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Article

Effect of Innovation Orientation of High-Tech SMEs “Small and Mid-Sized Enterprises in China” on Innovation Performance

by
Tong Tong
1,2 and
Azmawani Abd Rahman
2,3,*
1
Department of Literature, Sichuan Minzu College, Kangding 626000, China
2
School of Business and Economics, Universiti Putra Malaysia, Serdang 43400, Selangor, Malaysia
3
Putra Business School, Universiti Putra Malaysia, Serdang 43400, Selangor, Malaysia
*
Author to whom correspondence should be addressed.
Sustainability 2022, 14(14), 8469; https://doi.org/10.3390/su14148469
Submission received: 2 June 2022 / Revised: 23 June 2022 / Accepted: 6 July 2022 / Published: 11 July 2022
Browse Figure
Review Reports Versions Notes

Abstract

:
Mass entrepreneurship and innovation refer to encouraging the broad masses of the people, including industry, agriculture, commerce, education, and soldiers, to participate in entrepreneurship, encouraging all Chinese people to participate in innovation, which Premier Li put forward at the 2014 Summer Davos Forum in Tianjin. After seven years of development, the innovation orientation of mass entrepreneurship and innovation has become an important engine leading China’s economic growth in the future. This research aims to examine the effect of innovation orientation on enterprise innovation performance. Based on a survey of 378 high-tech SMEs in Sichuan Province, China, structural equation modeling (SEM) was employed to examine the research model. The result shows that innovation orientation and organizational flexibility significantly affect enterprise innovation performance. Among the effects of innovation orientation on enterprise innovation performance, capability and resource flexibility play mediators. This research disclosed that important factors affecting the innovation performance of high-tech SMEs enterprises include resource flexibility and capability flexibility. To give better play to the positive impact of innovation orientation, we should strengthen the flexible strategy of organizations. Thus, committed to more flexible market development, promoting the vigorous development of new technologies, new industries, and new formats, and realizing the growth of enterprise innovation performance.

1. Introduction

Mass entrepreneurship and innovation refer to encouraging the broad masses of the people, including industry, agriculture, commerce, education, and soldiers, to participate in entrepreneurship, encouraging all Chinese people to participate in innovation, which Premier Li put forward at the 2014 Summer Davos Forum in Tianjin [1]. After the introduction of mass entrepreneurship and innovation, China’s scientific and technological strength and innovation ability have been greatly improved. The whole society’s R&D investment has increased from RMB 1.42 trillion in 2015 to RMB 2.4 trillion in 2020. The R&D investment intensity will reach about 3% in 2020, of which the basic research expenditure will nearly double that in 2015. The contribution rate of scientific and technological progress will exceed 60% in 2020. The proportion of citizens with scientific quality exceeds 10%. According to the global innovation index, released by the world intellectual property organization, China’s ranking jumped from 29th in 2015 to 14th in 2020 [2]. In the meantime, the industry and academic circles have responded with the conscientious implementation of all localities and departments. Various new industries, new models, and new formats are emerging, which has effectively stimulated social vitality, released great creativity, and become a highlight of economic development [3]. It can be seen that the orientation effect of mass entrepreneurship and innovation is obvious.
Schumpeter [4,5] claims innovation is a revolutionary change. Drucker [6] believes innovation is a behavior that endows resources with new wealth creation ability. Many empirical studies show that start-ups are the source of innovation. These enterprises initially completed the commercialization of many major technologies and inventions in history. Mass entrepreneurship and innovation turn scientific and technological achievements into real productive forces.
Innovation orientation can improve the efficiency and competitiveness of enterprises, glow the entrepreneurial spirit, create high-quality products and services that can stimulate the needs of consumers, meet new needs, open up new markets, promote the vigorous development of new technologies, new industries, and new formats, and accelerate the transformation of development momentum [7].
The academic circles believe that the innovation orientation reflects the attitude of the market, the government, and enterprises towards changes in things and new ideas, as well as the open attitude of enterprises towards new technologies, new resources, and new management systems and the tendency to innovate. Innovation orientation helps enterprises overcome obstacles and achieve sustainable development [8]. Entrepreneurship orientation also profoundly impacts organizational innovation [9].
From above, the existing literature confirms that innovation orientation positively affects enterprises’ innovation performance. However, innovation orientation is more likely directional guidance of possibility. Will it have a positive impact on enterprise innovation? What are essential factors that affect the development of the enterprise? How does it affect the innovation performance of enterprises? These studies are inconclusive. Behind the achievements created by the innovation and entrepreneurship policy, there is still a foam economy and false packaging [10]. In order to obtain national support and funds, the 100,000 projects were described as 100 million, and the three million investment was described as 30 million. Enterprises were built blindly, and immature technologies were introduced to the market. Only six months after the occurrence of the COVID-19, from February to August 2020, China’s high-tech enterprises were withdrawn, reaching 66,000. The cancellation rate was 4.5% [11], higher than the overall level of manufacturing and producer services.
Freeman, 2013, [12] stated that the innovation process is characterized by randomness, contingency, and arbitrariness. Due to the technological instability of innovation and the wrong estimation of the future market and competition. All of those would lead to innovation failure.
Technical uncertainty refers to the technical uncertainty of the success of an innovation. Market uncertainty refers to whether innovation results will be welcomed in the market after it is technically successful [12].
This uncertainty will lead to unforeseen accidents that are difficult to predict according to experience analysis and the impact of previous technical achievements. The technical capability of an organization may be locked in [13].
For those enterprises with R&D, production, marketing, and other organizational and functional departments, if they want to achieve commercial success through product and process innovation, they need close and continuous communication and mutual adaptation between various departments.
In addition, successful business innovation also requires rapid decision-making and close integration and coordination of research, development, production, sales, and services.
Flexibility reflects an organization’s “potential ability” to deal with environmental uncertainty. This “potential capability” includes the organization’s decision-making response capability and realization response capability in the face of environmental uncertainty and the degree of coordination within the organization.
Therefore, this study aims to answer the following research questions: (1) What effects of innovation orientation on enterprise innovation performance? (2) Do capability and resource flexibility mediates the relationships between innovation orientation and enterprise innovation performance? In order to solve these research problems, based on the existing research, this study established a structural equation model using Amos 24 and conducted an empirical study on 378 high-tech SMEs in Sichuan Province, China. Data collection and questionnaire survey show that: (1) innovation orientation has a positive effect on innovation performance; (2) both capability flexibility and resource flexibility have positive effects on innovation performance, and capability flexibility has a stronger impact on high-tech SMEs’ innovation performance than resource flexibility; (3) both capability flexibility and resource flexibility have mediating effects on the relationships between innovation orientation on enterprise innovation performance.
This research makes three contributions. First, this study determines the impact of innovation orientation on enterprise innovation performance as an intermediary in organizational flexibility. This extends the previous research and fills the gap in the relationship between innovation orientation and innovation performance. Most studies directly explore the relationship between innovation orientation and enterprise innovation performance and measure the direct impact of innovation orientation on R&D investment rate, patent invention, and other achievement conversion rates. However, these studies ignore innovation orientation’s most critical internal driving force. They do not reflect that innovation orientation must be combined with the organization’s operation, decision-making, and response-ability. The implementation of innovation orientation also includes the organization’s ability to coordinate various internal and external resources. Secondly, we examine organizational flexibility from two dimensions. The results of this study will help high-tech SMEs fully understand the important role of capacity and resource flexibility in innovation performance. Thirdly, this study suggests that high-tech SMEs should establish a flexible organizational structure that adapts to the innovation orientation to improve innovation performance.
On the one hand, they can not only face the changes in the external environment but also achieve their own organizational management goals according to the familiar model. It can not only adjust the changes of various innovation policies but also create its innovation value beyond the environment. The rest of this paper is organized as follows. Section 2 reviews relevant literature and proposes the research model and hypotheses. Section 3 reports methodology and data collection. Section 4 reports results, and Section 5 discusses findings. We present the theoretical and practical suggestions and limitations in Section 6. The conclusion is presented at the end of this paper and provides directions for future research.

2. Literature Review and Hypotheses

2.1. Innovation Orientation

Since the late 20th century, most economies have entered the “innovation-driven” stage. Innovation is the most effective way for organizations to obtain a competitive market advantage and realize sustainable development [14,15,16]. Innovation is the process of generating innovative ideas and implementing creative behavior. Its essence is reflected in organizational innovation performance.
Agi, M. A., and Jha, A. K., [17] define innovation performance as when employees consciously create, introduce, and apply innovative ideas in their work roles, teams, or organizations to improve the innovation performance of parts, teams, or organizations.
Hurley and Hult [8] defined innovation orientation based on organizational culture: innovation orientation mainly reflects the openness of corporate culture. Its important connotation lies in whether the enterprise supports and encourages innovation at the level of values [18]. Innovation orientation is the initial stage of creation. For enterprises with a strong innovation orientation, their members are willing to adopt innovative ideas and innovative things. Innovation orientation is the key for enterprises to overcome Key drivers of innovation barriers [19]. The innovation orientation in this paper specifically refers to the guiding role of mass entrepreneurship and innovation policies in the direction of technology R&D, path selection, factor prices, and the allocation of various innovation factors.
Existing studies have shown that innovation promotes high-tech small and medium-sized enterprises to constantly update knowledge and technology as the basis and premise for building competitive advantage [20,21]. On the one hand, innovation helps high-tech SMEs to correctly understand the value of knowledge and technology [22], form a consensus to pay attention to knowledge and technology, sensitively develop and master key new knowledge and technology, realize the value of knowledge and technology with open and new thinking, and continuously improve the technical capacity of small and medium-sized enterprises [23].
On the other hand, the research also shows that innovation orientation creates an innovative atmosphere in entrepreneurial teams. Innovation atmosphere plays a crucial role in cultivating creativity and is a necessary condition for improving the technological capability of start-ups [24]. The innovation atmosphere can also stimulate the work motivation and efficiency of entrepreneurial individuals, facilitate the transformation and integration of complementarity and tacit knowledge within the entrepreneurial team, and improve the technological capability of entrepreneurial enterprises [25].
To sum up, it can be seen from the existing research that innovation orientation plays an important role in innovation performance, but in the process of innovation orientation playing a role in innovation performance, does organization management play a role? What does it do? The research has not been concluded yet.
It should be noted that implementing policies is often inseparable from the organization’s response, decision-making and implementation. In particular, China’s high-tech SMEs have an obvious bureaucratic system and face the policies, perplexing the innovation management of enterprises. Whether the market accepts the funds for developing new technologies and new products? How do you allocate various resources within an organization? How to deal with the opposition of organization members? What strategies should be adopted to win the support and necessary resources from the top? How do you keep a reasonable expectation for the organization?
The school of national innovation system suggests that government is the internal factor of technological innovation. According to Freeman’s theory, a complete innovation system comprises government, enterprises, education, industry, and other factors. Among them, the government can influence other factors in many ways. Therefore, relying solely on market guidance to promote a country’s technological innovation is not enough. The government should allocate resources, create the environment and encourage technological innovation from a strategic perspective to promote enterprise innovation. Innovation is not a single subject. As the main undertaker of public technology construction, the government plays an irreplaceable role in innovation. The government can effectively promote the innovative behavior of enterprises through scientific and technological support, tax incentives, and government procurement.
Drucker believes that there are two kinds of innovation: one is technological innovation. It finds new applications for some natural objects in nature and endows them with new economic value. However, an organization’s technology exists in the organizational system and habits of managing and coordinating tasks. These systems and habits are called organizational conventions. Innovation accumulation often leads to path dependence-research follows a specific technical trajectory.
On the other hand, organizational knowledge such as past innovation models and practices will impact future innovation decisions [26]. Freeman also believes that the innovation process is random, accidental, and arbitrary. Because of the instability of innovation technology and the wrong estimation of future market and competition, innovation will fail. Continuous innovation promotes organizational flexibility and eliminates the negative impact of core rigidity on competitive and innovation performance advantages [27,28]. Flexibility promotes the technological upgrading of enterprises and the integration of various resources. At the same time, with the change in environment and market, new technology R&D and innovation activities promote flexible management of organizations and enhance “anti-enterprise” vulnerability capability [29]. Therefore, the guiding role of technological innovation needs resource flexibility as a bridge.
What is more, the other is social innovation. It creates a new management organization, management mode, or management means in the economy and society ‚ Thus, great economic and social value are obtained in allocating resources. Due to the flexibility of strategy and organization, out of the rapid response to the market, flexibly adjust the organizational strategy and various guidelines and policies to improve the innovation performance level of the enterprise. In the S–C–P (Structure–Conduct–Performance) paradigm, the performance of enterprises is completely determined by the environment [30,31]. However, under the same external environment, internal resources and capabilities enable some enterprises to gain more advantages and performance [32,33]. According to the competence-based theory [34], flexible organizational capability is a scarce resource that is difficult to imitate and will affect competitive advantage. Therefore, it is reasonable to believe that the role of social innovation orientation needs capacity flexibility. In other words, exploring the relationship between innovation orientation and innovation performance of high-tech SMEs under the intermediary of resource and capacity flexibility is necessary and significant.

2.2. Hypotheses

2.2.1. Innovation Orientation and Innovation Performance

According to the Resource-Based Theory, the essence of an enterprise is a collection of heterogeneous resources, and the process of transforming enterprise resources into innovation performance does not occur naturally [34]. Factors such as organizational structure, organizational culture, and organizational strategy will affect the transformation process, and innovation leads to the direction that can affect the accumulation of innovation resources and capabilities within the enterprise to impact enterprise innovation performance [35].
Dynamic capability theory [36] holds that, to maintain their long-term competitive advantage, enterprises are forced to constantly adapt, update, reconfigure and create their resources and capabilities to adapt to the changes in the environment [37]. Innovation has become a key factor for enterprises to survive and develop in the changing external competitive environment. Innovation orientation is the internal driving force for enterprises to implement sustainable innovation [38]. Based on this, we hypothesize:
Hypothesis 1 (H1).
Innovation orientation has a positive effect on the innovation performance of high-tech SMEs.

2.2.2. Capability Flexibility and Innovation Performance

Tushman and O’Reilly (1997) [39,40] pointed out that the motivation for organizations to continuously pursue innovation comes from their internal belief and understanding of innovation. Only when this belief and knowledge are transformed into specific actions can organizations have sufficient motivation to achieve sustainable breakthroughs and development, and this internal motivation is “organizational innovation orientation [41].” Organizational innovation orientation reflects some lasting action logic and tendency of the organization, which affects the decision-making of corporate resource allocation, organizational learning, and the development of creative activities [42].
Academic circles have conducted rich research on the relationship between flexible strategy and enterprise innovation performance. A flexible strategy is a kind of dynamic capability of enterprises. Enterprises’ adaptability, flexibility, and response-ability to large-scale uncertain and rapid environmental changes. It can enable enterprises to reconfigure resources and processes and reduce risks, to improve the innovation success rate of enterprises [43,44]. Flexible strategy is a multidimensional concept. Sanchez [45] divided organizational flexibility into resource flexibility and coordination flexibility. Resource flexibility emphasizes the ability to accumulate resources through multiple uses, expand the applicable scope of resources and match the potential of existing opportunities [46,47]. Capability flexibility refers to the ability of an enterprise to integrate existing resources and obtain new resources in the face of a changing market environment, quickly improve the development speed of new products, and launch new products in the market for the first time, to provide guarantee for the organization to carry out innovation activities quickly [48].
The highly agile and flexible resource allocation characteristics in organizational flexibility can overcome the specificity and rigidity of corporate resources [49], respond quickly to unpredictable technological innovation changes, and have positive significance for improving enterprise innovation performance. Xie, W. et al. [50] pointed out that flexible enterprises respond quickly to environmental changes and make strategic decisions, significantly improving enterprise R&D efficiency and new products entering the market. Farnese, Fida, and Livi [51] pointed out in the research that flexible strategy positively impacts enterprise innovation, and a flexible approach plays a vital role in the use and development of an invention. Shao fuze and Delmar F et al. [52,53] believe that flexible enterprises have obvious efficiency advantages in innovation methods and reorganization of enterprise resources, which can improve product innovation performance. Based on this, we hypothesize:
Hypothesis 2 (H2a).
Capability flexibility has a positive effect on the innovation performance of high-tech SMEs.
Hypothesis 2 (H2b).
Resource flexibility has a positive effect on the innovation performance of high-tech SMEs.

2.2.3. Innovation Orientation and Capability Flexibility Resource Flexibility

From the institutional level, innovation orientation is the innovation orientation of enterprises in development planning, management system, code of conduct, and other systems [38]. If there is no flexible knowledge and technology management for science and technology enterprises, only national policies and policies support innovation drive [54]. The organization adheres to outdated technology and expertise. Suppose the enterprise innovation management system is not adjusted and improved according to the innovation direction. In that case, the innovation orientation cannot be transformed into the innovation performance of high-tech SMEs.
Therefore, innovation orientation can force and promote enterprises to optimize the organizational structure, build a management system with significant innovative enterprise characteristics, and effectively ensure and improve the innovation performance of enterprises [55]; It is also conducive to shaping and cultivating a good innovation atmosphere, stimulating the creativity of employees, and promoting enterprises to carry out active learning and breakthrough innovation to obtain competitive market advantage and improve market innovation performance. Based on this,
Hypothesis 3 (H3a).
Capability flexibility has a positive effect on the innovation performance of high-tech SMEs.
Hypothesis 3 (H3b).
Resource flexibility has a positive effect on the innovation performance of high-tech SMEs.
The theoretical model of this study can see in Figure 1.

3. Methodology and Data Collection

3.1. Procedure and Sample

This study uses a sample of China’s high-tech SMEs through a questionnaire survey to collect data. In recent years, since China put forward the mass entrepreneurship and innovation policy in response to the national policy, the tide of entrepreneurship has risen, and SMEs have developed very rapidly in China. In particular, high-tech SMEs are the most important. According to the National Bureau of Statistics, the total economic output of top 20 cities reached 16.16 trillion, with a national contribution ratio of 35.84%, an increase of 1.2 percentage points over the same period last year. Among them, Chengdu, the capital of Sichuan Province, has a GDP of RMB 770.24 billion in the first half of 2019, ranking eighth in China, with an actual growth rate of 8.2%, leading the top 20 in China. Meanwhile, Chengdu has been the first in economic growth for five consecutive years (2016–2020). Before introducing the mass entrepreneurship and innovation policy, Chengdu ranked 38th among Chinese cities.
Apart from them, Sichuan Province has opened five high-tech incubation parks, equipped with 2000 experts to guide entrepreneurship, and formulated ten decrees to encourage science and technology-based talents to start businesses. Therefore, we selected the high-tech SMEs in Sichuan, China, as the research sample in this study.
In China, high-tech SMEs refer to many scientific and technical personnel engaged in scientific and technical research, developing activities, observing independent intellectual property rights, and into high tech products or services to small and medium-sized enterprises to achieve sustainable development (Ministry of industry and information, 2012) At the same time, small and medium-sized enterprises should be enterprises with less than 1000 employees or enterprises with total income less than RMB 400 million.
Collected data through a questionnaire survey. The questionnaire used in this paper is designed according to the strict questionnaire development program based on systematic research on many relevant pieces of literature at home and abroad and in-depth enterprise field investigation. The survey samples are mainly distributed in 18 East, Central, and West provinces. The pre-survey phase began in March 2018 and was completed in April 2018. A total of 203 questionnaires were distributed, and 132 valid questionnaires were recovered. Through the effective questionnaire collected in the pre-survey stage, the reliability and validity of the questionnaire data are tested, and a formal questionnaire is formed. The formal investigation was conducted from June to August 2018. The investigated enterprises include state-owned enterprises, private enterprises, three foreign-funded enterprises, domestic holding enterprises, and other property rights involving electronics and appliances, machinery, new materials, energy, software and communication, and high-tech enterprises of various sizes. In order to ensure the familiarity and understanding of the survey object on these aspects and the objectivity and accuracy of the questionnaire answer, the survey object of this study is mainly middle and senior managers (including the chairman or general manager and managers of significant departments) who have worked in the enterprise for more than three years.
Three hundred ninety questionnaires and 378 valid questionnaires were recovered. Among them, the sample data of Chengdu, Mianyang, and other cities in the central region account for 52.2% of the total sample, and the sample data of Ganzi, Ya’an, and other southern areas account for 34.2% of the full sample. The sample data of Luzhou, Nanchong, and other western provinces account for 13.6% of the total sample.

3.2. Variable Measurement

This study consists of five main constructs: innovation performance, orientation, capability flexibility, and resource flexibility. The measurement items were adapted from the existing literature. Considering that senior executives and well-educated business students mainly conduct the questionnaire survey, the more levels, the better the reliability and validity, and there is room for degradation if the data are not ideal in the later stage, the 7-point scale is adopted, the numbers 1~7 represent the degree of the consent of the respondents to the items. The larger the number, the higher the degree of conformity between the respondents’ views and the content of the questions. The specific meanings of numbers 1 to 7 are 1—significantly disagree, 2—disagree, 3—slightly disagree, 4—uncertain, 5—slightly agree, 6—agree, and 7—very agree.
Innovation performance is the dependent variable of this study. This study followed the research of Janssen [56] and used four items to measure the innovation performance of SMEs. Items were compared with other enterprises in the same industry; this enterprise has developed more new products compared with other enterprises in the same industry, this enterprise has developed more new technologies compared with other enterprises in the same industry, and this enterprise’s sales of new products account for a large proportion of total sales compared with other enterprises in the same industry, this enterprise launches new products faster.
Independent variable: innovation-oriented scale mainly referred to the research of Hurley and Hult [8], Gassmann O. et al. [57], and D’Angelo, A. et al. [58]. There are 6 measurement question items. They attach great importance to innovation, are willing to invest in innovation, emphasize that strategic development needs innovation, attach importance to resource development and utilization, attach importance to management concept innovation, and vigorously support product service or service technology innovation. These items were mainly asked to explain the perception of high-tech SMEs on the mass entrepreneurship and innovation policy and their views on and promotion of it in the internal organizational decision-making.
Mediator variables: This study mainly adopts the strategic flexibility scale developed by Kreiner [59], divides strategic flexibility into resource flexibility and capability flexibility, and uses four items to measure it, respectively. They were a wide range of products and services produced by the same resource, the conversion cost and difficulty of producing different products and services with the same resource are small, the conversion time for the same resource to produce different products and services is short, the same resource often has multiple uses. For capability flexibility, they were enterprises can identify future opportunities and respond faster than existing. Enterprises can find new resources or their combinations faster than existing ones, and potential competitors can explore new markets faster. Potential competitors and enterprises can change the organizational system faster than existing and potential competitors to support the strategic adjustment of enterprises.
Controls: According to Schumpeter’s theory, large enterprises are keener on technological innovation. At the same time, we can observe that some enterprises that can survive and develop for a long time in the market are almost innovative. Therefore, this paper takes R&D investment, enterprise personnel size, and enterprise age as control variables. Details of the measurement items are available in Appendix A.

4. Results and Discussion

This paper uses spss22 and amos24 perform factor analysis on the data, including exploratory and confirmatory factors. Then SEM carries out statistical analysis through the four steps of model construction, fitting, evaluation, and correction. Finally, it tests the regulatory effect that the regulatory variables are continuous and uses the hierarchical regression method to analyze.
Reliability and validity test the reliability is generally through Cronbach’s α Coefficient. Still, hair et al. α the reliability of the questionnaire is too harsh; composite reliability (CR) should be used for measurement [60]. In terms of validity test, because the items used in the scale are from domestic and foreign maturity scales, this paper mainly adopts convergent and differential validity (discriminant validity) to measure the validity of the questionnaire. Table 1 shows that the factor load of all observed variables is greater than 0.5, reaching the acceptance standard, the CR value meets the threshold requirement of greater than 0.7, and the AVE value also reaches the acceptance standard of 0.5, indicating that the questionnaire has good convergent validity as a whole. The test results of discriminant validity are shown in Table 1. The correlation coefficients of the variables are less than the square root of the AVE value of the variables themselves. To sum up, the scale in this paper meets the requirements in terms of reliability and validity.
SEM can properly deal with many latent variables that cannot be accurately or directly measured in management [61]. At the same time, it also has a measurement model that can deal with multiple dependent variables simultaneously, allow greater elasticity, and deal with independent and dependent variables, including measurement errors.
It has many advantages, such as estimating the factor structure and factor relationship and estimating the fitting degree of the whole model. The statistical analysis is carried out through model construction, fitting, evaluation, and correction. See Table 2 for the commonly used indexes and SEM’s fitting degree evaluation range.
Using AMOS24, the initial structural equation model is analyzed, and the operation results judge the fitting degree between the correlation mode between variables and the actual data. As shown in Table 3, the X2 value of the initial model fitting is 703.334 (degree of freedom DF = 416), so the fitting effect is good; At the same time, the TLI value and CFI value of the initial model are 0.950 and 0.955, which all meet the standard that the value is greater than 0.9; RMSEA value is 0.047, SRMR = 0.044, which all meet the standard that the value should be less than 0.8. The initial model fitting index shows that the initial model fits well with the sample data. Meanwhile, the relevant test results of the initial SEM model are shown in Table 4. All hypotheses are supported.

5. Finding and Discussion

5.1. Main Findings

The purpose of this study is to explore the impact of innovation orientation on the innovation performance of small and medium-sized enterprises and whether strategic flexibility plays an intermediary role in the impact of innovation orientation on the innovation performance of small and medium-sized enterprises.
This study finds that innovation orientation and strategic flexibility positively impact the innovation performance of high-tech SMEs, among which capacity tenderness has a greater impact on innovation performance.
This shows that innovation is complex, expensive, and risky. Innovation-oriented technology-based SMEs may be difficult to achieve successful innovation with their resources. The results of quantitative research show that innovation orientation impacts the innovation performance of small and medium-sized enterprises. At the same time, organizational flexibility reduces innovation costs and risks and improves innovation performance by acquiring key external knowledge and resources. This conclusion is in line with the basic view of open innovation theory and is similar to the conclusion of Laursen and Salter. They found that open innovation has a positive impact on the innovation performance of enterprises [62].
In addition, capability tenderness has a greater impact on innovation performance. As explained below, the management flexibility of technology-based small and medium-sized enterprises are mainly reflected in one management strategy, including technology strategy, strategy and environment, and long-term strategy. The second is the technological innovation management ability, which mainly involves the enterprise process innovation ability, the enterprise’s ability to manage R&D projects, and whether the enterprise attaches importance to the management and reserve of R&D resources. The third is the ability of market demand management, which mainly involves the enterprise’s ability to control the current product market and its ability to predict and develop the future product market.
The implementation and implementation of these flexibility policies for mass entrepreneurship and innovation are mainly to examine whether enterprises’ basic management systems and facilities are sound and conducive to implementing technological innovation policies. Incentive innovation system, standardization management, intellectual property management, R&D equipment management, etc., are classified as marketing ability and integration ability, which constitute the elements of enterprise competitiveness. This classification method is consistent with Sally’s method in 2000.

5.2. Theoretical Implications

This study contributes to the literature in several ways. First of all, based on the contribution of innovation orientation to China’s innovation, from the growth in the number of small- and medium-sized scientific and technological enterprises, the growth in the number of patents, the growth in R&D funds, to the growth in the conversion rate of scientific research achievements, the growth in enterprise innovation performance, and the growth in the international ranking of scientific research strength, it shows that the role of innovation orientation cannot be ignored. However, it cannot be ignored. While the mass entrepreneurship and innovation policy are vigorously implemented, It has also produced many false packages for innovation and entrepreneurship, a large number of scientific and technological small and medium-sized enterprises have been written off, and a large number of national innovation funds have been lost. All these make us think about the same problem: the mass entrepreneurship and innovation policy. Why do some enterprises take advantage of the momentum and seize the opportunities of the times, and their development is booming?
In contrast, some enterprises have never recovered and disappeared in the wave of mass entrepreneurship and innovation? In the S–C–P paragraph, the innovation performance of enterprises is essentially determined by the environment [63,64]. However, under the same external environment, internal resources and capabilities enable some enterprises to obtain more advantages and innovative performance [65]. Therefore, this study takes organizational capacity as an intermediary variable in the research on the impact of innovation orientation on innovation performance and expands the research on the internal driving force of innovation orientation.
Secondly, this study has further expanded how and under what conditions the innovation orientation plays its role. Freeman has confirmed that innovation will bring great uncertainty. For SMEs, the revolutionary changes brought about by innovation may be a big problem related to survival. In an uncertain market, managers must make more significant efforts to monitor external changes [66]. It challenges the decision-making response-ability and realization response-ability of managers facing environmental uncertainty, including the coordination degree within the organization. In the case of low market uncertainty, a well-structured organization can make decisions and realize responses, including the degree of coordination within the organization, which is consistent with the development of technology and the changing needs of customers. Organizations can gain competitive advantage and innovation performance when they understand the state of organizational flexibility because they can obtain stable and accurate information to evaluate organizational behavior. However, when the market is highly uncertain, important information such as market price, product specification, and technology will change rapidly [67,68,69,70,71,72,73,74,75]. It will be difficult for organizations to accurately identify the external environment’s risks and benefits. At this time, it will be difficult for organizations in a balanced state to give full play to their flexibility, resulting in a decline in the effectiveness of management in promoting continuous adaptation and adjustment of internal and external resources and the ability to make decisions and achieve responsiveness, it also includes the decline of the coordination degree within the organization, which is not conducive to the formation of the competitive advantage of the enterprise. Therefore, this study helps explain the differences in innovation performance of technology-based SMEs.
Thirdly, this study focuses on the innovation orientation under the mass entrepreneurship and innovation policy and discusses the organizational capacity of small and medium-sized scientific and technological enterprises. The study shows that organizational flexibility significantly affects innovation performance. This study fills the blank that the scholar Chen [76,77] said that the whole society is talking about innovation orientation, but is innovation orientation useful to SMEs. In addition, this study responds to the latest research field and calls for research to use large-scale data to explore the innovation orientation of technology-based SMEs.

5.3. Practical Implications

Both innovation orientation and organizational flexibility have a significant impact on the sustainable competitive advantage of enterprises. Innovation orientation significantly impacts resource flexibility and capability flexibility. In the process of innovation orientation affecting the sustainable competitive advantage of enterprises, resource capability and flexibility capability play mediators.
Innovation orientation is closely related to organizational learning activities. Organizational learning is a knowledge processing activity that includes knowledge acquisition, transfer, sharing, and application [78]. The realization of this learning ability must be realized through organizational flexibility. On the one hand, innovation orientation helps organizations give up old knowledge and existing cognition, and by forgetting the past thinking mode, it helps promote the acquisition and absorption of new knowledge. On the other hand, innovation orientation also helps to share, accumulate, and store knowledge within the organization to improve the utilization efficiency and application effect of knowledge.
In addition, innovation orientation is closely related to creative activities. The biggest impact of the innovation climate is to enhance the organization’s creativity effectively. Many studies have confirmed the effectiveness of innovation climate in stimulating creativity and innovative behavior of employees and teams. For employees, the innovation atmosphere helps stimulate their internal motivation for work, form the self-identity of the innovation role and enhance their good perception of their innovation efficiency [79]. As for the team, the innovative atmosphere helps create a positive sense of psychological security. It can effectively promote the transformation, integration, and innovation of the team’s complementary knowledge and tacit knowledge.
Finally, organizational learning activities help organizations acquire new knowledge from the outside and transfer, share, and store knowledge within the organization, providing the necessary knowledge for the next innovation process. In the innovation-oriented transformation stage, the innovation implementation activities will transform the innovative ideas into the final products and promote them to the market faster [80] because the innovation-oriented organizations can quickly identify and seize the opportunities of the external environment, accelerate the cycle process from new knowledge to new ideas to new products, and greatly improve the innovation efficiency of the whole organization. Improving innovation efficiency, ability, and continuous innovation actions can ultimately help organizations achieve higher innovation performance.

6. Limitations and Future Directions

From a theoretical perspective, this research examined the effect of innovation orientation on enterprise innovation performance. This research identified the determinants of innovation orientation and organizational flexibility have a significant impact on the sustainable competitive advantage of enterprises. We should innovate the multi-District linkage mechanism, realize collaborative cooperation, data sharing, and efficient management among multiple departments, and promote the multidimensional integration of institutional innovation, open innovation, financial innovation, and scientific and technological innovation to form a chemical reaction of various innovation elements and transform them into powerful energy to promote high-quality development. Second, flexible organization is the decisive condition for the rise of enterprises in difficulties. The novel COVID-19 poses many challenges and considerations to the production and management of enterprises. Accenture points out that work and team have broken the traditional organizational boundaries, and an adaptive workforce is emerging. An adaptive group, also known as a flexible team, is a dynamic talent ecosystem that can flow immediately with business needs change. It can make enterprises more innovative, forward-looking, flexible, and competitive. Third, resource flexibility significantly impacts innovation performance because it should be laid out for future planning and innovative talent structure. In the context of mass entrepreneurship and innovation, and with the support of national innovation-oriented policies, what are the possible scenarios for enterprises to improve their innovation performance in terms of demand and supply [81]? How should key organizational capabilities be pre-invested and allocated? Where is the layout? Is there a diversified skill label for enterprise talent capital? Can it complete the ability to transform innovation achievements into enterprise innovation performance? These are the issues that enterprises should pay attention to. Fourth, because flexible capabilities significantly impact innovation performance, rolling prediction and deployment should be carried out as soon as possible. Through flexible scheduling and deployment, we can quickly meet the labor gap of current enterprises under the guidance of innovation. For project-based organizations, according to positioning requirements, the timeliness and effectiveness of employees’ participation in projects and the shelving of resources directly determine the revenue and operational efficiency of business departments. Capability flexibility is reflected in the organization’s rapid adjustment of personnel’s job responsibilities and work contents according to the internal and external harsh environment changes to improve innovation performance.
As subjective and objective conditions limit the research, there are still several problems that need further improvement through extensive and in-depth follow-up research. First, data used in this study were only collected from high-tech SMEs in Sichuan, Chinese areas; however, this may restrain our findings. In the future, additional research can incorporate other SMEs in the sampling process and collect data from other regions in China to validate the findings. Second is the research of innovation orientation on innovation performance in different stages of enterprise growth. In this paper, the research on innovation orientation and strategic flexibility does not consider the impact of different stages of enterprise growth. Especially now that the entrepreneurship and innovation policy has been carried out for 7 years, it is more necessary to consider this factor and obtain the corresponding panel data to study its impact on enterprise innovation performance.

Author Contributions

T.T. were involved in this research activity in the data analysis and preprocessing phase, simulation, analysis, discussion of the results, and manuscript preparation. A.A.R. approved the manuscript which was submitted. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Ethical review and approval were waived for this study, due to (1) The research was carried out in the volunteer alliance of high-tech SMEs, a member unit of Sichuan Minzu College. The responsibilities and obligations of member companies to fill in the questionnaire have been clarified in the alliance charter, and the subjects cannot be directly identified and no trade secrets involved. (2) This research is based on the research generally recognized in practice. (3) Studies involving investigation or interview procedures do not involve potentially destructive and/or sensitive studies among subjects.

Informed Consent Statement

Informed consent was obtained from all subjects involved in the study.

Conflicts of Interest

The authors declare no conflict of interest.

Appendix A

  • Measurement scale and items
  • Innovation Orientation (adapted from Hurley and Hult [8], Gassmann O et al. [57], and D′Angelo, A et al. [58]).
  • CT1 They were attaching great importance to innovation.
  • CT2 They were willing to invest in innovation.
  • CP2 They were emphasizing that strategic development needs innovation.
  • CP3 They were attaching importance to resource development and utilization.
  • CP4 They were attaching importance to management concept innovation.
  • CI1 They were supported product service or service technology innovation.
  • Innovation Performance (adapted from Janssen [56].
  • TF1 Compared with other enterprises in the same industry), this enterprise has developed more new products.
  • SF3 Compared with other enterprises in the same industry, this enterprise has developed more new technologies.
  • ES5 Compared with other enterprises in the same industry, this enterprise’s sales of new products account for a large proportion of total sales.
  • OR1 Compared with other enterprises in the same industry, this enterprise launches new products faster.
  • Resource Flexibility (adapted from Kreiner [59]).
  • BT1 They were a wide range of products and services produced by 356 the same resource.
  • BT2 The conversion cost and difficulty of producing different products and services with the same resource are small.
  • BT3 The conversion time for the same resource to produce different 358 products and services is short.
  • BT5 The same resource often has multiple uses.
  • Capability flexibility (adapted from Kreiner [59]).
  • AI1 They were enterprises can identify future opportunities and respond faster than existing and potential competitors.
  • AI2 Enterprises can find new resources or combinations faster than existing and potential competitors.
  • AI3 Enterprises can explore new markets faster than existing and potential competitors.
  • AI4 Enterprises can change the organizational system faster than existing and potential competitors to support the strategic adjustment of enterprises.

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Sustainability 14 08469 g001 550
Figure 1. Presents the research model. The independent variable is innovation orientation, the dependent variable is innovation performance, and the intermediary variable is organizational flexibility. It is divided into two dimensions to study the impact on innovation performance.
Figure 1. Presents the research model. The independent variable is innovation orientation, the dependent variable is innovation performance, and the intermediary variable is organizational flexibility. It is divided into two dimensions to study the impact on innovation performance.
Sustainability 14 08469 g001
Table
Table 1. Standardized item loadings, AVE, CR and alpha values.
Table 1. Standardized item loadings, AVE, CR and alpha values.
FactorItemStd. DeviationSkewnessKurtosisStandardized LoadingAVECRALPHA
F2TF11.868−0.918−0.1690.8070.620.820.86
SF31.899−0.843−0.3570.611
ES51.772−0.897−0.1010.905
OR11.732−1.0040.2040.881
F3AI11.719−0.9890.2020.9420.710.890.68
AI21.755−1.0760.2730.997
AI31.724−1.0870.3090.954
AI41.788−0.9990.1230.712
F1BT11.755−1.0760.2730.7740.790.800.78
BT21.748−1.0280.1920.845
BT31.767−1.0730.2450.776
BT51.724−1.0870.3090.942
F4CT11.781−1.0500.2190.9540.830.880.75
CT21.784−0.9930.0350.885
CP21.767−1.0730.2450.885
CP31.774−0.929−0.1220.624
CP41.789−0.862−0.1100.897
CI11.767−1.0730.2450.870
Note: F2—Innovation Performance, F3—Capability flexibility, F1—Resource flexibility, F4—Innovation orientation.
Table
Table 2. Fitting degree evaluation range.
Table 2. Fitting degree evaluation range.
NameRangeJudgment Value
χ2/df ---p < 2
CFI0~1>0.09
IFI0~1>0.09
TLI0~1>0.09
SRMR0~1<0.05
RMSEA0~1<0.05
Table
Table 3. The recommended and actual values of fit indices.
Table 3. The recommended and actual values of fit indices.
Overall Fitting Coefficient Table
χ2/dfRMSEATFICFINFI
I---F---I
703.3340.0470.9500.9550.88
0.89------------
Table
Table 4. The results estimated by AMOS.
Table 4. The results estimated by AMOS.
EstimateS.E.C.R.p
F2---F10.2580.0495.268***
F3---F20.1700.0602.8130.005
F4---F30.1900.0543.537***
F4---F10.1080.0492.2260.026
F4---F20.1740.0573.0570.002
Note(s): the first *** means p < 0.01; the second *** means p < 0.001.
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Tong, T.; Rahman, A.A. Effect of Innovation Orientation of High-Tech SMEs “Small and Mid-Sized Enterprises in China” on Innovation Performance. Sustainability 2022, 14, 8469. https://doi.org/10.3390/su14148469

AMA Style

Tong T, Rahman AA. Effect of Innovation Orientation of High-Tech SMEs “Small and Mid-Sized Enterprises in China” on Innovation Performance. Sustainability. 2022; 14(14):8469. https://doi.org/10.3390/su14148469

Chicago/Turabian Style

Tong, Tong, and Azmawani Abd Rahman. 2022. "Effect of Innovation Orientation of High-Tech SMEs “Small and Mid-Sized Enterprises in China” on Innovation Performance" Sustainability 14, no. 14: 8469. https://doi.org/10.3390/su14148469

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