MARKET ORIENTATION, ENTREPRENEURIAL ORIENTATION, AND BUSINESS MODEL INNOVATION: DRIVING PRODUCT INNOVATION IN INDONESIAN MSMEs

Budi Purnomo Saputro; Titik Kusmantini; Yekti Utami; Rifky Adiyatna; Faizatu Almas Hadyantari

doi:10.32500/jebe.v8i1.11294

Authors

Budi Purnomo Saputro UPN Veteran Yogyakarta
Titik Kusmantini UPN Veteran Yogyakarta
Yekti Utami UPN Veteran Yogyakarta
Rifky Adiyatna UPN Veteran Yogyakarta
Faizatu Almas Hadyantari UPN Veteran Yogyakafrta

DOI:

https://doi.org/10.32500/jebe.v8i1.11294

Keywords:

Entrepreneurial Orientation, Business Model Innovation, Market Orientation, Product Innovation, MSMEs

Abstract

This study aims to examine business model innovation among Micro, Small, and Medium Enterprises (MSMEs) in Indonesia by analyzing the influence of market orientation and entrepreneurship on enhancing product innovation performance. MSMEs are encouraged to remain adaptive and innovative in responding to market dynamics, particularly during times of crisis. Data were collected by a questionnaire administered to MSME operators in the manufacturing and service sectors, and were analyzed using Structural Equation Modeling (SEM). The findings show that market orientation positively affects business model innovation (β = 0.427; p < 0.001), while entrepreneurial orientation also positively and significantly affects business model innovation (β = 0.351; p < 0.001). Furthermore, business model innovation positively affects product innovation performance (β = 0.472; p < 0.001). An R² value of 0.58 suggests that this model explains 58% of the variation in product innovation performance. These findings highlight the importance of strategic direction and business model innovation in strengthening the sustainability and competitiveness of MSMEs amid crises such as a pandemic or market uncertainty. This research has implications for MSME practitioners and regulators in fostering innovation, adaptive business strategies, and strengthening competitiveness. A limitation of this study is its sample scope, which is restricted to the manufacturing and service sectors.

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