THE EFFECT OF ENTREPRENEURIAL COMPETENCY ON PRODUCT INNOVATION AND BUSINESS PERFORMANCE: EMPIRICAL CASES OF FASHION BUSINESS IN CENTRAL JAVA, INDONESIA

Abstract

INTRODUCTION:Various literature describe how businesses can be successful (Ahmad et al., 2010; Baum et al., 2001; Chandler & Hanks, 1994; Chandler & Jansen, 1992). One who runs business successful has the entrepreneurial competence (Chandler & Hanks, 1994; Chandler & Jansen, 1992; Cheng & Dainty, 2003; Huck & McEwen, 1991; Markman, 2007). Competence, possessed by an entrepreneur enables business with competitive advantage compared to others (Meutia et al., 2012). Competence is a combination and integration between knowledge, skills and behaviour (Kyndt & Baert, 2015). Entrepreneurial competency is nothing but capable of making the company effective (Robles & Zarraga-Rodriguez, 2015) so that the goals set can be achieved.Fashion clothes or business is undergoing significant development in Indonesia. Various outlets started popping up due to the needs of consumers with regards to fashion, especially clothes, greatly increased. Model and style of the clothes are getting increasingly diverse today. which makes consumers tend to make purchases because consumers want to follow new trends. Fashion items are unique consumer products marked with short life cycles, high demand volatility, predictability, lower sales and impulsive purchase behavior(Bruce et al., 2004; Moon et al., 2010). Innovation has become an important part in business suits. Innovation is the key to drive the performance in fashion SMEs.The purpose of this study is to examine the influence of competency in entrepreneurial innovation product and business performance. The research questions are as follows:Q1. How does the influence of entrepreneurial competency on product innovation?Q2. How does the influence of product innovation on business performance?Q3. How does the influence of entrepreneurial competency on business performance?LITERATURE REVIEW:Entrepreneurial Competency:Competency is the ability to coordinate the deployment of assets that helped the company to achieve its purpose (Sanchez et al., 1996). Competency enables companies to use their resources efficiently and/or effectively. Competency is a logical extension of the resource-based view (Lado et al., 1992). Because of the complex, tacit knowledge, competencies, and specific companies, they can be a source of competitive advantage (Reed et al., 1990). because competence involves a complex trade-off between the skills of many people, they are embedded in the fabric of the Organization '(Day, 1994).The competence of a businessman became an important factor in achieving excellence in performance to ensure continuous growth and success of a business in the midst of a competitive business environment. Hence the importance of entrepreneurial competence has increased over the past few decades because of the strategic role played by the human factors in particular employers of the company business.Bird (1995) shows that 'entrepreneurial competence' is defined as the underlying characteristics as specialized knowledge, motif, nature, self image, social roles and skills that produce business births, survival and/or growth. Man et al. (2002) mentioned that entrepreneurial competence is defined as the ability of entrepreneurs to do a successful job role.. Johnson and Winterton (1999) observed that various skills and competencies are needed to run a small company qualitatively as well as quantitatively which is different from that of the skills required to run a larger organization. This is at least partly correct because the context of the focus is on individual entrepreneurship (Hunt and Meech, 1991).Product Innovation:Corporate Research Foundation found that one of the keys to bring success to a company is the power of innovation (Cook, 1998). Such innovation should be supported with human resource of high creativity in the company. This innovation is able to bring up something new that ultimately makes strong positioning. …