Analysis of SMEs performance based on innovation practice, market orientation, and innovation barriers

Abstract

This study focuses on factors that can improve SME business performance, from a theoretical market-base view perspective, with a market orientation construct, and from a resource-base view theory, specifically from innovation resources, with a market orientation construct. In addition, this study also aimed to look at the factors that can hinder SMEs from carrying out innovation practices, and how these barriers affected the innovation practices and performance of SMEs. Through an online survey, collected of 352 answered of respondents analyze using Structural Equation Methods. From the results of the AMOS SEM analysis, it was found that market orientation directly affects the performance of SMEs without finding the mediating role of innovation practices. However, innovation practices can mediate the effect of innovation barriers on SME performance in a negative direction. The result of this study has theoretical and practical implications that will also be discussed.