Driving Product Innovation Productivity through Entrepreneurial Orientation and Quality Management Processes: A Contingency Analysis of Malaysia’s Semiconductor Industry

Product innovation productivity (PIP) is a decisive competitive goal for manufacturing firms, yet the mechanisms that drive it remain contested. The strategy literature attributes superior innovation to entrepreneurial orientation (EO), whereas the operations literature emphasises quality management processes (QMP). This study develops and tests an integrated contingency model that examines the direct effects of EO and QMP on PIP and the moderating roles of three transition-economy conditions, market unfairness, policy support and competitive intensity. Survey data were obtained from 222 semiconductor manufacturing firms operating in Malaysia and analysed using covariance-based structural equation modelling (AMOS 29.0). The results confirm that both EO (β = .49, p < .001) and QMP (β = .51, p < .001) exert strong, positive and complementary effects on PIP, together explaining 67% of its variance. Contrary to expectations, strong policy support significantly weakened the EO–PIP relationship (β = −.11, p < .001), and market unfairness significantly dampened the QMP–PIP relationship (β = .09, p < .05); the remaining moderating hypotheses were not supported. Incorporating the two significant moderators raised the explained variance to 82%. The findings indicate that internally cultivated entrepreneurial and quality capabilities are robust drivers of innovation that are largely resilient to external contingencies, while over-reliance on institutional support may erode entrepreneurial advantage. The study contributes a novel contingency framework integrating EO and QMP and offers Malaysian semiconductor managers evidence-based guidance for building an entrepreneurial, continuously improving innovation system.

entrepreneurial orientation, product innovation productivity, quality management processes, semiconductor industry, structural equation modelling

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