Научная статья на тему 'Effect of learning effectiveness on market orientation, innovation, and performance of SMEs'

Effect of learning effectiveness on market orientation, innovation, and performance of SMEs Текст научной статьи по специальности «Экономика и бизнес»

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Ключевые слова
LEARNING / MARKET ORIENTATION / INNOVATION / BUSINESS PERFORMANCE / SME

Аннотация научной статьи по экономике и бизнесу, автор научной работы — Suratna Suratna

Market uncertainty can be caused by a constantly changing consumer preference, and it is market uncertainty that drives companies to continue to innovate. Some research results indicate that learning effect the market orientation and innovations that occur within an organization. Nevertheless, research on influence of learn­ing effectiveness on market orientation, innovation, and performance of Small and Medium Enterprises (SMEs) is still very minimal. Successful SMEs will contribute greatly to the development of the country by providing employment and increasing national income. Therefore, learning effectiveness and its impact on the market orientation, innovation, and performance of SMEs is of interest for researchers. This research explains the concept of training and its effect on market orientation, innovation, and performance of SMEs. In addition, the study proposes and tests effective training models and their impact on market orientation, innovation, and performance of SMEs.

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Текст научной работы на тему «Effect of learning effectiveness on market orientation, innovation, and performance of SMEs»

UDC 330

EFFECT OF LEARNiNG EFFECTIVENESS ON MARKET ORiENTATiON, iNNOVATiON, AND

PERFORMANCE OF SMES

® 2018 S. SURATNA

UDC 330

S. Suratna

Effect of Learning Effectiveness on Market Orientation, Innovation, and Performance of SMEs

Market uncertainty can be caused by a constantly changing consumer preference, and it is market uncertainty that drives companies to continue to innovate. Some research results indicate that learning effect the market orientation and innovations that occur within an organization. Nevertheless, research on influence of learning effectiveness on market orientation, innovation, and performance of Small and Medium Enterprises (SMEs) is still very minimal. Successful SMEs will contribute greatly to the development of the country by providing employment and increasing national income. Therefore, learning effectiveness and its impact on the market orientation, innovation, and performance of SMEs is of interest for researchers. This research explains the concept of training and its effect on market orientation, innovation, and performance of SMEs. In addition, the study proposes and tests effective training models and their impact on market orientation, innovation, and performance of SMEs.

Keywords: learning, market orientation, innovation, business performance, SME. Fig.: 1. Tbl.: 4. Bibl.: 26.

Suratna Suratna - Faculty of Social and Political Science, Universitas Pembangunan Nasional «Veteran» Yogyakarta (Jalan SWK104 (Lingkar Utara), Condongcatur, Yogyakarta, 55283, Indonesia)

УДК 330

Суратна С. Вппив e4ieKmuBHOcmi навчання на ринкову орieнmацiю, шноваци та продуктивнсть МСП

Невизначешсть ринку може бути викликана постшно змнюваною перевагою споживачв, i саме ринкова невизначешсть спонукае ком-пани продовжувати впроваджувати iнновацii. Результати деяких дотджень показують, що навчання впливае на ринкову ор'кнтацж та iнновацii, що в'>дбуваються всередин органiзацii. Проте досл'>-дження щодо впливу ефективностi навчання на ринкову о^ентацю, iнновацii та продуктивнсть малих i середнх тдприемств (МСП), як i ранше, м'ш'шальш. Успшн МСП будуть значною мiрою сприяти розвитку кра'ни шляхом забезпечення зайнятостi та зб'шьшення наи/онального доходу. Тому ефективнсть навчання i його вплив на ринкову орiентаиiю, iнноваиii та продуктивнсть МСП становлять штерес для дошднимв. Це дотдження пояснюе концепцю навчання i ii вплив на ринкову орiентаиiю, шноваци та продуктивнсть МСП. Крм того, в дотджент пропонуються i тестуються ефективн моделi навчання i iх вплив на ринкову орiентаиiю, iнноваиii та про-дуктившсть МСП.

Кпючов'1 слова: навчання, орiентаиiя на ринок, iнноваиii, продуктив-нсть тдприемства, МСП. Рис.: 1. Табл.: 4. Б'бл.: 26.

Суратна Суратна - Факультет со^альних та полтичних наук, Ушверситет наионального розвитку «Ветеран» Джокьякарта (Jalan SWK 104 (П'втчне коло), Кондонгкатур, Джокьякарта, 55283, Ыдонез'т)

УДК 330

Суратна С. Влияние эффективности обучения на рыночную ориентацию, инновации и производительность МСП

Неопределенность рынка может быть вызвана постоянно меняющимся предпочтением потребителей, и именно рыночная неопределенность побуждает компании продолжать внедрять инновации. Результаты некоторых исследований показывают, что обучение влияет на рыночную ориентацию и инновации, происходящие внутри организации. Тем не менее, исследования по влиянию эффективности обучения на рыночную ориентацию, инновации и производительность малых и средних предприятий (МСП) по-прежнему минимальны. Успешные МСП будут в значительной мере способствовать развитию страны путем обеспечения занятости и увеличения национального дохода. Поэтому эффективность обучения и его влияние на рыночную ориентацию, инновации и производительность МСП представляют интерес для исследователей. Данное исследование объясняет концепцию обучения и ее влияние на рыночную ориентацию, инновации и производительность МСП. Кроме того, в исследовании предлагаются и тестируются эффективные модели обучения и их влияние на рыночную ориентацию, инновации и производительность МСП.

Ключевые слова: обучение, ориентация на рынок, инновации, производительность предприятия, МСП. Рис.: 1. Табл.: 4. Библ.: 26.

Суратна Суратна - Факультет социальных и политических наук, Университет национального развития «Ветеран» Джокьякарта (Jalan SWK 104 (Северный круг), Кондонгкатур, Джокьякарта, 55283, Индонезия)

Introduction. Innovation is the key word to win the growing business competition. Market uncertainty can be caused by a constantly changing consumer preference and market uncertainty that drives companies to continue to innovate. Companies implement innovation as the main strategy to win the competition and only high-innovative companies can compete and grow. A lot of research has been done to find out how the innovation was built within an organization in order

to improve the organization's performance. Nevertheless, research on the factors that influence the formation of innovation and its development within an organization should still be developed.

Some research results indicate that learning contribute to the market orientation of an organization and innovations that occur within it, among them are the results of studies by Farrell and Oczkowski [1], Baker and Sinkula [2], and Slater and

Narver [3]. Nevertheless, research on the influence of learning on the effectiveness of market orientation, innovation, and performance of Small and Medium Enterprises (SMEs) is still very minimal. However, the relationship between innovation and organizational performance has received much attention. Research on overall market orientation and firm performance is demonstrated by Horng and Chen [4] and Pelham [5]; market orientation and export performance by Hart and Tzokas [6]; market orientation and financial performance by Dolinger [7]; as well as the relationship between innovation and company performance by Aharoni [8].

SMEs have different characteristics compared to large-scale enterprises. Characteristics of SMEs in developing countries in terms of ownership, organizational formality, resources, and flexibility are unique compared to large companies. SMEs have limited resources, despite having high flexibility. Most of the owners of SMEs in Indonesia play the role of managers, so there is no limit between the owner and manager of the company. In Indonesia, various related community components such as government, universities, non-government organizations, and companies contribute to the development of SMEs in order to improve the performance of SMEs by providing training and mentoring for SMEs management.

The progress of SMEs is determined not only by internal factors influencing their functioning, but also by external factors through learning programs. Successful SMEs will contribute greatly to the development of the country by providing employment and increasing national income. Therefore, learning effectiveness and its impact on the market orientation, innovation, and performance of SMEs is of interest for researchers.

The purpose of this study is to test empirically the relationship between the effectiveness of SMEs training and market orientation, innovation and performance of SMEs. This research will explain the concept of training and its effect on market orientation, innovation, and performance of SMEs. In addition, the study will propose and test effective training models as well as their impact on market orientation, innovation, and performance of SMEs.

Conceptual Framework. The Effect of Traning Effectiveness on Market Orientation, Innovation, and Performance of SMEs

Training is one of the most commonly used human resource development interventions and is the pillar and the stage of the empower program. The main objective of training is to improve the competence in order to achieve the company's objectives [9]. According to McManus and Russell [10], learning is every effort to improve performance. Training is an integrated way that is oriented to actual performance demands, with an emphasis on skill development, knowledge, and abilities.

Elnaga and Imran [11] state that without proper training, companies are unable to receive information and ensure competence development to maximize their potential. In a small company in a developing country, most of the company owners work as managers as well, so training for the owner / manager becomes very important.

In many cases in Indonesia, training is undertaken on the initiative of the government or other non-governmental institutions, so that the motivation of SMEs in the training program should get attention. Strong commitment and support of

the organization is a successful capital of a training program. An organizational leader is instrumental in determining the success of learning in order to improve organizational performance [12]. SME training aims to improve market insight, skills, and innovation, where the ultimate goal is to improve the performance of SMEs. Based on the above opinion, it can be concluded that effective training will improve the understanding of SMEs on the market, improve product innovation, and ultimately will improve the performance of SMEs as a whole.

H1: Training effectiveness has a significant effect on Market Orientation of SMEs.

H2: Training effectiveness has a significant effect on Innovation Ability of SMEs.

H3: Training effectiveness has a significant effect on Performance of SMEs.

■ The Influence of Market Orientation on Innovation

Baker and Sinkula [13] argue that market orientation is

the extent to which a company acquires, distributes, and uses market information, as input data for innovation processes. According to the authors, market orientation will encourage companies to absorb important information the company needs, improve knowledge, experience, skills, as well as ideas to improve the product. Knowledge generated by market orientation will foster innovation. They demonstrate the effect of learning orientation or market orientation on innovation driven organizational performance. In their research Baker and Sinkula [13] present a model for measuring the degree to which market orientation and learning orientation influence organizational performance, independent of their effect on product innovation. The implications are important because they provide insights into the type of organizational culture that is associated with high levels of performance.

H4: Market Orientation has a significant effect on Innovation of SMEs.

■ The Effect of Market Orientation on SMEs Performance

According to Pelham [5], a market-oriented company will have excellent market information. The ability to collect and process information allows them to accurately and quickly predict market requirements and changes, so that they can promptly respond to them. The results of this study are also supported by previous research conducted by Wilson and Peterson [14], Meziou [15], as well as Pelham and Wilson [16]. Horng and Chen [4] have also discussed the effect of market orientation on the performance of a company and the competitive advantage that it possesses. The market orientation that SMEs possess provides a potential competitive advantage over large companies. This is because SMEs are closer to customers; able to exploit customer needs and desires quickly and more flexibly; capable of transferring and realizing customer intelligence quickly and with little difference; have the thin layer of SME organization and bureaucracy; can implement the marketing plan quickly due to lack of formality.

H5 Market Orientation has a significant effect on Performance of SMEs.

■ The Influence of Innovation on Performance of SMEs

Keizer, Dijkstra, and Halman [17] as well as Motwani, Dandridge, Jiang, and Soderquist [18] noted that SMEs must be innovative to gain a competitive advantage because of re-

source constraints, vulnerability to market uncertainty, turbulence in the business environment, and the power of customers and suppliers broad. Appiah-Adu and Singh [19] stated that what matters most for SMEs is innovation under environmental uncertainty as a result of the lack of competence to utilize technology as a means of new product development, cost effectiveness, operational efficiency, anticipation of market niche that continues to grow, and part of the innovation process it-

self. Nevertheless, the positive role of corporate innovation on corporate performance is supported by many theoretical and empirical studies of new product development, adoption and diffusion technologies, process improvement, and innovation [20]. SMEs can achieve leadership positions by implementing aggressive innovation strategies in niche industries.

H6: Innovation has a significant effect on Performance of SMEs.

Fig. 1. The hypothesis model

Research Method. To test the above hypothesis, the multi item scale is taken from previous research. All constructs are measured using 5 Likert scales ranging from "strongly disagree" (1) to "strongly agree" (5). The unit of analysis of this research is SMEs that in at least for the last five years have voluntarily attended training conducted by the government or other institutions. The data collection tool uses a questionnaire filled by the main manager of SMEs. Before the questionnaires were distributed, the researchers conducted focus group discussions with 40 SME owners to get feedback on questionnaire items related to the assessment, especially for the variables and sentences used in the questionnaire to be easily understood by the respondents. After the questionnaire was improved, the questionnaires were distributed to 180 SMEs engaged in creative industries in Bantul District of Yogyakarta. There were collected and processed the data provided by as many as 150 respondents.

The effectiveness of training SMEs is measured using instruments developed through Focus Group Discussion (FGD). The training effectiveness items include aspects concerning ease of receiving training materials, ease of implementing training materials, benefits to individuals, benefits to the company, and fostering new ideas for the company. The empirical measurement of market orientation was conducted by some experts, among others by Narver and Slater [21], Kohli, Jaworski, and Kumar [22], Hunt and Morgan [23], and Ruekert [24]. Market orientation indicators in this study include: collection and use of market information, development of a market-oriented strategy, and implementation of the market-oriented strategy. The scale of corporate innovation is adapted from Calantone, Cavusgil, and Zhao [20]. Calantone, Cavusgil, and Zhao [20] define company innovation as an openness to new ideas, as an aspect of corporate culture with a willingness to try new ideas, find new ways to do something new, create methods, and introduce new products. The company's performance scale is adapted from Calantone, Cavusgil, and Zhao [20] and Lee and Choi [25]. Performance measures used are relative sizes that are perceptive and assessed by respondents covering market share expansion, growth rate, profitability, and business size improvement.

Research Result. The research paradigm used is a mix method, which combines qualitative and quantitative research. The qualitative methods are using FGD to 40 small entrepreneurs to get input, especially logical one, with measurement of the effectiveness of training, while the quantitative method is done by distributing questionnaires. The validity of the qualitative methods is done by triangulation method involving government elements and training organizers. The statistical validity test uses the coefficient of grain correlation (Product Moment). If the correlation coefficient is greater than 0.3 then the result of this study can be declared valid [26]. Test reliability is assessed using the Alpha-Cronbach coefficient formula. The instrument is considered to be reliable if it has an Alpha-Cronbach coefficient of at least 0.6. The results of validity and reliability testing of this research can be seen as follows:

Table 1

Validity and Reliability Test Results

Item Correlation Coefficient Alpha-Cronbach Coefficient

1 2 3

Training 1 0.949

Training 2 0.795

Training 3 0.923 0.925

Training 4 0.949

Training 5 0.774

MO 1 0.938

MO 2 0.905 0.887

MO 3 0.950

INNO 1 0.941

INNO 2 0.855

INNO 3 0.874 0.926

INNO 4 0.941

INNO 5 0.855

End tbl.1

1 2 3

PERF 1 0.958

PERF 2 0.878

PERF 3 0.919 0.948

PERF 4 0.958

PERF 5 0.878

Source: Data processed

Test results in the table above shows that all items in the research instrument are valid and meet the reliability test. Furthermore, the characteristics of respondents can be seen in the following table:

Table 2

Respondent Characteristics

Age 22-35 year old 35 (persons) 23.33%

36-45 year old 61 40.66%

46-56 year old 39 26.00%

>56 year old 15 1.00%

Gender Male 88 58.66%

Female 62 41.33%

Business Fields Craft 86 57.33%

Culinary 56 37.33%

Etc. 8 5.33%

Source: Data processed

Interrelations

The inferential statistical analysis was performed using SEM methods by means of AMOS 20 software. The presented results show the relationship between the following research variables (tbl. 3):

The hypothesis test shows that all hypotheses are accepted. The results of this study demonstrate consistency with previous research results that determine training, market orientation, and innovation as a predictor of SMEs' performance. The evaluation of the multifactor model of the above measurements yields goodness of fit indices as presented in the following table (tbl. 4).

The table above shows that all measurements of goodness of fit, meet the critical value so that the overall model is acceptable.

From Table 3, it can be seen that the highest value is that reflecting market orientation and its effect on innovation applied to SMEs. This is in line with the results of research conducted by Pelham [5]; Baker and Inkula [13]; Keizer, Dijkstra, and Halman [17]; Motwani, Dandridge, Jiang, and Soderquist [18]; as well as Calantone, Cavusgil, and Zhao [20]. Market oriented SMEs are SMEs that make customers a reference for doing business (customer orientation). In order for SMEs to be continuously customer-oriented, SMEs must be competitively oriented at the same time. This is what drives significant and sustained innovation growth in an effort to meet these demands.

The second highest impact estimate is that reflecting the correlation between innovation on the overall performance of SMEs. Innovation is a corporate mechanism to adapt in a dynamic environment, so SMEs are required to be able to create new assessments, new ideas, offer innovative products, and improve customer service performance. All of these components

Table 3

in the variables

Table 3

Interrelations between the variables

Relationship Between Variables Estimate S.E. C.R. P Explanation

Market_Orientation Training 0.143 0.072 1.994 0.046 HI accepted

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Innovation Training 0.253 0.066 3.824 0.000 H2 accepted

Performance <--- Training 0.237 0.086 2.753 0.006 H3 accepted

Innovation <--- Market Orientation 0.868 0.110 7.920 0.000 H4 accepted

Performance <--- Market Orientation 0.645 0.150 4.296 0.000 H5 accepted

Performance <--- Innovation 0.696 0.109 6.375 0.000 H6 accepted

Source: Data processed

Table 4

Results of goodness of measurement model fit

Index Cut off Value Result Model Evaluation

Chi-Square 75.833

Probability > 0.05 0.103 Good

CMIN/DF < 2.00 1.936 Good

GFI > 0.90 0.917 Good

AGFI > 0.90 0.908 Good

TU > 0.95 0.948 Good

CFI > 0.95 0.919 Good

RMSEA < 0.08 0.018 Good

Source: Data processed

will directly drive the overall performance of SMEs in a more positive direction. Therefore, the performance of an organization is any system associated with the activities and results (outcome) obtained. Every company is concerned to know his achievements as a mirror of its business success in market competition.

It is of interest that the results of this study are the lowest values of the correlation between training and market orientation, although the value obtained remains positive. The number and quality of training that SME managers or owners have, in turn, has little to do with the market orientation that SMEs can use to run their businesses. According to respondents, training only serves to open ideas that can be implemented in the discourse. This makes the lack of interest of SMEs to participate in

training because they considers these activities to be less useful in practical terms for sustainability of their business. Generally, training is considered not to play a role in improving the performance of SMEs as a whole.

Conclusion. Test results of the validity and reliability test presented above show that all items in the research instrument are valid and meet the reliability test. The inferential statistical analysis of interrelations between the variables shows that all hypotheses are accepted. All measurements of goodness of fit meet the critical value so that the overall model is acceptable. The results of this study demonstrate consistency with previous research results that determine training, market orientation, and innovation as predictor of SMEs performance. The highest value is that reflecting market orientation and its effect on innovation applied to SMEs. Market oriented SMEs are SMEs that make customers a reference for doing business (customer orientation). In order for SMEs to be continuously customer-oriented, SMEs must be competitively oriented at the same time. It is this that drives significant and sustained innovation growth in an effort to meet these demands. It is worthwhile noting that the results of this study are the lowest values of the correlation between training and market orientation, although the value obtained remains positive. According to respondents, training only serves to open ideas that can be implemented in the discourse. This makes the lack of interest of SMEs to participate in training because they considers these activities to be less useful in practical terms for the sustainabil-ity of their business.

Limitations of Research. There are several methodological limitations in this study. The methodological limitations lie in the respondents. The questionnaire filling is not directly supervised by the researcher, so it is possible that the respondent is less serious in filling the questionnaire. A very tight supervision will also cause the respondents to be less comfortable in filling out the questionnaire. The filling of the questionnaire should be conducted under reasonable supervision to avoid bias. In addition, respondents provided an assessment of the effectiveness of the training. The training was done sometime before, so that weakness in remembering it becomes a weakness in filling the questionnaire.

LITERATURE

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REFERENCE

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(1998): 385-394.

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(1999): 411-427.

Calantone, R., Cavusgil, S., and Zhao, Y. "Learning orientation, firm innovation capability, and firm performance"Industrial marketing management vol. 31 (6) (2002): 515-524.

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Horng, S. C., and Chen, A. C. H. "Market orientation of small and medium-sized firms in Taiwan" Journal of Small Business Management vol. 36 (3) (1998): 79-85.

Hart, S., and Tzokas, N. "The impact of marketing research activity on SME export performance: evidence from the UK" Journal of small business management vol. 37 (2) (1999): 63-76.

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