Service Innovation and Firm Performance of SMEs auto service: the mediating role of Pricing Capability
DOI:
https://doi.org/10.14738/abr.68.4892Keywords:
Service innovation, Pricing capability, Firm performance, SMEsAbstract
The purpose of this paper is to examine service innovation, pricing capability and firm performance of SMEs auto services, with service innovation (Independent Variables), pricing capability (mediating variable) and firm performance (Dependent Variable). Quantitative research principles were adopted where each of the path between the three variables were measured with co-efficient value (β) after controlling firm age, firm size and firm form. A total number of 200 service operators participated using convenience sampling technique
The results showed that firm performance is influenced by both service innovation and pricing capability and that pricing capability mediates the relationship. The authors highlight the convenience nature of gathering data and the fact that the study was conducted in in a single city. This study contributes to the existing and growing literature on pricing capability and how it can moderate the relationship between service innovation and firm performance. The study opens up a research in an interesting area of the SMEs auto services industry in the context of a developing country.
References
Akimova, I. (2000), “Development of market orientation and competitiveness of Ukrainian firms. European Journal of Marketing, 34(9/10), pp.1128-1148
Allen, R.S. and Helms, M.M. (2002), “Employee perceptions of the relationship between strategy, rewards and organizational performance”, Journal of Business Strategies, Vol. 19 No. 2, p.115.
Aulakh, P.S., Rotate, M. and Teegen, H. (2000), “Export strategies and performance of firms from emerging economies: Evidence from Brazil, Chile, and Mexico”, Academy of Management Journal, Vol. 43 No. 3, pp.342-361.
Artz, K.W., Norman, P.M., Hatfield, D.E. and Cardinal, L.B. (2010), “A longitudinal study of the impact of R&D, patents, and product innovation on firm performance”, Journal of Product Innovation Management, Vol. 27 No. 5, pp.725-740.
Armbruster, H., Bikfalvi, A., Kinkel, S. and Lay, G. (2008), “Organizational innovation: The challenge of measuring non-technical innovation in large-scale surveys”, Technovation, Vol. 28 No.10, pp.644-657.
Avlonitis, G. J., Papastathopoulou, P. G. and Gounaris, S. P. (2001), “An empirically-based typology of product innovativeness for new financial services: Success and failure scenarios”, The Journal of Product Innovation Management, Vol. 18 No. 5, pp. 324–342.
Callen, J. L. (1991), “Data envelope analysis: Partial survey and applications for management accounting”, Journal of Accounting Management Research, Vol. 3, pp.35−56.
Capon, H., Farley, J.U., Lehmann D.R., and Hulbert, J.M. (1992), “Profiles of product innovators among large U.S. manufacturers. Manage Sci, Vol. 38 No.2, pp. 157– 69.
Chen, M.C., Cheng, S.J. and Hwang, Y. (2005), “An empirical investigation of the relationship between intellectual capital and firms’ market value and financial performance”, Journal of Intellectual Capital, Vol. 6 No. 2, pp.159-176.
Cooper, R.G. (2000), “New product performance: what distinguishes the star products”, Australia Journal of Management, Vol. 25, pp.17 – 45.
Cooper, R.G. and Kleinschmidt, E.J. (2007), “New products: what separates winners from losers?”, Journal of Product Innovation Management, Vol. 4, pp.169–84.
Craig, J. and Dibrell, C. (2006), “The natural environment, innovation, and firm performance: A comparative study”, Family Business Review, Vol. 19 No. 4, pp.275-288.
Danneels, E. and Kleinschmidt, E. J. (2001), “Product Innovativeness from the Firm’s Perspective: Its Dimensions and Their Relation with Project Selection and Performance”, Journal of Product Innovation Management, Vol.18 No.6, pp. 357–373.
Dalton, D.R., Daily, C.M., Certo, S.T. and Roengpitya, R. (2003), “Meta-analyses of financial performance and equity: fusion or confusion?”, Academy of Management Journal, Vol. 46 No. 1, pp.13-26.
Donkor, J., Donkor, G.N.A. and Kankam-Kwarteng, C. (2018), “Strategic planning and performance of SMEs in Ghana: The moderating effect of market dynamism”, Asia Pacific Journal of Innovation and Entrepreneurship, Vol. 12 No. 1, pp.62-76.
Drejer, I. (2004), “Identifying innovation in surveys of services: a Schumpeterian perspective”, Research Policy, Vol. 33 No. 3, pp.551-562.
Elbashir, M.Z., Collier, P.A. and Davern, M.J. (2008), “Measuring the effects of business intelligence systems: The relationship between business process and organizational performance”, International Journal of Accounting Information Systems, Vol. 9 No.3, pp.135-153.
Erhardt, N.L., Werbel, J.D. and Shrader, C.B. (2003), “Board of director diversity and firm financial performance”, Corporate Governance: An international review, Vol. 11 No. 2, pp.102-111.
Garcia, R. and Calantone, R. (2002), “A Critical Look at Technological Innovation Typology and Innovativeness Terminology: A Literature Review”, Journal of Product Innovation Management, Vol. 19 No. 2, pp. 110–132.
Gatignon, H., Tushman, M. L., Smith, W. und Anderson, P. (2002), “A Structural Approach to Assessing Innovation: Construct Development of Innovation Locus, Type, and Characteristics”, Management Science, Vol. 48 No. 9, pp. 1103–1122.
Grawe, S.J., Chen, H. and Daugherty, P.J. (2009), “The relationship between strategic orientation, service innovation, and performance. International Journal of Physical Distribution & Logistics Management, 39(4), pp.282-300.
Hansen, G.S. and Wernerfelt, B. (1989), “Determinants of firm performance: The relative importance of economic and organizational factors”, Strategic management journal, Vol. 10 No. 5, pp.399-411.
Henri, J. F. (2004), “Performance measurement and organizational effectiveness: Bridging the gap”. Managerial Finance, 30: 93-123.
Henderson, R.M and Clark, K. B. (1990), “Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of Established Firms”, Science Quarterly, Vol. 35 No.1, pp. 9–30.
Hitt, M.A., Keats, B.W. and DeMarie, S.M. (1998), “Navigating in the new competitive landscape: Building strategic flexibility and competitive advantage in the 21st century”, The academy of Management Executive, Vol. 12 No. 4, pp.22-42
Hughes, M. and Morgan, R.E. (2007), “Deconstructing the relationship between entrepreneurial orientation and business performance at the embryonic stage of firm growth. Industrial marketing management, Vol. 36 No. 5, pp.651-661.
Hult, G.T.M., Griffith, D.A. and Cavusgil, S.T. (2008), “An assessment of the measurement of performance in international business research”, Journal of International Business Studies, Vol. 39 No. 6, pp.1064-1
Knight, G.A. and Cavusgil, S.T. (2004), “Innovation, organizational capabilities, and the born-global firm”, Journal of International Business Studies, Vol. 35 No.2, pp.124-141.
Laursen, K. and Salter, A. (2006), “Open for innovation: the role of openness in explaining innovation performance among UK manufacturing firms”, Strategic Management Journal, Vol. 27 No. 2, pp.131-150.
Li, T. and Calantone, R.J. (2002), “The impact of market knowledge competence on new product advantage: conceptualization and empirical examination”, Industrial Marketing Management, Vol. 31, pp. 515–524
Liozu, S.M. and Hinterhuber, A. (2013), “Pricing orientation, pricing capabilities, and firm Performance”, Management Decision, Vol. 51 No. 3, pp.594-614.
Liozu, S. and Hinterhuber, A. (2014), “Pricing capabilities: the design, development, and validation of a scale”, Management Decision, Vol. 52 No.1, pp.144-158.
Mahmoud, M.A., Kastner, A. and Yeboah, J., 2010). “Antecedents, environmental moderators and consequences of market orientation: A study of pharmaceutical firms in Ghana. Journal of Medical Marketing, 10(3), pp.231-244.
Mone, M.A., McKinley, W. and Barker, V.L. (1998), “Organizational decline and innovation: a contingency framework”, Academy of Management Review, Vol. 23 No. 1, pp. 115–32.
Murray, J.Y., Gao, G.Y. and Kotabe, M. (2011), “Market orientation and performance of export ventures: the process through marketing capabilities and competitive advantages”, Journal of the Academy of Marketing Science, Vol. 39 No. 2, pp.252-269.
Schmickl, C. and Kieser, A. (2008), “How much do specialists have to learn from each other when they jointly develop radical product innovations?”, Research Policy, Vol. 37 No. 3, pp.473-491.
Oke, A. (2007), “Innovation types and innovation management practices in service companies”, International Journal of Operations & Production Management, Vol. 27 No.6, pp.564-587.
Otero-Neira, C., Tapio Lindman, M. and Fernández, M.J. (2009), “Innovation and performance in SME furniture industries: An international comparative case study. Marketing Intelligence & Planning, 27(2), pp.216-232.
Prieto, I.M. and Revilla, E. (2006), “Learning capability and business performance: a non-financial and financial assessment”, The Learning Organization, Vol. 13 No. 2, pp.166-185.
Rogers, E.M. (1995), “Diffusion of Innovations. 4th ed. New York: Free Press.
Roger J., Calantone, R.J., Cavusgil, S.T. and Zhao, Y. (2002), “Learning orientation, firm innovation capability, and firm performance”, Industrial Marketing Management, Vol. 31 No. 6, pp.515-524.
Salomo, S.; Weise, J. and Gemünden, H. G. (2007), “NPD Planning Activities and Innovation Performance: The Mediating Role of Process Management and the Moderating Effect of Product Innovativeness”, Journal of Product Innovation Management, Vol. 24, pp. 285–302.
Stuart, T.E. (2000), “Inter-organizational alliances and the performance of firms: A study of growth and innovation rates in a high-technology industry”, Strategic Management Journal, pp.791-811.
Schultz, C. (2009), “Collaboration with users of innovative health care services – the role of service familiarity. International Journal of Services Technology and Management, Vol. 12 No.3, pp. 338–355
Srivastava, R.K., Shervani, T.A. and Fahey, L. (1999), “Marketing, business processes, and shareholder value: An organizationally embedded view of marketing activities and the discipline of marketing”, The Journal of Marketing, pp.168-179.
Stern, P.C.(2000),“New environmental theories: toward a coherent theory of environmentally significant behaviour”, Journal of Social Issues, Vol. 56 No.3, pp.407-424.
Terziovski, M. (2010), “Innovation practice and its performance implications in small and medium enterprises (SMEs) in the manufacturing sector: a resource‐based view”, Strategic Management Journal, Vol. 31 No. 8, pp.892-902.
Venkatraman, N., and Ramanujam, V. (1986), “Measurement of business performance in strategy research: A comparison of approaches”, Academy of Management Review, Vol.11: 801–814.
Vorhies, D.W. and Morgan, N.A. (2005), “Benchmarking marketing capabilities for sustainable competitive advantage”. Journal of marketing, 69(1), pp.80-94.
