Abstract
This study investigates the mediating effect of business process performance on innovation strategy-cost performance relationship of manufacturing companies in the East Java Province, Indonesia. As many as 170 managers from 170 companies participated in this study. Purposive sampling technique was employed and questionnaires were used to collect data. The data were analysed using the partial least square-structural equation modelling (PLS-SEM) approach. This study provides the new insight on how business process performance mediates the relationship between innovation strategy and cost performance. The findings of the study suggest that managers need to improve their innovation strategy and business process performance to optimise the companies' cost performance.
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