Eduvest �
Journal of Universal Studies Volume 3 Number 2, February, 2023 p- ISSN 2775-3735- e-ISSN 2775-3727 |
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THE EFFECT OF TECHNOLOGICAL CAPABILITY, SOCIAL CAPITAL,
AND ENTREPRENEURIAL ORIENTATION ON FIRM PERFORMANCE THROUGH ABSORPTIVE
CAPACITYIN THE FOOD AND BEVERAGE PACKAGING INDUSTRY |
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1Arif Darmawan, 2Hamdy Hadi, 3Agustinus Sri Wahyudi 1,2Universitas Trisakti,
Indonesia, 3Sekolah Tinggi Ilmu Ekonomi Trisakti |
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ABSTRACT |
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The purpose of this study is to present a model
that describes the general influence of technological capability, social
capital, entrepreneurial orientation on firm performance through absorptive
capacity in the food and beverage packaging industry in Indonesia which is
tested with a structural equation model by processing data from 168
respondents. This study found that technological capability, social capital
and absorptive capacity have a positive and significant effect on firm
performance. Meanwhile entrepreneurial orientation has a positive but not
significant effect on firm performance. Absorptive capacity partially
mediates the relationship between technological capability and social capital
on firm performance and absorptive capacity fully mediates the relationship
between entrepreneurial orientation on firm performance |
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KEYWORDS |
technological
capability, social capital, entrepreneurial orientation, firm performance,
absorptive capacity |
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This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International |
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INTRODUCTION
The food and
beverage industry is one of the most important
industries in the economy in Indonesia and is still one of the mainstay sectors
supporting Indonesia's manufacturing and economic growth in 2021. According to
(Lukman, 2021), as General Chair of GAPPMI, the food and beverage industry
contributed 38.42% to Indonesia's non-oil and gas manufacturing industry in the
second quarter of 2021, with a positive growth of 2.95% and contributed 6.66%
to the Gross Domestic Product (GDP) in the first quarter II 2021 of Rp. 278.1
trillion. In terms of the food and beverage export sector, it recorded an
increase to US$. 19.58 billion in the second quarter of 2021, compared to
exports in the same period in 2020 of US$. 13.73 billion.
Mobility restrictions
at the time of COVID-19 changed the buying patterns of consumers who were used
to going to the market physically, since the pandemic changed to using online
sales services through e-commerce and online stores. Changes in people's
consumption patterns are indirectly related to changes in marketing, logistics
and production systems in the food and beverage industry. This phenomenon of
increasing demand for ready-to-eat food is one of the reasons why sales of food
and beverage packaging continued to increase during the COVID-19 pandemic.
Based on information from the Indonesian Packaging Federation, the level of
sales of food and beverage packaging in 2021 has increased by 3% - 4%, and
packaging sales in 2022 are projected to reach 110.2 trillion or grow by 5%
from 2021.
There are 244
packaging supply companies in the food and beverage industry that are
registered in the B2B directory in 2020. With the number of companies,
variations in packaging and the use of technology that are still limited, this
causes a high level of competition between companies, where competition occurs
because each company always tries to provide competitive selling prices,
innovating new products to meet customer desires and providing a commitment to
quality, quantity and timely delivery to customers. For companies buying food
and beverage packaging, if packaging prices can be competitive, packaging
innovations that are unique and attractive and of good quality will of course
be able to increase sales of their products.
Company
resources can be in the form of visible physical assets or invisible assets in
the form of knowledge, social relations and capabilities (Penrose, 2009; Wernerfelt, 1984), if companies are able to utilize and
combine the resources they have to build a competitive
advantage then these resources will be difficult to imitate, valuable, rare,
inimitable, and irreplaceable. The resource-based viewpoint also suggests that
although resources are important, they must be managed appropriately and
effectively meaning that resources alone do not guarantee competitive advantage
(J. Barney, 1991; J.B. Barney & Arikan, 2008).
The theory of
resource-based view is still unable to explain more specifically how and why
certain companies achieve competitive advantage in markets with dynamic
environments with unpredictable changes (Engelen et
al., 2014). This is the basis of the theory of dynamic capabilities where the
theory is an extension of the perspective from the resource-based view which is
defined as the ability of a company to integrate, build, and reconfigure
internal and external competencies to cope with a rapidly changing environment
(Teece et al., 1997), absorptive capacity is one of the company's dynamic
capabilities because it is embedded in the company's routine by combining
existing knowledge and capabilities within the company which aims to build
organizational capabilities (Engelen et al., 2014).
In facing
market dynamics and facing ever-changing competitive environment, it is
necessary to emphasize knowledge-based capabilities (Grants, 1996) as the basis
for the absorptive capacity process to create and disseminate the necessary
knowledge (Engelen, 2014). Referring to the theory of
knowledge-based view, accumulation, application and combination of knowledge is
very important for companies (Lee et al., 2020), because it can provide insight
into corporate strategy, which is created through the conversion between tacit
knowledge in the form of skills and contextual knowledge in the form of
knowledge that can be easily communicated between individuals and companies
(Grant, 1996; Nonaka et al., 2016). It is very important for companies to
acquire and use external knowledge with the aim of increasing product
innovation and improving performance by carrying out collaborations between
suppliers and buyers (Tzokas et al., 2015), and take
advantage of newly developed knowledge if they are to be able to recognize
changing environments and take advantage of new opportunities (Helfat & Peteraf, 2015).
In this study,
there are three variables studied as antecedent absorptive capacity, namely
technological capability variable as technological alignment which is an
individual and organizational process, social capital variable as relational
alignment which is a process in individuals in groups as well as
inter-organizational and entrepreneurial orientation variable as strategic
alignment which is a managerial and organizational process
RESEARCH METHOD
The population in this study are food and beverage packaging companies
registered in the B2B directory in 2020. The sample collection technique was
carried out using a purposive sampling technique, namely sampling using several
criteria in collecting samples (Sekaran & Bougie, 2020). The criteria for
the unit of analysis in this study are companies in the food and beverage
industry with the criteria for companies that have been registered in the
Indonesian B2B directory and have been operating for more than 5 years until
2020 so that research can get an overview of company performance in the food
and beverage packaging industry. To get a complete picture of the condition of
the company, in one company there is not only one respondent, but several
employees with senior and middle manager levels within the company. Furthermore,
respondents gave responses to the questionnaire given. The questionnaire used
is a closed questionnaire in which respondents have been provided with choices
in the form of a check list of answers selected with a Likert scale from number
1 (strongly disagree) to number 5 (strongly agree).
RESULT AND DISCUSSION
Validity test results
1. The
results of the validity test of the Technological Capabilities variable (X1)
The results of the validity test of the technological capabilities (X1) variable can be seen based on the following table:
Table 1 Variable Validity Test Results Technological Capabilities (X1)
Variable |
Dimensions |
Question
Indicator |
Estimates |
R
Table |
Information |
Technological
Capabilities |
Product
Related Technology |
PT1 |
0.589 |
0.5 |
Valid |
PT3 |
0.547 |
0.5 |
Valid |
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PT4 |
0.546 |
0.5 |
Valid |
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Process
Related Technology |
PS1 |
0.595 |
0.5 |
Valid |
|
PS2 |
0.53 |
0.5 |
Valid |
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PS3 |
0.813 |
0.5 |
Valid |
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Human
Resources |
HR2 |
0.754 |
0.5 |
Valid |
|
HR3 |
0.689 |
0.5 |
Valid |
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Research
and Development |
RD2 |
0.813 |
0.5 |
Valid |
|
RD3 |
0.834 |
0.5 |
Valid |
Source: Amos Output v.26.0, Primary Data
2022
2. The
results of the validity test of the Social Capital variable (X2)
The results of the validity test of the social capital variable (X2) can be known based on the following table:
Table 2 Variable
Validity Test Results Social
Capital (X2)
Variable |
Dimensions |
Question
Indicator |
Estimates |
R
Table |
Information |
Social
Capital |
Structural
Capital |
SC1 |
0.649 |
0.5 |
Valid |
SC2 |
0.624 |
0.5 |
Valid |
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SC3 |
0.612 |
0.5 |
Valid |
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Cognitive
Capital |
CC1 |
0.611 |
0.5 |
Valid |
|
CC2 |
0.584 |
0.5 |
Valid |
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CC3 |
0.818 |
0.5 |
Valid |
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Relational
Capital |
RC1 |
0.604 |
0.5 |
Valid |
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RC2 |
0.744 |
0.5 |
Valid |
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RC3 |
0.544 |
0.5 |
Valid |
3. Entrepreneurial
Orientation variable validity test results (X3)
The results of the validity test of the entrepreneurial orientation variable (X3) are known based on the following table:
Table 3
Variable Validity Test Results Entrepreneurial
Orientation (X3)
Variable |
Dimensions |
Question
Indicator |
Estimates |
R
Table |
Information |
Entrepreneurial
Orientation |
Innovativeness |
IN1 |
0.691 |
0.5 |
Valid |
IN2 |
0.673 |
0.5 |
Valid |
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IN3 |
0.735 |
0.5 |
Valid |
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Risk
Taking |
RT1 |
0.647 |
0.5 |
Valid |
|
RT2 |
0.95 |
0.5 |
Valid |
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RT3 |
0.715 |
0.5 |
Valid |
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proactiveness |
PR1 |
0.724 |
0.5 |
Valid |
|
PR2 |
0.814 |
0.5 |
Valid |
Source: Amos Output v.26.0, Primary Data
2022
4. Absorptive
Capability variable validity test results (Y1)
The results of the validity test of the absorptive capability variable (Y1) are known based on the following table:
Table 4
Variable Validity Test Results Absorptive
Capability(Y1)
Variable |
Dimensions |
Question Indicator |
Estimates |
R Table |
Information |
Absorptive Capacity |
Exploratory Learning |
ER1 |
0.622 |
0.5 |
Valid |
ER2 |
0.688 |
0.5 |
Valid |
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ER3 |
0.588 |
0.5 |
Valid |
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ER4 |
0.689 |
0.5 |
Valid |
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Transformative Learning |
TR1 |
0.728 |
0.5 |
Valid |
|
TR2 |
0.700 |
0.5 |
Valid |
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TR3 |
0.749 |
0.5 |
Valid |
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Exploitative Learning |
ET1 |
0.505 |
0.5 |
Valid |
|
ET2 |
0.635 |
0.5 |
Valid |
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ET3 |
0.557 |
0.5 |
Valid |
||
ET4 |
0.781 |
0.5 |
Valid |
Source: Amos Output v.26.0, Primary Data 2022
5. Firm
Performance variable validity test results (Y2)
The results of the validity test of the firm performance variable (Y2) are known based on the following table:
Question
Indicator |
Estimates |
R
Table |
Information |
|
Firm
Performance |
FP1 |
0.672 |
0.5 |
Valid |
FP2 |
0.73 |
0.5 |
Valid |
|
FP3 |
0.642 |
0.5 |
Valid |
|
FP4 |
0.673 |
0.5 |
Valid |
|
FP5 |
0.545 |
0.5 |
Valid |
|
FP6 |
0.752 |
0.5 |
Valid |
Table 5
Variable Validity Test Results Firm Performance(Y2)
Source:
Amos Output v.26.0, Primary Data 2022
Reliability Test Results
Variable |
Cronbach Alpha value |
Information |
|
1 |
Entrepreneurial Orientation |
0.769 |
Reliable |
2 |
Social Capital |
0.830 |
Reliable |
3 |
Technological Capabilities |
0.869 |
Reliable |
4 |
Absorptive Capacity |
0.881 |
Reliable |
5 |
Firm Performance |
0.824 |
Reliable |
�Table 6.� Reliability Test Results
Source:
Amos Output v.26.0, Primary Data 2022
The goodness of fit criteria from the structural equation model above are presented in the following table:
Table 7
Goodness of Fit Research Model Testing
GOF |
Acceptable
Match Level |
Index
models |
Explanation |
|
Chi
Square |
Chi
Square≤
2df (good fit), 2df
< chi square ≤ 3df (marginal fit) |
1.151 |
Good
Fit |
|
P-values |
P
≥ 0.005 (good fit) |
0.000 |
Good
Less |
|
CMIN/DF |
Cmin/df
≤ 2 (good fit) |
1,547 |
Good
Fit |
|
RMSEA |
0.05
< RMSEA < 0.08 (good fit), 0.08
RMSEA < 1 (Marginal) |
0.059 |
Good
Fit |
|
CFI |
CFI
> 0.9 (Good fit), 0.8 ≤ CFI < 0.9 (marginal) |
0.927 |
Good
Fit |
|
TFI |
TFI
> 0.9 (Good fit), 0.8 ≤ TFI < 0.9 (marginal) |
0.914 |
Good
Fit |
|
IFI |
IFI
> 0.9 (Good fit), 0.8 ≤ IFI < 0.9 (marginal) |
0.929 |
Good
Fit |
|
NFIs |
NFI
> 0.9 (Good fit), 0.8 ≤ NFI < 0.9 (marginal) |
0.822 |
marginal |
|
RFI |
RFI
> 0.9 (Good fit), 0.8 ≤ RFI < 0.9 (marginal) |
0.791 |
marginal |
|
Source:
Amos Output v.26.0, Primary Data 2022
The goodness of fit model recapitulation table shows that in general the goodness of fit model is good fit.
Based on the results of the suitability of
the model, the next step is to test the hypothesis using Structural Equation
Modeling (SEM). The results of the analysis can be displayed in 2 (two)
diagrams, namely unstandardized or standardized estimate
Figure 1
Structural Equation Modeling (SEM) Standardized Estimates
Based on the structural model image, two structural equations are obtained as follows:
1.� AC = 0.121*TC + 0.171*SC + 0.694*EO, Errorvar.= 0.154, R� = 0.209
2.� FP = 0.188*TC + 0.249*AC + 0.186*SC + 0.083*EO, Errorvar.= 0.151, R� = 0.271
Table 8
SEM recapitulationtest
hypothesis |
Description |
Est. |
CR |
P |
Ket |
H1 |
tc�air conditioning |
0.121 |
2.055 |
0.04 |
Significant |
H2 |
tc�FP |
0.188 |
3,018 |
0.003 |
Significant |
H3 |
SC�air conditioning |
0.171 |
3,081 |
0.002 |
Significant |
H4 |
SC�FP |
0.186 |
3,236 |
0.001 |
Significant |
H5 |
EO�air conditioning |
0.694 |
3,326 |
*** |
Significant |
H6 |
EO�FP |
0.083 |
0.452 |
0.651 |
Not significant |
H7 |
air
conditioning�FP |
0.249 |
2,4 |
0.016 |
Significant |
H8 |
tc�air conditioning�FP |
0.078 |
2,19 |
0.028 |
Significant |
H9 |
SC�air conditioning�FP |
0.064 |
2,14 |
0.031 |
Significant |
H10 |
EO�air conditioning�FP |
0.042 |
2,24 |
0.025 |
Significant |
Source:
Amos Output v.26.0, Primary Data 2022
Table 9 Direct
and Indirect Effects of Form Performance
Variable |
Influence |
Results |
||
Direct |
Indirect |
Total |
||
EO�FP |
0.038 |
0.078 |
0.115 |
mediated |
SC�FP |
0.28 |
0.064 |
0.344 |
mediated |
tc�FP |
0.263 |
0.042 |
0.304 |
mediated |
Source : Output Amos
v.26.0, Primary Data 2022
Discussion of Research Outcome
The results of this study support the
results of previous research conducted by
In the food and beverage packaging
industry, the application of technological capability emphasizes two
objectives. First, increasing production efficiency, this is achieved by
consulting external parties and applying the results of internal meetings which
are held periodically to become a culture that can increase technical
knowledge.
Second, implementing standard operating
procedures that prioritize customer satisfaction and consistently following the
latest standards through the application of the exploitation process of the
knowledge gained. In research conducted by
This is in line with the RBV theory and
dynamic capability which explains the benefits of technological capability in
increasing competitive advantage and performance, by enabling companies to
identify acquiring and applying external knowledge to develop operational
competencies aimed at achieving competitive advantage (Salisu, 2019). Results
of research by Hsu et al., (2014); Tzokas et al.,
(2015) also shows that technological capability affects performance and is very
important because responding to dynamic market needs requires the development
of new products that are based on technology development, so that they can
accurately predict and adapt to technological changes (Salisu & Abu Bakar , 2019) by turning information into product innovation
So it can be concluded that technological capability in food and
beverage packaging companies is an important resource for companies that must
be managed effectively to develop products that are in line with market trends
and to introduce new products from time to time.
In line with
previous research by
So it can be concluded that in the food and beverage packaging industry companies need to strengthen network relationships between partners, where social capital acts as a liaison process between partners through the interaction of knowledge exchange and as one of the factors to increase the success of implementing the absorptive capacity process.
One of the important elements to achieve
competitive advantage is to collaborate with internal and external partners
that aim to build trust and exchange information
However, the management of relationships between partners in the food and beverage packaging industry is not simple but very complex, one of the reasons is the large number of employees, the supply chain which requires timeliness, quality and quantity according to standards, thus causing the relationship between internal partners to be managed in an integrated manner. effective to achieve maximum results. In this study it was concluded that the social capital variable has a positive effect on firm performance in the food and beverage packaging industry and is able to facilitate the achievement of company goals, so that internal and external partners can understand the actions taken by companies to achieve successful collaboration and improve performance (Zhang et al. , 2016).
Entrepreneurial orientationis a
strategic orientation of the company that focuses on finding and exploiting new
opportunities through a process of innovation, risk taking and level of
proactiveness towards market changes, but the end result of this strategic
orientation has the possibility of success or failure and the absorptive
capacity process is able to determine the level of probability of success of
the company's strategic orientation
The results of this study indicate that
food and beverage packaging companies have a tendency not to take risks, this
is considered reasonable for company management due to the uncertainty factor
due to the COVID-19 pandemic, but companies are still actively looking for new
opportunities to maintain business continuity and conduct experiments. to
innovate new products to meet consumer needs. To ensure which opportunities can
be acted upon and which consumer needs can be met, the absorptive capacity
process plays a very important role in interpreting information obtained from
market intelligence, competitor activities and combining it with existing
knowledge to help evaluate opportunities and detect errors during the product
innovation process.
This contradicts previous research which
concluded that entrepreneurial orientation has become a widely accepted way to
increase innovation and firm performance
In the food and beverage packaging industry, there are three reasons that cause entrepreneurial orientation and company performance to have no significant effect. First, during the COVID-19 pandemic the company still showed an increase in sales, which was triggered by the trend of changes in people's consumption patterns, so that the company was still able to survive and tended to increase its production capacity. Second, from the results of interviews with respondents in each packaging category, the technology used is not much different, so the difference in the products produced is also not too significant. This similarity causes more business risk on the financial side than on the production side, and to minimize this risk, Companies have a tendency to prefer existing customers to new customers and avoid high-risk projects. Third, descriptive statistics show that the age of the respondent's company is above 15 years, with this experience the company is able to manage risks and is able to map the level of competition in the industry and is more careful in investing.
In interviews with respondents it is known that the absorptive capacity process has been applied to food and beverage packaging companies, namely first, identifying and understanding valuable external knowledge for companies with exploratory learning by periodically collecting and evaluating information about competitors' activities, comparing selling prices, updating production process, applying the latest technology and increasing machine efficiency. Second, assimilate that knowledge through transformative learning by applying research results into the production process, providing solutions to consumers and looking for new opportunities with the technology they have.
In line with research conducted by Nazeer
et al., (2021), which states that absorptive capacity can act as a mediating
factor between technological capability and firm performance, as well as being
the main driver of technological capability and the performance of
manufacturing companies through exploratory, transformative and exploitative
processes. new knowledge related to technology so as to improve company
performance
The previous experience possessed by manager level employees in the food and beverage packaging industry is the basis for obtaining new knowledge obtained through collaboration between departments, consumer feedback, consulting with external parties and having standard operating procedures that are implemented and evaluated regularly regarding the technology used. relating to products, processes, human resource skills towards mastery of technology and development research that is processed through exploration, transformation and exploitation processes can improve company performance. This can happen because the absorption of knowledge about technology through absorptive capacity has a significant influence on the results of product innovation and production processes.
In line with research conducted by
In the food and beverage packaging
industry, the level of connection between members in social networks, trust and
emphasis on the common goals of cooperation have the most influence on firm
performance, but this influence can be increased by investing resources to
build social capital capabilities to maximize new knowledge
Consistent with research conducted by
This research took place during the Covid-19 pandemic, when conditions of uncertainty were very high. The food and beverage packaging industry has not only survived but has experienced growth, although not too high, in conditions of uncertainty, companies must be very careful in making every decision. With knowledge combined with previous experience, the absorptive capacity process can help determine the direction of entrepreneurial orientation activities, especially in determining risk taking in times of uncertainty.
CONCLUSION
There are three findings in this study which provide empirical support that the absorptive capability variable acts as an intervening or mediating variable in increasing the effect of technological capability, social capital and entrepreneurial orientation on firm performance in the food and beverage packaging industry in Indonesia as follows:
1.
The indirect effect of entrepreneurial
orientation on firm performance through absorptive capacity is greater than the
direct effect. With market conditions where the level of competition is not too
tight and continues to increase during the COVID-19 pandemic, companies tend
not to take high-risk investments, but continue to innovate and actively seek
new opportunities. These conditions cause company performance to be achieved
with a low level of entrepreneurial orientation
2.
The direct effect of social capital on
firm performance is the highest compared to the technological capability
variable. Social capital facilitates effective relationships between internal
and external partners based on a common vision and goals of cooperation, trust
and success of cooperation, so that it directly influences firm performance
which results in increased quality, speed and flexibility of delivery
3.
The direct effect of technological
capability on firm performance is greater than the indirect effect. This is because
in the same packaging category, the technology and types of materials used are
not much different, so what differentiates between companies is the ability of
each company to master and apply better technology. This is in accordance with
the results of research by Hsu et al., (2014); Tzokas et al., (2015) which
shows that technological capability affects performance.
Managers of companies in the food and
beverage packaging industry must pay attention to three things if they want to
get the benefits of entrepreneurial orientation and absorptive capacity to
improve company performance. First, always anticipate market changes by taking
opportunities and taking risks
The use of technology in the food and
beverage packaging industry is not too high considering the limited use of raw
materials and machine technology used. However, company managers must always
look for new opportunities by investing time, money and resources
Although the empirical findings of this study provide theoretical
and managerial contributions, this study has limitations, including, the
population studied is companies in the food and beverage packaging industry in
Indonesia, so adjustments are required due to possible differences in behavior
(Cisneros, 2021, Makhloufi, 2021) and corporate culture (Xin, 2020), if you
want to generalize it in the context of a different industrial environment. The
dependent variable in this study is firm performance with the mediator variable
being absorptive capacity while the independent variables are technological
capability, social capital and entrepreneurial orientation.
Research on the relationship between technological capability,
social capital and entrepreneurial orientation on firm performance through
absorptive capacity is still very limited. Some suggestions for future further
research include using samples of different product industries, research
locations and times.(Chuang et al., 2016; Hsu et al.,
2014; Nazeer et al., 2021; Taghizadeh et al., 2020; Tzokas et al., 2015), the type of service provider company(Kittikunchotiwut, 2018), or by comparing company attributes
such as company age, company age and product variety(Aljanabi,
2017). Further research is needed regarding the impact caused by the
uncertainty of environmental conditions during the pandemic, because the
uncertainty of environmental conditions can affect performance(G�lgeci & Kuivalainen, 2020; S�enz et al., 2014; Salisu & Abu Bakar, 2019), so that
future research can add variable uncertainty or uncertainty about environmental
conditions as a moderating variable for each variable tested to further clarify
the relationship between variables and firm performance, especially if the
company is in environmental conditions with intense competition or declining
market conditions or both (Shirokova et al., 2016).
In this study, it shows that the direct effect of the variables tested on firm
performance is greater than the indirect effect, so that the
re-conceptualization of absorptive capacity put forward by Lane et al., (2006)
where absorptive capacity is three sequential process mechanisms, needs to be
examined more closely. more about the interprocess
mechanism. So that it can be concluded which process or dimension in absorptive
capacity has the most influence on firm performance. Research conducted by(Zou
et al., 2018)states that the longer the age of the company causes a declineabsorptive capacitycompany,
but in this study the role of company age onabsorptive
capacityhas not been discussed in detail, so it is
interesting to examine further the relationship between age and experience
possessed by the company and abilityabsorptive capacityhis.Food and beverage packaging companies have
similar raw materials and technology, so the effect of technology intensity on
performance is not yet clear. Because accordingAydin,
(2020); Nazeer et al., (2021); Rodr�guez-Serrano & Mart�n-Armario, (2019); Tzokas et al.,
(2015), differences in the intensity of technology used can affect company
performance. So that the next research can take samples from the population of
companies that have different levels of technology use, so that the influence
of variables can be clearly seentechnological capabilitytofirm performance.
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