Abstract
The purpose of this study is to analyze the influence of networks on SMEs performance both directly and indirectly through innovation. The sample in this study were 165 SMEs in East Java, which focused on a number of districts / cities that became the eastern development corridor area and had superior food and beverage businesses. The data that has been collected is then analyzed using path analysis. Four hypotheses were formulated to answer the question: (a) There is a direct effect of networks on SMEs innovation, (b) There is a direct effect of networks on SMEs performance, (c) There is a direct effect of innovation on SMEs performance, (d) There are indirect effects of networks on SMEs performance through innovation. Of the four hypotheses proposed in this study, there are three hypotheses that were accepted and one hypothesis that was rejected. The results of testing the direct influence hypothesis show that there are two pathways that have a significant effect, namely networks on SMEs innovation, as well as innovation on SMEs performance. The results of testing the indirect effect hypothesis show that the networks influences the performance of SMEs through innovation.
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