ANALYSIS OF STRATEGY ORIENTATION TO INCREASE BUSINESS INNOVATION AND PERFORMANCE (Study On SME In Kasongan, Bantul District, Special Region of Yogyakarta)

Abstract

Innovation in SMEs (Small and Medium Enterprises) like art craft pottery in Kasongan Bantul Regency, certainly can improve in terms of business performance of SMEs. This study aims to analyze the factors that affect business performance using variables such as customer orientation, competitor orientation, technological orientation, and innovation as an intervening variables. Departing from the research problem, this study aims was how to improve business performance through innovation and factors that influence innovation that is customer orientation, competitor orientation and technological orientation.The sample of the study was 130 respondents, where 10 respondents not willing to return the questionnaire that has been in charge, within the deadline of the return. So this study yields final respondents as much as 120 respondents, but there are some questionnaires that are not fully answered. So, the results of finals questionnaire that can be analyzed was 110 respondents. Determination of sample was done by purposive sampling technique, where purposive sampling is sampling technique of data source with certain consideration. The respondents in this study are the owners of SMEs art craft pottery in Bantul District. The tool used to analyze was Structural Equation Modeling (SEM). The results of this study were are four hypotheses accepted from seven research hypotheses. The significant factors that influencing innovation are competitor orientation and technological orientation, and factors that directly influence significant to business performance were innovation and technological orientation.