The Linking of Strategic Planning and Innovation to the Performance of Public Organization in Indonesia

Abstract

The purpose of this study is to develop a model that relates directly and indirectly to the performance achievement of Free Trade Zone Development Agency in Indonesia including the construct of strategic planning and the role of innovation as mediation in supporting the relationship of independent variables and dependent variable. The proposed mpdel was tested using SmartPLS ver. 3.0 for data processing. Data was collected from questionnaires completed by 109 samples who were seating as executives/head of department of Free Trade Zone Development Agencies in Indonesia. The four hypotheses tested in this study conclude that the construct of strategic planning has negative effect and not significant to the performance of the agencies, but indirectly has a significant effect on performance if it through innovation as a mediation. Strategic planning directly have significant relation on innovation, and innovation also evidenced to have strong influence in achieving organization performance. This study indicates that the Agency may achieve great performance when they can practically set up a strategic planning and optimize innovation ability within the organization.