The Effect of Innovation Capability on Market Performance Mediated by External Collaboration on MSMEs
Mohamad Trio Febriyantoro, Zulkifli, Yohanes Totok Suyoto, Fendi Saputra, Dede Suleman

Departement of Management & Jaya Launch Pad, Universitas Pembangunan Jaya, Indonesia

Abstract

The functions and roles of MSMEs in Indonesia are quite numerous both economically, politically, socially, culturally and security. Economic-social-political functions and roles, for example, are to increase people^s income, reduce unemployment and poverty and urbanization flows. This study aims to determine the effect of innovation capability on market performance mediated by external collaboration in Batam MSMEs. This study took a sample of 257 respondents who are managers or owners of MSMEs selected using non-probability sampling method with purposive sampling technique. Data were analyzed using Structural Equation Modeling with Partial Least Square (SEM PLS) approach. The results show that innovation capability has a significant effect on market performance in MSMEs, there is a significant relationship between innovation capability and external collaboration and a significant relationship between external collaboration on market performance, while the results of the indirect effect show that external collaboration mediates the relationship. between innovation capability and market performance. Suggestions for Batam City MSMEs to continue to maximize innovation capabilities and collaborate with various parties to improve market performance

Keywords: Innovation Capability, Market Performance, External Collaboration, MSMEs

Topic: Small and Medium Enterprises (SMEs)