Innovativeness Model Of Small And Medium Enterprises Based On Market Orientation and Learning Orientation: Testing Moderating Effect Of Business Operation Mode

Firms tend to perform better when they attempt to focus on market orientation with special emphasis on flexibility and faster response time. The aims of this study is to analyze the interrelationships between market orientation, learning orientation and innovativeness. The effects of business operation mode on learning orientation and innovativeness are also investigated.The study involves a questionnaire-based survey of owners from small-medium sized-firms operating in Banyumas regency. A total of 149 usable questionnaires were received from SMEs. A structural equation model was designed to examine the relationship. Model was tested by Partial Least squares (PLS) analysis. The results show that firm innovativeness positively affects firm performance; firm learning-orientation positively influences firm innovativeness; firm market-orientation positively impacts firm learning orientation; firm learning-orientation mediates the relationship between firm market-orientation and firm innovativenes. The study found that participation moderate the relationship between market orientation and learning orientation on innovativeness.