1. Business Process Management Journal
Emerald Article: Assessing the relationship between firm resources and
product innovation performance: A resource-based view
Lily Julienti Abu Bakar, Hartini Ahmad
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To cite this document: Lily Julienti Abu Bakar, Hartini Ahmad, (2010),"Assessing the relationship between firm resources and
product innovation performance: A resource-based view", Business Process Management Journal, Vol. 16 Iss: 3 pp. 420 - 435
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BPMJ
16,3 Assessing the relationship between
firm resources and product
innovation performance
420
A resource-based view
Lily Julienti Abu Bakar and Hartini Ahmad
College of Business, Universiti Utara Malaysia, Sintok, Malaysia
Abstract
Purpose – This paper seeks an answer to the question about which of a firm’s resources contributes
most to product innovation performance (PIP). The paper aims to adopt the resource-based view (RBV)
and consider both tangible and intangible assets.
Design/methodology/approach – A mail administrated survey was distributed to a randomly
selected list of 700 small and medium enterprises (SMEs) in Malaysia. The response rate was
20.1 percent and the usable response rate was 15.4 percent which is favorable for this type of research.
As comparable to other SME studies and particularly in Malaysia, this relatively low-response rate is
not surprising for mail administrated questionnaire.
Findings – The findings indicate that, in the Malaysian context, intangible resources are the main
drivers of PIP. This is keeping with the expectations of the RBV.
Research limitations/implications – Establishing a cooperative relationship with the Small and
Medium Size Industries Development Corporation of Malaysia plays a significant role in helping us to
garner a larger than expected response rate among the SMEs. Alliances such as this may help
researchers improve survey response rates among smaller manufacturers.
Originality/value – This paper is unique in that it is the first paper to address the relationship
between firm resources and PIP among Malaysian companies. While the paper is primarily descriptive
in nature, it does provide some evidence that can be used in the development and testing of hypotheses
concerning the relationship between PIP and firm’s resources.
Keywords Product innovation, Organizational performance, Manufacturing, Resource management,
Malaysia
Paper type Research paper
1. Introduction
Previous literature suggests that not all resources are equally important to determine
firm success and performance. Findings show that intangible resources are important
determinants for firm’s success. Such assets that are scarce, specialized and difficult to
trade, imitate, or appropriate are viewed as intangible (Barney, 2001; Conner, 2002;
Ray, et al., 2004). This paper focuses on the firm’s resources as determinants for
product innovation success. The failure or the success of the product innovation will be
identified through the product innovation performance (PIP) indicators.
Business Process Management PIP has been defined as the economic financial and non-financial outcomes of
Journal the firm’s product innovation efforts (Cooper, 1984; Cooper and Kleinschmidt, 1987;
Vol. 16 No. 3, 2010
pp. 420-435 Gemunden and Heydebreck, 1992; Hise and O’Neal, 1990; Hollenstein, 1996) which
q Emerald Group Publishing Limited is new or significantly improved in it technical specifications, components and
1463-7154
DOI 10.1108/14637151011049430 material, incorporated software, user friendliness or other functional characteristics

3. (OECD, 2005). The relationship between a firm’s resources and PIP is less documented. Firm resources
Yet, there has been significant interest in product innovativeness in Malaysia in recent and product
years. Even so, the innovativeness of a new product and innovation capability is
important to present opportunities for Malaysia manufacturing firm in terms of growth innovation
and expansion into new areas as well as to allow them to gain competitive advantage.
2. Firm’s resources 421
Through the empirical exploration, firm’s resources have been classified into six
strategic resources that are:
(1) physical;
(2) reputational;
(3) organizational;
(4) financial;
(5) human intellectual; and
(6) technological (Amit and Schoemaker, 1993; Barney, 1991; Puente and Rabbino,
2003).
Entrepreneurial orientation (EO) has been considered as human intellectual resources
since manufacturing firms that are entrepreneurial in nature also strive to gain
competitive advantage and adopt both technological and non-technological innovation
(Weerawardena and Coote, 2001). Fitriah and Wafa (2006), in their recent research, found
that Malaysian manufacturing firms have a high inclination towards the business
orientations whereby EO and innovative capability affects innovation. In addition,
previous literature stated that soft factors such as employee involvement, management
commitment, customer focus, entrepreneurial characteristics, organizational context
and the external environment are strategic factors that influence firms effectiveness
(Dollinger, 1999; Hashim, 1999; Kao, 1989; Tracy, 1992; Zimmerer and Scarborough,
1998).
Resources can be defined as the productive assets of firms, the means through which
activities are accomplished (Mathews, 2006). In the same manner, it also has been
defined as stocks of available factors (knowledge, physical assets, human capital, and
other tangible and intangible) that are owned or controlled by the firm, which are
converted into final products or services efficiently and effectively (Amit and
Schoemaker, 1993; Capron and Hulland, 1999). Although small and medium enterprises
(SMEs) have limited resources, some of them are unique and are well-positioned
compared to their competitors to create value products for consumers and also provide
the greatest potential for wealth creation and redistribution (Day and Wensley, 1988).
Generally, resources can be categorized as tangible and intangible entities. These
entities are all the object of entrepreneurial attention that can be acquired and take their
place as assets on the company’s balance sheet (Mathews, 2006). Tangible resources
include capital, access to capital and location such as location of the buildings,
warehouse and other facilities. Intangible resources consist of knowledge, skills and
reputation and EO such as proactiveness, innovativeness and risk-seeking ability
(Runyan et al., 2006). Even though it is much easier to protect tangible resources and
property such as physical and financial assets in a more concrete form compared to
intangibles where many factors could make them flow out of the company, intangible

4. BPMJ assets are contributing more than tangible assets in creating value (Apintalisayon,
16,3 2008).
The first published papers in entrepreneurship identifies resources in the context of
resource-based view (RBV) (Greene and Brown, 1997) that are human, social, physical,
organizational and financial resources. Technological resources have been identified in
subsequent research as an important dimension for national economic development
422 efforts (Venkataraman, 2004). Resources may be acquired in a simple state and
combined together by the firm in distinctive combinations that are certainly not easily
traded (Mathews, 2006). The recombination of resources, activities and linking routines
within the firm is the implementation of the strategic choice and it leads to a new set of
activities, new sources of revenue and a new business model for the firm (Mathews,
2006). The previous listed activities can be categorized as innovation. Even though a
company may be working on an innovation, this does not necessarily mean that a
successful product will result (Aboulnasr et al., 2008).
Innovation is a driver of competitive advantage with a combination of resources that
creates higher-order competencies that can be referred as capabilities. Organizational
capabilities has been defined as a firm’s collective physical facilities, skills of employees
and firm capacity to deploy its assets, tangible or intangible to perform a task or activity
to improve performance (Amit and Schoemaker, 1993; Chandler, 1990, O’Regan et al.,
2006; Teece et al., 1997).
RBV theoretically predicts intangible resources as the important factors for firm
success (Amit and Schoemaker, 1993; Barney, 1991; Conner, 2002; Hall, 1993; Michalisin
et al., 1997). For all these reasons, intangibles are able to support a greater level and
breadth of activity than are tangible resources. More recent research has shifted attention
from tangible to intangible resources as it may be more important from a strategic point of
view, since they bring together more frequently the requirements necessary for producing
sustainable advantage: to be valuable, rare and difficult to imitate and replace by
competitors (Barney, 1991; Hitt et al., 2001). This paper focuses on six types of intangible
resources namely physical, financial, human/intellectual, organizational, reputational and
technological resources.
3. RBV: key predictor for firm’s resources and PIP
Penrose (1959) is identified as one of the earliest major contributors to the theoretical
underpinnings of the RBV (Kor and Mahoney, 2000; Rugman and Verbeke, 2002). The
heterogeneity approach posits that a firm does not achieve competitiveness because their
resources but because of its competence in making better use of it resources whereby the
productive services of resources must be discovered over time as entrepreneurs interact
with its resources and make subjective decision about resource allocation, deployment and
maintenance (Penrose, 1959). The study stressed that the firm is made up of a group of
resources not a single unit resource.
This is in common with core competencies concept in RBV of competition that
explain a firm’s success based on its competencies (Ritter and Gemunden, 2004). Bain
(1959) type industrial organization theory also supported the heterogeneity of firm
resources especially in the form of legally protected assets such as patents, which are
unique to individual firms. In addition, the theory concentrates on examining the effects
of concentration, firm size and entry barriers as the determinants of firms success

5. (Feinberg, 2007). A firm’s entrepreneurial growth process involves two forms of Firm resources
heterogeneity: and product
(1) Resource heterogeneity. Firms differ from one another in their resources that innovation
influences strategy and helps explain sustained profitability differences among
firms.
(2) Resources productive services heterogeneity. Firms with similar bundles of
resources significantly differ in their entrepreneurial productivity (Barney, 423
1991; Penrose, 1959).
The RBV highlights the firm as a unique collection of resources (Barney, 1986, 1991;
Wernerfelt, 1984), but the theory emphasizes that not all these resources possess the
potential to provide the firm with a sustained competitive advantage (Clulow, 2007).
Previous literature on RBV frequently focused on resources as a stable concept that can
be identified at a point in time and will endure over time (Dunford et al., 2003). When
referring to the RBV, most researchers focus in strategic context, presenting resources
and capabilities as essential to gain a sustained competitive advantage and superior
performance (Ferreira and Azevedo, 2007).
Superior performance is usually based on developing a competitively distinct set of
resources heterogeneity and strategic deployment and a capable workforce in a
well-conceived strategy to sustained superior returns (Fahy, 2000; Collis and Montgomery,
1994). Indeed, strategists who embrace the RBV also point out that competitive advantage
comes from aligning skills, strategic deployment, capable workforce with organizational
systems, structures, and processes that achieve capabilities at the organizational level
(Salaman et al., 2005). On the other hand, firms with bundles of resources that are valuable,
rare, inimitable and non-substitutable can implement value creating strategies not easily
duplicated by other firms (Barney, 1991). However, it is quite difficult to find a resource
which satisfies the Barney’s entire VRIN criterion except for a monopolistic type of
company.
Table I highlights the historical view of the underpinning theory and it contribution
to RBV. The information contained within this table has been taken from Foss et al.
(2006) and Galbreath (2004).
Integration between the three theories (Schumpeterian, Penroses and RBV) initiates
the importance of firm’s internal resources as firm’s capabilities subject to their
uniqueness and their ability to create competitive advantage to the firm. Product
innovation would be source of competitive advantage and also as a determinant of firm’s
success. Its performance indicates portion of overall firm’s performance based on the
effective use of firm’s resources. In this case, Malaysian SMEs which are known to have a
scarcity of resources need to have entrepreneurial capabilities that are valuable, rare,
inimitable and non-substitutable which suit the RBV theory.
4. Product innovation performance
PIP has been defined as the economic financial and non-financial outcomes of the firm’s
product innovation efforts (Cooper, 1984; Cooper and Kleinschmidt, 1987; Gemunden
and Heydebreck, 1992; Hise and O’Neal, 1990; Hollenstein, 1996). On the other hand, the
relationship between SME’s resources and PIP has been less documented. Yet, there
has been significant interest in product innovativeness in Malaysia in recent years.
Even so, the innovativeness of a new product and business innovation capability is

6. BPMJ
Authors Contribution to RBV
16,3
Nelson and Winter (1982) Technological innovation and “creative destruction” basis of
and Schumpeter (1934, 1942) competitive advantage
Managerial action and entrepreneurialism influence firm success
rather than market power or industry structure
424 Firm view as bundle of resources and hierarchies of activities
governed by routines and rules
Penrose (1959) Firm as bundle of resources
Firm’s growth is based on the effective use of resources and limited by
managerial resources
Entrepreneurship exercised by team, emphasizes alertness as well as
judgment
Services rather than resources are stressed
Barney (1991), Rumelt (1987) Suggests that to be sources of competitive advantage, resources must
and Wernerfelt (1984) be valuable, rare, inimitable and non-substitutable
Individual resources as unit of analysis
Focuses on state (equilibrium) where firms earned sustained
Table I. competitive advantage
The historical view of the A strategic resource to one firm is also a strategic resource to another
underpinning theory and firm. Usually, no distinction between resources and their services
its contribution to RBV
and entrepreneurship Sources: Foss et al. (2006); Galbreath (2004)
important to present opportunities for businesses in terms of growth and expansion
into new areas as well as to allow businesses to gain competitive advantage.
An effective performance measurement system ought to cover more than just financial
measures (O’Regan and Ghobadian, 2004). Financial measures mostly reflect the firm’s
emphasis on achieving quantifiable performance objective such as profitability, sales,
asset, etc. (Heidt, 2008). Recently, researchers introduced several non-financial
determinants of PIP and the relative positioning of the firms against the leading
competitor (Alegre et al., 2006; Ulusoy and Yegenoglu, 2005). This type of measurement is
becoming popular to overcome the limitation of the financial measurement such as, high
probability of low-response rate due to reluctance to share confidential data.
For example, non-financial performance scale constructed. in French biotechnology
firms (Alegre et al., 2006), focusing on two different dimensions: efficacy and efficiency,
whereby both dimension reflects the degree of success of an innovation and the effort
carried out to achieve that degree of success (Griffin, 1997; OECD-EUROSTAT, 1997;
OECD, 2005; Valle and Avella, 2003; Wheelwright and Clark, 1992; Zhan and Doll, 2001).
PIP shows up the efficiency and effectiveness of implementation of product ideas
whereby it can be determined objectively (analyze in detail) and subjectively (implemented
in innovation surveys) by the cost and time of the innovation project (Alegre et al., 2006).
The efficiency and effectiveness of implementation have been broken down into resource
management (workflow and financial resources) and organizations business practices
(business planning process and roles and responsibilities) (Ryan, 2005). Similarly,
Wernerfelt (1984) refers that the term of resources frequently limited to those attributes that
enhance efficiency and competitiveness. Whereas, Ulusoy and Yegenoglu (2005) identified
that the determinants of competitiveness in their study of Turkish manufacturing industries
are product quality performance, delivery lead time and product cost (the most important

7. determinants for manufacturing sectors: food processing, textiles, metal and chemical Firm resources
industries). The chemical industry appears to be the leading sector with their performance in and product
new product development.
Measurement scale of product performance in terms of its innovation, marketability, innovation
supply chain and other determinants has been developed by several authors (Table II).
These measurement scales mostly focused on non-financial measurement to identify
product performance. However, in particular, RBV studies performance can be classified 425
into financial (accounting-based measurement such as cash in hand/at bank, profitability,
sales growth, etc.) and non-financial (market share, new product introduction, product
quality, marketing effectiveness or manufacturing value-added) (Kapelko, 2006).
Profitability and sales growth is the most common measurement of performance
(Doyle, 1994; Kasim et al., 1989).
It was also argued that there are four resources and capabilities affecting firm’s new
product performance in foreign markets, i.e. market orientation, host country knowledge,
absorptive capacity and product innovation, thus it shows that product innovation has a
direct impact on new product performance whereby its influence has been moderated by
market and technology turbulence in the host country market (Murray and Chao, 2005).
Previous literatures on resource-based tradition also suggested that intrinsic attributes of
resources and capabilities can slow innovation, and it is not clear when this effect
outweighs the benefits of inimitability.
5. Research methodology
This section elaborates the method of data collection for the present research together
with its justifications.
Questionnaire development and mail survey
The procedure was based upon accepted methods of scale development for a business
research (Cooper and Schindler, 2003). The construct domain for the present study was
Authors Measurement scale of PIP
Heidt (2008) Changes in new product introduction, technical and technological
aspects, market response, product quality, product introduction/
development time, profitability and market share
Alegre et al. (2006) Replacement of products, extension of product range, development of
new product, market share evolution, opening new markets, project
development time, number of innovation project, cost per innovation
project and global satisfaction degree
Ulusoy and Yegenoglu (2005) Brand product, after sales service, certified product, ease of use,
appearance, short delivery period, product quality performance,
production cost and customer-focused product
O’Regan and Ghobadian (2004) Advertise/promote the product or service, deliver a broad product
range, distribute products broadly, respond to swings in volume,
make rapid design changes, compete on price, deliver products
quickly, deliver products on time, involvement of top management,
involvement of line managers, flexibility to adapt to unanticipated
changes, provide after sales service, provide high-performance Table II.
products and offer consistent quality Measurement scale of PIP

8. BPMJ derived from two main sources which are the literature and experts recommendations.
16,3 Those questionnaires were self-developed questionnaires and were posted to the
respondents.
The main reason for choosing mail survey despite of other types of research surveys
were due to sensitive questions such as company profits, sales, and number of
employees that were requested in the survey. In addition, this type of survey provides a
426 wider geographical coverage at a lower cost. However, it is expected that this method
yield a lower rate of response. Learning from previous experience, it was relatively
difficult to get in touch with the technology entrepreneur in person because they are
usually very busy. Thus, by using mail survey it enables the individuals to evaluate
and comprehend the questionnaire and response to it in the comfort of their office.
As mentioned earlier that this type of survey usually yields a lower response rate,
however, it allows the individual to spend their available free time to answer the survey
without any external pressure. Besides that, they were given the required flexibility to
respond to the questionnaire at any designated time or setting, which indirectly allows
them to provide a more accurate response. Mail survey usually allows anonymity
of the respondents as long as the information given is kept confidential and used only for
the purpose of the research. Anonymity of the respondents and the accuracy of the
responses could not be assured if the survey were done through face-to-face interview
session (Cooper and Schindler, 2003).
Respondents
The sampling frame for this study is the SME Directory – Bank Negara Malaysia
(2007) SME Info Portal, provided by United Nations Development Programmes (2007).
SMEs were chosen as they tend to be more vulnerable to internal and external
environmental forces with larger firms in aspects such as access to resources, financial
capital, entrepreneurial traits, etc.
This directory contains the list of 15,150 SMEs in Malaysia (as at 28 December 2007)
which have been listed by state and organized in alphabetical order, divided by seven
business sectors including the list of 5,819 manufacturing (including agro-based) SMEs
in Malaysia. Out of that, 700 individuals were selected randomly to take a survey.
They were including the business owners who work in various sizes of
manufacturing firms, which comprises 12 industrial. The list is accurate since it was
regularly up to date, included the elements that belongs to target population and there is
no duplication of elements. The present study tested the measurement scale by focusing
on multi-industry in manufacturing sector. This seems to be appropriate sector for the
following reasons:
. manufacturing SME mostly involved in innovation activities;
.
it has experienced manufacturing technology upgrade and an increasing level of
product innovation in recent years; and
.
it is adequately large to meet sample size requirement sectors.
Every firm in the database has had equal chance to be selected based on a systematic
random sampling. A self-addressed returned envelope is attached along with the
questionnaire.
A number of 141 responses were received. Out of that, they were 29 firms with no
innovation activities and another four were returned unanswered due to change of address.

9. Firms with no innovation have been detected from the filter question provided in the Firm resources
questionnaire. and product
6. Results and discussion innovation
Frequency analyses were obtained for all the firms’ data and classification variables.
The summary of the analysis are shown in Table III.
In the survey, PIP was measured using ten items with two dimensions (financial and 427
non-financial) which has been adapted and modified from previous research (use
five-point Likert scale, ranging from 1 – very low achievement to 5 – very high
achievement). A reliability analysis of the ten items was undertaken and found to be
reliable. Cronbach’s alpha coefficients of 0.889 emerge for the non-financial variables
and 0.715 for financial variables. This showed that, there is average to high
achievements in PIP, as in the descriptive statistics shown in Table IV.
No. Profile of respondents Valid percent
1 Firm’s age
0-5 years (young) 17.6
6-10 years (intermediate) 18.5
More than ten years (old/established) 63.94
2 Company size in terms of annual sales turnover
Small 56.5
Medium 43.5
3 Company size in terms of full time employees
Small 55.15
Medium 41.85
4 Industry types
Electrical and electronic 23.1
Engineering support industry 3.7
Machine and equipment 6.5
Food and beverage 28.7
Petrochemical and polymer 6.5
Rubber products 7.4
Textiles and apparel 4.6
Transport and equipment 2.8
Basic metal product 4.6
Life science industry 4.6
Wood based 6.5
Others 0.9
5 Firms with R&D department 55.6
6 Firms with no R&D department 44.4 Table III.
7 Firms with product innovation expertise 75.0 Summary of frequency
8 Firms with no product innovation expertise. 25.0 distributions
n Minimum Maximum Mean SD
PIP non-financial 108 1 5 3.45 0.854 Table IV.
PIP financial 108 1 5 3.57 0.783 Descriptive statistics
Valid n (listwise) 108 for PIP

10. BPMJ Firm’s resources variables were measured using 22 items in six dimensions: physical,
16,3 financial, human intellectual, organizational, reputational and technological (using
five-point Likert scale, ranging from 1 – comparatively very low impact on PIP to 5 –
comparatively very high impact on PIP). A reliability analysis of the six dimensions
was undertaken and found to be reliable as in Table V.
Overall, as stated in Table VI, firm’s resources given average to high impact on
428 firm’s PIP, whereby buildings give the lowest impact and product reputation shows
the highest impact on PIP compared to other factors.
This research wishes to summarize the structure of a set of variables. With that, an
exploratory factor analysis has been used. An examination of correlation matrix for
both PIP and firm’s resources has exceeded 0.3, and so the matrix is suitable for
factoring. Table VII shows that the Bartlett’s test of sphericity are significant and the
Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy are far greater than 0.6.
Cronbach’s alpha based on
Dimensions Cronbach’s alpha standardized items No. of items
Physical 0.827 0.821 4
Financial 0.842 0.841 3
Entrepreneurial 0.878 0.878 6
Table V. Reputational 0.875 0.876 3
Reliability analysis Organizational 0.817 0.818 3
for firm’s resources Technological 0.847 0.848 3
Firm’s resources n Minimum Maximum Mean SD
Buildings 108 1 5 3.18 1.142
Location of buildings 108 1 5 3.26 1.147
Physical structure 108 1 5 3.30 1.146
Machineries 108 1 5 3.82 1.003
Financial capital 108 1 5 3.68 1.214
Financial investment 108 1 5 3.44 1.202
Cash from operation 108 1 5 3.66 0.997
EO-innovativeness1 108 1 5 3.75 1.086
EO-innovativeness2 108 1 5 3.90 1.012
EO-proactiveness1 108 1 5 3.77 1.189
EO-proactiveness2 108 1 5 3.84 1.104
EO-risk seeking1 108 1 5 3.47 0.971
EO-risk seeking2 108 1 5 3.32 1.057
Company’s reputation 108 1 5 3.87 0.928
Customer service reputation 108 1 5 3.86 0.952
Product reputation 108 1 5 3.93 0.983
Organizational structure 108 1 5 3.55 0.970
Organizational culture 108 1 5 3.67 0.995
Organizational policies 108 1 5 3.60 1.032
Held in secret technology 108 1 5 3.68 1.075
Table VI. New/improved product design 108 1 5 3.55 1.179
Descriptive Statistics Unique technological know-how 108 1 5 3.88 1.021
for Firm’s Resources Valid n (listwise) 108

11. Table VIII displays the communality of the items and items regarding “success in Firm resources
gaining market share” (PIP) and “machineries” (firm resource) have the lowest and product
communalities (Table IX).
In reference to the eigenvalues, no factors to be extracted from the PIP items since all innovation
of the eigenvalues are lower than 1. The previous factors which represent financial and
non-financial indicators for PIP suggested to be named “firm’s product innovation
performance”. However, five factors to be extracted from the firm resources items 429
because they have eigenvalues greater than 1. If five factors were extracted, then the
66 per cent of the variance would be explained. The rotated factor matrix shows that
technological and organizational resources fall under one factor. Technological
resources in this research considered to be more on in-house technology (product design,
held in secret technology and unique technological know-how) rather than external
technology outside the company. It is not surprising if technological resources have been
categorized as organizational resources. From the result, these paper suggestions for the
names of the factors are:
(1) reputational;
(2) organizational;
(3) human intellectual;
(4) physical; and
(5) financial.
Meanwhile, both screen plots which displays the eigenvalues for each factor suggests
that there is one predominant factor for both PIP and firm’s resources. Overall, the
assessment of factor analysis in this study proposed that the scales are existent and
valid in Malaysia context. The above findings are also in line with the RBV point of view
Test PIP Firm’s resources
KMO measure of sampling adequacy 0.907 0.840
Bartlett’s test of sphericity
Approx. x 2 601.053 1,720.786
df 45 0.231 Table VII.
Sig. 0.000 0.000 KMO and Bartlett’s test
Initial Extraction
Regularly of change of PI 0.565 0.477
New product introduction 0.552 0.472
PI technically superior 0.673 0.649
Technological b/through 0.555 0.457
Market response 0.584 0.554
quality 0.660 0.649
PI introduction time 0.505 0.539
Profitability 0.611 0.626 Table VIII.
Success in gaining market share 0.350 0.358 Communalities
Improved sales growth 0.513 0.454 of PIP items

12. BPMJ
Initial Extraction
16,3
Buildings 0.743 0.713
Location of buildings 0.771 0.804
Physical structure 0.759 0.786
Machineries 0.500 0.324
430 Financial capital 0.806 0.939
Financial invesment 0.723 0.650
Cash from operation 0.558 0.473
EO-innovativeness1 0.686 0.702
EO-innovativeness2 0.703 0.687
EO-proactiveness1 0.733 0.599
EO-proactiveness2 0.769 0.731
EO-risk seeking1 0.734 0.709
EO-risk seeking2 0.615 0.520
Company’s reputation 0.769 0.707
Customer service reputation 0.779 0.606
Product reputation 0.755 0.642
Organizational structure 0.710 0.620
Organizational culture 0.665 0.617
Organizational policies 0.639 0.612
Table IX. Held in secret technology 0.716 0.746
Communalities of firm’s New/improved product design 0.685 0.663
resources items Unique technology know-how 0.679 0.585
that focuses on intangible resources as the main drivers for firm’s performance which
comprise the element of product innovation as one the performance indicators. Firm’s
performance can be measured by looking at the differences between firm’s profitability
and the average profitability of the industry (Villalonga, 2004). The present paper
focuses on firm’s specific performance that is PIP. Malaysian manufacturing firms have
been found gained high profitability from its product innovation. It can be concluded
that their achievement in innovation are relatively higher especially through its
intangible resources, the product reputation.
Intangible resources such as product reputation are difficult to acquire and develop or
replicate by others. Product reputation that mixes up with innovation activities will create
excellent PIP as reputation lies in customer’s mind. Good reputation creates opportunities
for Malaysian manufacturing companies to be more innovative. The performance of
product innovation in Malaysian manufacturing companies can be identified through the
positive market response and the improvement in the product design itself. Most
63.9 per cent of the companies in this study are more than ten years since incorporation.
Established company is well known in their reputation and also having opportunities
gaining more loans and financial assistance for their product innovation. Out of 141, 29
were non-innovative firms. The reason why there are non-innovative are because of the
financial constraint and lack of technology. This is quite similar with finding by
Kaufmann and Todtling (2002) who discovered that besides confronted with financial
constraints, SMEs also having manpower bottlenecks in terms of few of qualified
personell in product innovation.
Among of all resources including product reputation, organizational, technological
and human/intellectual, building alone seems to be given lowest impact on firms PIP.

13. However, the strategic location of the building with a proper warehouse, attractive Firm resources
showrooms, etc. will affect the performance of product innovation. The location of the and product
building is very important to ensure there are adequate supply of labour and raw
materials for production process as resources are the ultimate tools that used by the innovation
firms to improve profitability, productivity and innovation (Montana and Charnov,
2000). In addition, a manufacturing firm must consider proximity to suppliers and
customers, as well as local taxes and regulations. This kind of proximity is very practical 431
for ease of communication among the previous-listed parties. Good communication
among the parties will create good reputation especially for the manufacturing firms
which offers products or services. As mentioned before, product reputation will then be
the starting point for the firm to add more values to the product in order to create
customer awareness and maintaining networking with its suppliers, financial
institutions, government and other related parties.
Conclusions and limitations
It can be concluded that the PIP can be viewed as one of firm’s specific performance
of the product innovation such as changes in new product introduction, technical
and technological aspects, market response, product quality, product introduction/
development time, profitability and market share. The study support RBV point of view
which stated intangible resources, particularly “product reputation” as the main
indicators for PIP. Product reputation considered to be unique since it was difficult to
acquire and replicate by others. Furthermore, reputation is something that lies in customer
minds which are abstract and differentiate one firm with other firms. Established firms
with larger size having opportunities in gaining product reputation compared to younger
firm as there are ease of getting financial assistance and mostly having qualified personnel
in product innovation and research and developments (R&Ds).
Several limitations of this research should be mentioned. First, the study is mainly
restricted to the context of study; therefore, it will be problematic to generalize its
findings to other sectors. Also, as the ground of this study in PIP is quite new, the data
must be interpreted cautiously. The study also constrained by the relatively small data
due to the constraint of time. Finally, exploring firm’s resources with PIP in
entrepreneurial context in manufacturing firms is a very challenging task especially in
getting questionnaire responses from the firm owner. Future research are encourage
using qualitative methods focusing in one industrial sector/case study to a better
understanding of the nature of product innovation and firm resources.
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Corresponding author
Lily Julienti Abu Bakar can be contacted at: julienti@uum.edu.my
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