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Academy of Strategic Management Journal Volume 20, Special Issue 2, 2021
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Strategic Management & Strategic Planning 1544-1458-20-S2-117
THE IMPACT OF ENTREPRENEURSHIP TOWARDS
INNOVATION IN AIRPORT INDUSTRY: THE DOUBLE
MEDIATION FRAMEWORK OF STRATEGIC
ALIGNMENT AND LEARNING ORIENTATION
Ali Khalifa Mohamed Salim Alsuwaidi, Institute of Technology Management
and Entrepreneurship Universiti Teknikal Malaysia Melaka
Samer Ali Alshami, Institute of Technology Management and
Entrepreneurship Universiti Teknikal Malaysia Melaka
Suriati Akmal, Institute of Technology Management and Entrepreneurship
Universiti Teknikal Malaysia Melaka
ABSTRACT
Innovation is broadly regarded as highpoint of success and one of the essential factors
in highly competitive market and global economy. Many airports are lacking strategic alignment
to implement entrepreneurship towards innovation in airport facilities and services. Adding to
that the absence of learning orientation in airport projects is one of the hinders to improving
innovation performance of airports. This study discussed and analyzed the combined mediating
effect of learning orientation and strategic alignment on the relationship between
entrepreneurial orientation and innovation performance within the context of airport industry.
In addition to that, the direct influence of entrepreneurial orientations on innovation
performance was examined. This study broadens the understanding of the phenomenon of
entrepreneurial and learning orientation through highlighting the importance of strategic
alignment relevant with these concepts. The result of this study showed that entrepreneurial
orientation has a direct and indirect effect on innovation performance, while learning
orientation and strategic alignment mediates the influence of entrepreneurial orientation
towards innovation performance.
Keywords: Strategic Alignment, Learning Orientation, Innovation Performance, Entrepreneurial
Orientation
INTRODUCTION
Large airports in major developing countries recognized that they must adopt new
approaches in order to actively support this growth of air travel and be competitive. Innovation
capability is one of the main factors that enhance the performance of airports in today
competitive market in aviation and airport industry. Those airports that successfully rise to the
challenge “Airports of the Future” and will exhibit three key characteristics that distinguish the
successful from all others (McGrath, 2013). United Arab Emirates (UAE) has undertaken
massive construction projects to develop its airports. Such development has taken place over a
very short span of time and has involved particularly heavy investments. At the present time,
modern airports developed with accordance to innovation concepts and entrepreneurship in
aviation. The business models innovation in airlines and airport industry can contribute to the
creation of value, competitive advantage and profitability with new possibilities of action (Bruno
& Mauro, 2017).
Innovation has changed its aim from products new development or a new process to
focusing on increasing the customers experience by accumulating a value to a product that
already exists. Innovation is the development process of introducing products with new
specifications or a new process to the world in a specific field, market, or a specific industry
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(Mukhtar & Ahmed, 2018). When it comes to air transport competitiveness and airport industry,
there is no denying their association with the management of innovation, for both manufacturing
and service companies must constantly seek innovation of its products, services and processes
(Caetano et al., 2019). Moreover, the lack of alignment of organization elements towards the
organizational strategy leads to weak performance. When the different departments of the
organization have different strategies that are different directions and implementations, the
whole organizational purposes and visions rarely could archive (Mohammed, 2015).
Thus, this study aims to align innovation with the overall strategy and infrastructure of
the organization. Implementation of a model to harmonize an innovative strategy that supports
the direction of the business and determines the engine of change and its impact on other areas
of the business. This study discussed and analyse the combined mediating effect of learning
orientation and strategic alignment on the relationship between entrepreneurial orientation and
innovation performance within the context of airport industry. In addition to that, the direct
influence of entrepreneurial orientations on innovation performance was examined. Therefore,
the mediation role of learning orientation and strategic alignment on the relationship between
entrepreneurial orientation and innovation performance in airport industry has been examined.
Innovation and Entrepreneurship in UAE
Since its inception in 1971, the United Arab Emirates has constantly been distinguished
as an icon for innovation and creativity in all industries, enhancing its social and economic status
and transforming into a primary destination for talents and businesses in record time. Believing
that innovation is the future of human investment, the UAE Leadership emphasizes its
importance across all sectors through the UAE Vision 2021: “Innovation, research, science and
technology will form the pillars of a knowledge-based, highly productive and competitive
economy, driven by entrepreneurs in a business friendly environment where public and private
sectors form effective partnerships”. While in Asia, carious airport systems have generally
evolved through the construction of new high capacity airports, due to a much weaker set of
available airports, high-perceived benefits of strong growth of traffic and weaker opposition to
the construction of airports (Bonnefoy et al., 2010). Therefore, the improving innovation
performance in airport design and construction would not be achieved without the adoption of
entrepreneurial orientation as well as learning orientation. The UAE National Innovation
Strategy (NIS) focuses on promoting innovation at large, it aims in parallel to lead innovation in
7 primary national sectors, namely renewable and clean energy, transportation, technology,
education, health, water and space. According to the vision of UAE government, transportation
and airports is one of the pillars in innovation strategies in UAE as shown in Figure 1.
FIGURE 1
THE NATIONAL INNOVATION STRATEGY OF UAE
SOURCE: (UAE MINISTRY OF CABINET AFFAIRS, 2015)
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The innovation in airport design is targeted at service providers in aviation. The service
providers in aviation usually focus not only on the quality of the service, but also on the
efficiency of aircraft operation.
The National Innovation Strategy (NIS) aims to take innovation in the UAE to new
heights, where a culture of innovation is embedded amongst individuals, companies and
governments. It primarily focuses on identified priority sectors that will drive future innovation.
The NIS Framework is structured around the following key pillars: 1. An Innovation-Enabling
Environment 2. Innovation Champions 3. Innovation Priority Sectors.
Several studies have been carried out in order to tackle the growing passenger flows
through innovated methods. (Bonnefoy et al., 2010), issued a study known as “Evolution and
Development of Multi-Airport Systems”. The core of their solution was creating Multi-Airport
Systems. A multi-airport system is defined as a set of two or more significant airports that serve
commercial traffic within a metropolitan region. However, with this solution they determined
that the congestion problem at the three major airports in New York could also drive the
emergence of a new secondary airport. Nevertheless, the development of a multi-airport system
still poses several challenges in terms of planning and development (Bonnefoy et al., 2010).
As stated in the laws and regulations on aerodromes, there are four main factors which
play a major role in improving airport capacity (Abeyratne, 2014): (1) integration of
arrival/departure/surface management; (2) optimization management; (3) improvement of
surface surveillance; and (4) airport collaborative decision making.
Strategic Alignment
A “strategic alignment” may also refer to a state in which “company product
development and business strategies are focused on customers, users, and markets,” which leads
to financial success (Eunice, 2015). Reconciliation is defined as "suitable or desired component
coordination or relationship" (TheFreeDictionary.com 2014). The strategy describes
harmonization as a fit between the internal structure of the company and the external
environment (Hiekkanen et al., 2013). Some scholars suggest that strategic alignment refers to
inter-organizational relationships that focus on how to achieve a specific goal. Strategic
alignment can help maximize return on investment, gain competitive advantage, and provide
direction and flexibility to meet challenges and opportunities (Basile & Faraci 2015, Wong et al.,
2012, Wu & al., 2014). In their research, (Satyro et al., 2014) relate to a number of relevant
terms or synonyms of strategic alignment, namely structural alignment, strategic uncertainty,
strategic coding, strategic adjustment, strategic coherence, unity model and strategy adjustment,
all management terms (Ilka et al., 2018).
A recent study by (Abdulrahman, 2016) showed that the strategic direction has a
positive impact on the company's performance. Based on configuration theory, a strategic
alignment study suggests that adapting a corporate strategy to internal and external factors
increases business efficiency and abuse results in reduced productivity (Wu et al., 2015). For
almost a quarter of a century, corporate strategic direction has demonstrated the positive impact
of adjustments on corporate results (Coltman et al., 2015).
Several famous international Airports have implemented strategic alignment to improve
the overall performance of the airport. One of successful examples is Dallas/Fort Worth
International Airport (DFW) applied a leadership system that promotes employee alignment and
engagement with the airport's strategic plan and has generated superior business results. Each
phase and element of this system is integrated to help management and employees understand
how they affect DFW's most important goals and initiatives that drive performance. Although
DFW has been implementing its current leadership system for the past six years, it has still not
integrated all concepts throughout all levels of the organization (Poinsatte, 2011).
Strategic alignment is essential for international airports in particular. In air transport,
the evolution of traffic depends upon many economic factors, and on the way in which the
markets participants respond to those factors. Although airlines are the main actors, the airports
are by no means passive, and their strategies will also have an impact on airline behavior and
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route development (Badánik et al., 2010). The new airline business models as the focus of the
strategic and organizational research have changed the airport management philosophy (Halpern,
2018). Moreover, the alignment of IT strategy in airport functions is one of the success factors of
well-known international airport nowadays. The allocation and automated passenger flow
forecast tools. Focusing on improving operations and innovation while enhancing passenger
experience, airports use different concepts such as: Airport Collaborative Decision Making
(ACDM), Airport Operations Center (APOC) and Total Airport Management (TAM), which
benefit on new technologies and digital tools (Sorin et al., 2018).
Learning Orientation
Learning orientation indicates the extent to which an organization receives and shares
information about market changes, customer expectations and needs, competitive behavior, and
the development of new technologies to create new products or services beyond the capabilities
of the competition (Radwan et al., 2017). In recent decades, organizational learning has become
a key element in gaining a competitive advantage and the ability to learn faster than competitors
is seen as a source of stable competitive advantage. Therefore, anything that competes in a
dynamic, changing environment must follow the learning process, behavioral changes, and
productivity gains (Abbas & Alireza, 2011). Therefore, learning orientation can be a
development approach that allows transforming a new strategic initiative into superior
organizational performance. Thus, it is expected that two different but related concepts will
result in distinct and linear effects and a common synergy in various aspects of the organization's
activities. Strategic synergy and learning orientation can be assessed by determining the
mediating effect of learning orientation in the relationship between strategic direction and
organizational activity (Natasa, 2016; Ariamanesh et al, 2020).
Learning from the company has many interesting consequences: success of the new
product, customer service, improved profitability, access to quality desired by the customer,
increased flexibility, opportunities and threats of the new environment. This allows
organizations to respond quickly to new opportunities and environmental threats (Beyene et al.,
2016). Learning orientation has three main aspects: the desire to learn, the shared vision and the
open-mindedness (Beyene et al., 2016). The literature shows that learning orientation is
influenced by three factors namely: Shared vision, commitment to learning, and open-
mindedness.
A shared vision means that all members of an organization focus on training, which
strengthens their energy, commitment and dedication. As a result, organizations can not
implement creative ideas because there is no common vision (Abbas & Alireza, 2011). An
organization's commitment to learning is an amount it considers worthwhile to provide training.
It aims not only to promote the learning process, but also to create and strengthen the learning
environment in the learning process. In fact, the company that seeks to learn recognizes that
training is an important investment required to maintain the organization. (Abbas & Alireza,
2011). An open mind refers to a critical assessment of an organization's day-to-day activities and
the acceptance of new ideas. In other words, it is the process by which an organization begins to
suppress existing knowledge or repetitive assumptions and habits. Indeed, existing knowledge is
a fundamental obstacle to diverting an organization from the vision and processes needed for
innovation and migration (Abbas & Alireza, 2011).
Innovation Performance
Innovation is one of the most popular words in modern society. Innovation can be
defined as a successful implementation of a new idea in the market (Steiber & Alänge, 2014).
This definition has several advantages. This indirectly highlights the differences between
creativity and invention on the one hand and the development and implementation of products
on the other. This gives the organization its purpose and momentum and suggests that creativity
is nothing of continuity. The advantage of this definition is that it goes beyond the traditional
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limits of generating innovative ideas and patents. But this puts a lot of pressure on the results
(Benaim, 2015). Many people value innovation and believe that innovation is necessary for
individuals and organizations. For example, citizens ask organizations to be more innovative in
addressing organizational and socio-economic issues (Mehmet, 2016). The literature examines
various types of innovation, including incremental products, radical products, incremental
processes, radical processes, and administrative innovations (Kim et al., 2012). This research
focuses on the two most cited types of organizational innovation: product innovation and process
innovation (Zia, 2017). Product innovation is defined as changes or innovations made to the final
product or service, and process innovation refers to the novelty introduced in the method or
process that produces the product or service (Kim et al., 2012). Product innovation is defined as
a new product or service introduced on the market to meet the needs and expectations of
customers. Types of innovation vary and depend on the object, sector, volume or strength. They
are independent, have recognizable attributes and no boundaries. These are: product innovation,
process innovation, organizational innovation, technological innovation and market innovation
(Carayannis & Grigoroudis, 2015).
Product innovation refers to the development of new products, changes in the current
product design or the application of new technologies and resources to current production
methods, focusing on existing markets for existing products and not current products.
Differentiation of features and functions (Tony, 2016). Process innovation means significant
improvements in production and logistics methods or support activities such as procurement,
accounting, maintenance and information technology (Polder et al., 2010). Process innovation
consists of changes related to the production process of a product or service. Although it does
not necessarily affect the final product, it benefits the production process and generally increases
productivity and reduces costs. Example: A car made by a robot and a car made by a human
worker (Tony, 2016). Marketing innovation is defined as implementing new marketing method
that involve significant changes in the packaging, design, placement and product promotion and
pricing strategy OECD Oslo Manual, 2005. The objective of marketing innovation is to increase
the sales and market share and opening new markets (Polder et al., 2010). Market innovation
involves finding new markets or market segments for existing products. Some adjustments or
modifications to existing products may be required in order satisfying requirements of the new
market. Example: existing hard and soft back books transformed into electronic books suitable
for users of mobile devices (Tony, 2016). Organizational innovation is defined as introduction of
new practices of doing business, workplace organizing methods, decision making system and
new ways of managing external relations (Polder et al., 2010). OECD 2005 defined the
organizational innovation as implementing new ways of organizing business practices, external
relations and work place. Organizational innovation is new ways of organizing routine activities.
Entrepreneurial Orientation
Entrepreneurship is the practice of starting a new business /venture or reviving an
existing one in order to capitalize on new found opportunities. In its essence it is about a
proactive mindset that encourages ownership of surrounding problems in society, sees them as
opportunities and embraces the risks and failures involved in finding a solution. Thus,
entrepreneurship development requires an appropriate framework that encourages people to take
the necessary steps to start a small and medium business and to improve their chances for
success (Ernest, 2011). Entrepreneurship it is a holistic sight of the organization can occur in
methods, services, and products, therefore organizations in order to take suitable action to
overcome environmental challenges need to entrepreneurship (Al-Shami, Muhamad, Majid &
Rashid, 2019; Al-Shami, Mamun, Sidek & Rashid, 2019; Pan et al., 201615). Companies using
entrepreneurial orientation have performed better than other companies (Roxas et al., 2016;
Morgan et al., 2015). Therefore, entrepreneurial orientation incorporates policies into additional
practices that make assumptions about entrepreneur choice and activity (Mason et al., 2015).
Entrepreneurial orientation is a strategic company-wide orientation that captures the
behavior of an organization with strategic practice, management philosophy, and
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entrepreneurship (Anderson et al., 2009). entrepreneurial orientation has become one of the most
established and popular components in the entrepreneurship literature (Gupta & Wales, 2017).
Most entrepreneurial orientation definitions concern the organizational level: (i) commitment,
(ii) risk taking and risk-taking, (iii) developing an appropriate business culture, (iv) practice,
entrepreneurship Decision-making and implementation of actions (v) Ensuring dynamic
development. In view of the above, the focus on entrepreneurship is a type of organizational
culture that provides a higher level of entrepreneurship (Fang et al., 2014). The components of
entrepreneurial orientation are distinguished and used reliably in the literature of previous
studies. Based on the conceptualization of (Miller & Friesen, 1983), three dimensions of
entrepreneurial orientation have been identified and used consistently in the literature.
Innovativeness: Willingness to innovate, to introduce novelties through creativity and
experiments focused on the development of new products and services, as well as
new processes (Lechner & Gudmundsson, 2014).
Pro-activeness: Seeking opportunities, advancing by introducing new products and
services and to act anticipating future demands to create change and shape the
environment (Kwak, 2013; Khan & Khalique, 2014)
Risk-taking: Tendency to act boldly. Venturing into new and unfamiliar markets, relying
on a large portion of resources to risk with uncertain results, get loans heavily
(Kellermanns, et al., 2016; Kajalo & Lindblom, 2015)
LITERATURE REVIEW
Relationship 1: Entrepreneurial Orientation and Innovation Performance
Many studies have demonstrated the importance of improving business performance
through entrepreneurship (Shan et al., 2016; Wenhao et al., 2019). To maintain the competitive
advantage of organizations, it is necessary to legitimately recognize the dynamic nature of
customers' needs and desires (Wenhao et al., 2019). EO is therefore one of the key strategic
directions that provide businesses with a sustainable competitive advantage and superior value
for their customers (Rigtering et al., 2017). Innovation is an important factor of entrepreneurship
and innovation in today's business world (Kantur, 2016; Al-Shami, Al-Hammadi, et al., 2019).
Therefore, understanding what drives innovation is essential for every business or
project. In addition, a better understanding of economic obsolescence, trends in open innovation
and the relationship between openness and IP can provide practical guidance on how companies
can enhance their innovation capabilities (Semrau et al., 2016).
The results of a survey conducted by Asbjørnand (2013) showed that economic
obsolescence must focus on organizational innovation as a means to improve the overall
performance of the company. As a result, managers must allocate resources to organizational
innovation and organizational innovation to improve intellectual property. In this study, the
moderation model between these three variables will be validated in the airport environment.
While Patrick (2014) proposed a conceptual model of the impact of EO on IP. He found that
trends in open innovation and the entrepreneurship provide a proof on the association between
them. The high-level of EO will enhance innovation performance (Patrick, 2014; Shan et al.,
2016; Rigtering et al., 2017; Zhai et al., 2018; Wenhao et al., 2019). Based on the results of
previous studies, it is concluded that EO has a direct impact on IP. Therefore, the empirical part
of this study will validate the following hypothesis statement:
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Hypothesis 1: Entrepreneurial orientation has a significant relationship with
innovation performance.
Relationship 2: Strategic Alignment and Innovation Performance
As a business grows, strategic alignment is becoming more important each day,
especially for a large organization. Previous studies have highlighted the positive association
between alignment and better organizational performance (Laban & Deya, 2019). Roberts &
Grover (2012) found that firm performance is higher when customer-sensing capability and
customer responding capability are aligned than when they are misaligned. Misalignment has an
adverse impact on managers’ intrinsic motivation to improve firm performance (Laban & Deya,
2019). However, the alignment of IT strategy will impact the strategy of innovation by the
organization (Al-Lamy et al., 2018; Yunis et al., 2017). Strategic alignment has been a top
managerial concern (Laban & Deya, 2019), for its positive impacts on firm performance
(Saunila, 2017). It is deemed crucial in understanding how organizational performance can be
improved through supporting business strategy with other organizational strategies. In order to
understand whether strategic alignment results in superior organizational performance, much
effort has been put on the definition, measurement, backgrounds and consequences of the
alignment between business and IT strategies, that is, the strategic IT alignment (Jinhwan et al.,
2020). Hazeline, et al., (2016) presents a case study of a large Malaysian service provider that
has extensively utilized the BSC as its core strategy alignment tool. Their study results indicate
the implications of strategic alignment on an organization’s strategic alignment process and its
performance. Airlines have consistently outperformed its competitors throughout its history, in
the context of an unforgiving industry environment. It is important to examine how airlines has
achieved its outstanding performance and sustained its competitive advantage, through
effectively implementing a dual strategy: differentiation through service excellence and
innovation, together with simultaneous cost leadership in its peer group. Based on the results of
previous studies show empirical evidence that SA affects IP directly. Therefore, this study
examines the following assumptions.
Hypothesis 2: Strategic alignment has a significant relationship with innovation
performance
Relationship 3: Learning Orientation and Innovation Performance
Understanding the learning mechanism is important for creating an environment of
innovation in which mutually beneficial relationships between employees and their organizations
contribute to learning and innovation (Rashid et al., 2014; Sirén et al., 2019). Learning can
therefore have a significant impact on organizational innovation. Examining these relationships
shows that LO has a positive relationship with business innovation and efficiency of learning
(Wenhao et al., 2019). (Yacine, 2015) conducted a study to examine the role of LO employees in
IP in production. The results of the Yatsin study confirmed an association between LO and IP.
Furthermore, Yatsin encouraged researchers to explore this relationship in other sectors in the
future and to add value to researchers and practitioners of organizational learning and
intellectual property. Another claim is by (Suliyanto & Rahab, 2012) who found that businesses
need to strengthen learning strategies and innovation practices to improve their performance.
These findings support the influential role for LO on IP. However, some studies have shown that
LO plays an important role in mediating the relationship between entrepreneurship and
organizational performance (Lonial & Carter, 2013). More detailed studies are generally needed
to demonstrate the existence and effectiveness of EO parameters and organizational performance
reports with the influence of LO (Chih-Yuan et al., 2017).
In the same field, (Chih-Yuan et al., 2017) concluded that LO is important for
entrepreneurial businesses and influences the intellectual property of businesses. They suggested
that the indirect influence of LO on the relationship between organizational activities is still
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unknown and that further research is needed. As a result, they created a model that included
several intermediaries to study in depth the impact of entrepreneurial activity on the performance
of several companies (improvement of productivity and profitability) through LO mediation. The
results of their studies show that LO can increase growth and profitability, respectively,
compared to intermediate effects (Soares & Perin, 2019). The results of previous studies show
empirical evidence that LO directly affect IP. Therefore, this study examines the following
hypothesis statement:
Hypothesis 3: Learning orientation has a significant relationship with innovation performance.
Relationship 4: Entrepreneurial Orientation and Strategic Alignment.
The alignment of IT strategy with business strategy has been among the top concerns of
business leaders for several decades (Kappelman et al., 2014). Thus, IT can be used to support
entrepreneurial activity. The association between SA and EO has been approved in many studies
in the past. (Street et al., 2018) found that the different patterns of EO could result in a high or
moderately degree of SA between the IT and business in large size organizations. Furthermore,
there are many type of entrepreneurial action leads to SA, the most significant action is
interconnection efforts to align strategies (Street et al., 2018).
The organizational entrepreneurial initiatives are described as a cause of favorable
strategic positions. Entrepreneurial opportunities are linked to entrepreneurial initiatives which
build adaptive capabilities that enable organizations to sustain a state of adaptation of new
strategies and align these strategies through a strategic adaptation mechanism (Kappelman et al.,
2014). This lead to a conclusion that EO helps organizations to achieve IT-Business alignment
strategy. Renata et al., (2018) claimed that the organizational ability to adapt entrepreneurship to
changes in the IT field staff is high and is directly related to SA. In other words, the application
of alignment analysis technique has a promising future together national companies, but it would
be more difficult without entrepreneurial efforts. In the same context, (Rothaermel et al., 2016)
suggested that the majority of large organizations should ensure the organization’s competitive
advantage on the market (entrepreneurial orientation), and linked it to core IT and business
competencies through strategic alignment. The association between EO and SA is mainly
because entrepreneurship is the base of IT infrastructure and process. Hence, any plan to achieve
alignment between IT and business strategy should reply on EO to achieve this goal (Street et
al., 2018). Based on these reviews, it is found that SA and EO has a certain degree of direct
association, this finding need further investigation. Thus, this study will examine the following
hypothesis statement:
Hypothesis 4: “Entrepreneurial orientation has a significant relationship with strategic alignment”.
Relationship 5: Entrepreneurial Orientation and Learning Orientation
There is plenty of empirical evidence that demonstrates a direct relationship between
entrepreneurship and learning activities. Entrepreneurship is a learning process and that every
aspect of organizational learning is directly or indirectly related to business management
(Wenhao et al., 2019). Hence, the link between EO and LO does exist. Based on this claim,
several studies in the past in these disciplines empirically shown that EO has a positive effect on
LO (Sirén et al., 2017; Zhai et al., 2018).
In addition, previous studies have argued that the adoption of EO reflect on the
effectiveness of the entire organization, thus promoting high-level generative learning, and
enhance business opportunity in the future (Yang et al., 2013) Therefore, this study conclude
that EO affects LO. However, how entrepreneurship and learning interchangeably correlated.
Entrepreneurship and learning are connected to each other by increasing opportunities for people
to learn the process of becoming an entrepreneur and starting a business through
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entrepreneurship orientation, education, and instruction; and providing access to
entrepreneurship training and small business counseling opportunities (Oktavio et al., 2019).
In the same context, (Timothy & Jim, 2016) assumed that learning obligations and a
learning culture, combined with entrepreneurship tools and functions will help organization to
collect knowledge from outside the organization and identify new business opportunities. While
Henry (2013) suggested that managers and entrepreneurs involved can develop a culture that
includes LO training to support profitability. In other words, (Henry, 2013) claim the existence
of connection between LO and EO. Another empirical evidence supports this relationship is
found in a study conducted by (Julia, 2015) in Indonesian SMEs which revealed that EO
influences the LO of SMEs.
Hence, to improve organizational performance, these EO and LO are essential factors to
sustain innovation development. While the findings of some studies indicated that LO must be in
place to maximize the effect of EO on innovation performance, and that LO is an important
dimension, along with EO to foster innovation performance (Wenhao et al., 2019). Some
scholars found that LO and performance are significantly correlated but with the interaction
effect of EO (Jawad et al., 2018). Another empirical evidence provided by (Nek et al., 2018)
who figured out that EO was seen to have a strong direct relationship to the organizational
performance. Therefore, an increase on LO will reduce performance while increasing EO, would
increase the performance of the organization. Accordingly, the empirical part of this study
considers the following hypothesis statement:
Hypothesis 5: “Entrepreneurial orientation has a significant relationship with learning orientation”.
Relationship 6: The Mediation Model between Entrepreneurial Orientation, Learning
Orientation, and Innovation Performance
In highly entrepreneurial and market oriented organizations, it is still necessary to act
indirectly through education and mediate the impact of entrepreneurship on innovation
effectiveness. Understanding the clearinghouse mechanism is important in creating an
environment where mutually beneficial relationships between employees and their organizations
promote learning and innovation (Oktavio et al., 2019). Therefore, focusing on learning can have
a significant impact on organizational innovation. Therefore, the overall goal of this study is to
assess the impact of learning orientation on the relationship between entrepreneur orientation
and innovation effectiveness. By examining this report, you can see that education orientation
has a positive relationship between innovation and continued effectiveness. A focus on learning
is essential for both innovation and productivity. The concept of a high-performance company
focused on entrepreneurial behavior is likely a necessary situation, but entrepreneurship may not
be the only feature related to high efficiency (Brettel & Rottenberger, 2013). LO can increase the
impact on entrepreneurial towards organizational innovation. Hence, that companies need to
strengthen their innovation performance through entrepreneurship and advanced learning
strategies (Soares & Perin, 2019).
Various studies have shown an influential role in learning orientation. However, some
studies have shown that learning orientation can play an important role as an intermediary in the
relationship between EO and IP (Chih-Yuan et al., 2017). The willingness and ability of an
organization to take the initiative, take risks and innovate to take advantage of market
opportunities may require the company and its decision makers to gather information about
potential opportunities and translate information into new knowledge (for example, to learn)
potential opportunities (Oktavio et al., 2019). Thus, two additional functions can work with an
entrepreneurial orientation to help increase the level of productivity in organizations (Soares &
Perin, 2019), and a focus on learning is a determining factor (Lonial & Carter, 2013). In the
same context, (Chih-Yuan et al., 2017) also concluded that training attention is important for
entrepreneurs and affects the effectiveness of business innovation. They suggested that the
indirect impact of LO on the relationship between EO and IP is still unknown and further
research is needed. Therefore, they created multiple intermediary models to fully study how
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entrepreneurship impacts the performance of various companies (productivity growth and
profitability) through training orientation. The results of their studies show that growth and
profitability each increase when focusing on learning in terms of mediation effects. The results
of previous studies provide empirical evidence that LO plays a mediating role and does not
directly affect IP, therefore, it is assumed that there is a model of mediation between EO, LO,
and IP. Therefore, this study examines the following hypothesis statement
Hypothesis 6: “Learning orientation mediates the relationship between entrepreneurial orientation and
innovation performance”.
Relationship 7: The Mediation Model between Entrepreneurial Orientation, Strategic
Alignment, and Innovation Performance
The review of literature reveals few empirical attempts in the past to evaluate the
mediation role of SA between EO and IP. Some scholars suggested that the alignment of IT and
business strategy with entrepreneurship strategy has been considered among the top interest of
businesses and researchers for several decades (Kappelman et al., 2014; Tseng & Tseng, 2019).
Likewise, (Chris et al., 2018) claimed that SA plays a significant mediation role between
entrepreneurship and innovation. This claim is based on several empirical findings in the
literature stating that dimensions of SA been proposed to influence both entrepreneurship and
innovation. They suggested that future researches should measures this relationship and validate
the significant mediation role of SA in innovation strategies (Chris et al., 2018). Today, large
organizations must consider the alignment of IT/business strategy with entrepreneurship and
innovation. Some researchers may choose to use IT alignment as a mediator variable between
EO and IP simply to improve the efficiency of business performance, while others use business
alignment as a way to indirectly enable entrepreneurship towards innovation and enhance value
of creativity in the workplace (Levy et al., 2001). Thus IS/IT alignment strategy can be
categorized as a mediator variable by evaluating whether an organization has IT resources to
achieve growth, differentiation, business alliance, and process innovation; or a hybrid strategy
that combines differentiation, alliance, growth, and innovation with entrepreneurship
(Kappelman et al., 2014).
In addition to that, the theoretically pairings between EO and IP is influenced by a third
variable. In this regard, SA should be paired with an IS/IT alignment strategy for innovation
strategy, this mediation relationship will explain the growth of innovation in airport industry;
and a new alignment should be paired with IS/IT strategy. Each of these theoretically- pairings is
a good solution to achieve high degree of strategic alignment in airport projects (Sabherwal et
al., 2001). Moreover, the four principal dimensions of innovative (process, product,
organization, and marketing) linked to IT/Business alignment as well as entrepreneurship. Hence
SA mediates the association between EO and IP (Shan et al., 2016; Wenhao et al., 2019). This
mediation model concentrating entrepreneurship through a newly organization, helping
innovative works to full potential, and rewarding a corporate entrepreneur, encouraging
individuals in the organization to look at the organization from a different perspective and
educating employees on the importance of corporate entrepreneurship (Tseng & Tseng, 2019).
Based on the previous claims, this study suggests the following hypothesis statement for
empirical evaluation in chapter four.
Hypothesis 7: “Strategic alignment mediates the relationship between entrepreneurial orientation and
innovation performance”
Based on an extensive review of previous literatures, as well as discussion of the
underlying theories, a conceptual framework is developed to show the relationship between the
four variables and their influences on innovation in airport industry. Moreover, this study will
examine the direct influence of entrepreneurial orientation towards innovation performance with
the mediation effect of strategic alignment based on the finding of Duppen (2014) who suggest
that mangers should focus of entrepreneurship to enhance innovation inside organization.
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Therefore, the empirical evidence that the author attempts to examine in the survey is that SAM
theory should be implemented in innovation development plan but without of entrepreneurial
orientation, strategic alignment is not sufficiently explaining the change of innovation
performance with strategic alignment. The variables were categorized into three groups, group
(1) independents variables: entrepreneurial orientation, group (2) mediation variables learning
orientation and strategic alignment, the group (3) dependent variable: innovation performance as
shown in Figure 2. Based on the findings of previous studies it is evident that entrepreneurial
orientation has a direct and indirect effect on innovation performance, while learning orientation
and strategic alignment mediates the influence of entrepreneurial orientation towards innovation
performance.
FIGURE 02
PROPOSED MODEL
Furthermore, the author summarized the different findings on these relationships and
develops a framework for analysis and investigating the model fit after conducting a survey in
Dubai airport. The constructs of this framework would result in a beneficial impact on the
performance of airport industry. Therefore, the focus should be given by the management of
airports to benefit from this framework and ensure that innovation performance can be enhanced
through entrepreneurship and strategic alignment. Furthermore, the review of literature indicates
a set of propositions about the relationship between those variables. These propositions could
support the formulation of hypotheses for empirical study.
RESEARCH METHODOLOGY
This study applies quantitative methodology to examine the relationship between
strategic alignment, learning orientation, innovation performance, and entrepreneurial
orientation. Therefore, this study used a causal and correlation research methodology in an
attempt to investigate the research hypothesis. The study population consists of individuals
represents the staffs and employee working in Dubai airport. The number of respondents in the
study sample equal to 413. SEM approaches have been used to examine the hypotheses and
model fit and evaluates the direct and indirect relationships between the variables. The output
data in Table-1 reveals the degree of data reliability by evaluating the magnitude of Cronbach's
Alpha coefficient. It is found that the overall reliability of primary data collected from the survey
associated with all items is “Excellent” (Cronbach's Alpha=0.911). While the reliability of each
variable is greater the cut-off point (0.7). The magnitude of reliability coefficient varying
between 0.70 – 0.95 is acceptable. It is highly recommended to exceed cut-off point (0.7) before
conducting the actual analysis (Cronbach, 1951). Reading the data in Table-1 indicate an
acceptable consistency of primary data for all items in the questionnaire. Therefore, further
analysis could be conducted with reliable results.
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Table 1
SCORES OF CRONBACH'S ALPHA RELIABILITY COEFFICIENTS
Variable name
#items
Cronbach's Alpha Coefficient
Reliability level
Entrepreneurial Orientation
18
0.716
Good
Learning Orientation
18
0.808
Very Good
Strategic Alignment
16
0.825
Very Good
Innovation Performance
24
0.800
Very Good
Overall Reliability
76
0.911
Excellent
FINDINGS AND ANALYSIS
This section presents the quantitative analysis of data gathered from the respondents
who have been participated in the survey which was conducted at Dubai International Airport.
The respondents represent the administrative and non-administrative staff working in this
airport. The results from the statistical methods is used to answering research questions,
examining the relationships between the independent variable of the study (entrepreneurial
orientation) with the dependent variable (innovation performance) and two mediators (learning
orientation & strategic alignment) using statistical regression analysis. SEM analysis is used to
examine the hypothesis of this study as well as evaluating the model fit of the conceptual
framework. The Construct Validity is divided to two types; the convergent validity which
indicates how closely related the observed variables (indicators) to a given latent variable. While
the discriminant validity in contrast indicates how far the latent variable to each other.
Establishing discriminant validity requires ensuring that the correlation between two latent
variables EO and IP is significantly lower than unity (Franke et al., 2018). Table-2 indicates the
amount of AVE and composite reliability of each factor.
Table 2
CONVERGENT AND DISCRIMINANT VALIDITIES
Variable
Latent Variables
(dimensions)
Number of
indicators
AVE
> 0.4
Square root of
AVE
Composite
Reliability >
0.6
Entrepreneurial
Orientation
Innovativeness
5
0.410
0.569
0.704
Proactiveness
5
0.542
0.736
0.852
Risk taking
4
0.554
0.744
0.760
Learning Orientation
Shared Visions
5
0.615
0.784
0.888
Commitment
5
0.465
0.682
0.813
Open Mindedness
5
0.461
0.679
0.810
Strategic Alignment
Business Strategy
5
0.413
0.643
0.778
System Strategy
6
0.437
0.661
0.819
Innovation
Performance
Product
Innovation
5
0.466
0.682
0.813
Process
Innovation
4
0.420
0.567
0.652
Marketing
5
0.515
0.717
0.836
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Innovation
Organizational
Innovation
4
0.401
0.633
0.717
Average Variance Extracted (AVE) higher 0.4 is acceptable with a condition that
composite reliability > 0.6. (Fornell & Larcker, 1981). The convergent validity of the construct
in this case is sufficiently reflects variance for the variables “observed variables” to join into a
single construct. In other words, the indicators of each dimension are explaining well the latent
construct (Fornell & Larcker, 1981).
The early reviw of output from AMOS version 22.0 after running SEM analysis reveals
that most fit indeces was satisfactory enough to consider a good model-fit with the observed data
from the survey. The values of fit-indices are satisfactory and compatible with the cut-off points
for SEM standards. PCLOSE=1.00 (perfect non-significant) which reflects a high degree of
model-fit, CMIN/DF=1.560 (≤ 2.00), and CFI=0.903 (≥0.90). RMSEA=0.037 (≤0.05) for high
degree of model-fit. Therefore, hinging on the effective analysis above, an effective
measurement model fitted effective data (Figure 3).
FIGURE 3
INNOVATION MODEL AT AIRPORT INDUSTRY
Model Structure
Table.1 indicates the significance level of non-standardized relationships between
entrepreneurial orientation, learning orientation, strategic alignment, and innovation
performance. In addtion to that the critical ratio (CR) is used to assess the significance of these
relationships. The range -1.96 ≥ C.R ≥ 1.96 indicates 2-sided significance at the customary 5%
level (Hair et al., 2010). All direct relationships are significant (Sig. ≤ 0.05) whereas the lowest
C.R.=2.431 and the highest C.R.=5.199. All CR values within the cut-off points. Accordingly,
all regressions (estimates) between entrepreneurial orientation, learning orientation, strategic
alignment, and innovation performance are validated and justified to confirm statistical
associations btween these variables as shown in Table 3.
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Table 3
NON-STANDARDIZED REGRESSION WEIGHTS
Endogenous variable
Exogenous Variable
SE
C.R.
Sig.
Innovation Performance
<<
EntrepreneurialOrientation
0.165
2.431
0.015
Innovation Performance
<<
Learning Orientation
0.061
2.944
0.003
Learning Orientation
<<
EntrepreneurialOrientation
0.273
4.836
StrategicAlignment
<<
EntrepreneurialOrientation
0.277
5.199
Innovation Performance
<<
Strategic Alignment
0.061
2.890
0.004
Hypothesis Evaluaiton
To justify the direct relationships between variables the Critical Ration (C.R) is applied
in order to examine each hypothesis as well as assess the significance level of regression
coefficients. C.R is formed by dividing an estimate by its standard error. The following two
criteria are used to validate the hypotheses of this study.
i) The C.R ≥ 1.96 or ≤ -1.96 for a regression weight. Then a hypothesis is true, otherwise
the hypothesis should be rejected (Garsson, 2005; Hair et al, 2010)
ii) Estimation path coefficient for a relationship is significant at the 0.05 cut-off point
(Sig. ≤ 0.05)
The justification of each hypothesis is indicated in Table 4.25 shows that all values of
C.R ≥1.96 and ranging between lowest value 2.431 (EO-IP) and highest value 5.199 (EO-SA).
Moreover, the level of significance ≤ 0.05 for all relationships indicated in Table 4. From this
result it is concluded that EO (independent variable) influences three variables at once in the
conceptual model namely: SA (mediator variable), LO (mediator variable) and IP (dependent
variable) in direct relationships. While SA and LO together affect IP directly and indirectly.
The indirect effect (mediation) of SA and LO will be examined in next section. In summary, the
SEM analysis shows that “Hypothesis 1, Hypothesis 2, Hypothesis 3, Hypothesis 4, and
Hypothesis 5” are validated to be true and not rejected. In other words, there are significant and
positive correlations (direct effects) between the four constructs (EO, LO, SA, and IP) of the
conceptual framework.
Table 4
HYPOTHESES VALIDATION
Hypothesis
Hypothesis Statement
C.R
Result
Sig.
Hypothesis 1
Entrepreneurial orientation has a significant relationship
with innovation performance
2.431
Validated
0.015
Hypothesis 2
Strategic alignment has a significant relationship with
innovation performance.
2.890
Validated
0.004
Hypothesis 3
Learning orientation has a significant relationship with
innovation performance.
2.944
Validated
0.003
Hypothesis 4
Entrepreneurial orientation has a significant relationship
with strategic alignment
5.199
Validated
0.000
Hypothesis 5
Entrepreneurial orientation has a significant relationship
with learning orientation
4.836
Validated
0.000
Indirect Effect Hypotheses (Mediation Effect)
To test a mediation model, this study conducted a mediation analysis based on (Baron
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& Kenny’s, 1986) theory. This theory is a well-known technique to examine a mediation
relationship based on three variables. The final step in mediation test is to measure the multiple
regression of first mediation model constructing entrepreneurial orientation and learning
orientation towards innovation performance as well as the second mediation model constructing
entrepreneurial orientation and strategic alignment towards innovation performance. Reading the
output data in Table.5 shows that the multiple regression of entrepreneurial orientation and
learning orientation is significant according to mediation theory.
The magnitude of regression coefficient B01=0.454 related to entrepreneurial orientation
is decreased from initial value B1=0.564 after learning orientation mediated the direct effect of
entrepreneurial orientation on IP, while this relationship is still significant. Therefore, learning
orientation partially mediates the relationship between entrepreneurial orientation and innovation
performance.
Table 5
MULTIPLE REGRESSIONS OF ENTREPRENEURIAL ORIENTATION AND LEARNING
ORIENTATION.
Unstandardized
Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
(Constant)
.903
.134
6.751
.000
Learning Orientation
.259
.031
.332
8.444
.000
Entrepreneurial Orientation
.454
.038
.473
12.038
.000
a. Dependent Variable: Innovation Performance
With regard to the mediation role of strategic alignment. Table 6 shows the multiple
regression of entrepreneurial orientation and strategic alignment is significant according to
mediation theory. The magnitude of regression coefficient B01=0.497 related to entrepreneurial
orientation is decreased from initial value B1=0.564 after strategic alignment mediated the direct
effect of entrepreneurial orientation on innovation performance, while this relationship is still
significant. Therefore, strategic alignment partially mediates the relationship between
entrepreneurial orientation and innovation performance.
Table 6
MULTIPLE REGRESSION OF ENTREPRENEURIAL ORIENTATION AND STRATEGIC
ALIGNMENT
Unstandardized
Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
(Constant)
.583
.123
4.746
.000
Entrepreneurial Orientation
.278
.038
.289
7.359
.000
Strategic Alignment
.497
.036
.546
13.881
.000
a. Dependent Variable: Innovation Performance
Baron and Kenny advise that the strongest evidence of mediation exists when IV affect
DV in a significant relationship as in mediation theory, but to this relationship still significance
after entering the mediators (strategic alignment and learning orientation) as well as decreasing
the strength of direct association between entrepreneurial orientation and innovation
performance. This is an evidence of “partial mediation”.
The analysis of empirical data revealed that EO has a significant effect on SA, LO, and
IP. While the relationship between EO and IP is mediated by SA and LO. This result is identical
with the findings from previous studies on this topic (Chih-Yuan et al., 2017; Julia, 2015;
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Patrick, 2014; Asbjørnand, 2013; Yang et al., 2013; Henry, 2013; Shihping & Yu-Lin, 2011).
While LO is necessary factor to overcome the complexities of airport system which require
skilled workers and experienced managers. Hence, modern airports must practice LO in a way to
establish innovated services. This result is identical what other scholars concluded in this field
like (David, 2017; Beyene et al., 2016; Ratajczak, 2014). IP has a high degree of association
with EO. However, this association is partially mediated by two mediators (EO & SA). This
outcome is identical with previous results and empirical projects in the same domain by
(Shihping & Yu-Lin, 2011; Hazeline et al., 2016; Brettel & Rottenberger, 2013).
CONCLUSION AND IMPLICATIONS
This study broadens the understanding of the phenomenon of entrepreneurial and
learning orientation through highlighting the importance of strategic alignment relevant with
these concepts. Based on the findings of previous studies it is evident that entrepreneurial
orientation has a direct and indirect effect on innovation performance, while learning orientation
and strategic alignment mediates the influence of entrepreneurial orientation towards innovation
performance. The results reveal that significant correlations between the endogenous and
exogenous variables were demonstrated through analyses of Critical Ratio (CR) values. In
addition to correlation analysis, the goodness of fit for the model was also scrutinized. In this
section, both academic and practical applications in airport industry are recommended and
supported in this study. With regard to academic and theoretical implications, this research
makes the following three contributes: First: formulation of a valid factor structure for each
variables with the airport settings; Third: the effective implication of these three variables. With
respect to the practical empilication, this study highlights the role of learning and SA in large
organizations like airports and strengthens the involvement of entrepreneurship and innovation
in large industries, which contributes to better performance and passenger services.
LIMITATIONS AND FUTURE RESEARCH
Although this research has answered the main research questions and tested the fit of
theoretical model successfully, but conducting this research were not without certain limitations
and constraints. One of the main constraints is the time needed for conducting this study to a
wider population and includes other airports in UAE as well as covering the whole area of UAE,
other limitation is the geographic area where the researcher suggests to test the theory presented
in this study. Drawing from current literature and theory in the area, the researcher proposed the
main hypotheses based on the relationship between these two variables, the moderation effect of
strategic management should be examined as well. Thus, entrepreneurial orientation could have
a significant relationship with innovation performance through moderation influence. Hence, it
is recommended to make further validations to more hypotheses in entrepreneurship and
innovation, other industries also should be surveyed
ACKNOWLEDGEMENT
The author would like to thank Universiti Teknikal Malaysia Melaka (UTeM) and
Centre for Technopreneurship Development (CTED) for their support in obtaining materials and
funding for supporting
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