Unlocking New Product Performance Through Market Orientation and Firm Capabilities in Malaysian Manufacturing SMEs

In Malaysia, small and medium enterprises (SMEs) are critical to the economic transformation as they form the key domestic source of growth and the bedrock of private sector activity. Moreover, SMEs are also important in stimulating innovation and stabilizing growth during the economic slowdown. Therefore, this paper investigates how the relationships between a firm’s market orientation and its new product performance are mediated by such capabilities (marketing and technological capabilities). Embedded in the firm's Resource-based View (RBV), a theoretical framework for new product performance was developed. The empirical results demonstrate that a firm’s market orientation positively impacts new product performance. Also confirms that marketing capabilities do have a direct impact on new product performance. Besides, marketing capabilities serve as an indirect-only mediator (full mediation) for the relationship between market orientation and new product performance. A clear message for managers and owners is that they should develop strong firm capabilities to achieve superior new product performance.