The mediating role of absorptive capacity on the relationship between entrepreneurial orientation and technological innovation capabilities

Purpose The purpose of this paper is to empirically examine the relationships between entrepreneurial orientation (EO), absorptive capacity (ACAP), and technological innovation capabilities (TIC) among industrial SMEs operating in an unstable environment. The research also aims to determine whether ACAP has a mediating role in the relation between EO and TIC. Design/methodology/approach A structural equation model was designed to examine the relationships. On the basis of a research framework, a self-administered questionnaire was used to gather data from SMEs owners in the Kurdistan region of Iraq. There were 432 out of 676 questionnaires returned and subsequently used for statistical analysis. Findings The outcomes of the present research indicate both EO and ACAP have significant effects on TIC. Furthermore, the outcomes suggest that ACAP has a mediation role in the nexus between EO and TIC and that indicates the ability of EO to strengthen TIC via ACAP. Originality/value The research contributes to the literature through three aspects. First, it provides some empirical evidence on the relationships between EO, ACAP and TIC of SMEs. Second, the research sheds light on the insights that firms can use externally generated knowledge as a mechanism to enhance their proactivity and willingness toward innovation. Third, for the innovation literature, it is valuable contribution to placing ACAP within the frame of EO. Thus, they can be advantageous to more development in innovation literature.