Relationship Between Innovation Activities and Business Performance: A Case Study in Indonesia

Abstract

The study aims to investigate the relationship between innovation activities and business process performance in higher education institution (hereinafter referred to as “HEI”) context. The data was collected using a survey and later analyzed through Partial Least Squares Structural Equation Modelling (PLSSEM) and SmartPLS software. A total of 50 questionnaires were submitted from respondents representing vocational study program management located in Makassar, Indonesia. The findings show that two hypotheses discussed in this study fit the empirical data. Specifically, the results show that there is a positive relationship between innovation activities and business process performance, involving two types of innovation activities, which are exploration activities and exploitation activities, within HEIs. Explorative activity is firmly related to exploitative activity, which furthermore links to business process performance within the HEIs observed. The results confirm that exploration activity can stimulate and lead the HEIs management to generate exploitation activity. For instance, capabilities to absorb knowledge from the external institution may lead this institution to generate advanced academic processes, as well as more efficient and effective managerial processes. The study also signifies ambidexterity capacity, suggesting that it may lead HEIs management to formulate proper strategies in achieving better performance and gaining competitive advantage. Keywords: Innovation Activities, Higher Education, Business Process Performance, Ambidexterity Capacity JEL Classification Code: O30, I23, D23