Batik is one of the important industries and the pride of Indonesia. Batik is a world cultural heritage which is originally Indonesia. In batik industry, innovation is one of the important factors that will improve marketing

performance. This study wanted to test some of the main drivers of innovation and marketing performance on Batik SMEs. The purpose of this study is (1) Testing the influence of social capital on innovation and marketing

performance; (2) Testing the effect of entrepreneurial orientation on innovation and marketing performance;

and (3) Testing the influence of co-creation on innovation and marketing performance. The research sample

consisted of 161 batik businesses in the city of Sragen and Purwodadi. Data were analyzed using SEM PLS

and processed using WarpPls with version 5. The results of this study indicate that only some of the hypotheses

are accepted, such as (1) entrepreneurial orientation is able to significantly improve innovation, (2) co-creation

is able to significantly increase innovation, (3) market capability is able to significantly improve innovation, and (4) market capability is able to significantly improve marketing performance



Keywords: Entrepreneurial Orientation, Social Capital, Market Capabilities, Co-Creation, Innovation, Marketing Performanc

Farida, Naili

English

Naili Farida

Crossref

Advanced Science Letters

Antecedent of Innovation and Marketing Performance in Batik Industry

Diponegoro University Institutional Repository

Delivered by Ingenta to: Bulan PrabawaniIP: 120.188.67.137 On: Tue, 04 Apr 2017 08:15:18Copyright: American Scientific PublishersCopyright © 2017 American Scientific PublishersAll rights reservedPrinted in the United States of AmericaR E S E A R CH AR T I C L EAdvanced Science LettersVol. 23, 471–474, 2017Antecedent of Innovation and MarketingPerformance in Batik IndustryNaili FaridaFaculty of Social Sciences, Diponegoro University, Jl. Prof. Sudarto, SH., No. 1 Tembalang, Semarang, Central Java, IndonesiaBatik is one of the important industries and the pride of Indonesia. Batik is a world cultural heritage whichis originally Indonesia. In batik industry, innovation is one of the important factors that will improve marketingperformance. This study wanted to test some of the main drivers of innovation and marketing performance onBatik SMEs. The purpose of this study is (1) Testing the influence of social capital on innovation and marketingperformance; (2) Testing the effect of entrepreneurial orientation on innovation and marketing performance;and (3) Testing the influence of co-creation on innovation and marketing performance. The research sampleconsisted of 161 batik businesses in the city of Sragen and Purwodadi. Data were analyzed using SEM PLSand processed using WarpPls with version 5. The results of this study indicate that only some of the hypothesesare accepted, such as (1) entrepreneurial orientation is able to significantly improve innovation, (2) co-creationis able to significantly increase innovation, (3) market capability is able to significantly improve innovation, and(4) market capability is able to significantly improve marketing performance.Keywords: Entrepreneurial Orientation, Social Capital, Market Capabilities, Co-Creation, Innovation,Marketing Performance.1. INTRODUCTIONBatik is one of the important industries in Indonesia1 and a pridefor Indonesia.2 Batik is a product that is recognized by UNESCOas a cultural heritage of Indonesia.3 Originally batik was just asthe art of dyeing cloth and focused on the use of motifs, but in itsdevelopment, batik is considered as one of the flagship product.In Indonesia, batik is well developed in several areas, such asSolo, Sragen, Pekalongan, Lasem, and several cities in Java.Innovation becomes an important part in the SMEs,4 partic-ularly Batik SMEs. The innovation in batik industry can be inthe form of batik motif development. Initially, batik motifs aremostly animals and plants. But in its development, the motif ismodified into a variety of models showing that batik is a modernproduct. Innovations done by a business will be able to improveits performance,5–9 and this is also true for Batik SMEs.1 SomeBatik SMEs produced only by firm order while some others madeproduction and innovation incrementally. Thus, it can be saidthat the existing problems in SMEs Batik in Sragen and Pur-wodadi is that product innovation and marketing performance isnot maximal.The focus of this research is some antecedents of innova-tion and marketing performances. There are some variablesthat become the antecedent of innovation and marketing perfor-mances, they are: (1) entrepreneurial orientation, (2) social capi-tal, and (3) co-creation.The purposes of this research are:1. To test the influence of social capital on innovation and mar-keting performance.2. To test the influence of entrepreneurial orientation on innova-tion and marketing performance.3. To test the influence of co-creation on innovation and mar-keting performance.2. LITERATURE REVIEW AND HYPOTHESESSocial capital is synonymous with networks of social relations.From the standpoint of Woolcock,10 social capital is defined asinformation, trust and norms inherent in social networking. Lin11defines social capital as a resource that is embedded in social net-works accessed and used by the actors to perform certain actions.Social capital is more focused on individual characteristics inrelation to social interaction they do. It is important to improveinnovation12 and performance.113Innovation means creating new product and offering it intothe market. Companies that are innovating will attempt to gettheir product always needed by the markets, although it is a newproduct. Some studies suggest that innovation done by a companyis able to improve the performance of the company.5–9Entrepreneurial orientation (EO) of a company is definedas a company involved in technology innovation, doing riskybusiness, and pursuing proactive opportunities.14 Entrepreneurialorientation will be able to increase success in innovation.5Besides affecting innovation, entrepreneurial orientation isalso able to improve performance. Matsuno, Mentzer15 showsthat entrepreneurial orientation can improve performance.Adv. Sci. Lett. Vol. 23, No. 1, 2017 1936-6612/2017/23/471/004 doi:10.1166/asl.2017.7226 471Delivered by Ingenta to: Bulan PrabawaniIP: 120.188.67.137 On: Tue, 04 Apr 2017 08:15:18Copyright: American Scientific PublishersR ES E A R CH AR T I C L E Adv. Sci. Lett. 23, 471–474, 2017Li, Huang16 examines how entrepreneurial orientation influencesworking performance in entrepreneurships in Taiwan. Soininen,Martikainen17 studied the influence of entrepreneurial orientationon performance (growth and profitability). The results of both16and17 is positive and significant.Joint creation is a joint participation between consumersand producers to create value in the marketplace.18 Con-ducting a joint creation between companies and consumerswill also be able to improve much innovation and marketingperformance.1920 One of the dimensions of joint creation (shar-ing knowledge and experience) can improve innovation and per-formance significantly.2122From the above explanation, the hypotheses in this study are:H1: Social capital can significantly improve innovation.H2: Innovation can significantly improve marketingperformance.H3: Social capital can significantly improve marketingperformance.H4: Entrepreneurial orientation can significantly improveinnovation.H5: Entrepreneurial orientation can significantly improve mar-keting performance.H6: Co-creation can significantly improve innovation.H7: Co-creation can significantly improve marketingperformance.H8: Market capabilities can significantly improve innovation.H9: Market capabilities can significantly improve marketingperformance.3. RESEARCH METHODOLOGYThe population in this study was 525 batik business in the cityof Sragen and Purwodadi. Sampling technique is purposive sam-pling, with criteria, as follows:(1) the age of Batik SMEs is at least 5 years,(2) having network with other companies, and(3) having at least 10 employees.Questionnaires were distributed to all owners of SMEs Batik, butthe questionnaires given back and can be processed again is asmuch as 161 respondents. So the study sample was 161 batikSMEs in Sragen and Purwodadi.Data analysis in this study used Structural Equation Model-ing (SEM), in particular the SEM-PLS. SEM-PLS Model wasdivided into two types: the measurement model (examine therelationship between observed and latent variables) and the struc-tural model (examine the relationship between the latent variableswith latent). To process the data obtained, this study uses Warp-PLS version 5.4. RESEARCH RESULTS4.1. Result of Measurement ModelReliability and validity were used to test whether the researchinstrument developed has been reliable or valid. In this study,reliability measurement used Composite Reliability while valid-ity measurement used Convergent Validity and Average Vari-ance Extracted. The requirement for Composite Reliability is thatthe value should be above 0.60; the requirement for Conver-gent Validity is that the Loading Factor value should be above0.50; and the requirement for AVE is that the value should beTable I. Factor loading, AVE, and composite reliability.Variable and indicator Factor loading AVE CRSocial capital 0.644 0.844Relationship network 0.807Social network 0.854Social norms 0.742Entrepreneurial orientation 0.52 0.764Ability to take risk 0.696Flexibility 0.767Anticipation 0.698Innovation 0.678 0.863New product developing 0.784The development of quality products 0.835The development of a quality 0.850range of productsMarket capability 0.519 0.815Environmental understanding 0.689Innovation creation 0.655Uniqueness function 0.771Capability 0.776Co-creation 0.519 0.81Dialogue 0.833Access 0.743Risk assessment 0.622Transparency 0.668Marketing performance 0.623 0.831Growth 0.860Sales 0.697Profit increase 0.802above 0.50. From Table I, it can be concluded that the researchinstrument used in this study has been reliable and valid. This isbecause the value of Composite Reliability, Convergent Validityand AVE have already been above the required value.4.2. Result of Structural ModelModel fit is an evaluation of whether the data is matchedwith the empirical model developed in this study. Several typesof model fit used in this study are Average Path Coefficient(APC), Average R-Squared (ARS), Average Adjusted R-Square(Aars), Average Block VIF (AVIF), Average Full collinearity VIF(AFVIF), Sympson’s Paradox Ratio (SPR), R-Squared Contri-bution Ratio (RSCR), Statistical Suppression Ratio (SSR), andNonlinear Bivariate Casuality Direction Ratio (NLBCDR). Fromthe Figure 1 below, it can be concluded that the data are in accor-dance with the model developed for all model fit measurementshave been in conformity with the requirements.Hypothesis 1 tests whether social capital has a positive and sig-nificant influence on innovation. The results of this study indicatethat social capital has a negative but not significant influence oninnovation (B = −0062; p > 005). Hypothesis 1 was rejected.The results of this study differ from previous studies.12Hypothesis 2 tests whether innovation has a positive and sig-nificant impact on marketing performance. The results of thisstudy indicate that innovation has a positive but not significanteffect on marketing performance (B= 0122, p > 005). Hypoth-esis 2 was rejected. These results differ from previous research,which explains that innovation has a positive and significantimpact on marketing performance.5–723Hypothesis 3 tests whether social capital has a positive andsignificant impact on marketing performance. The results of thisstudy indicate that social capital has a positive but not significant472Delivered by Ingenta to: Bulan PrabawaniIP: 120.188.67.137 On: Tue, 04 Apr 2017 08:15:18Copyright: American Scientific PublishersR E S E A R CH A R T I C L EAdv. Sci. Lett. 23, 471–474, 2017Path model of the research:Fig. 1. Path model.effect on marketing performance (B= 0039; p > 005). Hypoth-esis 3 is rejected. The results of this study differs from previousresearch saying that social capital has a positive and significantimpact on marketing performance.24 There are two conditionsthat possibly make the influence of social capital on marketingperformance not significant. First, individualism in this industryis still quite thick. They may have a network, but the networkis not used to improve business performance. The tendency ofindividualism in running a business get them to consider otherbusiness as the main competitor so that the networks createdare not able to improve its business performance. Second, theabsence of a mature system in making social networking.Hypothesis 4 tests whether entrepreneurial orientation has apositive and significant impact on innovation. The results of thisstudy indicate that entrepreneurial orientation has a positive andsignificant impact on innovation (B = 0171; p < 005). Hypoth-esis 4 is accepted. These results are similar to previous studies.5Hypothesis 5 tests whether entrepreneurial orientation hasa positive and significant impact on performance marketing.The results of this study indicate that entrepreneurial orienta-tion has a positive but not significant effect on marketing per-formance (B= 0013; p > 005). Hypothesis 5 is rejected. TheseTable II. Results of goodness of fit.Model fit Requirement Result NoteAverage path coefficient (APC) P < 005 APC= 0,146; p = 0.015 Model has been fitAverage R-squared (ARS) P < 005 ARS= 0.229; p < 0001 Model has been fitAverage adjusted R-square (AARS) P < 005 AARS= 0.207; p < 0001 Model has been fitAverage block VIF (AVIF) AVIF< 3.3 1.672 Model has been fitAverage full collinearity VIF (AFVIF) AVIF< 3.3 1.527 Model has been fitSympson’s paradox ratio (SPR) SPR> 0.7 0.889 Model has been fitR-squared contribution ratio (RSCR) RSCR> 0.9 0.970 Model has been fitStatistical suppression ratio (SSR) SSR> 0.7 1.000 Model has been fitNonlinear bivariate casuality direction ratio (NLBCDR) NLBCDR> 0.7 0.722 Model has been fitresults are in contrast with previous studies.15–1725 There aresome researches explaining that entrepreneurial orientation hasno significant effect on performance.2627Hypothesis 6 tests whether co-creation has a positive and sig-nificant impact on innovation. The results of this study indicatethat co-creation has a positive and significant impact on inno-vation (B = 0218; p < 005). Hypothesis 6 is accepted. Theseresults are in line with previous studies’.19Hypothesis 7 tests whether co creation has a positive and sig-nificant impact on marketing performance. The results of thisstudy indicate that co-creation has a positive but not signifi-cant effect on marketing performance (B = 0096). Hypothesis 7was rejected. These results differ from previous results, whichstated that co-creation has a positive but not significant impacton marketing performance.2022 Co-creation is not a driving fac-tor increasing marketing performance. The main function of co-creation is just to boost innovation.Hypothesis 8 tests whether market capability has a positiveand significant impact on innovation. The results of this studyindicate that market capability has a positive and significantinfluence on innovation (B = 0243; p < 005). Hypothesis 8accepted.473Delivered by Ingenta to: Bulan PrabawaniIP: 120.188.67.137 On: Tue, 04 Apr 2017 08:15:18Copyright: American Scientific PublishersR ES E A R CH AR T I C L E Adv. Sci. Lett. 23, 471–474, 2017Table III. Hypotheses testing results.Hypotheses Coefficient ResultH1: Social capital→ Innovation −0062 RejectedH2: Innovation →Marketing performance 0122 RejectedH3: Social capital→Marketing performance 0039 RejectedH4: Entrepreneurial orientation → Innovation 0171∗ AcceptedH5: Entrepreneurial orientation → 0013 RejectedMarketing performanceH6: Co-creation → Innovation 0218∗ AcceptedH7: Co-creation →Marketing performance 0096 RejectedH8: Market capability→ Innovation 0243∗ AcceptedH9: Market capability→Marketing performance 0353∗ AcceptedNote: ∗Sig< 0.05.Hypothesis 9 tests whether market capability has a positiveand significant effect on marketing performance. The results ofthis study indicate that market capability has a positive and sig-nificant effect on marketing performance (B = 0243; p < 005).Hypothesis 9 accepted.5. CONCLUSIONFrom the 9 hypotheses constructed in this study, there are only4 hypotheses accepted, they are, Entrepreneurship Orientationon Innovation, Co-Creation on Innovation, Market Capabilitieson Innovation and Market Capability on Marketing Performance.The results of this research suggest that many antecedents ofmarketing performance did not able to establish marketing per-formance. This is possible because of the imprecision in selectingmarketing performance, particularly in Batik industry. It is possi-ble that in batik industry, every business has unique perfor ance,such as loyalty and customer satisfaction.Limitations of this study are:(1) Research was confined to small areas, namely the city ofSragen and Purwodadi, so this study can not be generalized and(2) The business of batik is not in large scale, so that the mea-surement for the marketing performance of each SMEs is possi-bly different.This is what might make entrepreneurial orientation, co-creation,and social capital do not have a significant influence on mar-keting performance. From the two limitations of this study, it isrecommended the following things for future research:(a) analyzing innovation as an intervening variable. Fromthe influence of social capital on marketing performance,entrepreneurial orientation on marketing performance, marketingperformance on market capabilities, and co-creation on market-ing performance, it can be concluded which one is the best inter-vening effect of the relationship of these variables;(b) using the age and size of the business venture as a controlvariable;(c) testing the empirical model on two data, the city of Sragenand Purwodadi, to know whether using one model to analyzetwo cities will produce the same output; and(d) using loyalty and customer satisfaction as an indicator ofperformance.References and Notes1. E. Ardyan, G. Rahmawan, and S. Isstianto, Membangun modal sosial dankesuksesan berinovasi untuk meningkatkan kinerja UKM Batik, SeminarNasional UNIBA, Universitas Batik: Surakarta (2015).2. R. K. Andadari, et al., International Journal of Organization Innovation 8, 156(2016).3. G. Budiono and V. Aryanto, Studies in Business and Economics 5, 156 (2010).4. R. D. Ireland and J. W. Webb, Business Horizons 50, 49 (2007).5. G. J. Avlonitis and H. E. Salavou, Journal of Business Research 60, 566(2007).6. E. D. Eris, O. Neczan, and T. Ozmen, International Journal of Economic Sci-ences and Applied Research 5, 77 (2012).7. J. K. Han, N. Kim, and R. K. Srivastava, Journal of Marketing 62, 30(1998).8. S. Matear, et al., European Journal of Marketing 36, 1058 (2002).9. S. Olavarrieta and R. Friedmann, Journal of Business Research 61, 623(2008).10. M. Woolcock, Theory and Society 27, 151 (1998).11. N. Lin, Social Capital: Theory of Social Structure and Action, Cambridge Uni-versity Press, United Kingdom (2001).12. R. Martinez-Canas, F. J. Saez-Martinez, and P. Ruiz-Palomino, Journal ofKnowledge Management 16, 61 (2012).13. X. Luo, et al., Journal of International Marketing 12, 25 (2004).14. D. Miller and P. H. Friesen, Strategic Management Journal 3, 1 (1982).15. K. Matsuno, J. T. Mentzer, and A. Ozsomer, Journal of Marketing 66, 18(2002).16. Y.-H. Li, J.-W. Huang, and M.-T. Tsai, Industrial Marketing Management38, 440 (2009).17. J. Soininen, et al., International Journal of Production Economics 140, 614(2012).18. V. Swass, International Journal of Electronic Commerce 15, 11 (2010).19. J.-S. Chen, H.-T. Tsou, and R. K. H. Ching, Industrial Marketing Management40, 1331 (2011).20. H. Nysveen and P. E. Pedersen, international Journal of Market Research56, 807 (2014).21. Z. W. Wang and N. Wang, Expert System with Application 39, 3899 (2012).22. Y. Wang and J. Wu, Journal of Business to Business Marketing 20, 227(2013).23. S. Matear, B. J. Gray, and T. Garrett, International Journal of Service IndustryManagement 15, 284 (2004).24. X. Luo, et al., Journal of International Marketing 12, 25 (2004).25. M. Arif, et al., Journal of Management Reseach 5, 44 (2013).26. S. Sciascia, et al., European Management Journal 32, 761 (2014).27. S. F. Slater and J. C. Narver, Journal of Business Research 48, 69 (2000).Received: 1 March 2016. Accepted: 1 March 2016.474

Antecedent of Innovation and Marketing Performance In Batik Industry

http://eprints.undip.ac.id/53171/1/naili_Antecedent_of_Innovation_and_Marketing.pdf

Antecedent of Innovation and Marketing Performance In Batik Industry

Abstract

Similar works

Full text

Available Versions

Crossref

Diponegoro University Institutional Repository