INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 02, FEBRUARY 2020 ISSN 2277-8616

Examining The Impact Of Entrepreneurial

Orientation On Marketing Performance: The
Mediating Role Of Entrepreneurial Networking
And Innovation Capability
Harini Abrilia Setyawati, Agus suroso, Pramono Hari Adi

Abstarct: Batik is a wax-resist with a dyeing technique used in textiles that are valued for nation identity and the value of the life of Indonesian
culture. Batik has been an art and craft for centuries. The speciality of culture-based products, human creativity, technological innovation, the
natural environment are the primary sources of differences in the production of handmade batik, and it is essential to maintain its existence.
This study generally aims to empirically examine the relationship between entrepreneurial networking to marketing performance, and the
mediating entrepreneurial orientation and innovation capabilities on the relationship between entrepreneurial networking to marketing
performance. Data were collected from the owner of Batik Micro, Small and Medium Enterprises (MSMEs) in Kebumen Regency. The total
sample of this research is 100 MSMEs. The present study uses variance-based structural equation modelling (PLS-SEM) to diagnose the
association between entrepreneurial orientation and marketing performance through innovation capabilities and entrepreneurial networking.
Research results indicated that Entrepreneurial orientation has a positive effect on Entrepreneurial networking, innovation capabilities and
marketing performance. However, Entrepreneurial networking and innovation capabilities did not affect marketing performance. The results of
our study are also beneficial for SME owners. They can produce excellent marketing performance by increasing their entrepreneurial
orientation by and the need for achievement by continuing to work until they reach their desired goals. Moreover, it must improve the locus of
control, self-reliance and extraversion behaviour.

Index-Term : Entrepreneurial networking, innovation capabilities, entrepreneurial orientation, marketing performance

——————————  ——————————

1. INTRODUCTION strategies, that is decisions and actions aimed at

In the era of globalization, business competition among achieving goals (Kuncoro, 2006) and adjusting
corporation is increasing. Especially with the crisis that organizational resources to the opportunities and
is faced by several developed countries, it had a direct challenges faced in the industrial environment (Coulter,
impact on the economies of developing countries such 2002).Authenticity becomes necessary for product
as Indonesia. In this situation, the role of Micro, Small excellence so that competitors do not easily imitate it.
and Medium Enterprises (MSMEs) becomes very One of the real examples of the original form is the
strategic, because of their important role in the element of regional culture, such as Batik. Batik is a
economy development of a country (Philip, 2011). piece of cloth made traditionally and used in traditional
MSMEs in Indonesia is the largest business unit (99%) events. The fabric has a decorative batik pattern and is
and contribute to GDP (Gross Domestic Product / GDP) made using the dipping technique with wax or batik wax
of 59% and contribution to employment by 97% as an colour component (Doellah & Santosa, 2002).
(Kompas, 1 October 2016). MSMEs in Indonesia grew Batik is a cultural inheritance and a form of local
significantly, in 2013-2016 MSMEs grew 2.41% to a wisdom created from the values of the people of a
total of more than 55 million units. Even though MSMEs region. The appreciation of Indonesian Batik from the
have great potential, they have classical constraints United Nations Educational, Scientific and Cultural
such as lack of capital and resources, poor Organization (UNESCO) as a world heritage in 2009
management, and shortage of quantity and quality of giving an added value to the development of batik. Data
human capital (Hernama and Hermawati, 2011). released from the Ministry of Industry shows the
number of batik business units for five years from 2011
to 2015 grew 14.7%. The increased interest in batik
from abroad was reflected in the value of batik exports
which rose 14.7% from 2011 amounting to Rp 43.96
______________________________________
trillion to Rp 50.44 trillion in 2015. However, Indonesia
must encounter the competition of batik products from
 Harini Abrilia Setyawati, Universitas Jenderal Soedirman, China after the implementation of free trade between
Departement of Economic and Business, Purwokerto, Indonesia. ASEAN and China or the ASEAN China Free Trade
e-mail : [email protected] Area (ACFTA), as of January 1, 2010. The opening of
 Agus Suroso, Professor, Universitas Jenderal Soedirman, free trade demands the production of domestic
Departement of Ecomic and Business, Purwokerto], Indonesia.e-
mail : [email protected]
handmade batik from China at much lower prices
 Pramono Hari Adi;Professor, Universitas Jenderal Soedirman, because they use high technology in producing batik
Departement of Economic and Business, Purwokerto, Indonesia. and exemption from import duties. Therefore, this
That is why
E-mail the performance of MSMEs is not optimal.
: [email protected] research is vital to conduct, so local batik entrepreuner
Optimal performance can be achieved by implementing know how to improve marketing performance through
innovation capabilities, networking, and entrepreneurial
1895
IJSTR©2020
www.ijstr.org
 INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 02, FEBRUARY 2020 ISSN 2277-8616

orientation. Entrepreneurial orientation is closely related companies, to realize healthy competition among them
to entrepreneurial networks, mainly because of its role in gaining new market opportunities. Once the
in providing a positive influence (Wincent and enormous potential of the entrepreneurial network for
Westerberg, 2005) and provides a considerable input to organizations makes the researchers continue to try to
improving company performance (Dada and Watson, find adequate forms for the success of the organization.
2013) (Frank, Kessler and Fink, 2010). Entrepreneurial Several forms of cooperation that can be implemented
orientation is defined as a construct that combines by companies for network work, such as purchasing
entrepreneurship and strategic management (Aloulou cooperation, workforce cooperation, product
and Fayolle, 2005). Entrepreneurial orientation tends to development and collaboration, sales and marketing
have positive implications for company performance. cooperation. The original form of collaboration within the
The results of previous studies of (Wiklund and scope of a business network will vary depending on the
Shepherd, 2005) identified a positive relationship type of business carried out and their shared goals.
between entrepreneurial orientation and business However, any form chosen by a business network must
performance. However, according to (Frank, Kessler be flexible so that it can quickly and effectively get new
and Fink, 2010) entrepreneurial orientation has a business opportunities. Baum, Calabrese and
negative effect on business performance. Likewise, Silverman, (2000), in their longitudinal research that
previous research shows a weak relationship between results in three dimensions which are the main
entrepreneurial orientation and company performance elements of the entrepreneurial network:
(Lumpkin and Dess, 2001); and (Zahra and Covin, 1. Upstream partners: Suppliers, mainly involving direct
1995). Additionally, Other studies report no significant supplier lines, channeling production needs. Very
correlations between Entrepreneurial Orientation and useful for new and small-scale companies, because
performance (Avlonitis and Salavou, 2007) and (Day, with the help of suppliers, this will form a more
2013). Based on previous research, there are efficient process and can reduce prices.
contradictions in the results of the study. 2. Downstream partners: Customers, marketing is
Entrepreneurial networks are proven not always to have done directly to consumers so that it can be used to
a positive and significant influence on performance. find out more precise info about consumers.
This condition happens possibly because of several Consumers are the main actors in determining the
factors and other variables that influence it. This value of a product, understand what needs, their
research aims to find variables that mediate the desires will deliver to success.
relationship between entrepreneurial networks and 3. Horizontal partners: Competitors, or external parties
performance, especially to develop an entrepreneurial outside the chain of relations with the company. Like
networking model that is appropriate for MSMEs to the government and the University. Collaborating
achieve optimal performance (Susilowati and Taufan, with external parties can be very profitable but must
2013). Developing an entrepreneurial or networking be done with extra caution.
model is one of the steps that can be taken to bridge
the gap. Networking is becoming increasingly important Because in this collaboration, it can be done to acquire
because it makes it easier for companies to access resources in a flexible form so that it can reduce costs
information, resources, markets, and technology (Gulati, and risks. Entrepreneurship networks are defined as the
Nohria and Zaheer, 2000), especially for small-scale ability of network ties to connect actors with various
businesses with various limitations. Networking businesses such as business partners, friends, agents,
provides business opportunities that can be used as a mentors to obtain the necessary resources such as
tool to improve performance because vertical information, money, moral support from network actors
integration is not something that SMEs can do because (George, Wood and Khan, 2001). The six things that
of limited resources (Jennings and Beaver, 1997). are part of the entrepreneurial network (Mathews,
Looking for variables that affect the relationship 2001), the first is actors, which are companies that are
between entrepreneurial networks and performance is the main members of the network. The second is
very important to do, it is necessary to develop an activities carried out by the actor. Every actor has
entrepreneurial networking model that is appropriate for specific competencies and makes them unique so they
MSMEs to achieve optimal performance (Susilowati and can influence other companies or actors to act. The
Taufan, 2013). Entrepreneurial orientation has a close third element in the network is the resources or
relationship with entrepreneurial networks, so it is resources that are the superiority of each actor and
appropriate that in this study the entrepreneurial determine how the implementation of the strategy in the
orientation is used as a mediating variable in explaining network will be carried out. Routines are the fourth
the relationship between entrepreneurial networks and element, which consists of the operating procedures of
investments that are still not related in the previous each actor in carrying out their activities. The fifth
research. element is relations or the relationship between actors
in the network, and the sixth element is fitness functions
2. LITERATURE REVIEW AND or strategic decisions that govern how each actor
HYPOTHESES harmonizes activities, resources, routines and
relationships in the entrepreneurial network. Further
2.1 Entrepreneurial Networking studies on networking reveal that there need to be six
Entrepreneurial networking or commonly known as crucial elements in cooperation if success is achieved,
networking is the collaboration of at least three flexible namely (De Klerk, 2006); trust, credibility, synergy

1896
IJSTR©2020
www.ijstr.org
 INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 02, FEBRUARY 2020 ISSN 2277-8616

(synergy), competence (competence), information opportunities, experience, and creativity. Experience

(information) and other resources (other resources). A is a valuable teacher that triggers business
network that is successful both for personal or business pioneering, especially by the presence of
purposes requires the presence of people with high opportunities and creativity.
integrity capabilities, committed to relationships, trust, 2. Proactiveness is an active attitude by pursuing
and mutual respect. This element makes each network opportunities in competitive competition, trying to
something unique and different from one another anticipate future demand to create changes in a
because its shape will depend on how individuals continually changing business environment
participate in the process (De Klerk, 2006). The network (Lumpkin and Dess, 2001). Proactive attitudes can
is multidimensional and can be used to get extensive also be characterized by a desire to excel. The main
access. Important things to consider in forming a driver that motivates entrepreneurs is the need for
network are: must include people with the right achievement, which is usually identified as the need
connections, have the same skills, willingness, for achievement. This need is defined as the desire
knowledge, and opportunities to create a balance. or encouragement in people, which motivates
Successful networking is based on the willingness and behaviour toward achieving goals. Second, the
intention of the organization to become a member of the desire to be responsible. An entrepreneur wants
network. So that enthusiasm will be obtained into the personal responsibility for achieving goals. They
driving energy to achieve precise results, excited about choose to use their resources by working on their
the goal or exchange something of value (De Klerk, own to achieve goals and take responsibility for the
2006). The networking strategy is a very appropriate results.
thing to be implemented in MSMEs and can be quickly 3. Risk-taking. Concerning taking risks, it occurs when
developed. Entrepreneurial networks that focus on companies intentionally devote resources to projects
developing relationships and continuously striving to with an equally high probability of failure success
increase the value of cooperation will create competitive (Miller and Friesen, 1982); (Lumpkin and Dess,
advantages and multiple positive effects. Nevertheless, 1996)). However, taking risks is also often
the rules must be clear, transparent with justice for all associated with entrepreneurial behaviour that
parties to avoid disputes and create a responsible successful entrepreneurs, in general, are risk-takers
collaboration (De Klerk, 2006). (Kuratko & Hodgetts, 2001). Someone who always
prioritizes tasks and results is someone who always
2.2 Entrepreneurial Orientation prioritizes the values of achievement motives, profit-
According to (Lumpkin and Dess, 1996), entrepreneurial oriented, perseverance and fortitude, determination
competition is needed in the implementation of to work hard, have an active, energetic, and
marketing strategies to obtain a definite competitive initiative. Initiative means always wanting to find and
advantage through the value of responsiveness to start. To get started, we need strong intentions and
customer needs. The entrepreneurial spirit includes five determination, as well as a great initiative. Once
things, namely: autonomy, innovation, risk-taking, success or achievement, the next success will
proactivity, and competitive aggressiveness. In follow, so that the business is more advanced and
connection with the fact that entrepreneurship can be growing.
applied as prescriptions for universal value action, not
only in the business field but also in the field of society, Some management literature also uses three
then entrepreneurship is also called modern social foundations of organizational trends for the
ethics. Further, McClelland, (1987) states that entrepreneurial management process, namely
entrepreneurial behaviour will bear risks that are not too innovation ability, risk-taking ability, and proactive
large as a result of carrying out activities, have nature (Mahmood and Hanafi, 2013); (Covin and
responsibility personal responsibility and having Slevin, 1989); (Miller and Friesen, 1982). The role of
knowledge of the results of decisions. The interest in entrepreneurs also plays an important role in the ability
entrepreneurship work is a result of their dignity and of leaders, in addition to the level of education and risk-
risky attitude. Entrepreneurial Orientation (EO) is a taking abilities, because with tremendous business
significant contributor to the success of the company experience the ability of leaders to see consumer
(Miller, 1983). Miller developed an entrepreneurial desires for a product is also very high (Hadjimanolis,
orientation and divided it into three dimensions; 2000). Entrepreneurship and the consequences of
innovation, proactive and risk-taking. behaviour towards innovation are strongly influenced by
1. Innovation can be interpreted as a company's ability the leadership of the leader, which concerns his
and willingness to support creativity, new ideas and business experience. The ability of the leader will
experiments that can produce new products or significantly influence the attitude of the company to pay
services (Lumpkin and Dess, 1996). Some personal attention to the business change, market needs, and
factors that drive innovation are the desire to producing new products to adjust to consumer demand.
achieve, the nature of curiosity, the desire to bear Entrepreneurial orientation has variables and
the risk, educational factors, and experience factors. dimensions that have been developed by (Mahmood
The existence of innovation originating from and Hanafi, 2013) adopted from research (Covin and
someone will encourage him to find a trigger Slevin, 1989) based on research (Miller and Friesen,
towards starting a business. Whereas environmental 1982) namely the dimensions of entrepreneurial
factors encourage innovation are the existence of orientation variables are (1) innovative, (2) proactive

1897
IJSTR©2020
www.ijstr.org
 INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 02, FEBRUARY 2020 ISSN 2277-8616

and (3) courage to take risks. This research use ability to ask, member space for creativity and the
measurement from (Lee, Don Y and Tsang, 2001) need results are new products, market exploration, and
for achievement, locus of control, self-reliance and innovation processes, which are all very important to
extroversion as the indicator. improve organizational performance in all aspects of
management. Entrepreneurial orientation is the basis of
2.3 Correlation between Entrepreneurial most decision-making and strategies that will deliver
Orientation and Entrepreneurial Networking success in competition and improve business
Entrepreneurship is a pivotal factor in determining the performance (Wiklund and Shepherd, 2003). When
development capabilities of a company's capabilities. product innovation continues to be carried out,
Entrepreneurship is also a key element in gaining monitoring customers and acting quickly to deal with
competitive advantage, which, absolutelly have a market changes, companies will get many profits so that
positive impact on financial performance. Companies that performance will be better (Zahra and Covin, 1995).
with high entrepreneurial skills will pay close attention to These studies are evidence of the positive influence of
innovation, change initiation, and high response speed entrepreneurial orientation on performance. Because
to keep changing flexibly. Entrepreneurial orientation in entrepreneurial orientation will encourage businesses to
this research is a form of behaviour where or how the be superior in competition and improve performance.
company shows its innovation, activity, and courage to Based on the thoughts above, the hypothesis
take risks in strategic decisions of entrepreneurs. The formulated is:
link between entrepreneurial orientation and business
networks as in the (Lukiastuti, 2012) study states that Hypothesis 3: Entrepreneurship Orientation has a
people who have high levels of innovative behaviour are positive effect on Marketing Performance.
more likely to seek advice or advice compared to
people who have lower levels of innovative behaviour. 2.6 Correlation between Entrepreneurial
Furthermore, there is empirical evidence that if Networking and Marketing Performance
entrepreneurs academically educated, they will be more Previous studies have found that SME's entrepreneurial
likely to become members of several professional network can access resources that are difficult to
organizations and will get a more extensive external replicate (Yli‐Renko, Autio and Sapienza, 2001). Hence,
network than uneducated entrepreneurs. This statement by developing the SME's ability to dominate the network
indicates that innovation-oriented people can have resulting in proper growth and performance, and strong
secure external networks. Based on the theory stated resilience (Lee, Lee and Pennings, 2001).
above, the hypothesis proposed in this study are: Entrepreneurial networks encourage the achievement of
optimal company performance, so that the more
Hypothesis 1: Entrepreneurial orientation has a existing organizations within the entrepreneurial
positive effect on Entrepreneurial networking. network, the more optimal performance is obtained
(Petzer et al., 2012) and proven to improve financial
2.4 Correlation between Entrepreneurial performance (George, Wood and Khan, 2001). Some of
Orientation and innovation capability these studies provide evidence of the positive influence
Ngah and Ibrahim (2009), entrepreneurship orientation of entrepreneurial networks on performance. Because
plays an essential role in generating innovation of its ability to provide access to information and
capability. The entrepreneurial orientation is generally resources needed, without requiring a long time or
considered as one of the most critical resources that significant difficulties so that that performance
SMEs have to create a higher level of innovation that improvement can be ensured. Based on these thoughts,
can lead them to get a significant increase in their the hypothesis formulated is:
enterprise return ((Kohli and Jaworski, 2012); (Slater
and Narver, 1995). Pérez-Luno, Wiklung, and Valle- Hypothesis 4: Entrepreneurial Networks have a
Cabrera (2011) concluded that entrepreneurial positive effect on Marketing Performance.
orientation creates a higher level of innovation in
enterprises. The study also found that entrepreneurial 2.7 Correlation between innovation capability
orientation positively affects innovation, thus lead to and Marketing Performance
higher SMEs' performance (Alvonitis and Salavou 2007) Innovation capability as the capacity of the organization
which in line with other researchers. to create new ideas, process, and product successfully.
It means small-medium enterprises need the capacity to
Hypothesis 2: Entrepreneurial orientation has a create something new to achieve a competitive
positive effect on innovation capability. advantage. Whereas Jiménez-jiménez and Sanz-Valle
(2011); stressed that innovation helps the company to
2.1 Correlation between Entrepreneurial deal with the turbulence of the external environment
Orientation and Marketing Performance and, therefore, is one of the key drivers of long-term
In a dynamic environment, the effect of eentrepreneurial success in business. The organization business with
orientation is significant for performance (Frank, Kessler innovation capability will be able to respond to the
and Fink, 2010). Entrepreneurial orientation has three challenges faster and to exploit new products and
dimensions (Wiklund and Shepherd, 2005), namely, market opportunities better than non-innovative
innovation, proactivity, and risk-takers. The dimensions organization business. The researches of Jimenez-
of innovation represent aspects of willingness and jimenez and Sanz-Valle (2011), Allred and Swan (2005)

1898
IJSTR©2020
www.ijstr.org
 INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 02, FEBRUARY 2020 ISSN 2277-8616

found that innovation capability influences performance this research refers to a suggestion in Hair, Black,
significantly. Provided that firms possess a capacity to Babin, and Anderson (2010), which is 5 to 10 times the
innovate, the capacity will allow those firms to develop a number of indicators used for the whole latent variable.
competitive advantage, enabling them to derive There are 14 indicators in this research; thus the
outcomes from it (Damanpour, 1991; Hurley and Hult, minimum respondent number is 14 x 5 = 70
1998. This result revealed that process innovation had a respondents, while the maximum number is 14 x 10 =
more significant impact on organizational performance 140 respondents, so the sample size in this research is
than product innovation research. Based on the above enough to fulfill the requirement.
discussion, this paper proposes a hypothesis as
following: 3.2 Analysis
The research data were analyzed at the individual level
Hypothesis 5: Innovation Capability has a positive by SPSS, PLS 3.
effect on Marketing Performance.
3.3 Characteristic of Respondent
3.RESEARCH METHOD
3.1 Assessment and instrumentation Tabel 1. Respondent Profile
This research used the quantitative approach that has Variable Frequency Percentage
causal characteristics since it will examine the influence Education
of variables to be analyzed. The collection of data was Elementary school 90 90%
conducted directly using a self-administered survey. Junior high school 9 9%
The research was divided into two parts: first, it looked High school 1 1%
into the descriptive profile of the respondents. Secondly, Total 100 100%
a multi-item scale taken from previous research studies Respondent age
was used. 21 - 30 3 3%
31 - 40 13 13%
Instrument development 41 - 50 34 34%
The construct was assessed using 5 question items in 51 - 60 28 28%
61 - 70 22 22%
the form of the five-point Likert scale, in which 1
Total 100 100%
indicates strong disagreement and five strong
agreement. The questions used in this research are Firm Age
similar to those developed by previous research : ≤ 10 years 0 0%
1. Entrepreneurial Orientation measured by Need for 11 - 20 years 17 17%
21 - 30 years 24 24%
Achievement, Locus of Control, Self-Reliance,
31 - 40 years 20 20%
Extroversion (Lee dan Tsang, 2001). 41 - 50 years 21 21%
2. Innovation Capability measured by New product or 51 - 60 years 18 18%
service innovation, Methods of production or Total 100 100%
rendering of services, Risk-taking by critical
executives, and Seeking unusual and novel The result of the descriptive analysis of the respondents
solutions (Miller & Friesen, 1983). indicates that about 90% of the company owners
3. Entrepreneurial Networking measured by Upstream studied were elementary school graduates, with an
Networking, Downstream Networking and Horizontal average age of over 40 years. Furthermore, the
Networking (De Klerk, 2006). average age of the firm is 20 years.
4. Marketing Performance measured by Sales growth,
Consumer growth and Sales volume (Song & Parry, 3.4 Measurement model
1997). In the first step, to assess the measurement model,
reliability and validity analyses were conducted. Table 1
3.2 Sample and data collection presents the result of all factor loadings on the
The population in this study was 176 MSMEs, according corresponding latent constructs, achieving the required
to the number of UMKM data of Kebumen batik value and higher than the recommended 0.7. Therefore,
craftsmen obtained from the Kebumen Regency all indicators in this study were valid and of acceptable
Industry, Trade and Cooperative Office in 2018. internal consistency. The following measurement is
Respondent criteria are SMEs in batik producing their average variance extracted, the AVE representing a
batik. There are three types of batik, printed batik, confirmatory test of Variance captured by a construct
handmade and printing; the author takes batik SMEs with the variance due to random measurement error.
who produce handmade batik. Data of Batik SME The AVE of each measure in this study was set at 0.5
Owners in Kebumen Regency took 176, but after (Fornell & Larcker, 1981) or extracted more than or
researchers visited the batik SME owners, 38 SME was equal to 50% of the variance, as the cut-off value
no longer active, and 17 UKM was not found. All 116 (Bagozzi & Yi, 1988). The overall AVE values were
questionnaires distributed were returned, but only 100 calculated, and they were all greater than the
valid. The questionnaire was filled out by the SMEs recommended value of 0.5, suggesting that the
Batik owner himself. The survey that was completed by variance explicated by each construct exceeds that due
100 respondents was carried out from January 1st to to measurement error (Fornell & Larcker, 1981). The
June 1st, 2019. The optimal quantity of the sample in reliability of the factor is measured by using composite
1899
IJSTR©2020
www.ijstr.org
 INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 02, FEBRUARY 2020 ISSN 2277-8616

reliability. Composite reliability for all factors in our Innovation Capability, Entrepreneurial Networking and
measurement model was calculated at the above Innovation Capability on Marketing Performance. The
required 0.5 levels (Fornell & Larcker, 1981). In our following is a table of calculation results:
research, the discriminant validity of the measures was
examined by comparing the square root of the AVE to Table 2: Effect of Entrepreneurial Orientation on
each variable relation (Fornell & Larcker, 1981). Marketing Performance
Original P Hypothesi
SD T Stat
Table 1: Measurement model Variable Sampling Values s
Factor Cronbach Entreprene
Construct Item AVE urial_Netw
Loading alpha
Need for orking –>
0,899 0,329 0,203 1,618 0,106 rejected
Achievement Marketing
Entrepreneurial Performan
Locus of
Orientation 0,922 ce
Control 0,849 0,941
(Lee dan Entreprene
Self-
Tsang, 2001) 0,931 urial_Orien
Reliance
tation –>
Extroversion 0,933 0,891 0,036 24,502 0,000 accepted
Entreprene
New product
urial_Netw
or service 0,862
orking
innovation
Entreprene
Methods of
urial_Orien
production
Innovation 0,948 tation –> 0,872 0,041 21,374 0,000 accepted
or rendering
Capability Innovation
of services
(Miller & 0,819 0,926 _Capability
Risk-taking
Friesen, 1983) Entreprene
by key 0,902
urial_Orien
executives
tation – >
Seeking 0,334 0,146 2,291 0,022 accepted
Marketing_
unusual and Performan
0,907
novel ce
solutions.
Innovation
Upstream _Capability
0,948
Entrepreneurial Networking –>
Networking Downstream 0,260 0,140 1,856 0,064 rejected
0,959 0,895 0,941 Marketing_
(De Klerk, Networking Performan
2006) Horizontal ce
0,932
Networking
Sales growth 0,970
Marketing
Consumer 3.5 Hypotheses testing
Performance
growth
0,980
0,947 0,972 The results of the structural equation modelling
(Song & Parry,
Sales indicated that the direct effect model between
1997) 0,970
volume Entrepreneurial orientation with Entrepreneurial
networking showed a significant correlation between the
Testing of the structural model is done by looking at the two variables (ß = 0,891, t = 24,909, p < 0,000).
R-square value, which is a test of the model's goodness Therefore, the first hypothesis is accepted. Following
fit. The model of the influence of Entrepreneurial hypotheses, as shown in Table 2, Entrepreneurial
Orientation on Entrepreneur Networking gives an R- orientation is positively associated with innovation
square value of 0.794 which could be interpreted that capability. The result correlation between the two
the construct variability of Entrepreneur Networking variables (ß = 0,872, t = 21,374, p < 0,000). As
which could be explained by the construct variability of presented in Table 3, Entrepreneurial Networks (ß =
Entrepreneurial Orientation is 79.4% while other 0.329, t = 4.004, p < 0.001, direct effect model),
variables explained 20.6 % outside of the research. The Entrepreneurship Orientation (ß = 0.329, t = 4.004, p <
Effect of Entrepreneurial Orientation on Innovation 0.001, direct effect model) and innovation capability (β:
Capability gives an R-square value of 0.761 which could 0.362, t = 4.352, p < 0.001, direct effect model) showed
be interpreted that construct variability in Innovation a significant positive association with Marketing
Capability which could be explained by construct Performance.
variability of Entrepreneurial Orientation at 76.1% while
23.9% was explained by other variables outside of the 3. DISCUSSION
one studied. The effect of Entrepreneurial Networking, The results showed that the entrepreneurial orientation
Entrepreneurial Orientation, and Innovation Capability variable has a positive effect and significance on firm
on Marketing Performance gives an R-square value of performance in Batik SMEs in Indonesia. Most of the
0.791 which could be interpreted that construct Batik SMEs in Indonesia have a strong entrepreneurial
variability in Marketing Performance could be explained orientation in their business and also have intense
by Entrepreneurial Networking and Innovation creativity that’s why they can survive until can reach
Capability by 79,1% while other variables explained their goals. Supported by Gosselin’s (2005) research
20,9 % outside of the research. The second test was to which states that entrepreneurial orientation plays a big
see the significance of the effect of Entrepreneurial role in creating innovation. This is because
Orientation on Entrepreneurial Networking and entrepreneurs always have the nature to be proactive in
1900
IJSTR©2020
www.ijstr.org
 INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 02, FEBRUARY 2020 ISSN 2277-8616

taking the opportunities available. By observing

consumers and markets will help companies in making 5. LIMITATION AND SUGGESTION
renewal/innovation. The results of our study are also FOR FUTURE RESEARCH
wholesome for SME owners. They can improve In this study, there are several limitations :
marketing performance by increasing their 1. The SMEs sample used only comes from one type
entrepreneurial orientation by increasing the need for of business, so the results cannot be generalized for
achievement by continuing to work until they reach their all types of businesses. Future research could
desired goals. Besides, it must improve the locus of investigate handicraft SMEs or all of manufacturing
control, self-reliance and extraversion behaviour. The SMEs.
results of this study also show that entrepreneurial 2. The purpose of this study is to find mediation
orientation influences entrepreneurial networks and variables that can bridge the relationship between
innovation capabilities. When the SME owner has a Entrepreneurship Orientation and performance, not
high entrepreneurial spirit, he will open his mind and yet achieved. Because Entrepreneurial Networks
self to build networks, both in terms of suppliers, and the Capability of innovation are not found to
competitors, and the government. Besides the nature of mediate the relationship between the two, further
entrepreneurship that tends to be open, it will be easy to researches could use marketing innovation as a
accept novelty, for example, new technology in mediating variable or perceptions of environmental
developing marketing. The next hypothesis, uncertainty (Alhwarai, 2012).
Entrepreneurial Networks, have a positive effect on 3. PLS was used to analyze data in this study, and it
marketing performance, is rejected. The results showed has several limitations. So future research should
that the innovation capability has not a significant add to the number of samples, the number of
influence on firm performance in Batik's small and research indicators and also be careful of the results
medium enterprises in Indonesia. An explanation of this of the bootstrap from the PLS.
is that the process of making handmade batik still uses 4. The existence of results that are different from
a manual system not yet using high technology as well previous studies can be caused by the
as the batik SMEs marketing system in Indonesia is characteristics of respondents who are different from
mostly done offline. Although entrepreneurial orientation previous studies.
increases the ability of innovation, in the implementation
of technological innovation, not many SMEs do so they
have not been able to improve marketing performance. 6 REFERENCES
This is because innovation requires a significant [1] Allred, B. B., & Swan, K. S. (2005). The
investment, and in innovation itself, there is a mediating role of innovation on the influence of
substantial risk of failure, so innovation does not always industry structure and national context on firm
have an impact on performance. performance. Journal of international
management, 11(2), 229-
252.https://doi.org/10.1016/j.intman.2005.03.01
4. CONCLUSION 1
By fostering the desire of small entrepreneurs to [2] Aloulou, W. and Fayolle, A. (2005) ‘A
compete, taking risks and being more proactive with conceptual approach of entrepreneurial
customers will bring significant progress to the orientation within small business context’,
business, especially in finding more efficient methods Journal of Enterprising Culture. World
and developing the designs of motifs and forms of Scientific, 13(01), pp. 21–45.
processed batik products themselves. Entrepreneurship https://doi.org/10.1142/S0218495805000045
training needs to be done primarily to change the [3] Alhwarai, M. and Elbanna, S. (2012). The
mindset of the craftsmen to be more courageous to Influence Of Environmental. Changes, 729, 1-
move forward. Especially innovation that is very much 802.
needed by batik business must find a solution so that [4] Avlonitis, G. J. and Salavou, H. E. (2007)
every existing innovation can be applied by all ‘Entrepreneurial orientation of SMEs, product
businesses, both micro and small and medium innovativeness, and performance’, Journal of
enterprises. Training should also be aimed at young Business Research. Elsevier, 60(5), pp. 566–
people, because the regeneration of Batik business is 575.
essential, with the age of those who are still very https://doi.org/10.1016/j.jbusres.2007.01.001
productive, they are expected to be more creative in [5] Baum, J. A. C., Calabrese, T. and Silverman,
doing innovation and more active in trying. Continuing B. S. (2000) 'Do'nt go it alone: Alliance network
to develop the uniqueness of Batik must be considered. composition and startups' performance in
The development of actual motives should be done Canadian biotechnology', Strategic
more carefully so that the value of the style and original management journal. Wiley Online Library,
meaning of batik are still visible, because often artisans 21(3), pp. 267–
combine various motifs without knowing their essence, 294.https://doi.org/10.1002/(SICI)1097-
becoming a characteristic of batik mixed and lost. 0266(200003)21:3<267::AIDSMJ89>3.0.CO;2-
Making unique brands or symbols that characterize 8
Batik identity also needs to be considered, because by [6] Coulter, K. S. (2002) ‘The influence of print
including these symbols, consumers can easily advertisement organization on odd-ending
recognize the authenticity of Batik. price image effects’, Journal of Product &
1901
IJSTR©2020
www.ijstr.org
INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 02, FEBRUARY 2020 ISSN 2277-8616

Brand Management. MCB UP Ltd, 11(5), pp. management, 12(2), 263-

319–334. 281.https://doi.org/10.1080/713698465
https://doi.org/10.1108/10610420210442193 [20] Hernama, R. and Hermawati, S. (2011)
[7] Covin, J. G. and Slevin, D. P. (1989) ‘Strategic ‘Pengembangan Usaha Batik Banyumas:
management of small firms in hostile and Pendekatan Pemasaran’. Gunadarma
benign environments’, Strategic management University.
journal. Wiley Online Library, 10(1), pp. 75– [21] Hodgetts, R. M., & Kuratko, D. F.
87. https://doi.org/10.1002/smj.4250100107 (2001). Entrepreneurship: A contemporary
[8] Dada, O. and Watson, A. (2013) approach. South-Western/Thomson Learning.
‘Entrepreneurial orientation and the franchise [22] Huhtala, J. P. et al. (2014) ‘Market orientation,
system: Organisational antecedents and innovation capability and business
performance outcomes’, European Journal of performance: Insights from the global financial
Marketing. Emerald Group Publishing Limited, crisis’, Baltic Journal of Management, 9(2), pp.
47(5/6), pp. 790–812. 134–152. doi: 10.1108/BJM-03-2013-
https://doi.org/10.1108/03090561311306877 0044.https://doi.org/10.1108/BJM-03-2013-
[9] Damanpour, F. (1991). Organizational 0044
innovation: A meta-analysis of effects of [23] Hurley, R. F., & Hult, G. T. M. (1998).
determinants and moderators. Academy of Innovation, market orientation, and
management journal, 34(3), 555- organizational learning: an integration and
590.https://doi.org/10.5465/256406 empirical examination. Journal of
[10] Day, G. S. (2013) ‘The of Market-Drive marketing, 62(3), 42-54.
Capabilities Organizations’, 58(4), pp. 37–52. https://doi.org/10.1177/002224299806200303
[11] Dirisu, J. I., Iyiola, O. and Ibidunni, O. S. (2013) [24] Jennings, P. and Beaver, G. (1997) ‘The
‘Product Differentiation: A Tool Of Competitive performance and competitive advantage of
Advantage And Optimal Organizational small firms: a management perspective’,
Performance (A Study Of Unilever Nigeria Plc)’, International small business journal. Sage
European Scientific Journal, 9(34), pp. 1857– Publications Sage CA: Thousand Oaks, CA,
7881. 15(2), pp. 63–75.
[12] De Klerk, E. (2006). Aspects of semidefinite https://doi.org/10.1177/0266242697152004
programming: interior point algorithms and [25] Jiménez-Jiménez, D., & Sanz-Valle, R. (2011).
selected applications (Vol. 65). Springer Innovation, organizational learning, and
Science & Business Media. performance. Journal of business
[13] Doellah, S. and Santosa (2002) Batik, the research, 64(4), 408-
impact of time and environment. Danar Hadi. 417.https://doi.org/10.1016/j.jbusres.2010.09.0
[14] Fornell, C., & Larcker, D. F. (1981). Structural 10
equation models with unobservable variables [26] Kim, N., Shin, S. and Min, S. (2016) ‘Strategic
and measurement error: Algebra and statistics. marketing capability: Mobilizing technological
https://doi.org/10.1177/002224378101800313 resources for new product advantage’, Journal
[15] Frank, H., Kessler, A. and Fink, M. (2010) of Business Research. doi:
‘Entrepreneurial orientation and business 10.1016/j.jbusres.2016.03.072.
performance—A replication study’, https://doi.org/10.1016/j.jbusres.2016.03.072
Schmalenbach Business Review. Springer, [27] De Klerk, S. (2006) ‘Networking practices in
62(2), pp. 175–198. Gauteng businesses: an analysis and
https://doi.org/10.1007/BF03396804 proposed framework’. North-West University.
[16] George, G., Robley Wood Jr, D. and Khan, R. http://hdl.handle.net/10394/735
(2001) ‘Networking strategy of boards: [28] Kohli, A. K. and Jaworski, B. J. (2012) ‘Market
Implications for small and medium-sized Orientation: The Construct, Research
enterprises’, Entrepreneurship & Regional Propositions, and Managerial Implications’,
Development. Taylor & Francis, 13(3), pp. Developing a Market Orientation, 54(2), pp. 7–
269–285. 44. doi: 10.4135/9781452231426.n2.
https://doi.org/10.1080/08985620110058115 https://doi.org/10.1177/002224299005400201
[17] Gulati, R., Nohria, N. and Zaheer, A. (2000) [29] Kuncoro, M. (2006) ‘Strategi Bagaimana
‘Strategic networks’, Strategic management Meraih Keunggulan Kompetitif’, Jakarta:
journal. Wiley Online Library, 21(3), pp. 203– Erlangga.
215. https://doi.org/10.1002/(SICI)1097- [30] Lee, Don Y and Tsang, E. W. . (2001)
0266(200003)21:3<203::AID- ‘Lee_et_al-2001-
SMJ102>3.0.CO;2-K Journal_of_Management_Studies’, Journal of
[18] Hair, J. F., Black, W. C., Babin, B. J., & Management Studies, 38(June).
Anderson, R. E. (2010). Multivariate data [31] Lee, C., Lee, K. and Pennings, J. M. (2001)
analysis: Global edition. ‘Internal capabilities, external networks, and
[19] Hadjimanolis, A. (2000). A resource-based performance: a study on technology‐based
view of innovativeness in small ventures’, Strategic management journal. Wiley
firms. Technology analysis & Strategic Online Library, 22(6‐7), pp. 615–640.

1902
IJSTR©2020
www.ijstr.org
INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 02, FEBRUARY 2020 ISSN 2277-8616

https://doi.org/10.1002/smj.181 Limited.
[32] Lukiastuti, F. (2012) ‘Terhadap Peningkatan https://doi.org/10.1108/09555341211254490
Kinerja Ukm Dengan Komitmen Perilaku ( [44] Philip, M. (2011) ‘Factors affecting business
Studi Empiris pada Sentra UKM Batik di success of small & medium enterprises
Sragen , Jawa Tengah )’, Jurnal Organisasi (SMEs)’, Amity Global Business Review, 6(1),
dan Manajemen, 8, pp. 157–179. pp. 118–136.
[33] Lumpkin, G. T. and Dess, G. G. (1996) [45] Rahman, M., Rodríguez-Serrano, M. Á. and
‘Clarifying the entrepreneurial orientation Lambkin, M. (2017) ‘Corporate social
construct and linking it to performance’, responsibility and marketing performance: The
Academy of management Review. Academy of moderating role of advertising intensity’,
Management Briarcliff Manor, NY 10510, 21(1), Journal of Advertising Research, 57(4), pp.
pp. 135–172. 368–378. doi: 10.2501/JAR-2017-047. Doi :
https://doi.org/10.5465/amr.1996.9602161568 10.2501/JAR-2017-047
[34] Lumpkin, G. T. and Dess, G. G. (2001) ‘Linking [46] Slater, S. F. and Narver, J. C. (1995) ‘Market
two dimensions of entrepreneurial orientation orientation and the learning organization’,
to firm performance: The moderating role of Journal of marketing. SAGE Publications Sage
environment and industry life cycle’, Journal of CA: Los Angeles, CA, 59(3), pp. 63–74.
business venturing. Elsevier, 16(5), pp. 429– https://doi.org/10.1177/002224299505900306
451. https://doi.org/10.1016/S0883- [47] Song, X. M. and Parry, M. E. (1997) ‘A cross-
9026(00)00048-3 national comparative study of new product
[35] Mahmood, R., & Hanafi, N. (2013). development processes: Japan and the United
Entrepreneurial orientation and business States’, Journal of marketing. SAGE
performance of women-owned small and Publications Sage CA: Los Angeles, CA, 61(2),
medium enterprises in Malaysia: Competitive pp. 1–18.
advantage as a mediator. International Journal https://doi.org/10.1177/002224299706100201
of Business and Social Science (IJBSS), 4(1), [48] Sukesti, F. and Karim, A. (2014) ‘Development
82-90. http://ijbssnet.com/index.php/home Strategy For Smes Through Product
[36] Mathews, J. A. (2001) ‘Competitive interfirm Differentiation And Government Regulations
dynamics within an industrial market system’, With Working Capital As Moderating Variable :
Industry and Innovation. Taylor & Francis, 8(1), Case Study In Semarang City Indonesia’,
pp. 79–107. South East Asia Journal of Contemporary
https://doi.org/10.1080/13662710120034419 Business, Economics and Law, 5(2).
[37] McClelland, D. C. (1987) Human motivation. [49] Sundar, S., Kannabiran, G. and Tigga, G. A.
CUP Archive. (2018) ‘IT leveraged downstream supply chain
[38] Miles, R. E. and Snow, C. C. (1992) ‘Causes of capabilities on competitive marketing
failure in network organizations’, California performance - A study of Indian manufacturing
management review. SAGE Publications Sage firms’, International Journal of Business
CA: Los Angeles, CA, 34(4), pp. 53–72. Performance and Supply Chain Modelling,
https://doi.org/10.2307/41166703 10(2), pp. 165–194.
[39] Miller, D. and Friesen, P. H. (1982) ‘Innovation https://doi.org/10.1504/IJBPSCM.2018.098309
in conservative and entrepreneurial firms: Two [50] Susilowati, E. and Taufan, G. (2013) ‘Model
models of strategic momentum’, Strategic Pengembangan Jejaring Wirausaha Dalam
management journal. Wiley Online Library, Upaya Meningkatkan Kinerja Perekonomian
3(1), pp. 1–25. Unit Usaha Kecil Dan Menengah Di
https://doi.org/10.1002/smj.4250030102 Semarang’, Sustainable Competitive
[40] Morgan, N. A., Slotegraaf, R. J. and Vorhies, Advantage (SCA), 3(1).
D. W. (2009) ‘Linking Marketing Capabilities [51] Wiklund, J. and Shepherd, D. (2003)
with Profit Growth Author ’ s personal copy ‘Knowledge‐based resources, entrepreneurial
Linking marketing capabilities with pro fi t orientation, and the performance of small and
growth’, (December). medium‐sized businesses’, Strategic
https://doi.org/10.1016/j.ijresmar.2009.06.005 management journal. Wiley Online Library,
[41] Ngah, R., & Ibrahim, A. R. (2009). The 24(13), pp. 1307–1314.
Relationship of Intellectual Capital. Innovation https://doi.org/10.1002/smj.360
and. [52] Wiklund, J. and Shepherd, D. (2005)
[42] Pérez-Luño, A., Wiklund, J., & Cabrera, R. V. ‘Entrepreneurial orientation and small business
(2011). The dual nature of innovative activity: performance: a configurational approach’,
How entrepreneurial orientation influences Journal of business venturing. Elsevier, 20(1),
innovation generation and adoption. Journal of pp. 71–91.
Business Venturing, 26(5), 555-571. https://doi.org/10.1016/j.jbusvent.2004.01.001
https://doi.org/10.1016/j.jbusvent.2010.03.001 [53] Wincent, J. and Westerberg, M. (2005)
[43] Petzer, D. et al. (2012) ‘Networking as key ‘Personal traits of CEOs, inter-firm networking
factor in Artpreneurial success’, European and entrepreneurship in their firms:
business review. Emerald Group Publishing Investigating strategic SME network

1903
IJSTR©2020
www.ijstr.org
INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 02, FEBRUARY 2020 ISSN 2277-8616

participants’, Journal of Developmental

Entrepreneurship. World Scientific, 10(03), pp.
271–284.
https://doi.org/10.1142/S1084946705000215
[54] Yli‐Renko, H., Autio, E. and Sapienza, H. J.
(2001) ‘Social capital, knowledge acquisition,
and knowledge exploitation in young
technology‐based firms’, Strategic
management journal. Wiley Online Library,
22(6‐7), pp. 587–613.
https://doi.org/10.1002/smj.183
[55] Zahra, S. A. and Covin, J. G. (1995) ‘Contextual
influences on the corporate entrepreneurship-
performance relationship: A longitudinal analysis’,
Journal of business venturing. Elsevier, 10(1), pp.
43–58. https://doi.org/10.1016/0883-
9026(94)00004-EGet rights and content

1904
IJSTR©2020
www.ijstr.org