The Influence of Strategic Orientations and Innovation Capability on Small and Micro Farm Performance NORAINDAH ABDULLAH FAHIM ROHAIZAT BAHARUN Faculty of Management Universiti Teknologi Malaysia 81310 UTM Johor Bahru JOHOR indafahim78@gmail.com, m-rohaizat@utm.my Abstract: - The objective of this paper is to examine the determinants of strategic orientation (SO), which consist of market learning orientation (MLO) and entrepreneurial orientation (EO) and innovation capability (IC) towards small firm’s performance. According to the resource based view theory, MO and LO are significant antecedents of firm performance but many of the studies measured both as separate constructs. These two orientations are complementary in term of behavioral perspective where firm will learn and focus on market and later can help in the contribution of marketing towards business strategy. While the combination of MLO and EO is significant to proactively identify any changes related with the environment. Considerably, IC is regard as a dynamic capability approach to enable firm to sustain in this volatile market. The study is to explore the MLO, EO and IC of small and micro farmers of Malaysia using 235 respondents from Northern, Southern, Western and Eastern regions. The statistical analysis were done through scale’s reliability, factor loading determination and hypotheses testing. The testing showed that MLO and EO have positive impact to IC as well as farm performance. The contribution of this paper are on the conceptual model as well as the hypotheses development, particularly how MLO and EO give small and micro farmers’ ability to innovate and implement it towards farm’s performance. Key-Words: market orientation, learning orientation, market learning orientation, entrepreneurial orientation, innovation capability, small and micro farm performance 1. Introduction Strategic orientation (SO) studies has emerged more than thirty decades ago. Until present, the study of SO is still relevant and mushrooming with different types of orientations, either individually, or complement with other orientations, either for firms’ growth [50] or firms’ innovation [65]. In this paper, two types of SO are selected, the market learning and entrepreneurial orientations. Market learning (ML) is the exploration and exploitation ability of firm to organize, appropriate and apply new external knowledge or build from prior existing knowledge and use it for the development of innovation [28]. Market learning is regard as one of the firm’s business strategy in relation to the importance of firm to orient their firms’ learning behavior about market to gain competitive advantage position. Different concepts related with market learning are recognized such as market-based organizational learning (MBOL) by Sinkula et al. [73] or market learning capability by Weerawardena [78] and have been applied in various sectors or industries such as towards the exporting firms [20],[9], family businesses [83], high-tech business [28] or manufacturing [44]. Moreover, many of the market learning related studies were conducted in the developed countries [82] or in the Asian countries [28], [44] However, to the knowledge of author, limited number of studies on market learning have been done towards the small or micro sized firms, particularly in the developing countries, where these countries are facing with limited domestic market growth [76]. Albeit ML will lead firms towards superior growth and innovation performance, the impact of ML towards this sector is undeniable and significance. This paper will also highlight on the literature gap, specifically on agricultural sector, by analyzing two types of orientations, the firm’s market learning orientation (MLO) and entrepreneurial orientation (EO). The capability of exploration and exploitation of MLO in gaining market knowledge alone is not enough. Firms need high-level of EO to fuel firms with a greater growth potential instead only depend on the high level of MLO [19]. Based from the resource based view (RBV) theory, even though the market knowledge and EO are distinct construct, Noraindah Abdullah Fahim, Rohaizat Baharun International Journal of Economics and Management Systems http://www.iaras.org/iaras/journals/ijems ISSN: 2367-8925 75 Volume 2, 2017