The Influence of Market Orientation and Innovation on Business Performance Mediated by Competitive Advantage (Survey of SMEs Registered with the Mukti Manunggal Batik Association)

Abstract

The purpose of this research is to test the influence of market orientation and innovation on SME’s performance and market orientation and innovation on SME’s performance mediated by competitive advantage in the batik SME’s of Mukti Manunggal Batik Association. The phenomenon in this research the inability of the batik SME’s of Mukti Manunggal Batik Association to understand market orientation, innovate, and competitive advantage. The methods in this study use descriptive and quantitative analysis. The population in this research amounted to 35 batik SME’s. Sampling technique use census techniques that make all SME’s as sample. The analytical techniques uses Partial Least Square with loading factor and AVE > 0.5, composite reliability and cronbach's alpha > 0.7, compares cross loading value with the cross loading value on the affected variable, and original sample in determining relationships direction as well as p values < 0.5 in determining significance. Data collection using observations, questionnaires, and interviews. The results of the analysis showed that: 1). Market orientation and innovation has positive and significant effect on SME’s performance, 2). Market orientation and innovation influence positive and significant SME’s performance mediated by competitive advantage.