Analysis of the Relationships Among Strategic Quality Orientation, Innovation Capabilities and Business Outcomes of Mobile Network Operators in Pakistan

Abstract

This research study explores the relationships among Strategic Quality Orientation (Soft and Hard Quality Management Practices), Innovation Capabilities (Exploitative and Explorative Innovation) and Business Outcomes (Innovation Success and Sustainable Business Growth) of Mobile Network Operators in Pakistan. The telecommunication industry of Pakistan is facing increasing challenges in maintaining quality of services, meeting the diversified customer needs, being innovative and ensuring sustainability in business growth. It has been observed that the operators providing telecommunication services in Pakistan do not follow a steady trend in terms of their growth and sustainability. This can be realized by having a firm commitment on maintaining quality and addressing customer needs by improving existing business practices and adopting emerging technologies. Using the dynamic capability theory, the study suggests that Quality Management and Innovation can be integrated together to ensure Sustainable Business Growth in a step-wise joint improvement framework. Relationships among the variables are modeled in a sequence from Strategic Quality Orientation to Innovation Capabilities and then to Sustainable Business Growth. The study analyzes how Strategic Quality Orientation practices can foster Innovation Capabilities, and what is the mediating role of Hard Quality Management practices in it. It examines how the Innovation Capabilities and their outcomes can ensure sustainable growth of MNOs, and how the direct success of Innovation Capabilities mediates this process. The moderating effects of intensity of market competition and regulatory conditions on the framework have also been examined under the contingency theory perspective. In order to determine and establish these relationships a conceptual framework was formulated, and a vii questionnaire survey was conducted on the target population to empirically examine the framework. Results were obtained on the basis of 485 samples collected through a survey. The proposed framework was tested for three types of model fit (Direct Co-variation, Indirect Mediation and Moderation fit) through Structural Equation Modeling – SEM technique, which suggested good model fitness. The results show that Soft Quality Management practices positively influence Hard Quality Management practices and they both have a positive impact on Innovation Capabilities, while Hard Quality Management mediates this relationship. Innovation Capabilities have a positive impact on Innovation Success. However, only Explorative Innovation has a significant positive impact on Sustainable Business Growth, while, Innovation Success mediates this relationship. The proposed moderating relationships were also found significant. Building on the perspective of dynamic capabilities which suggests that quality and innovation does not necessarily compete for rare resources and hence can exist together, the research study contributes in the field of quality and innovation management by conceptually and empirically establishing a joint framework of these approaches to achieve sustainable growth, with strategic quality orientation as the foundation for innovation. Through conceptual and empirical analysis the study suggests that both quality and innovation are important improvement approaches and setting a conducive quality driven culture, systems and processes with strong performance objectives and continual improvement initiatives enable innovation capabilities of exploitation and exploration. Since quality management practices supplements innovation capabilities, which in turn leads to sustainable growth, the two approaches can be integrated together and coexist in a cumulative improvement framework.