Fostering SME's organizational effectiveness through strategic orientations, learning capability, and innovation

The strategic management behavior of Small and Medium Enterprises in the trade and service sector within an emerging economy displays distinctive characteristics that differentiate them from larger corporations. This empirical study investigates the relationships among Miles and Snow's strategic orientations, learning capability, innovation, and organizational effectiveness. By integrating the knowledge-based view and stakeholder theory, the research model is empirically tested using a cross-sectional database of 391 founders, cofounders, and managers in trade and service SMEs located in the Southeast Region of Vietnam. The results demonstrate that learning capability and innovation act as mediators through which prospector and defender orientations contribute to organizational effectiveness. Specifically, the findings indicate direct positive effects of prospector, analyzer, and reactor orientations on innovation, as well as direct positive effects of prospector and defender orientations on learning capability. These findings enhance the existing body of literature, providing significant practical implications for strategic management field.