Abstract:
The major objective of the study is to examine the impact of market orientation and
innovation capability on the performance of the small businesses in the Eastern
Province of Sri Lanka. It is observed that many small businesses are being emerged
and in existence after the prolonged war in the Eastern part of Sri Lanka. Therefore, it
is paramount to investigate the market orientation and innovation capability and its
effect on their performance. For a firm to be successful, firms should be market
oriented and be innovative in their products within the competitive dynamic
environment. Therefore, it is essential to have study on the market orientation and
innovation capabilities of these small businesses. Hence, researcher conducted a survey
among 120 small businesses which comprises confectionaries, small restaurants, small
textiles and ice cream makers for selling. Convenient sampling technique was adopted
for this study. The research philosophy is positivism. The study was cross sectional
and the research approach was the deductive. A questionnaire was adopted from the
previous studies. Correlation and multiple regression were used as tool for analyzing
collected data. Analysis reveals that both market orientation and innovative capabilities
are lacking in the small businesses. In the case of market orientation, analysis reveals
that business firms are not responding to the competitive actions. They are also lacking
in the competitive advantage based on customer needs. It is also understood from the
analysis that the proprietors or managers are not discussing the competitors’ strengths
and weaknesses to formulate competitive strategies. Analysis further reveals that they
do not try out new ideas and also could not get new ways to do things during the
operations. These small businesses think that innovation is also risky for them to
continue. As the market orientation and innovation capability are not significantly
contributing to the performance of the small businesses in the Eastern Province of Sri
Lanka, there may be a requirement to train the small business people in the areas of
market orientation and innovation capability. Further studies can be done considering
small businesses in the other part of the country and future study can be done along
with entrepreneurial orientation as a variable since it may provide more findings on the
failure of adopting marketing orientation and innovation capability in the business.
