can maximise the opportunity to leverage
strategic network resources from network partners, making it
possible for them to integrate and optimise various expertise,
capabilities and knowledge that are considered strategic for the
organisations (Dyer and Singh, 1998; Lin, 2004; Mu, 2013;
Mu and Di Benedetto, 2012; Mu, 2014; Mu et al., 2016;
Vesalainen and Hakala, 2014).
Previous research has acknowledged the potential benefits of
firm networking. Inter-firm partnerships enable firms to deal
with the increasing complexity of technological dynamics
(Hoang and Rothaermel, 2010; Keil et al., 2008) and to
enhance their capability to innovate (Ahuja, 2000; Ahuja and
Katila, 2001; Baum et al., 2000; Keil et al., 2008). Several
studies also argue that the predominant performance of firms is
generated not only by specific resources but also from the
collaboration and arrangement of various resources
(Eisenhardt and Martin, 2000; Song et al., 2005).
Based on previous research by Mu and Di Benedetto, the
current study defines networking capability as the competency
of a firm to purposefully search and find network partners, and
manage and leverage network relationships for value creation
(Mu and Di Benedetto, 2012). Previous literature suggests that
networking capability is a composite capability of finding
networking partners and managing and leveraging networking
relationships (Mu and Di Benedetto, 2012; Mu et al., 2016).
However, the current study reconceptualises the indicators of
the “finding networking partners” dimension by adding a
“partners to count on in time” indicator and adds “a resource
sharing support” indicator to the “leveraging network
relationships” dimension (Table 3).
Role of networking capability in business process agility
Networking capability makes it possible for firms to gain, create
and share knowledge and to establish a partnership with the key
stakeholders, including customers and partners, to consolidate
strategic partnerships. This capability allows firms to gain
flexibility and leverage crucial resources and business partners
and to work across boundaries to achieve agility
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Table 3 Networking capability dimensions and Mu, 2011; Soh and Roberts, 2005; Stuart and Sorenson,
2007). By leveraging network relationships, both parties will be
Dimension Concept Source
able to generate differential returns that are beneficial for both
Finding networking The breadth of search (Dyer and Singht, (Capaldo, 2007; Dhanaraj and Parkhe, 2001; Dyer and Singh,
partners that a firm conducts 1998; Gulati, 1998; 1998; Mu and Di Benedetto, 2012). The superior value can be
to recognise valuable Mu and Di Benedetto, achieved by cooperating with partners as product and
network 2012; Mu et al., service development risk can be reduced, time-to-market can
opportunities and 2016) be shortened, defect rate can be reduced, product stock can be
resources, visualise reduced and flexibility and innovation can be enhanced (Dyer
the network and Nobeoka, 2000). Capaldo argues that superior innovation
architecture, and and market value could be achieved by leveraging network ties
identify the right (Capaldo, 2007).
individuals or Networking with partners enables the organisation to
organisations with access information from the market, generate and disseminate
which the firm wants information related to customers’ needs and preferences and
to interact information related to the competition to define an appropriate
Managing The relational skills of (Dyer and Singh, strategy (Mu et al., 2016). Market-oriented organisations
networking a firm in building 1998; Gulati, 1998; develop cross-functional processes and activities directed at
relationships effective and efficient Mu and Di Benedetto, creating and satisfying customers by understanding customers,
network ties/ 2012; Mu et al., competitors and the market environment (Jaworski and Kohli,
relationships with 2016) 1993, 1996; Kohli and Jaworski, 1990; Narver and Slater,
resource persons or 1990). The organisation’s capability to develop and leverage
organisations networks plays a crucial role in accessing external information
Leveraging The firm skills of (Mu and Di and generating required market intelligence (Mu et al., 2016)
networking turning the networks Benedetto, 2012; Mu related to the market, new opportunities and technology (Mu
relationships it has built into et al., 2016) and Di Benedetto, 2012).
performing networks Dynamic capability theory and the relational view suggest
that the capability of an organisation to access, manage and
leverage network resources facilitates customer value creation
(Battistella et al., 2017; Liu and Yang, 2019). Networking (Dyer and Singh, 1998; Mu, 2013; Mu and Di Benedetto,
capability enables firms to obtain information and 2012; Mu, 2014; Teece, 2007; Teece et al., 1997). Davies et al.
competencies reliably and rapidly, which consequently makes a (1995) and Teece (2007) argue that organisations with a higher
firm strategically agile because it is well positioned in its level of networking capability will benefit from acquiring more
strategic network core. By having this positioning, firms can access to and better quality market intelligence from
capture better opportunities faster and deal with any potential collaboration with appropriate partners. This high quality of
competition and threats (Battistella et al., 2017; Liu and Yang, market intelligence is critical for the organisation to develop
2019). coordinated strategies and activities, including intelligence
In their study on cooperative entrepreneurship, Rezazadeh
dissemination and coordinated responses to the market. Based
and Nobari (2018) argue that through cooperation with
on the above discussion, we therefore formulate the following
partners, synergy can be achieved and this accelerates the
hypothesis:
decision-making process. Collaboration with partners enables
firms to leverage partners’ resources and knowledge during H5: Networking capability has a positive and direct impact
joint project implementation, which is a worthwhile strategy for on market orientation.
firms’ agility (Sanchez and Nagi, 2001). Partnerships with agile
firms stimulate partners to achieve an equivalent level of
capabilities, competencies and flexibilities in their enterprise to Research method
conform with rapidly changing customer and market demands
Data collection
(Yusuf et al., 2014).
Research data was collected via a questionnaire distributed
Based on the explanation of the relationship between
through several methods, including electronic form and printed
networking capability and business process agility, we therefore
format directly delivered to participants. The respondents were
formulate the following hypothesis:
the high management level of the firm, including the Board of
H4: Networking capability has a positive and direct impact Directors, CEO, CTO, COO, Country Manager, Executive
on business process agility. General Manager and General Manager of the selected
companies who were believed to have sufficient knowledge of
both company strategy and the company’s business process.
Role of networking capability on market orientation The target populations were medium and large
Inter-firm networking capability has been recognised in the telecommunication equipment vendors in Indonesia having a
literature as a means of producing and improving product legal business entity in the form of foreign investment, domestic
value for customers in relation to product development and investment, limited liability companies, or limited partnerships.
innovation (Dhanaraj and Parkhe, 2001; Mu et al., 2008; Peng The classification of medium and large companies is based on

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Randy Kurniawan et al.
the Indonesia Central Bureau of Statistics and the Act of the
Republic of Indonesia Number 20 of the 2008 classification, as
shown in Table 4.
Medium and large organisations have functional divisions
and multiple project teams that are suitable for analysis based
on the research model. Based on the above classification, we
constructed a sampling frame from the Ministry of
Communication and Informatics from 2008 to 2017. Of the
239 distributed questionnaires, 150 valid responses were
obtained, representing a response rate of 62.76%. The
demographic profiles of the sample are shown in Table 5.
Measures
This study used multi-item scales to measure the dimensions of
the constructs. These scales were derived from previous studies
and reconceptualised. All items were assessed on 5-point Likert
scales ranging from 1 (“strongly disagree”) to 5 (“strongly
agree”). Appendix 1 presents the scale items for the construct
measurement. Appendix 2 presents the mean and standard
deviation values of the measurement results.
Data analysis
This study used structural equation modelling (SEM) to
examine the proposed model. Following Anderson and
Gerbing (1988), a two-stage approach that consists of a
measurement model and a causal structural model was
adopted. LISREL 8.8 and latent variable score (LVS) were
used to examine the measurement model and test the
hypotheses.
A measurement model analysis is performed to obtain a valid
and reliable measurement model to be used in a structural
model in the next stage. There are three factors that should be
analysed during estimation: overall model fit (Goodness of Fit
Index (GOFI)), validity and reliability. The validity test is
based on the construct validity and discriminant validity test to
understand the extent to which the intended construct is
measured. Construct validity is based on confirmatory factor
analysis (CFA) to measure the standardised loading factors of
each construct. A good rule of thumb is that a standardised
loading estimate should be  0.5. and ideally  0.7 (Hair et al.,
2014). Testing construct reliability is based on construct
reliability (CR) and variance extracted (VE) (Fornell and
Table 4 Size of business based on Indonesia Central bureau of statistics
and the act of the republic of Indonesia number 20 of 2008
Size of the firm No. of employees Revenue
Large business 100 or more  50B IDR
( 3.5 M USD)
Medium business 20  x  99 2.5B IDR  x < 50B IDR
(176k USD  x < 3.5M USD)
Small business 5  x  19 300M IDR  x < 2.5B IDR
(21k USD  x < 176k USD
Micro business 1x4 < 300 M IDR
(< 21k USD)
Notes: M IDR = Million IDR, B IDR = Billion IDR, k USD = kilo (thousand)
USD, M USD = Million USD
Source: www.bps.co.id and The Act of the Republic of Indonesia Number
20 of 2008
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Larcker, 1981; Hair et al., 2014). A construct is considered
reliable if the values of CR and VE are  0.70 and  0.50,
respectively. This study uses path analysis to test the predicted
causal relationships among the variables and determine
whether the model provides an acceptable fit to the data.
Result
Measurement model
Confirmatory factor analysis is performed in two stages:
1 First-order CFA analyses the observed variables (such as
FP1 to FP3) and derives latent variable score FP.
2 Second-order CFA analyses the fitness of the simplified
first-order LVS (such as FP and NFP) and forms the
second-order latent variables Firm Performance.
The results of the first-order CFA analysis are summarised in
Table 6.
As presented in Table 6, standardised factor loadings (SFLs)
for all variables are equal to or higher than 0.5; hence, all
variables have good validity. The reliability of a measurement
model is considered good if the CR  0.7, and the VE  0.50.
Table 6 also reveals that all variables have good reliability and
RMSEA  0.08, and GFI  0.90. Hence, based on the
RMSEA and GFI results, the model shows a good fit.
After adjusting the modification indices of the model, the
second-order CFA results are presented in Tables 7 and 8.
GOFI indicates a good fit of the model.
The validity and reliability table demonstrates that all SFLs
of the LVS exceeded 0.50 (from 0.79 to 0.99), indicating good
validity. The CR values of the constructs all exceed the 0.70
threshold value (from 0.78 to 0.99), and the VE values for all
constructs exceed 0.50 (from 0.64 to 0.99), indicating good
reliability.
Discriminant validity testing is also performed to ensure that
the dimensions of the second-order latent construct explain
their own construct instead of other constructs. According to
Ekinci et al. (2008) and Fornell and Larcker (1981),
discriminant validity is achieved when the average value of the
correlation between constructs is lower than the square root of
the AVE value of the respective construct. Table 9 indicates
that for each latent variable, the average of the correlation
values between constructs is lower than the AVE value,
indicating good discriminant validity.
Hypothesis testing.
Structural model analysis is conducted to determine whether a
research hypothesis is accepted. The hypothesis is accepted if
the absolute t-value >1.96, with a positive or negative
coefficient. The results of the hypothesis tests are summarised
in Table 10, and the SEM results are shown in Figure 2.
Table 11 reports the indirect and total effects of the model used
to evaluate the proposed hypotheses.
As recommended by Baron and Kenny (1986), we use
Sobel’s (1982) test to validate the significance of the mediating
effect. The Sobel test is used to validate the mediation effect of
market orientation on the relationship between networking
capability and business process agility, and the mediation effect
of business process agility on the relationship between market
orientation and firm performance. The z-value of the test is
3.521 for the networking capability-market orientation-
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Table 5 Demographic profiles of the sample (n = 150)

n (%)
1. Gender
Male 102 68.0
Female 48 32.0
2. Position
Director 16 10.7
CxO 24 16.0
Country manager 47 31.3
General manager (Executive GM) 55 36.7
Senior manager 8 5.3
3. Organisation size
Medium 86 57.3
Large 64 42.7
4. Yearly revenue
176k USD  x < 3.5M USD 45 30.0
3.5M USD  x < 10M USD 29 19.3
10M USD  x < 25M USD 33 22.0
25M USD  x < 50M USD 27 18.0
 50 M USD 16 10.7
5. Organisation age
1  x  10 26 17.3
11  x  25 60 40.0
26  x  50 52 34.7
> 50 12 8.0
6. Organisation origin
China 16 10.7
Japan 18 12.0
Korea 6 4.0
India 3 2.0
USA 23 15.3
Sweden 2 1.3
Finland 1 0.7
Indonesia 62 41.3
Other 19 12.7
7. Type of legal entity
Foreign investment 31 20.0
Domestic investment 18 11.3
Limited liability company 87 60.0
Limited partnership 6 3.3
Other 8 5.3
Notes: k USD (kilo USD), M USD (Million USD)

business process agility relationship, and 3.137 for the
relationship between market orientation-business process
agility-firm performance. The results validate that market
orientation mediates the relationship between networking
capability and business process agility and that business process
agility mediates the relationship between market orientation
and firm performance at a 99% confidence interval.
Discussion
Even though previous studies have acknowledged the potential
benefits of networking capability, some others highlight the dark
side of networking activities. Yang et al. (2018) note that
networking may cause an unbalanced outflow of firms’ specific
assets. The more firms invite outside resources, the more firms
depend on the external capability of their network partners. This
negative effect is not easy to overcome when partners become
closer and the relationship becomes more intense, while at the
same time there is conflict, discord and ongoing disagreements
that lead firms within this partnership into ambiguous issues
(Anderson and Jap, 2005; Yang et al., 2018). The fact that the
networking performance will be diminished when there is
opportunistic behaviour in dealing with specific resources is also
emphasised (David and Han, 2004; Lui et al., 2009) and there will
be cost incurred in pre-empting the opportunistic behaviour of
networking partners (Yang et al., 2018).
However, the current study argues and demonstrates that
networking capability benefits outperform its dark sides and
that networking capability contributes to firm performance
through market orientation and business process agility.
Aligned with the empirical investigation by Lui et al. (2009),
when firms are able to establish accurate and proper

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Table 6 the First-order CFA

Variable SFL  0.5 Error CR  0.7 VE  0.5 RMSEA  0.08 GFI  0.90
Firm performance
FP 0.83 0.62 0.00 1.00
FP1–FP3 0.74–0.87 0.24–0.46
NFP 0.82 0.61 0.00 1.00
NFP1–NFP3 0.63–089 0.20–0.60
Business process agility
BPA 0.90 0.50 0.03 0.96
BPA1–BPA9 0.63–0.78 0.39–0.60
Market orientation
CTO 0.89 0.63 0.03 0.98
CTO1–CTO5 0.69–0.86 0.27–0.52
CPO 0.87 0.64 0.04 1.00
CPO1–CPO4 0.69–0.95 0.09–0.53
IFC 0.80 0.51 0.00 1.00
IFC1–IFC4 0.58–0.83 0.31–0.66
IPC 0.85 0.58 0.00 1.00
IPC1–IPC4 0.64–0.86 0.26–0.60
Networking capability
FNP 0.87 0.62 0.00 1.00
FNP1–FNP4 0.70–0.86 0.26–0.51
MNR 0.85 0.59 0.00 1.00
MNR1–MNR4 0.70–0.83 0.35–0.51
LNR 0.87 0.63 0.00 1.00
LNR1–LNR4 0.70–0.89 0.21–0.51

Table 7 Goodness of fit index (GOFI) of second-order CFA

GOFI Description GOFI criteria Result Interpretation
p-value p-value p-value  0.05 0.738 Good fit
RMSEA Root mean square error approx. RMSEA  0.08 0.000 Good fit
NFI Normed fit index NFI  0.90 0.990 Good fit
NNFI Non-normed fit index NNFI  0.90 1.000 Perfect fit
CFI Comparative fit index CFI  0.90 1.000 Perfect fit
IFI Incremental fit index IFI  0.90 1.000 Perfect fit
RFI Relative fit index RFI  0.90 0.990 Good fit
SRMR Standardised root mean residual SRMR  0.05 0.019 Good fit
GFI Goodness of fit index GFI  0.90 0.970 Good fit
AGFI Adjusted goodness of fit index AGFI  0.90 0.940 Good fit

governance structures, the opportunistic behaviour of
networking partners can be minimised and, as a consequence,
firms’ performance improves. Furthermore, empirical evidence
reveals that asset specificity enhances trust between partners, as
proposed by relational exchange theory, more than the negative
effect of opportunism hazards, as promoted by transaction cost
economics, which subsequently improves cooperation and
enhances partnership performance (Lui et al., 2009). In their
study on cooperative entrepreneurship, Rezazadeh (2018)
highlights that through cooperation with partners, synergy that
accelerates the decision-making process can be achieved.
Networking capability enables a firm to obtain information and
competences reliably and rapidly, which consequently makes a
firm strategically agile because it is well positioned in its
strategic network core. Firms can capture better and faster
opportunities and deal with any potential competition and
threats (Battistella et al., 2017). Yang et al.’s (2018) empirical
study of 106 Chinese high-technology manufacturing firms
finds that networking capability increases performance growth.
Furthermore, the current study also examines the
relationship between networking capability, market
orientation, business process agility and firm performance,
which has not been theoretically explored and empirically
tested. This study argues and empirically demonstrates that
market orientation mediates the relationship between
networking capability and business process agility and that
business process agility mediates the relationship between
market orientation and firm performance. Therefore, the

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Table 8 Validity and reliability of second-order CFA

Variable SFL  0.5 Error CR  0.7 VE  0.5 Conclusion
Firm performance 0.78 0.65 Good reliability
FP 0.82 0.33 Good validity
NFP 0.79 0.38 Good validity
Business process agility 0.99 0.99 Good reliability
BPA 0.99 0.01 Good validity
Market orientation 0.92 0.75 Good reliability
CTO 0.81 0.34 Good validity
CPO 0.86 0.26 Good validity
IFC 0.91 0.17 Good validity
IPC 0.87 0.25 Good validity
Networking capability 0.88 0.71 Good reliability
FNP 0.87 0.24 Good validity
MNR 0.83 0.31 Good validity
LNR 0.83 0.31 Good validity

Table 9 Discriminant validity of second-order CFA

Variable Firm performance Business process agility Market orientation Networking capability
Firm performance 0.88 0.77 0.76
Business process agility 0.88 0.81 0.82
Market orientation 0.77 0.81 0.88
Networking capability 0.76 0.82 0.88
Sqrt (AVE) 0.805 0.990 0.868 0.844
Average R 0.803 0.837 0.820 0.820

Table 10 Significance test results on the structural model

Hypotheses Standardised effect T-values Conclusion
H1: Business process agility has a positive and direct impact on firm performance 0.82 5.81 Accepted
H2: Market orientation has a positive and direct impact on firm performance 0.11 0.76 Rejected (not significant)
H3: Market orientation has a positive and direct impact on business process agility 0.78 3.77 Accepted
H4: Networking capability has a positive and direct impact on business process agility 0.11 0.55 Rejected (not significant)
H5: Networking capability has a positive and direct impact on market orientation 0.94 11.09 Accepted

Figure 2 Results of the research model

Market
0.94* orientation 0.11

Networking 0.78*
Firm business
capability performance

0.11 Business process 0.82*

agility

Notes: *p < 0.05; N = 150; χ2 = 26.21, df = 30, p-value = 0.66453,

RMSEA = 0.000

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Randy Kurniawan et al.
Table 11 Standardised and T-values of indirect effects and total effects of the model
Indirect effect (standardised effect/T-values) Networking capability
Networking capability – –
Market orientation – –
Business process agility 0.74 (3.71)
Firm performance 0.79 (9.01)
Total effect (standardised effect/T-values) Networking capability
Networking capability –
Market orientation 0.94 (11.09)
Business process agility 0.85 (12.40)
Firm performance 0.79 (9.01)
findings of this study contradict previous studies that posit that
alliance is the mediating variable in the market orientation–firm
performance relationship (Nakos et al., 2018) and the market
orientation–innovation relationship (Li et al., 2019). The study
also confronts a previous study by Peng et al. (2018), which
verified that market orientation has a positive relationship on
network relationships. However, this study verifies the
argument that market orientation, as the extent to which an
organisation generates market intelligence, disseminates and
responds to market intelligence (Jaworski and Kohli, 1993;
Kohli, 2017; Kohli and Jaworski, 1990), is impacted by the
organisation’s capability to develop networking with partners.
Therefore, in contrast to previous studies, the current study
demonstrates that networking capability has a positive impact
on market orientation.
The mediating role of market orientation in the networking
capability–business process agility relationship demonstrates that the
capability of finding, managing and leveraging partnerships needs to
be framed by inter-functional and inter-partner coordinated
activities directed at creating superior customer value for the
organisation to be able to respond easily, quickly and properly in
addressing changes in customer demand. This finding supports the
argument that market orientation enables the organisation to
comprehend dynamics in the market rapidly and perform
coordinated action to appropriately address these dynamics
(Brusset, 2016; Gligor et al., 2016; Mandal and Saravanan, 2019;
Taghian, 2010).
The finding that business process agility mediates the
relationship between market orientation and firm performance
indicates that an organisation’s capability to comprehend
dynamics in the market and perform the relevant, coordinated
activity is not enough in the highly dynamic environment of the
telecommunications industry. In the telecommunications
industry, which is characterised by the McKinsey report as
having the highest degree of business environment instability
and volatility (Ahlbäck et al., 2017), business process agility is
essential to swiftly and effectively react to unpredictable
changes and achieve superior organisational performance
changes (Chen et al., 2014; Liu and Yang, 2019; Tallon and
Pinsonneault, 2011).
Furthermore, even though the literature conceptualises business
process agility into three dimensions: customer agility, operational
agility and partnering agility (Kale et al., 2019; Sambamurthy et al.,
2003; Tallon, 2008; Tallon and Pinsonneault, 2011), partnering
agility focuses only on one indicator related to the ability to switch
suppliers. In a contemporary business environment, the ability to
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Market orientation Business process agility Firm performance
– –
– –
– – –
0.64 (3.19) – –
Market orientation Business process agility Firm performance
–
0.78 (3.77) –
0.74 (4.04) 0.82 (5.81) –
switch business partners (the partner that provides a complementary
solution, partner for relationship or channel intermediary, e.g.
reseller or distributor) and become less dependent on a particular
business partner also plays an essential role for organisations to be
agile. Finally, this study reconceptualises dimensions of market
orientation to cover inter-partner coordination, as the partnership
has become an inseparable part of the contemporary organisation.
Limitations and future research
This study presents several limitations and invites other
researchers to expand the current findings. First, this study is
based on a cross-sectional study and does not capture
behaviour over a period of time. Second, the choice of a single
industry (telecommunication) in a single country provides a
limitation in terms of external validity. It is therefore suggested
that research efforts be extended to other industry sectors in
multi-country environments.
Conclusion
This study theorises that networking capability, framed by
market orientation, enhances organisation’s business process
agility in satisfying market demand and improving firm
performance. In contrast to previous studies that demonstrate
the positive impact of market orientation on alliance or network
relationships, this study demonstrates that networking
capability has a positive impact on market orientation. By
leveraging network relationships with suppliers, channels,
partners for complementary solutions, and even customers, the
organisation will be able to access information, generate
intelligence and perform inter-functional and inter-partner
coordinated actions to create superior customer value. With
this coordinated action, a market-oriented organisation will be
able to achieve business process agility, which is to easily and
quickly respond to changes in customer demand, customise
products or services, adopt new technologies and improve
time-to-market, thereby enhancing its business performance.
This study demonstrates that networking capability, through
market orientation, will enhance an organisation’s business
process agility in responding to market dynamics and
subsequently enhance firm performance. As shown in
Table 10, there are three accepted hypotheses that verify that:
 networking capability has a positive and direct impact on
market orientation;
 market orientation has a positive and direct impact on
business process agility;
 Market orientation and business process agility
Randy Kurniawan et al.
 market orientation mediates the networking capability–
business process agility relationship;
 Business process agility has a positive and direct impact on
firm performance; and
 Business process agility mediates the relationship between
market orientation and firm performance.
This study provides managers with a novel perspective to
improve the performance of telecommunication vendors as
technology providers, through the understanding and
development of its essential antecedents. First, we conclude
that managers need to develop business process agility. In a
new market with open standardisation and a much lower entry
barrier for new competitors, speed and responsiveness are
crucial. As demonstrated by the results of this study, the
primary mechanism to achieve business process agility is to
enhance market orientation. Market orientation creates value
for customers and answers their needs, so that the technology
provider gains in its bargaining position. This bargaining
position enables the market-oriented technology provider to
gain support from partners, suppliers, and customers to
respond swiftly and easily to market dynamics. Furthermore, to
ensure that their business process is agile, technology providers
need to consider whether they possess the following:
 sufficient suppliers and business partners to ensure there is
a choice to switch if/when needed;
 the ability to adapt to customers’ business processes;
 a fluid network of teams; and
 an end-to-end technology platform to integrate process
flows started from customer intent or interest to buy a
product, to a company’s realisation of revenue based on
product sales, from generating leads to the receipt of cash.
Second, managers need to direct the organisation’s activities to
create and satisfy customers through a continuous needs-
assessment. By understanding customer requirements,
especially latent and future requirements, and by
understanding the competitive situation, organisations will be
able to anticipate and respond appropriately and swiftly.
Appendix 2 indicates that inter-functional coordination and
coordination with partners are the priorities to improve market
orientation. Technology providers need to perform the
following to become market-oriented organisations:
 research problems, not solutions, and focus on short
development cycles and incorporate customer feedback
since, in the high technology industry, customers often do
not fully comprehend what the technological
advancement will be and what the condition of the
product will be by the time the product is shipped;
 up-skill all employees to become competent in marketing;
 realise the importance of direct and personal contact;
 focus on experiences, not features;
 comprehend the competition; and
 reshape after-sales services.
Third, managers need to improve the management of complex
business partnerships. Managers need to concentrate on the
development of new and open software-based ecosystems and
how to leverage partnerships in this new environment.
Appendix 2 suggests that managers need to focus on leveraging
networking relationships, because this dimension has the
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lowest mean value compared to other dimensions.
Furthermore, the descriptive analysis indicates that
organisations are still facing challenges in obtaining referrals to
third parties, who could assist if the partners cannot provide
direct help. Therefore, to further improve networking
relationships, this study suggests that the following are
important:
 becoming aligned on the central objectives of the
relationship;
 developing effective and transparent communication;
 developing constructive process governance;
 supporting competence development;
 nurturing relationships by building social connections;
and
 avoiding blind spots in the relationship as early as possible.
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Appendix 1. Scales items for construct measures Managing Network

Relationship
37) Our organisation can design an appropriate Dyer & Singh,
mechanism to navigate the dynamics of the 1998; Gulati,
Please indicate how much you agree or disagree with each of the following statements on a 5-point
Likert scale related to your organisation. partner network 1998; J. Mu & Di
1-Strongly Disagree, 2-Disagree, 3-Neither agree nor disagree, 4-Agree, 5-Strongly agree 38) Our organisation can fine-tune network Benedetto, 2012;
partnership relationships J. Mu et al., 2016
Construct Items Adapted from 39) Our organisation constantly analyses
Firm Business Compared to competitors: relationships with partners so that we know
Performance what adjustments to make
Financial Performance 1) Our organisation can achieve increased sales Lee et al., 2015; 40) Our organisation can dynamically integrate
revenue. Simon et al., 2015 networking activities into our business
2) Our organisation can achieve increased profit operational process
margins. Leveraging Network 41) Our organisation can obtain the required J. Mu & Di
3) Our organisation can achieve increased cash Relationship assistance from our partners in an accurate Benedetto, 2012;
flow. manner J. Mu et al., 2016
Non-Financial 4) Our organisation can achieve increased market Lee et al., 2015; 42) Our organisation can obtain the required
Performance share. Simon et al., 2015 assistance from our partners in a timely manner
5) Our organisation can achieve product and
43) Our partners can refer us to a third party who
service quality improvement.
could help if the partners cannot provide direct
6) Our organisation can achieve increased
help
customer satisfaction.
44) Our partners can share resources with us when
Strategic Agility Compared to competitors, to what extent do you Tallon, 2008;
we need it
agree that your firm can easily and quickly perform Tallon &
the following business actions? Pinsonneault,
7) Respond to changes in aggregate consumer 2011
demand
8) Customise a product or service to suit an Appendix 2. Descriptive analysis of the collected
individual customer
9) React swiftly to new product or service launches samples
by competitors
10) Introduce a new pricing schedule in response to
changes in competitors’ prices Variable and Indicator Code Mean SD
11) Expand into new regional or new markets Dimension
12) Change (i.e. expand or reduce) the variety of Firm Performance 3.92 0.75
products or services available for sale Financial Performance (FP) 3.89 0.73
13) Adopt new technologies to produce better sales revenue FP1 3.97 0.70
products or services profit margin FP2 3.83 0.74
14) Switch suppliers to get better benefits of lower cash flow FP3 3.86 0.73
costs, or better quality or improved delivery Non-Financial Performance (NFP) 3.96 0.76
times market share NFP1 3.87 0.80
15) Switch business partners (such as partners for products and services quality NFP2 3.97 0.76
the complementary offer, partners that provide customer satisfaction NFP3 4.04 0.73
the relationship with the customer, or channel Business process agility 3.94 0.76
intermediary, e.g. reseller, distributor) to fulfil BPA 3.94 0.76
customer’s requirements response to aggregate consumer demand change BPA1 3.95 0.73
Market Orientation
Customer Orientation 16) Our organisation constantly monitors our level Masa’deh et al., product or service customisation BPA2 4.13 0.75
of commitment to serve needs of the customer 2018; Narver & reaction toward competitors’ launching BPA3 3.91 0.81
17) Our organisation’s business objectives are Slater, 1990; new pricing scheme BPA4 3.89 0.81
driven by creating greater customer value Panda, 2014 new market expansion BPA5 3.93 0.76
18) Our organisation’s competitive strategies are products or services variety change BPA6 3.90 0.76
based on our understanding of customer need new technologies adoption BPA7 3.99 0.76
19) Our organisation measures customer satisfaction suppliers switching BPA8 3.86 0.71
frequently business partners switching BPA9 3.87 0.72
20) Our organisation pays close attention to after- Market Orientation 3.99 0.76
sales service Customer Orientation (CTO) 4.07 0.73
Competitor Orientation 21) Our customer-facing staff regularly share Masa’deh et al., customer commitment CTO1 4.07 0.72
information concerning competitor’s activities 2018; Narver & customer value creation CTO2 4.09 0.74
22) Our organisation rapidly responds to Slater, 1990; understanding of customer needs CTO3 4.08 0.75
competitive actions that threaten our Panda, 2014 measurement of customer satisfaction CTO4 4.05 0.73
organisation high attention on after-sales service CTO5 4.07 0.72
23) Our organisation’s top managers regularly Competitor Orientation (CPO) 4.00 0.81
discuss competitors’ actions
competitor information sharing by customer-facing CPO1 3.90 0.78
24) Our organisation targets customers where we team
have an opportunity for competitive advantage
rapid response to competitors' actions CPO2 4.11 0.79
Inter-functional 25) Our organisation’s top managers from every Masa’deh et al.,
discussion of competitors' actions CPO3 4.00 0.84
Coordination function regularly visit our current or 2018; Narver &
opportunities targeting for competitive advantage CPO4 3.98 0.80
prospective customers Slater, 1990;
26) We freely communicate information about our Panda, 2014 Inter-functional Coordination (IFC) 3.95 0.78
successful and unsuccessful customer inter-functional customer calls IFC1 3.77 0.76
experiences across all business functions information sharing across business functions IFC2 3.98 0.72
27) All our business functions are integrated in
serving the needs of our target market business functions integration IFC3 4.05 0.82
28) We share resources with other business resources sharing IFC4 3.98 0.79
functions when needed Inter-partner Coordination (IPC) 3.92 0.72
Inter-partner 29) There is effective communication between Diaz-Foncea & effective information flow IPC1 4.01 0.73
Coordination partners to create superior customer value Marcuello, 2013; collective decision-making IPC2 3.89 0.67
through joint activities Rezazadeh & collective commitment IPC3 3.91 0.74
30) There is collective decision-making between Nobari, 2018; mutual resource sharing IPC4 3.86 0.74
partners for the creation of superior customer Ribeiro-Soriano Networking capability 3.88 0.72
value & Urbano, 2009; Finding Network Partners (FNP) 3.91 0.73
31) There is a collective commitment to maintaining Rocha & Miles, local network partners FNP1 3.97 0.69
the development of superior customer value 2009; Tajeddini global network partners FNP2 3.99 0.71
through the joint processes & Ratten, 2017 right partners FNP3 3.86 0.73
32) If needed, mutual resource sharing can be done partners to count on in time FNP4 3.82 0.77
between cooperative partners for the creation of Managing Network Relationship (MNR) 3.91 0.70
superior customer value partner network navigation MNR1 3.81 0.72
Networking Capability network partnership fine-tuning MNR2 3.97 0.64
Finding Network 33) Our organisation has a system or mechanism in Dyer & Singh, relationships assessment and analysis MNR3 3.96 0.70
Partners place to help us search locally to find proper 1998; Gulati,
networking activities integration MNR4 3.91 0.72
network partners 1998; J. Mu & Di
Leveraging Network Relationship (LNR) 3.83 0.73
34) Our organisation has a system or mechanism in Benedetto, 2012;
J. Mu et al., 2016 accurate assistance LNR1 3.85 0.69
place to help us search globally to identify
appropriate network partners timely assistance LNR2 3.86 0.71
35) Our organisation has a system or mechanism in referral to a third party LNR3 3.77 0.81
place to help us search widely to look for resource sharing support LNR4 3.84 0.71
suitable partners
36) Our organisation has a system or mechanism in
place to help us find partners to count on when
the need arises
Corresponding author
(continued) Randy Kurniawan can be contacted at: randy.kurniawan28@
gmail.com

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