The Mediating Effect of Innovation on the Relationship between Strategic Orientation and Performance of Large Manufacturing Firms in Pakistan

Abstract

The main objective of this study is to examine how Strategic orientation and innovation influence the
performance of manufacturing firm working in Pakistan. This study examine the direct impact of strategic
orientation (SO) and innovation (INO) on firm performance (FP), meanwhile also examine the indirect
effect of innovation among strategic orientation and firm performance. Self-administered survey was used
to collect the data from 320 large firms. Simple random sampling technique was used for collection of data.
For statistical analysis, PLS-SEM technique was utilized by using Smart-PLS 3.2.8. The results indicate
that SO is positively related to FP, and its positive relationship is mediated by innovation. These findings
provide useful insights for firms, particularly for the manufacturing industry, seeking to be competitive and
responsive to environmental changes by successfully introducing innovations. Conclusions emphasize that
mechanisms to encourage and foster an innovative culture in the organization are likely to facilitate the
introduction, adoption, and diffusion of innovations which, in turn, is likely to result in the achievement of
superior FP. This paper makes a significant contribution to the prevailing literature by empirically
examining the relationship between SO, innovation, and FP.