Manufacturing capability as a function of firms’ strategic orientation: how do national institutions come into play?
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Date
2017-08
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Dar es Salaam University Press
Abstract
Despite the widely accepted role of formal institutions in driving industrialization,
there is a paucity of research exploring how firms in low-income developing countries
can influence national institutions in favour of their manufacturing capability. This
article argues that the resource-based and institution-based views can help to fill that
void. The paper applies a partial least squares path modeling method to test strategic
predictions on the survey sample of 105 export manufacturers. Additionally the paper
employs importance-performance-matrix analysis to identify strategic variables that
matter the most. Findings indicate that entrepreneurial orientation and learning
orientation are the major antecedents to firms’ manufacturing capability. In conclusion,
firms are urged to normalize learning by doing in order to enhance their manufacturing
capability. Findings based on capabilities would therefore, enhance firms’ strategic
position and explicitly demonstrate the circumstances under which such capabilities
matter. The logic behind capabilities is mainly important for low-income developing
countries, whose people are trapped in poverty despite the abundance of natural
factor endowments. Generally, this study provides a more convincing explanation why
export manufacturers should participate in the formulation of policies that affect their
investment, production and trade.
Description
Keywords
structural equation modeling, firm capabilities, institutional support, importance-performance-matrix analysis, low-income developing countries
Citation
Rwehumbiza, D. (2017), Manufacturing capability as a function of firms’ strategic orientation: how do national institutions come into play? Proceedings of the 17th International Conference on African Entrepreneurship & Small Business (ICAESB), Held from August 10 to August 11, 2017, University of Dar es Salaam Business School, Tanzania.