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http://dx.doi.org/10.13106/jafeb.2020.vol7.no12.329

Competitive Pressure and Business Performance in East Java Batik Industry  

SOEWARNO, Noorlailie (Department of Accounting, Faculty of Economics and Business, Universitas Airlangga)
TJAHJADI, Bambang (Department of Accounting, Faculty of Economics and Business, Universitas Airlangga)
PERMATANADIA, Devitania (Department of Accounting, Faculty of Economics and Business, Universitas Airlangga)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.12, 2020 , pp. 329-336 More about this Journal
Abstract
This study aims to assess the impact of competitive pressure and innovation capability on business performance in small- and medium-sized enterprises (SMEs) in the batik industry in East Java, Indonesia. Furthermore, this study explores the impact of competitive pressure on business performance through innovation capability as a mediating variable. This research was quantitative using primary data with questionnaire as a method of sampling collection. The measurement of the variables was captured using Likert scale. The respondents were small- and medium-sized enterprises (SMEs) in the batik industry in East Java Province, Indonesia. The sample totaled 254 subjects. The data analysis was done using SEM-PLS. The results of the study show that: 1) there was a positive direct impact of competitive pressure on business performance; 2) competition pressure positively influences innovation capability; 3) innovation capability positively influences business performance; and 4) innovation capability has a partial mediating role in the effect of competitive pressures on business performance. The findings of this study suggest that managers in SME's batik industry should increase their effort to cope with the high competitive pressure to increase the innovation capability, so that they can have an advantage to face successfully competitors, leading to higher business performance.
Keywords
Competitive Pressure; Innovation Capability; Business Performance;
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