The Influence of Entrepreneurial and Market Orientation on Business Performance through Mediation of Innovation Capability: Implementation of SMEs in Indonesia

Abstract

This study aims to determine the effect of entrepreneurial and market orientation on business performance and test the ability to mediate innovation between entrepreneurial orientation and market orientation on business performance in SMEs in Indonesia. Small and medium enterprises (SMEs) play a significant role in a country's economy. It makes SMEs very interesting to study. The form of research used in this study is a descriptive quantitative research method with a causal approach. The data collection method used a questionnaire with a sample of 219 respondents who owned SMEs through a purposive sampling technique—using Structural Equation Modeling (SEM) with AMOS 24 tools. The results of this study indicate that Entrepreneurial Orientation and Market Orientation have a positive and significant effect on Business Performance. The Ability to Innovate also has a positive and significant effect on Business Performance. It plays a significant mediating role in the Entrepreneurial Orientation and Market Orientation of SMEs in Indonesia.