The Negative Effect of Market Orientation on SMEs' Marketing Performance in The Creative Economy Sector, and How Innovation Mediating it

Authors

  • Sarli Rahman Institut Bisnis dan Teknologi Pelita Indonesia
  • Budiyanto Budiyanto Sekolah Tinggi Ilmu Ekonomi Indonesia
  • Suwitho Suwitho Sekolah Tinggi Ilmu Ekonomi Indonesia

DOI:

https://doi.org/10.37385/ijedr.v2i2.272

Keywords:

Market orientation, Marketing erformance, Product innovation, Process Innovation, ,SMEs

Abstract

There are problems with the performance of SMEs in the creative economy sector in Indonesia. At least about 34% to 35% of SMEs in the creative economy sector experience problems related to marketing and demand. So, this study aims to prove the effect of market orientation on the SMEs' marketing performance of the creative economy sector and to prove the mediate roles of innovation. By using a sample of 200 respondents, and Structural Equation Modeling (SEM - AMOS) analysis technique, surprising results were obtained. The results are that market orientation affects marketing performance negatively. However, product innovation and process innovation can be a solution for this.

References

Alizadeh, A., Alipour, H., & Hasanzadeh, M. (2013). Market Orientation and Business Performance Among Smes Based In Ardabil Industrial City-Iran. Kuwait Chapter of Arabian Journal of Business and Management Review Vol. 2, No.7, 38-47.

Anim, P.A., Agbemabiese, G. C., Acheampong, G., Adams, M., & Boakye, E. (2018). Market Orientation, Innovation and Business Performance: Insight from Womenpreneurs in the Fashion Industry in Ghana. Journal of Creativity and Business Innovation 4: 5-27.

Atalay, M., Anafarta, N., & Sarvan, F. (2013). The relationship between innovation and firm performance: An empirical evidence from Turkish automotive supplier industry. Procedia - Social and Behavioral Sciences 75 (2013), 226 – 235.

Baker, W. E., & Sinkula, J. M. (1999). Learning Orientation, Market Orientation, and Innovation: Integrating and Extending Models of Organizational Performance. Journal of Market Focused Management 4, 295–308.

Baron, R. M., & Kenny, D. A. (1986). The Moderator–mediator Variable Distinction in Social Psychological Research: Conceptual, Strategic, and Statistical Considerations. Journal of Personality and Social Psychology 51(6), 1173.

Brik, A.B., Ben, A., & Mellahi, K. 2011. Market Orientation, Corporate Social Responsibility, and Business Performance. Journal of Business Ethics (2011) 99, 307–324.

Buli, B.M. 2017. Entrepreneurial orientation, market orientation and performance of SMEs in the manufacturing industry. Management Research Review, 40(3): 292–309.

Charles, L., Joel, C., & Samwel, K. C. (2012). Market Orientation and Firm Performance in the Manufacturing Sector in Kenya. European Journal of Business and Management, Vol 4, No. 10, 20-28.

Eggert, A., Thiesbrummel, C., & Deutscher, C. (2014). Differential effects of product and service innovations on the financial performance of industrial firms. J Bus Mark Manag 7(3), 380–405.

Farida, N. (2016). Determinants of Marketing Performance: Innovation, Market Capabilities and Marketing Performance. Jurnal Dinamika Manajemen. 7(1), 59-65.

Fontana, R., & Nesta, L. (2009). Product innovation and survival in a high-tech industry. Review of Industrial Organization, 34(4), 287–306.

Fornell, C., & Larckers, D. F. (1981). Structural equation models with unobservable variables and measurement error: algebra and statistics. Journal of Marketing Research, 18(3), 382–388.

Geschka, H. (2015). Innovation Strategy: An Approach in Three Levels. Kindai Management Review 3, 129-140.

Hair, J.F.JR., Anderson, R.E., Tatham, R.L., & Black, W.C. (2010). Multivariate Data Analysis. Seventh edit. Prentice Hall Internatiional, inc.

Haryanto, A.T., & Haryono, T. (2015). The Influence of Market Orientation on Innovation Type and Enterprise Performance. Polish Journal of Management Studies 11(1), 68-78.

Helmers, C., & Rogers, M. (2010). Innovation and the Survival of New Firms in the UK. Rev Ind Organ (2010) 36, 227–248.

Hilman, H., & Kaliappen, N. (2014). Market Orientation Practices and Effects on Organizational Performance: Empirical Insight From Malaysian Hotel Industry. SAGE Open, October-December, 1-8.

Himam, M.N.E. (2020). The Central Government's Efforts in Helping Online (Online) and Information Technology-Based Economic Activities Amid the COVID-19 Outbreak. Ministry of Tourism and Creative Economy, https://uclg-aspac.org/wp-content/uploads/2020/05/NH-Peluang-Ekonomi-UMKM-V7.pdf.

Hooper, D., Coughlan, J., and Mullen, M.R. (2008). Structural Equation Modelling: Guidelines for Determining Model Fit. Electronic Journal of Business Research Methods Volume 6 Issue 1 2008 (53-60).

Hox, J.J., & Bechger, T.M. (1998). An introduction to structural equation modelling. Family Science Review, 11, 354-373.

Hox, J.J., & Bechger, T.M. (1998). An introduction to structural equation modelling. Family Science Review, 11, 354-373.

Hudson, M., Smart, A., & Bourne, M. (2001). Theory and practice in SME performance measurement systems. International Journal of Operations & Production Management 21(8), 1096-1115.

Indonesian Creative Economy Board. (2019a). 2019 Creative Economy Agency Performance Report. Indonesian Creative Economy Board, Jakarta.

Indonesian Creative Economy Board. (2019b). Graphic Info on the Distribution of Creative Economy Actors. Indonesian Creative Economy Board & Central Bureau of Statistics of the Republic of Indonesia, Jakarta.

Irwan , Ch., Andari, T. T., & Mukmin, M. N. (2019). The Effect of Market Orientation and Entrepreneurship on Performance in Costomer Perspectives. 3rd International Conference for Social Science. Ho Chi Minh City, Vietnam.

Jimenez, D.J., & Valle, R.S. (2011). Innovation, organizational learning, and performance. Journal of Business Research 64, 408–417.

Jimenez, D.J., & Valle, R.S. (2011). Innovation, organizational learning, and performance. Journal of Business Research 64, 408–417.

Jyoti, J., & Sharma, J. (2012). Impact of Market Orientation on Business Performance: Role of Employee Satisfaction and Customer Satisfaction. Vision, 16, 4, 297–313.

Kajanus, M., Heinonen, M., Eskelinen, T., & Pellikka, J. (2011). Challenges in Commercialisation Processess of Product Innovation among SMEs. Conference: EBRF At: Aalto University, Helsinki.

Karabulut, A.T. (2015). Effects of Innovation Types on Performance of Manufacturing Firms in Turkey. Procedia - Social and Behavioral Sciences 195, 1355 – 1364.

Karabulut, A.T. (2015). Effects of Innovation Types on Performance of Manufacturing Firms in Turkey. Procedia - Social and Behavioral Sciences 195, 1355 – 1364.

Leal-Rodríguez, A. L., & Albort-Morant, G. (2016). Linking Market Orientation, Innovation and Performance: An Empirical Study on Small Industrial Enterprises in Spain. Journal of Small Business Strategy 26(1), 37–50.

Lee, M. K. O., Cheung, C. M. K., & Chen, Z. (2005). Acceptance of internet-based learning medium: the role of extrinsic and intrinsic motivation. Information & Management, 42(8), 1095-1104.

Lee, Y. K., Kim, S. H., Seo, M. K., & Hight, S. K. (2015). Market orientation and business performance: Evidence from franchising industry. International Journal of Hospitality Management 44, 28–37.

Liu, J., & Su, J. (2013). How does market orientation affect product innovation in China’s manufacturing industry: The contingent value of dynamic capabilities. International Conference on Education Technology and Management Science (ICETMS 2013).

Mahmoud, M. A., Blankson, C., Owusu-Frimpong, N., Nwankwo, S., & Trang, T.P. (2016). Market orientation, learning orientation and business performance. International Journal of Bank Marketing 34(5), 623–648.

Narver, J.C., & Slater, S.F. (1990). The effect of a market orientation on business profitability. Journal of Marketing, October 2010, 20-35.

Newman, A., Prajogo, D., & Atherton, A. (2016). The influence of market orientation on innovation strategies. Journal of Service Theory and Practice 26: 72-90.

Nguyen, T.P., Phan, A.T.T., & Nguyen, M.T.T. (2016). Knowledge Creation, Innovation and Financial Performance of Firms: Evidence from Vietnam. International Journal of Business and Management. 11: 95.

Njeru, W., & Munyoki, M. J. (2014). Market orientation, external environment and performance of tour firms in Kenya. Journal of Business Administration and Management 4(7), 1515-1525.

Porter, M.E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: The Free Press.

Pramuki, N. M. W. A., & Kusumawati, N. P. A. (2020). The Influence of Product Innovation, Digital Marketing and Competitive Advantage in Improving the Marketing Performance of Small and Medium Industries in Bali. Advances in Economics, Business and Management Research 175, 248-254.

Rajapathirana, R.P. J., & Hui, Y. (2018). Relationship between innovation capability, innovation type, and firm performance. Journal of Innovation & Knowledge 3, 44–55.

Rammer, C. 2016. Measuring Output of Process Innovation at the Firm Level: Results from German Panel Data. Blue Sky Conference 2016, Belgium.

Riswanto, A., Rasto, R., Hendrayati, H., Saparudin, M., Abidin, A. Z., & Eka, A. P. B. (2020). The role of innovativeness-based market orientation on marketing performance of small and medium-sized enterprises in a developing country. Management Science Letters, 1947–1952.

Ropega, J. (2011). The Reasons and Symptoms of Failure in SME. Int Adv Econ Res 17, 476-483.

Schermelleh-Engel, K., Moosbrugger, H., and Müller. (2003). Evaluating the Fit of Structural Equation Models: Tests of Significance and Descriptive Goodness-of-Fit Measures. Methods of Psychological Research Online 2003, Vol.8, No.2, 23-74.

Schumpeter, J.A. (1934). The Theory of Economic Development. Harvard University Press, Cambridge.

Shaheen, F., Ahmad, N., Waqas, M., Waheed, A., & Farooq, O. (2017). Structural Equation Modeling (SEM) in Social Sciences & Medical Research: A Guide for Improved Analysis. International Journal of Academic Research in Business and Social Sciences 7(5), 132-143.

Shehu, A.M., & Mahmood, R. (2014). The Relationship between Market Orientation and Business Performance of Nigerian SMEs: The Role of Organizational Culture. International Journal of Business and Social Science, Vol. 5, No. 9(1), 159-168.

Tajeddini, K. (2016). Financial Orientation, Product Innovation and Firm Performance: An Empirical Study in the Japanese SME. International Journal of Innovation and Technology Management Vol. 13, No. 3 (2016), 1640005, 1-30.

Tajeddini, K. (2016). Financial Orientation, Product Innovation and Firm Performance: An Empirical Study in the Japanese SME. International Journal of Innovation and Technology Management Vol. 13, No. 3 (2016), 1640005, 1-30.

Takata, H. (2016). Effects of industry forces, market orientation, and marketing capabilities on business performance: An empirical analysis of Japanese manufacturers from 2009 to 2011. Journal of Business Research 69(12): 5611-5619.

Van Hemert, P., Nijkamp, P., & Masurel, E. (2013). From innovation to commercialization through networks and agglomerations: analysis of sources of innovation, innovation capabilities and performance of Dutch SMEs. Ann Reg Sci. 2013. 50, 425.

Verhees, F. (1999). Market orientation, product innovation and market performance: The case of small independent companies. Tijdschrift voor Sociaal Wetenschappelijk Onderzoek in de Landbouw (TSL), 14, 19-35.

Wu, J., Chen, Y., & Lin, L. (2007). Empirical evaluation of the revised end user computing acceptance model. Computers in Human Behavior, 23(1), 162-174.

Zartha, J.W., Montes, J. M., Vargas, E. E., Velez, E., Hoyos, J. L., Hernandez, R., & Novikova, O. (2016). Innovation strategy. Espacios 37(24), 1-19.

Downloads

Published

2021-09-29

How to Cite

Rahman, S., Budiyanto, B., & Suwitho, S. (2021). The Negative Effect of Market Orientation on SMEs’ Marketing Performance in The Creative Economy Sector, and How Innovation Mediating it. International Journal of Economics Development Research (IJEDR), 2(2), 327–340. https://doi.org/10.37385/ijedr.v2i2.272

Most read articles by the same author(s)