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Does absorptive capacity moderate the

relationship between entrepreneurial orientation
and supply chain resilience?

Majid M. Goaill & Mohammed, A. Al-Hakimi |

To cite this article: Majid M. Goaill & Mohammed, A. Al-Hakimi | (2021) Does
absorptive capacity moderate the relationship between entrepreneurial orientation
and supply chain resilience?, Cogent Business & Management, 8:1, 1962487, DOI:
10.1080/23311975.2021.1962487

To link to this article: https://doi.org/10.1080/23311975.2021.1962487

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Goaill & Al-Hakimi, Cogent Business & Management (2021), 8: 1962487
https://doi.org/10.1080/23311975.2021.1962487

OPERATIONS, INFORMATION & TECHNOLOGY | RESEARCH ARTICLE

Does absorptive capacity moderate the
relationship between entrepreneurial orientation
and supply chain resilience?
Received: 21 March 2021 Majid M. Goaill1 and Mohammed, A. Al-Hakimi2*
Accepted: 23 July 2021
Abstract: Supply chain resilience (SCR) is often seen as a dynamic capability that
*Corresponding author: Mohammed,
A. Al-Hakimi, Department of enables firms to effectively cope with disruptions and unforeseen events in the
Management, Faculty of Management business environment. However, empirical research focusing on influencing factors
& Commerce, B.A.M. University,
Aurangabad, 431004, India on SCR is still limited. Based on the resource-based view (RBV) and the dynamic
E-mail: [email protected]
capabilities theory (DCT), we examine if absorptive capacity (AC) does in fact
Reviewing editor: moderate the relationship between entrepreneurial orientation (EO) and SCR.
Albert W. K. Tan, Asia Pacific
Graduate Institute, Shanghai Jiao Drawing upon a sample of 171 Yemeni manufacturing SMEs, we tested the rela­
Tong University, SINGAPORE
tionships in the proposed model. The findings of the data analysis using SmartPLS
Additional information is available at show that EO positively affects SCR, further, AC positively moderates the relation­
the end of the article
ship between EO and SCR. With this outcome, it is expected that SME managers in
Yemen demonstrate significant interest in developing the AC of their firms. This has
implications that with the development of AC, it is expected that SMEs will be able
to utilize the full potential of EO to improve SCR.

Subjects: Operations Management; Supply Chain Management; Strategic Management;

Entrepreneurship and Small Business Management

ABOUT THE AUTHOR PUBLIC INTEREST STATEMENT

Majid M. Goaill is currently an assistant professor EO is revealed as a primary enabler of SCR for
at Thamar University (Yemen) in the Faculty of SMEs in turbulent environments. This is evident
Administrative Sciences, Department of from the study conducted in SMEs in Yemen. SMEs
Marketing and Production. He gained his PhD that adopt EO’s practices can improve their SCR
Degree (Marketing) in 2014 from the University significantly. However, entrepreneurial-oriented
Utara Malaysia (UUM). He has published articles SMEs should develop their ability to acquire,
in professional journals such as Journal of assimilate, transform and exploit new knowledge
Relationship Marketing, International Review of from various sources. As supply chain disruptions
Management and Marketing, and Asian Social increase, AC becomes critical. This suggests that
Science. His research interests are relationship the EO and AC should be important parts of
marketing, supply chains, consumer behavior, designing SMEs’ strategies to promote their SCR.
production & operations management, and
brand marketing.
Mohammed, A. Al-Hakimi is currently a PhD
scholar at Department of Management Sciences,
Dr. Babasaheb Ambedkar Marathwada
University, Aurangabad, India. He is working as a
senior lecturer in the department of Marketing &
Production of Thamar University, Yemen. His
research interests include supply chain man­
agement, production & operations manage­
ment, innovation, entrepreneurial orientation,
and strategic management.

© 2021 The Author(s). This open access article is distributed under a Creative Commons
Attribution (CC-BY) 4.0 license.

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Keywords: Entrepreneurial Orientation; Absorptive Capacity; Supply Chain Resilience;

SMEs; PLS-SEM

1. Introduction
Over the past two decades, a large part of interest in the literature of supply chain management
has concentrated on the disturbances management related to unpredicted events that obstruct
the materials and goods flow within a supply chain (e.g., Bier et al., 2020; Gualandris &
Kalchschmidt, 2015; Jabbarzadeh et al., 2016; Lee, 2004; Oke & Gopalakrishnan, 2009; Tang,
2006; Wagner et al., 2012), where the disturbances make a supply chain more vulnerable and
may affect a firm’s performance not only in terms of direct financial losses but also in terms of the
firm’s bad reputation and loss of demand (Bier et al., 2020; Lucker & Seifert, 2017). In line with this,
firms have tried to follow best practices that allow them to mitigate the implications of these
disturbances (Jüttner & Maklan, 2011) while making them more resilient versus supply chain
disruptions (Polyviou et al., 2019). Thus, supply chain resilience (SCR) is crucial to the success of
businesses and supply chains (Liu et al., 2017), where it provides a supportive response to
disturbances and sustains processes (Hohenstein et al., 2015; Mandal, 2020; Rajesh, 2016).

Entrepreneurial orientation (EO) is among the themes that have been studied widely in recent
times due to its major influence on business performance (Al-Hakimi et al., 2020; Hernandez-
Perlines, 2018; Ibarra-Cisneros & Hernandez-Perlines, 2019; Sarsah et al., 2020). Entrepreneurial-
oriented firms can respond to changes, disruptions, and environmental uncertainty by providing
opportunities and allocating resources to invest for sustainment and expansion (Hisrich et al.,
2016; Hitt et al., 2001). Although the belief in the importance of the EO of SMEs in reducing
environmental disturbances by improving the ability of resilience, especially in the constantly
changing business environment (Coleman & Adim, 2019), others found the relationship to be
insignificant (Mandal & Saravanan, 2019).

These inconclusive results have driven some researchers to have made a call for further study of
the relationship between EO and SCR (Al-Hakimi et al., 2020; Mandal & Saravanan, 2019), focusing
on intervening or moderating factors. This paper focuses on dynamic capabilities (absorptive
capacity (AC) in this case) as a moderator factor for the relation. In response to a call by
Engelen et al. (2014), we argue that AC has an outstanding contribution to enhancing the EO–
SCR relation, especially in dynamic environments, based on the presumption that dynamic cap­
abilities (like AC) are most important in the case of business environment disturbance (Zahra et al.,
2006). Dynamic capabilities differ from normal capabilities or resources in terms of they enable
a company to reallocate its present resources and capacity base (Teece et al., 1997). As such, the
smooth implementation of inherently uncertain entrepreneurial practices requires a reallocate of
the present resources or capabilities that can be offered by dynamic capabilities, where the inertia
of steady normal resources and capabilities cannot enable the full potential of the EO to be
realized (Eisenhardt & Martin, 2000). AC refers to the firm’s capability to recognize, ingest, and
apply external knowledge for commercial purposes meaningfully (Cohen & Levinthal, 1990). AC
represents a decisive prerequisite for renewing the information base of the firm (Zahra & George,
2002), which in turn drives higher flexibility in the resource base reconfiguration (Miroshnychenko
et al., 2020). According to Rojo et al. (2018), AC is one of the core dynamic capabilities, which
makes firms more resilient against disruption. Similarly, Liao et al. (2003) indicated that SMEs’
responsiveness in the turbulent environment raises if they possess sophisticated capabilities in
acquiring outward knowledge and disseminating it within the firm. AC takes advantage of essential
resources inherent in the firm’s relationships with supply chain partners and allows deploying
those resources effectively to attain a sustainable competitive advantage (Gölgeci & Kuivalainen,
2020). Moreover, previous literature has confirmed that AC effectively moderates the relation
between EO and other factors as performance (Engelen et al., 2014), technological innovation
capabilities (Mohd Noor & Aljanabi, 2016), international performance of family firms (Hernandez-
Perlines, 2018), innovation performance (Zhai et al., 2018), and business performance (Ibarra-

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Cisneros & Hernandez-Perlines, 2019). Therefore, the current study expands research in terms of
how a firm’s AC interacts with EO so as to improve SCR by arguing that AC plays a core role in
boosting the effect of EO on SCR.

The firms studied are the SMEs located in Yemen that, despite their dominance in the manu­
facturing sector, their contribution to the country’s GDP is negligible (AlQershi et al., 2020). A major
issue for its poor performance is the supply chain disruptions resulting from the conflict and the
political crisis in the country, including close inspection at seaports that have restricted imports,
and delayed arrival of raw materials in addition to high costs of insurance and shipping (Morris
et al., 2019; Tandon & Vishwanath, 2020). Moreover, empirical research on SMEs remains limited
for large firms (Didonet & Diaz-Villavicencio, 2020; Maldonado-Guzman et al., 2018), particularly in
the context of developing countries (Scholten & Schilder, 2015), although SMEs are an important
part of universal supply chains and suffer from adverse implications of the disturbances of supply
chains as well (Tukamuhabwa et al., 2017). Therefore, the current study seeks to address this
empirical research gap by analyzing the moderating effect of AC on the EO–SCR relationship in the
context of Yemeni SMEs. This study seeks, thence, to complement previous research (Al-Hakimi
et al., 2020; Mandal & Saravanan, 2019) and widens the realization of the dynamic capabilities’
impact (in this case, AC) to involve SCR.

2. Theoretical framework and hypotheses development

Over time, SCR has been emphasized as a critical capability in dealing with uncertainties because
of the capability to recover operations during turbulent times. A disturbance may be any unfore­
seen event with the potential of introducing the relevant firm’s negative outcomes (Mandal, 2017).
As such, resilience reflects the response capability to disruptions and coming back to the natural
position (Mallak, 1998). Relating to that, SCR defined by Ponomarov and Holcomb (2009) as “the
adaptive capability of the supply chain to prepare for unexpected events, responds to disruptions,
and recover from them by maintaining continuity of operations at the desired level of connectedness
and control over structure and function” (p. 131).

EO is defined as “the ability of the firms to show entrepreneurial practices and behaviors”
(Chaudhary & Batra, 2018, p. 1203). Whereas, an entrepreneurial firm is defined as “the firm
that engages in product market innovation, undertakes somewhat risky ventures and is first to
come up with ‘proactive’ innovations, beating competitors to the punch” (Miller, 1983, p. 771).
Numerous studies conceptualize EO as a strategic orientation focused on a collection of practices
and decision-making processes that facilitate the responsiveness of the firm to external changes
and disruptions by exploring new opportunities and delivering creative solutions that characterize
the firm from its rivals in the industry (Ibarra-Cisneros & Hernandez-Perlines, 2019; Kropp et al.,
2006). According to Miller (1983), EO has three dimensions, which are innovativeness, proactive­
ness, and risk-taking. Lumpkin and Dess (1996) define innovativeness as a firm’s tendency to
experiment and be creative that leads to introduce new products or technological processes. While
risk-taking refers to the proclivity to indulge in bold practices whose consequences are difficult to
foresee (Baker & Sinkula, 2009; Mandongwe et al., 2020; Vaznyte & Andries, 2019). Proactiveness is
defines as “seeking new opportunities which may or may not be related to the present line of
operations, introduction of new products and brands ahead of competition, strategically eliminating
operations which are in the mature or declining stages of their life cycle” (Venkatraman, 1989,
p. 949). In this sense, Lumpkin and Dess (1996) indicate that being proactive means taking the
initiative to anticipate and take advantage of new opportunities ahead of rivals.

Lately, inner resources and capacities have received great interest in the literature of EO, which
is consistent with the view of Kreiser (2011, p. 1026) that entrepreneurial firms “are more depen­
dent on their ability to fully utilize resources than other types of firms”. The argument on the
importance of inner resources and capacities for the EO–SCR relation depends on both RBV and
DCT. EO is seen by RBV as a strategically important resource since it indicates the level of firms’
indulging in risky projects through proactive activities and a propensity towards innovation (Covin

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& Slevin, 1989). Being proactive allows the firm to “rebuild internal and external competencies to
deal with rapidly changing environments” (Teece et al., 1997, p. 516). Risk-taking behavior on the
other side enhances the strategies of risk reduction that present in turn a fast response for the
disturbances (Mandal & Saravanan, 2019).

Besides, while RBV is not useful in identifying appropriate capabilities in the event of dynamic
changes taking place in unpredictable environmental contexts, DCT has appeared, as considered
an extension of the RBV, to overcome the deficiencies by appropriate planning of resources and
capacities, thus respond effectively to any circumstance (Chowdhury & Quaddus, 2017). According
to Grant (1991), resources constitute the foundation for developing the organization’s capabilities,
while capabilities represent the competence of the organization to employ resources in line with
business environment fluctuations (Barreto, 2010). In the same vein, many of the literature related
to dynamic capabilities emphasize the importance of these capabilities in a volatile business
environment in terms of allowing firms to respond to the circumstances of the disruption through
redistributing their current resources according to environmental scenarios (Buccieri et al., 2020;
Ponomarov, 2012; Sabahi & Parast, 2019; Teece, 2007). Therefore, resilience is a core capability for
a firm, particularly in light of disruptions to the business environment, and the need for it can be
justified through the DCT’s lens (Al-Hakimi et al., 2020; Chowdhury & Quaddus, 2017). According to
that, it is necessary for firms and supply chains to seek to develop their dynamic capabilities,
especially resilience capability in order to reduce disturbances that may face.

Firms can adopt EO to improve SCR in an environment undergo dynamic changes that are
increasingly rapid and deep (Al-Hakimi et al., 2020). When the impact of EO on SCR is analyzed,
it is necessary to take into consideration different contingency factors, which may facilitate or
inhibit this impact. The argument underlying this study is that there are dynamic capabilities (in
this case, AC) which aid to leverage the full potential of EO based on the assumption that AC plays
a prominent role especially in turbulent environments that require firms to adapt constantly to
new circumstances (Eisenhardt & Martin, 2000). This is in line with the view of Covin and Lumpkin
(2011) that dynamic capabilities are the mechanism that enables entrepreneurial-oriented firms to
take advantage of the opportunities they discover in the context of response to environmental
changes. In this research, AC represents an internal contingency factor that moderates the EO-SCR
relationship.

AC has been getting expanding interest among specialists after the valuable contributions of
scientist Cohen and Levinthal (1990), as they have defined it as the “ability to recognize the value
of new information, assimilate it, and apply it to commercial ends” (p. 128). Later, Zahra and George
(2002, p. 186) extend this definition to add that AC is “a set of organizational routines and
processes by which firms acquire, assimilate, transform, and exploit knowledge to produce
a dynamic organizational capability”. The AC literature indicates that the relationship between
the two companies may affect the level and quality of knowledge transfer (Aljanabi, 2017;
Andersen & Kask, 2012). Although the concept requires the acquisition and absorption of knowl­
edge from the outer environment (especially relations between the firms), it also emphasizes the
internal process of learning from previous experience and current behavior (Nagati & Rebolledo,
2012). Therefore, a firm’s AC is affected by the other firms in terms of supply chain collaboration
and the way the learning process is conducted (Aljanabi, 2017).

2.1. Entrepreneurial orientation

In the past few years, the relationship between EO and SCR has received considerable attention
from researchers (Al-Hakimi et al. (2020, 2019). Improving a firm’s capability to deal with disrup­
tions in SC is directly related to its resilience (Sheffi & Rice, 2005), which results from its proactive
practices and propensity to innovate (Coleman & Adim, 2019). Hence, EO enhances firm resilience.

Most studies have confirmed a positive association between EO and SCR, e.g., Li et al. (2008)
concluded that EO in fact enables firms to gain dynamic capabilities (in our case, resilience) in the

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face of environmental uncertainty. After that, depending on 125 medium enterprises, Eshegheri
and Korgba (2017) emphasized the importance of EO to boost organizational resilience. In the
context of SMEs also, Branicki et al. (2018) argued that entrepreneurship-oriented firms are more
resilient to environmental fluctuations than others are. Al-Hakimi et al. (2020) confirmed this in
their recent study, which revealed that EO positively influences SCR of SMEs. Therefore, depending
on the above arguments, we assume the following:

Hypothesis 1. EO positively affects SCR.

2.2. Absorptive capacity

AC is essential to promote learning and capability dynamics between organizations (Cheng & Lu,
2017; Cohen & Levinthal, 1990; Zahra & George, 2002). In addition to its relevance to a wide range
of phenomena, AC has been explored also in connection with supply chain risk and uncertainty
(Ambulkar et al., 2016; Gölgeci & Kuivalainen, 2020). This stream of literature demonstrates that
the acquainting, assimilating, and exploiting of external knowledge is particularly important when
firms face a torrent of negative changes and their existence is on the line (Gölgeci & Kuivalainen,
2020; Miroshnychenko et al., 2020), where AC has a core role in decreasing uncertainty to
effectively deal with supply chain risks (Ambulkar et al., 2016).

Previous research has found that entrepreneurial-oriented firms benefit from a broad scope of
capabilities (Kohtamäki et al., 2019). Besides, theoretical claims in the literature of strategic manage­
ment indicate that dynamic capabilities contribute significantly to disruptive environments, which
require the firms to continuously respond to new circumstances (Eisenhardt & Martin, 2000).
Therefore, the current study focused on exploring the effect of AC in the EO-SCR relationship.

Entrepreneurial-oriented firms usually achieve success compared with non-entrepreneurial

firms because they possess the ability to find out the best opportunities in the market
(Lumpkin & Dess, 1996). AC gives firms with EO continual access to new information and knowl­
edge related to opportunities through various channels, which increases the opportunities those
firms may find out (Engelen et al., 2014), and enhances their resilience in the face of environ­
mental disruptions. In line with that, Anderson and Eshima (2013) report that a firm with EO
achieves a high level of success if the available opportunities increase, as the availability of many
opportunities raises the likelihood of valuable opportunities with great potential. Moreover, firms
with AC can analyze information related to new opportunities based on their present knowledge
base (Cassiman & Veugelers, 2006; Cohen & Levinthal, 1990), where AC assures that the recently
obtained information is properly clarified and analyzed, helping to exploit those opportunities
effectively (Zahra & George, 2002). In other words, AC assures the availability of a large number
of high-quality opportunities, a broad knowledge base, and a correct interpretation of the
information gained about those opportunities, enabling a firm to successfully select and pursue
opportunities. Conversely, entrepreneurial-oriented firms’ lack of the AC may lead to fewer
opportunities available to them, and evaluate them inappropriately due to the missing of
a knowledge base from previous experience, all that may prevent the relationship between EO
and SCR.

Similarly, when entrepreneurial-oriented firms experience supply chain disruptions, it tends to

innovate through focusing on new and original ideas that drive the introduction of new products or
processes or improving present products and processes (Al-Hakimi et al., 2020). A high level of AC
helps those firms to assess the new ideas down to successful innovations, wherein a firm’s
innovation based on relevant prior knowledge is more successful than if there was no prior
knowledge (Asogwa et al., 2020; Engelen et al., 2014). As such, firms that own a wide information
base spend fewer costs in order to innovate (Sorescu et al., 2003). On the contrary, the cost of

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applying innovation processes is likely to be higher in case of no previous knowledge is available,

which may negatively affect the relationship between EO and SCR.

In the same vein, and in order to respond and adapt to disruptions in the supply chains,
entrepreneurial-oriented firms seek to engage in risky ventures (Al-Hakimi et al., 2020). The high
degree of AC allows those firms to evaluate the risk rationally by interpreting the present and new
knowledge to reduce the risk or deal with it at least (Jansen et al., 2005), thus enhancing the
resilience of those firms. Otherwise, if firms do not own that knowledge and the capability to
explain and operate on it during carrying out risky ventures, they may exaggerate the risk and
abstain from following these operations, which may prevent them to leverage the EO potential
(Barringer & Bluedorn, 1999; Zhai et al., 2018).

Additionally, entrepreneurial firms excel non-entrepreneurial firms in terms of they can

achieve first-mover advantages, which include creating a monopoly-like condition with big
returns for a term of time ahead the rivals follow (Lumpkin & Dess, 2001). Mostly, first movers
work in unpredictable environments where previous experiences do not offer no knowledge that
may be useful (Kerin et al., 1992). In this case, AC can be mitigate the latent risk through rapidly
creates insights from varied sources relevance the new environment, and interprets them
correctly by a large information base that may also provide information on analogous market
inputs into relevant environments (Escribano et al., 2009). Further, the whole potential for the
practices of first-mover can be reinforced through AC’s contribution to resilient, fast response
before opportunities lose their appeal (Rothaermel & Alexandre, 2009). Entrepreneurial-oriented
firms also fulfill outstanding performance because they target with their innovative products
promising market segments before the rivals and earn good profits from them (Lumpkin & Dess,
1996). Regarding that, AC may backing those firms through getting external knowledge related
to promising marketplace segments and how they can be dealt with in the best (Engelen et al.,
2014; Zahra & George, 2002). Opposite of that, if an entrepreneurial-oriented firm does not
possess AC, it may not be able to distinguish promised segments or respond to existing
directions in the industry, which may limit the benefit of the EO’s potential (Covin et al., 2006).

Lastly, entrepreneurial-oriented firms are usually good at carrying out trial-and-error processes.
Relating to this, AC ensures that entrepreneurial firms are aware of any error that may occur early
on, making immediate rectification potentially (Liao et al., 2003). For example, AC gives the firm
the ability to assimilate and interpret knowledge related to an innovative product failure fast to
make the necessary adjustments (whether in the product’s characters, marketing activities, or
target markets), thus raising the contribution of EO (Cohen & Levinthal, 1990; Engelen et al., 2014).
In addition, firms with a high degree of AC learn from trial-and-error processes or failures, which
make them stronger for the later trial-and-error process. With regard to that, McGrath (1995) view
that entrepreneurial activities may be accompanied by errors and disappointments that can
reinforce the entrepreneurial processes in the future when deriving the correct learning effects.

Without AC, entrepreneurial-oriented firms might neglect necessary rectifications or might

not be able to understand and interpret problems that they encountered correctly or act upon
them in time, thus not fully exploiting EO’s positive potential (Engelen et al., 2014). In light of the
above contentions, it can be said that the capacity to obtain, assimilate, transfer, investing new
knowledge, can enhance the positive effect of EO on SCR. Therefore, we suggest the following:

Hypothesis 2. AC moderates the effect of EO on SCR.

Depending on the theoretical framework and the hypotheses derived previously, the conceptual
model can be presented as in Figure 1.

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Figure 1. Conceptual model.

3. Methodology and results

3.1. Research population and sample

This study relies on primary data collected from SMEs in Sana’a city (capital of Yemen), specifically in
the manufacturing sector because the purpose of the study is to examine the SCR, which is considered
more important for manufacturers, in order to deal with disruptions in supply chains, compared to
service firms. This study adopted the definition of SMEs published in Yemen Ministry of industry and
trade’s (2014) report in terms of “employee number” criteria. Whereby firms with 4–9 employees were
identified as small-sized, while firms with 10–50 employees were identified as medium-sized.

As per Yemen Ministry of industry and trade’s (2014) report, there are 1058 Yemeni manufactur­
ing SMEs in Sana’a city. Given the absence of recent data on the number of SMEs, 384 SMEs were
adopted according to the researchers’ potentials. Moreover, 384 represents the appropriate sam­
ple size, as recommended by Krejcie and Morgan (1970). A self-administered questionnaire was
employed to gather the appropriate data from SMEs’ managers. Out of 384 questionnaires, 188
were received, with an average response of 49% of the overall sample size. However, after
preparing data for processing and analysis, 17 incomplete questionnaire surveys were excluded.
Thus, the response rate reduced to 44.5%. Table 1 shows a description of the sample.

Table 1. Description of the sample

Category Frequency Percentage
Job status:
Owner 111 64.9
Manager 60 35.1
Gender:
Male 157 91.8
Female 14 8.20
Education:
Secondary and below 35 20.5
Diploma 9 5.30
Bachelor 95 55.5
Master and above 32 18.7
Years of working:
Under 3 years 7 4.10
4–6 years 12 7.00
7–9 years 133 77.8
10 years and above 19 11.1

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Table 2. Loadings and cross loadings

Construct Items EO AC SCR
EO INN1 0.778 0.532 0.472
INN2 0.809 0.504 0.470
INN3 0.781 0.545 0.440
RT1 0.748 0.452 0.411
RT2 0.778 0.491 0.457
RT3 0.726 0.515 0.433
PRO1 0.752 0.400 0.335
PRO2 0.722 0.370 0.221
PRO3 0.774 0.459 0.395
AC ACC1 0.476 0.781 0.494
ACC2 0.501 0.834 0.651
ACC3 0.494 0.728 0.508
ASC1 0.452 0.745 0.508
ASC2 0.472 0.816 0.649
ASC3 0.601 0.802 0.609
TRC1 0.530 0.861 0.685
TRC2 0.510 0.830 0.541
TRC3 0.535 0.730 0.534
EXC2 0.467 0.834 0.603
SCR SCR1 0.607 0.503 0.854
SCR2 0.662 0.472 0.872
SCR3 0.597 0.428 0.840
SCR4 0.540 0.396 0.798
SCR5 0.531 0.374 0.755
SCR6 0.695 0.529 0.868

3.2. Measures
In order to get the required data for measuring the relationships in the proposed model, we
used a questionnaire tool. According to the literature, all measures were developed in the
questionnaire. Relating to that, EO was measured through nine items that assessed proac­
tiveness, innovativeness, and risk-taking adapted from Chang et al. (2007) and Saha et al.
(2017). While SCR was measured by six items overall that adapted from Al-Hakimi et al.
(2020), Dubey et al. (2019), Gölgeci and Ponomarov (2014), and Mandal (2017). Finally, AC
(the moderator variable) was measured through twelve items that evaluated acquisition,
assimilation, transformation, and exploitation capacities adapted from Hernandez-Perlines
et al. (2017), as shown in Table 2.

Table 3. Convergent validity analysis

Construct α CR AVE
EO 0.911 0.926 0.583
AC 0.935 0.945 0.635
SCR 0.910 0.930 0.692
CR = α = Cronbach’s Alpha, Composite Reliability, AVE = Average Variance Extracted

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Figure 2. Measurement model.

3.3. Statistical analysis and results

A partial least squares (PLS) method was used for data analysis by SmartPLS version 2.0 3 M, as
suggested by Ringle et al. (2005). PLS-SEM has many characteristics that lead to its extensive
use in management research (Goaill et al., 2014). It is considered a suitable method for small
samples (Henseler et al., 2009) because when used on complicated models of limited sample
sizes, it demonstrates greater statistical power than the covariance-based SEM (Reinartz et al.,
2009). This is highly appropriate in the current analysis, where the sample size was 171 cases.

In this study, the proposed PLS model is tested in two steps (Valerie, 2012). First, a reliability test
was done to measure the internal consistency among scale items, in addition to testing the
construct validity- including convergent validity and discriminant validity- through confirmatory
factor analysis (CFA). The consistency reliability (CR) and Cronbach’s alpha (α) must be over 0.70
(Hair et al., 2011); while convergent validity is achieved when all items are statistically significant,
with loadings 0.70 or above (Hair et al., 2011). Furthermore, the average variance extracted (AVE)
must be greater than the commonly accepted cut-off point of 0.50 (Hair et al., 2011). Second, R2,
effect size, and predictive relevance of the model were evaluated by analyzing the structural
model, further, bootstrapping was used to validate the research hypothesis.

As shown in Table 2, after excluding two items with loading below 0.70 (EC1 = .66 & EC3 = .69),
all the rest items were loaded for a specific construct when the loading on this construct higher
than the other constructs (as depicted in Figure 2), thus confirming the validity of the construct.

Furthermore, the results in Table 3 obtained from the convergent validity analysis show good
convergent validity, as all the CRs values ranged between 0.926 and 0.945, and Cronbach’s alpha

Table 4. Discriminant validity analysis

Construct EO AC SCR
EO 0.763
AC 0.631 0.808
SCR 0.545 0.732 0.832

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Table 5. Effect sizes of the latent variables

Construct R2 f2 Effect size rating
SCR 0.573
EO - 0.087 Small effect
AC - 0.642 Large effect
EO*AC - 0.059 Small effect
2 2 2 2
f = (R included—R excluded)/(1—R included)

values ranged from 0.910 to 0.935. As well, the AVEs ranged between 0.583 and 0.692, which were
all within the suggested limits.

To examine the discrimination of the latent factors, the discriminant validity was done. As shown
pffiffiffiffiffiffiffiffi
in Table 4, the discriminate validity of the measurement model is high, since the values of AVE
outweigh the correspondent correlations of all factors (Fornell & Larcker, 1981). This means that
the correlation of the indicators with their factors is greater than other factors.

In order to validate the study hypotheses and figure out if the proposed model is appropriate,
the coefficient of determination (R2) was computed overall, which shows three degrees of pre­
dictability, as per Chin (1998) (0.10 = weak; 0.33 = moderate; 0.67 = substantial). The outcome
denotes that EO and AC can account for 57.3% of the variance in the SCR, which falls within the
moderate range.

Additionally, effect size has calculated for the latent variables upon the dependent variable
using f2 analysis that complements R2 (Chin, 2010). Since f2 is not available in PLS automatically, it
is calculated manually as per the formula shown in Table 5. According to Cohen (2013), the f2
values of (0.35, 0.15, and 0.02) respectively are used to illustrate the effect sizes (large, medium,
and small) for the predictive variables. Hence the showing a small effect size of EO and EO*AC
(0.087, 0.059) respectively, and a large effect size of AC (0.642) on SCR.

Figure 3. Structural model.

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Table 6. Predictive quality of the model

Total SSO SSE Q2
SCR 1026.000000 635.770469 0.380341
2
Q = 1-SSE/SSO

Table 7. Hypotheses testing

H Relationship Path Standard T-value Result
coefficient error
H1 EO → SCR 0.134 0.039 3.388** Supported
H2 EO*AC → SCR 0.185 0.089 2.062* Supported
t-values > 1.96* (p < 0.05); t-values > 2.58** (p < 0.01); Bootstrapping based on n = 600 subsamples

Besides, the model predictive power was tested, as the model has predictive quality when the
value of crossed-redundancy (Q2) is higher than zero as suggested by Hair et al. (2011). Q2 is
calculated by the formula shown in Table 6, where the outcomes display that the Q2 value of SCR is
0.380, confirming that the model has an appropriate prediction quality.

Finally, the hypothesized relationships of the model were tested as shown in Figure 3 and
Table 7.

4. Discussion
In response to a call by Engelen et al. (2014), to conduct more investigations on AC relevance in
the EO context. Based on the RBV and DCT, this paper introduced valuable results on the impor­
tance of the EO of SMEs with a high level of AC in improving SCR. Although some studies show that
EO does not significantly affect SCR (e.g., Mandal & Saravanan, 2019), our research reveals the
contrary, as the evidence offered herein emphasizes that EO positively affects SCR of SMEs. This
supports the results of Al-Hakimi et al. (2020) study, which found that EO enhances SCR in
turbulent environments, and supports the traditional view of resilience as considered a reactive
response to environmental fluctuations (Gerwin, 1993), as well as reflects the longitudinal effect of
EO on SCR in the context of Yemeni SMEs, which would generalize the results. This finding supports
the argument that entrepreneurial firms inherently have a stronger and more significant align­
ment with their market and environment. This is because EO reflects a set of behaviors that are
directed towards achieving unique product improvements, improving the competitive position
within the environment. By firm-environment fit, firms can remain in contact and conform to
their environment. This trait reinforces their resilience and is a powerful indicator of resilient
behavior (Coleman & Adim, 2019). This outcome implies that when SME entrepreneurs seek to
innovate, indulge in risky projects, and are more aggressive in identifying and seizing market
opportunities, they can enhance their firms’ resilience and the supply chains as a whole. This
result provides an insight to the argument in the prior studies about the important contribution of
EO in improving SMEs’ SCR, particularly in making decisions related to reducing the adverse effects
of supply chain disturbances. Entrepreneurial-oriented firms are likely to benefit from disturbances
in spotting pioneering opportunities early and exploiting them by adopting innovation as a coping
strategy for those disruptions. With regard to Yemen, it seems that EO of SMEs represents an
effective tool for improving SCR, and this can be attributed to the precarious situation in the
country due to the political and security unrest.

In addition to the above, the results revealed that AC moderates the EO–SCR relation, so the link
between EO and SCR is not positive when AC is low. That is, the EO–SCR relation is not positive in all

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Table A1. The measure of the study

Construct Items
Entrepreneurial orientation Innovativeness
INN1. There is a great orientation to introduce and
experiment with new ideas.
INN2. Our firm encourages and stimulates innovation.
INN3. We continuously experiment with unique new
processes and methods of production to seek novel
solutions.
Risk-taking
RT1. Our firm, in general, tends to invest in high-risk
projects (with chances of high returns).
RT2. “Risk-taker” is considered a positive feature for
employees in our firm.
RT3. Our business strategy is characterized by the
inclination to allocate resources into projects with
uncertain results.
Proactiveness
PRO1. We continuously strive to take the initiative in
every situation (e.g., in projects, against competitors,
and when working with others).
PRO2. We always seek new opportunities (such as
new markets, new customers. etc).
PRO3. We seek to exploit expected changes in future
market conditions ahead of our competitors.
Absorptive capacity Acquisition capacity
ACC1. Searching for information regarding our
industry is a daily business in our firm.
ACC2. Our management motivates the employees to
use information sources within our industry.
ACC3. Our management expects the employees to
handle information beyond our industry.
Assimilation capacity
ASC1. In our firm, ideas and concepts are
communicated cross-departmentally.
ASC2. Our management emphasizes cross-
departmental support to solve problems.
ASC3. In our firm, there is a quick information flow.
Transformation capacity
TRC1. Our employees have the ability to structure and
use collected knowledge.
TRC2. Our employees are used to absorbing new
knowledge as well as to prepare it for further
purposes and making it available.
TRC3. Our employees successfully link existing
knowledge with new insights.
Exploitation capacity
EC1. Our management supports the development of
prototypes.
EC2. Our company regularly reconsiders technologies
and adapts them in accordance with new knowledge.
EC3. Our firm has the ability to work more effectively
by adopting new technologies.

(Continued)

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Construct Items
Supply chain resilience SCR1. Our firm’s supply chain is able to appropriately
respond to unforeseen disruptions through quickly
restoring its product flow.
SCR2. Our firm’s supply chain is well prepared to deal
with the financial outcomes of supply chain
disruptions through alternative plans.
SCR3. Our firm’s supply chain is able to maintain
a desired level of control over structure and function
at the time of disruption.
SCR4. Our firm’s supply chain can fast return to its
original state after being disrupted.
SCR5. Our firm’s supply chain can move to a new,
more desirable state after being disrupted.
SCR6. Our firm’s supply chain has the ability to extract
useful knowledge from unexpected disturbances, and
utilization.

cases, where the internal and external components of AC enhance the potential of an entrepre­
neurial-oriented firm to search out and seize opportunities by using the trial-and-error technique
(Engelen et al., 2014), notably under the disruptions of its supply chain. Therefore, the existing
study provides a valuable new theoretical lens (AC) as a moderator to understand and interpret
the EO–SCR relation. Our results are generally harmonious with other studies, which consider
dynamic capabilities important in the research context of EO (e.g., Covin & Lumpkin, 2011).
Although studies have begun to explore dynamic capabilities (like AC) as drivers of the EO–firm
performance relation in the turbulent market environment (e.g., Engelen et al., 2014), we have
concluded that AC is pertinent for entrepreneurial-oriented firms in face the disruptions along the
supply chain. Relating to that, the findings obtained reveal us that the Yemeni SMEs select the
suitable strategies to face the disruptions in their supply chains, by leveraging their dynamic
capabilities to acquire, assimilate, transfer, and exploit the new knowledge that they pursue
constantly striving to develop. However, these results can be generalized to other firms operating
within similar environments.

5. Theoretical and practical implications

RBV and DCT represent the basis for our present study to examine the EO–SCR relationship in the
context of SMEs. EO is considered according to RBV a strategic resource that offers firms the core
competencies (Barney, 1991). In this way, entrepreneurial-oriented SMEs may be able to respond
effectively to the disturbances of the supply chains, in contrast to firms that do not adopt EO. The
findings provided in the current research generally emphasize previous findings related to the
important role of EO in enhancing dynamic capabilities, particularly, in turbulent environments
(Engelen et al., 2014), thus giving more support to the literature on EO and dynamic capabilities.
Although entrepreneurial-oriented firms are resilient in coping with disturbances in their supply
chains, nevertheless, the studies that have researched in this area are still very limited (Al-Hakimi
et al., 2020). Hence, the current study contributes to the literature by confirming that relationship.
However, limiting our research to examining the EO–SCR relationship may not reflect the nature of
the relationship accurately, which was confirmed by the contradictory results of previous studies.
Therefore, in response to a call of Engelen et al. (2014), we have developed an argument that, in
SMEs, AC is indispensable to take full advantage of EO. The findings support the study’s assump­
tions. Particularly, the analysis showed that AC positively moderates the EO–SCR relationship. In
this sense, the EO–SCR relation is positive only for a high level of AC, where EO becomes more
effective when a firm’s AC mechanisms are well developed that represent knowledge acquisition,

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assimilation, transformation, and exploitation. Thus, our study also contributes to the literature by
examining the moderating effect of AC in the EO–SCR relationship.

In addition, the findings of this research have interesting implications for SMEs’ decision-makers
and practitioners. This work demonstrates the importance of creating a management philosophy
oriented to entrepreneurship to improve the SMEs’ SCR of firms to face environmental disruptions.
Accordingly, it is important to enhance the proactiveness, risk-taking, and innovativeness inward
the firm, and encouraging the managers and practitioners to strive hard to discover new oppor­
tunities with sensible risks, enabling the firm to respond and adapt to disturbances in their supply
chains. Moreover, as SMEs’ managers pursue to improve the SCR of their firms by EO, it must be
taken into account that AC enhances the relationship between them. Hence, managers should also
invest in AC development, as this helps to leverage the full potential of EO in improving SCR in the
context of similar turbulent environments.

6. Conclusions, limitations and future research

In this study, by using a survey of 171 manufacturing SMEs in Yemen, we theoretically suggested
and empirically tested a framework of the effects of EO and AC on SCR in SMEs. The findings
emphasized that EO has a significant positive effect on SCR and that AC positively moderates the
EO-SCR relation in SMEs in Yemen. This result provides insights for managers of SMEs to under­
stand how to properly use AC to promote the effect of EO on SCR. Our study results are only firmly
applicable to Yemeni SMEs. However, some earlier studies denoted that the results can be applied
in similar settings too. This study, nonetheless, assumes that future research is necessary to
ensure generalization.

Like any other study, this study has some limitations, which make it important to confirm the
findings and extend the research scope in the future. First, the sample scope was restricted to
SMEs in the manufacturing sector, therefore, researchers in the future could carry out the same
study on other sectors. Second, the study measured SCR as a one-dimensional concept, and thus it
may be better to address it as a multi-dimensional concept in future studies. Likewise, while the
present study has addressed AC as a composite construct, it may be important in future studies to
analyze the individual effects of both potential AC and realized AC, which constitute the AC
construct, as considered distinct dimensions, and differ in their roles (Sarsah et al., 2020).
Additionally, there is a need to study more intervening variables in order to interpret the EO–SCR
relationship more accurately. Moreover, the study framework proposed in developing countries can
be tested in the context of developed countries. Finally, the current study targeted only SMEs, so
future research could focus on large firms or even MSMEs.

Funding supply chain resilience?, Majid M. Goaill & Mohammed, A.

This research did not receive any specific grant from fund­ Al-Hakimi, Cogent Business & Management (2021), 8:
ing agencies in the public, commercial, or not-for-profit 1962487.
sectors.
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Author details Al-Hakimi, M., Borade, D. B., & Wright, L. T. (2020). The
Majid M. Goaill1 impact of entrepreneurial orientation on the supply
Mohammed, A. Al-Hakimi2 chain resilience. Cogent Business and Management, 7
E-mail: [email protected] (1), 1–18. https://doi.org/10.1080/23311975.2020.
ORCID ID: http://orcid.org/0000-0001-9923-1439 1847990
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The authors declare that there is no potential conflict of dimensions and performance of SMEs in Yemen: The
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