Strategic Orientation, Innovation Capacity And Firm Performance: A Synergy-based Perspective

Along with the course of the global economic integration and Chinese economic transition speeding up, advantages created by firm in stable environment are eroded gradually, and stable equilibrium is broke continuously. An effective approach to acquire super profit and sustainable advantages is to build innovation capacity for the challenges of turbulent environment. Considering that the connotation of innovation capacity and relevant researches are not unified, the analysis of innovation capacity should use specific perspective. Moreover, under the circumstance of market-oriented economy, the utility of ties with government is decreasing in china. Thus, companies should develop market-based strategies centered on strategicorientation to guide their behaviors and activities.This paper analyzes innovation capacity by the perspective of dynamic capability, which not only highlights the importance of company-specific resources and knowledge to form core competence, but also combines some views of evolution theory and Schumpeter's innovation theory.Strategic orientation, as an external perspective, focuses on strategy selection fitting with environment. Dynamic capability, as an internal perspective, focuses on how to integrate resources. Strategy selection could drive firms to acquire, deploy and exploit resource for dynamic capability creation and innovation capacity construction.On the one hand, extant scholars have common consensus on elements of strategic orientation, while they mainly focus on single element of strategic orientation. On the other hand, researches of dynamic capability are increasing, while its concept, dimensions are not clear yet, and reliable theory test is absent.To fill these gaps, I try to integrate strategy marketing theory, synergy theory and dynamic capability theory for answering how to acquire temporary and long-term competitive advantage through different strategic orientations. For this purpose, I build a basic model of strategic orientation-dynamic capability-performance. Following are three key questions I try to answering. Firstly, how different strategic orientations affect firm financial performance and innovation performance. Secondly, what are the synergy effects of different strategic orientation. Thirdly,how strategic orientation influence dynamic capability building to promoting innovation capacity and achieve competitive advantage.After theoretical building and empirical test by 106 firms. I propose three main conclusions.Firstly, strategic orientations have positive effects on both financial performance and innovation performance. Specifically, entrepreneurship orientation has positive effects on both financial and innovation performance, and technology orientation has positive effect on innovation performance, while market orientation has no significant effects on either financial or innovation performance.Secondly, based upon reviewing dynamic capability theory, I propose three dimensions of dynamic capability:knowledge absorptive capability, environment adaption capability and product development capability. And I find out that, knowledge absorptive capability and product development capability have positive effects on performance, and mediate the relationship between strategic orientation and performance.Finnaly, the synergies of different strategic orientations have significant differences from one dimension of strategic orientation with regard to dynamic capability, financial performance and innovation performance. Synergic ones perform better.This paper bridges strategic marketing theory and innovation capacity, dynamic capability theory, and bring synergy perspective into the research of strategic orientation. These efforts complement extant research and call firm's attention to selection and integration of strategic orientations for sustainable advantage building.This paper is end up with discussion of limitations and implications for future research.