Global Environments and Management Trends

Running head: GLOBAL ENVIRONMENTS AND MANAGEMENT TRENDS
Global Environments and Management Trends
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1GLOBAL ENVIRONMENTS AND MANAGEMENT TRENDS
Introduction
When recognising the importance of the small and medium-sized enterprises (SMEs)
for the economic growth and development of a country and their potential of providing job
opportunities to their nearby societies, particularly in the rural areas many researchers have
showcased their interest in studying the success factors along with the failure factors of these
SMEs in gaining competitive advantage. According to some researchers like Rua, Franca and
Fernandez (2018), the key determinants of the SMEs for gaining competitive advantage is
their potential of developing rare products and services and their skill of flexibility in the
process of adoption of new technologies with the growing and changing trends. This suggests
that the SMEs need to get involved in the innovation process for gaining competitive edge in
the market place. On the other hand, researchers like Sawang, Parker and Hine (2016), have
claimed that the continuity of the activities of innovation were all constrained because of the
fact that the SME firms are small. They have opined that small companies are facing several
barriers in their process of innovation and these barriers include the shortage of internal
funds, insufficient skills of management, shortage of labour skills and knowledge and the
shortage of market access. The earlier studies in relation to the competitive advantage and
business performance mainly focused on the SMEs that are engaged in the
internationalisation and trades. Those studies were carried out within the medium and large
enterprises and the companies under these segment have very strong financial resources and
at the same time, are well-equipped with ample of infrastructure for supporting the activities
of innovation to support positive business performance. Notwithstanding this fact, only a
limited empirical studies have successfully focused on the relationship between competitive
advantage and business performance in the other local SMEs in Malaysia despite of their
increasing contribution.
In Malaysia, studies on how competitive advantage influence the business
performance of the have been conducted for the hotel industry and for the wood industry.
Study of the relationship between competitive advantage and business performance in the
accounting service SMEs is still not conducted, although this industry has contributed
significantly in the economic growth of the country. This paper is going to elaborate on
reviewing an article by Louis Martinette and Alice Obenchain-Leeson named- “How
Competitive Advantage Moderates The Learning Orientation/ Business Performance
Relationship”. The main objective of this paper is to critically assess the effect or influence of
competitive advantage and strategic orientation on the performance of the SMEs, more
specifically, the accounting firms in Malaysia by means of reviewing this article and linking
it with the Malaysian SMEs.
Discussion
Critical assessment of the theoretical and research literature
SMEs and innovation
SMEs can be defined as the manufacturing enterprises or firms that give the
customers with the services that are related to the manufacture of sales turnover not more
than RM50 million. These firms employ full time employees and workers but not more than
200 in total. According to Aziz and Samad (2016), SMEs are defined as “an engine of
innovation and growth and (2) they help reduce poverty because they are labour-intensive

2GLOBAL ENVIRONMENTS AND MANAGEMENT TRENDS
and thus stimulate job growth, but (3) they are constrained by institutional and market
failures”. However, as per the Resource Based View (RBV), all the assets, capabilities and
characteristics that a firm possess along with the knowledge and information etc. are
controlled by the firm and they enable it in conceiving of and implementing the strategies that
will improve its effectiveness and efficiency (Kull, Mena & Korschun, 2016). This RBV
depends on the belief that the competitive advantage does not relied on the market and the
structural characteristics of the industry, but on the superior internal resources that a firm
possess. According to Ferlie et al. (2016), a firm is said to perform better and have
competitive advantage if it is potential enough for offering quality products at lower prices
than its competitors and is able to offer the customers the best possible services. To sum up,
the idea of resources is the centre of this theory that suggests that resources have that unique
and durable characteristics help the firms in achieving a competitive edge.
Since last three decades, market orientation is considered to be one of the other forms
that has occupied the key stage of the theory and the practise of marketing strategy. It is only
recently that researchers have conducted a theory of the consequences and the antecedents of
the market orientation process and have developed a valid measure of the construct and have
tested its effect on the performance of the business. According to the recent studies, there is a
positive relationship in between the business performance and market orientation. However,
there are some scholars as well, who have suggested that the competitive environment could
help in moderating this relationship in between these two (Story, Boso & Cadogan, 2015).
The study by Chen et al. (2015) have examined the impact of the learning orientation on the
business performance in terms of pure service, particularly the public accounting service
companies. They have investigated how the competitive environment influence the strength
of the market orientation performance relationship and whether it can affect the focus of the
external emphasis within a market orientation, which means, higher emphasis on the
customer analysis in relation to the competitor analysis, or vice versa, within a particular
magnitude of market orientation performance relationship.
Malaysian accounting service firms
The accounting service firms and profession in Malaysia is regulated by the MIA
(Malaysian Institute of Accountants) by means of powers that are conferred by the
Accountant Act of 1967. It is an agency that is under the Ministry of Finance and it reports to
the Accountant General Office (Adapa & Sheridan, 2019). It is to note that the Malaysian
government and stakeholders of the profession have acknowledged that accountancy is one of
the significant areas where Malaysia is notably under-served and the private and public
sectors are required to ensure that the demand that is driven by the steady and strong
economic growth of Malaysia is met. More than 33,000 members have been registered with
the MIA as per the reports of (Haji-Abdullah, Othman & Marzuki, 2017). As of the year
2015, there were about 1407 number of firms that offered auditing services and the other 836
firms were providing other accountancy services to the customers. It is to mention that this
industry have given job and employment to more than three lakhs Malaysian public is
regarded to be a key sector of interest for most of the youths. It has also contributed to the
increasing economic growth and development of the country in recent years.
Competitive advantage and learning orientation

3GLOBAL ENVIRONMENTS AND MANAGEMENT TRENDS
Organisations all over the world are continuously searching for strategies for gaining
and sustaining competitive advantage. The contemporary turbulent business environment is
rendering some conventional strategies absolutely obsolete. In this scenario, companies need
to update and enhance their skills, knowledge, resources and capabilities for surviving in the
market and grow further. Effective business strategy for improving and sustaining
competitive advantage of a firm and its performance is all about having high organisational
learning orientation as per Noe et al. (2017). It is to note that learning orientation refers to the
tendency of a firm to create and apply its knowledge and skills in the firm. According to
Obeidat et al. (2016), it is a very important antecedent of the orientation of knowledge
management. It can be referred to as a set of values that are exhibited by a firm that
demonstrate that the company is possibly to develop a culture of learning within itself. It is to
note that one of the most important characteristics of the learning oriented companies is that
they foresee the market changes and the environmental changes and make adjustments
accordingly.
According to Donate and de Pablo (2015), learning organisation refers to the manner
in which the companies regard their environment both internally and externally in their very
own interests. It can be said that it is the extent to which a company gains skills, information
and the required knowledge for the creation of value in it. AI-Somali, Cholami and Clegg
(2015) have opined that learning orientation is the process in which organisations obtain and
disseminate the knowledge regarding their competitors, customers and the market changes for
creating new services, which are superior to their market rivals. It is a mechanism that
influence the ability of a company to challenge the old assumptions regarding the market and
the way a company need to be organised for addressing the same. According to Nadarajah
and Syed (2016), the resources that are used for developing the market offerings comprise of
the sources of competitive advantage. These sources include the sensing, differentiation,
competitor responsiveness and customer responsiveness. They can be both enhanced and
exploited by the higher order learning. It is also to note that the construction of the
competitive advantage put forward by Antony, Setijono and Dahlgaard (2016) was also used
for this article by (___) and it has demonstrated the validity and reliability.
Market orientation and business performance
Mezzei, Flynn and Haynei (2016) have suggested that the SMEs can get more benefit
if they can communicate, develop, explore and embrace the orientation of innovation. The
term innovation by Aziz and Samad (2016), is defined as a mental process. This process
helps in creating a new phenomenon in the form of new service, techniques and materials. It
is to note that business performance refers to the performance of a business or the function of
the market structure within a competitive business world. Firms can create high value by
means of being low-cost producer of undifferentiated product and by providing some
differentiated products in more effective manner. With the same, the term market orientation
is defined as “the culture of the firm which emphasis on the creation of value for customers”
by Homburg, Jozic and Kuehnl (2017). It is suggested that companies that have developed
high market orientation are likely to discover the opportunities present in the business market
before their competitors and can establish market share and customer loyalty which further
could help in improving the business performance of the companies. Ozkaya et al. (2015) in
this context have also claimed that market orientation has a more significant and notable
effect on the profit of a firm than the sales has. This is due to the fact that market orientation