Innovation Capability and Open Innovation for Small and Medium Enterprises (SMEs) Performance: Response in Dealing with the COVID-19 Pandemic
Abstract
:1. Introduction
2. Literature Review
2.1. Firm Performance
2.2. Innovation Capability
2.3. Open Innovation
3. Research Methodology
3.1. Sample and Data Collection
3.2. Instrument Development
3.3. Operational of Construct
3.3.1. Independent Variable
3.3.2. Dependent Variable
3.4. Data Analysis
4. Result
4.1. Measurement Model
4.2. Structural Model
5. Discussion
6. Conclusions and Recommendation
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A
FP1 | Organization considers the trend of net profit as a performance measurement |
FP2 | Organization’s net profit has increased consistently over the past year |
FP3 | Organization considers the surge of revenue as a performance measurement |
FP4 | The surge of organization’s revenue has been consistent over the past year |
FP5 | Organization compares the investment cost against the value it generates. |
OpF1 | Customer feels satisfied with the product and service from the organization |
OpF2 | Organization ensures employees’ spirit remain high particularly during the pandemic |
OpF3 | The productivity target set by the organization has always been achieved over the past year |
OpF4 | The quality of product made by the employee is up to the pre-determined standard |
OpF5 | The product or service is delivered to the customer in a timely manner |
OpF6 | The book-keeping process of inventory is done properly |
OpF7 | The product made by organization dominates the market |
OpF8 | Total sales increased over the past year |
PLC1 | Manager allows subordinates to participate in the product development process |
PLC2 | The inclusion of employee’s opinion could help organization shape the innovation direction |
PLC3 | The leadership style in the organization is not merely instructing but open for collaboration |
PLC4 | The leader shows support to critical ideas that aim to reform the organization |
WCW1 | Integrity in working is important for the organization |
WCW2 | Competency in working is important for the organization |
WCW3 | Reliability in working is important for the organization |
WCW4 | Loyalty in working is important for the organization |
WCW5 | Openness to others in working is important for the organization |
WCW6 | Organization sees every member as equal |
WCW7 | Everyone understands their role within the organization |
WCW8 | Organization demonstrates effort to improve employee’s creativity in Working |
WCW9 | Organization demonstrates effort to improve employee’s independence in working |
WCW10 | The leader models behaviors that empower employees |
WCW11 | Every employee is treated fairly |
IOS1 | Work activities within organization are conducted in an organized manner |
IOS2 | There is a procedure that facilitates innovation within the organization |
IOS3 | Organization has within it a formal position responsible for innovation process |
IOS4 | Organization has tools to facilitate idea generation process |
IOS5 | The organization structure is informal |
IOS6 | The decision can be made by someone other than the owner |
IOS7 | Organization implements a reward system for creative and innovative initiatives |
KHD1 | Organization gives training to improve employee’s skills to understand customer’s situation |
KHD2 | Organization gives training to improve employee’s skills to understand competitor’s situation |
KHD3 | Organization gives training to improve employee’s skills to understand the emergence of new technologies |
KHD4 | Organization gives supplementary training to maximize employee’s potential |
Reg1 | Organization conducts an evaluation to assess the effectiveness of business initiatives |
Reg2 | Organization implements changes based on prior evaluation |
Reg3 | Manager treats mistakes as a learning opportunity for employees |
Reg4 | Organization perceives innovation as essential |
Reg5 | Organization is willing to take business risk |
Reg6 | Organization is willing to exchange opinion |
Reg7 | There is trust and respect with each other in the organization |
EK1 | Organization collaborates with external parties |
EK2 | Organization has a good relationship with suppliers |
EK3 | Organization has a good relationship with customers |
EK4 | Organization has a good relationship with industrial associations |
EK5 | Organization has a good relationship with competitors |
IA1 | Member of organization has new perspective on issues at organization |
IA2 | Member of organization is willing to take risk |
IA3 | Member of organization embraces uncertainty |
IA4 | Member of organization has intrinsic motivation to work |
IA5 | Organization changes individual tasks based on changes in business climate |
IA6 | Organization provides time for member to nurture creativity |
IA7 | Organization provides budget for member to nurture creativity |
IA8 | Organization provides tools and setups for member to nurture creativity |
VS1 | The leader socializes the organization’s vision and mission to all members |
VS2 | Each member knows the organization’s vision and mission |
VS3 | Organization decides business and functions that are performed by them |
VS4 | Organization decides business and functions that are not performed by them |
VS5 | Organization decides the scope of their target market |
VS6 | Organization can identify their unique value and differentiating factors compared to competitors |
VS7 | There is a new creation of product and service to stimulate demand |
VS8 | Organization is oriented towards the future |
VS9 | There are initiatives to save cost |
VS10 | There are initiatives to increase quality within organization |
MT1 | Organization includes technology into their generic strategy |
MT2 | Organization can anticipate the technological needs in the future based on the development of product and market trend |
MT3 | Organization conducts assessment on technological needs |
Inb1 | External parties who are directly involved in innovation activities within the organization |
Inb2 | The government plays a job in helping innovation activities within the organization |
Inb3 | Consumers contribute in innovation activities within the organization |
Inb4 | Competitors contribute in innovation activities within the organization |
Inb5 | Research institutions provide assistance in innovation activities within the organization |
Inb6 | Universities or educational institutions contribute to innovation activities within the organization |
Inb7 | The supplier contributes to the organization’s internal innovation activities |
Inb8 | There are consultants who provide assistance in innovation activities within the organization |
Inb9 | Innovative activities meted out by the organization depend upon the help of external parties |
Inb10 | I use the latest equipment to improve innovation within the organization |
Inb11 | I use the newest materials (fabrics, dyes, candles, etc.) to enhance innovation within the organization |
Inb12 | I bought patents for innovation activities within the organization |
Inb13 | I bought copyright to be used for innovation activities within the organization |
Inb14 | I bought a license to be used for innovation activities within the organization |
Outb1 | I try to get other benefits from the internal innovations that have been made |
Outb2 | I offer new methods used by internal organizations in other organizations |
Outb3 | The organization sells batik product licenses to other organizations |
Outb4 | I sell batik product patents to other organizations |
Outb5 | I sell copyrighted batik motifs to other organizations |
Outb6 | I collaborated by selling the latest technology (for example, new batik tools, new batik ways, new waste process methods) to manufacture batik in different organizations. |
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Measuring Instrument | Alfa Cronbach | Composite Reliability | Average Variance Extracted (AVE) |
---|---|---|---|
Financial Performance (FP) | 0.757 | 0.757 | 0.892 |
Operational Performance (OpF) | 0.896 | 0.897 | 0.928 |
Inbound Open Innovation (IOI) | 0.821 | 0.841 | 0.869 |
Outbound Open Innovation (OOI) | 0.633 | 0.721 | 0.505 |
Participatory Leadership Culture (PLC) | 0.795 | 0.787 | 0.725 |
Ideation and Organizing Structures (IOS) | 0.887 | 0.874 | 0.806 |
Work Climate and Wellbeing (WCW) | 0.710 | 0.897 | 0.762 |
Know-how Development (KHD) | 0.629 | 0.777 | 0.530 |
Regeneration (R) | 0.781 | 0.798 | 0.867 |
External Knowledge (EK) | 0.767 | 0.801 | 0.696 |
Individual Activity (IA) | 0.733 | 0.849 | 0.652 |
Vision and Strategy (VS) | 0.745 | 0.854 | 0.661 |
Management of Technology (MT) | 0.795 | 0.807 | 0.712 |
Hypothesis | Path Coefficient | T-Statistic | p Value | Conclusion | |
---|---|---|---|---|---|
H1 | IC → FP | 0.925 | 52.872 | 0.000 | Accept **** |
H2 | IC → OpF | 0.620 | 10.290 | 0.004 | Accept ** |
H3 | OI → FP | 0.823 | 31.330 | 0.001 | Accept *** |
H4 | OI → OpF | 0.819 | 17.518 | 0.002 | Accept *** |
R Square | R Square Adjusted | |
---|---|---|
Financial Performance (FP) | 0.944 | 0.944 |
Operational Performance (OpF) | 0.717 | 0.707 |
Inbound Open Innovation (IOI) | 0.998 | 0.898 |
Outbound Open Innovation (OOI) | 0.249 | 0.244 |
Participatory Leadership Culture (PLC) | 0.710 | 0.706 |
Ideation and Organizing Structures (IOS) | 0.616 | 0.611 |
Work Climate and Wellbeing (WCW) | 0.543 | 0.541 |
Know-how Development (KHD) | 0.311 | 0.307 |
Regeneration (R) | 0.532 | 0.528 |
External Knowledge (EK) | 0.896 | 0.896 |
Individual Activity (IA) | 0.927 | 0.926 |
Vision and Strategy (VS) | 0.904 | 0.903 |
Management of Technology (MT) | 0.527 | 0.522 |
Relationship | Correlation Value | T-Statistic | p-Value | Conclusion |
---|---|---|---|---|
Organizational Performance Financial Performance | 0.954 | 12.277 | 0.002 | Significant |
Organizational Performance Operational Performance | 0.971 | 20.290 | 0.000 | Significant |
Relationship | Correlation Value | T-Statistic | p-Value | Conclusion |
---|---|---|---|---|
Innovation Capability Participatory Leadership Culture | 0.964 | 5.465 | 0.004 | Significant |
Innovation Capability Ideation and Organizing Structures | 0.959 | 8.221 | 0.002 | Significant |
Innovation Capability Work Climate and Wellbeing | 0.771 | 17.895 | 0.000 | Significant |
Innovation Capability Know-how Development | 0.671 | 10.792 | 0.001 | Significant |
Innovation Capability Regeneration | 0.816 | 6.727 | 0.003 | Significant |
Innovation Capability External Knowledge | 0.946 | 53.115 | 0.000 | Significant |
Innovation Capability Individual Activity | 0.954 | 60.488 | 0.000 | Significant |
Innovation Capability Vision and Strategy | 0.949 | 56.269 | 0.000 | Significant |
Innovation Capability Management of Technology | 0.859 | 12.618 | 0.001 | Significant |
Relationship | Correlation Value | T-Statistic | p-Value | Conclusion |
---|---|---|---|---|
Open Innovation Inbound open innovation | 0.993 | 30.691 | 0.000 | Significant |
Open Innovation Outbound open innovation | 0.865 | 7.235 | 0.001 | Significant |
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Rumanti, A.A.; Rizana, A.F.; Septiningrum, L.; Reynaldo, R.; Isnaini, M.M. Innovation Capability and Open Innovation for Small and Medium Enterprises (SMEs) Performance: Response in Dealing with the COVID-19 Pandemic. Sustainability 2022, 14, 5874. https://doi.org/10.3390/su14105874
Rumanti AA, Rizana AF, Septiningrum L, Reynaldo R, Isnaini MM. Innovation Capability and Open Innovation for Small and Medium Enterprises (SMEs) Performance: Response in Dealing with the COVID-19 Pandemic. Sustainability. 2022; 14(10):5874. https://doi.org/10.3390/su14105874
Chicago/Turabian StyleRumanti, Augustina Asih, Afrin Fauzya Rizana, Lutfia Septiningrum, Rocky Reynaldo, and Mohammad Mi’radj Isnaini. 2022. "Innovation Capability and Open Innovation for Small and Medium Enterprises (SMEs) Performance: Response in Dealing with the COVID-19 Pandemic" Sustainability 14, no. 10: 5874. https://doi.org/10.3390/su14105874