Innovation and Firm Competitiveness as Intervening Variables in Improving Financial Performance of MSMEs

Yuli Soesetio; Budi Eko Soetjipto; Puji Handayati; Agung Winarno; Dyah Arini Rudiningtyas; Moh. Cholid Mawardi; Tasnim Nikmatullah Realita

doi:10.21776/ub.jam.2024.022.02.16

Authors

Yuli Soesetio
[email protected]
Universitas Negeri Malang, Indonesia, Indonesia http://orcid.org/0000-0001-8848-9880
Budi Eko Soetjipto Universitas Negeri Malang, Indonesia, Indonesia http://orcid.org/0000-0002-1170-2986
Puji Handayati Universitas Negeri Malang, Indonesia, Indonesia http://orcid.org/0000-0001-8241-1337
Agung Winarno Universitas Negeri Malang, Indonesia, Indonesia http://orcid.org/0000-0001-7783-1636
Dyah Arini Rudiningtyas Universitas Islam Malang, Indonesia, Indonesia
Moh. Cholid Mawardi Universitas Islam Malang, Indonesia, Indonesia
Tasnim Nikmatullah Realita STIE Indocakti Malang, Indonesia, Indonesia

Vol. 22 No. 2 (2024)

Current Development

Submitted January 22, 2024

Published June 30, 2024

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Micro, small, and medium enterprises (MSMEs), especially those operating in the craft industry, often remain overlooked and receive minimal attention from researchers and policymakers even though they have an important role in increasing exports and employment in Indonesia. Nevertheless, craft MSMEs face significant challenges in maximizing innovation and enhancing competitiveness to improve financial performance. Hence, this study aims to investigate how innovation and firm competitiveness influence the financial performance of craft MSMEs. This study utilizes the SEM AMOS analysis tool with data from 403 business actors across three craft centers in West Java: Tasikmalaya, Majelengka, and Bandung. The findings reveal that product, process, and green innovation significantly influence and partially mediate the connection between entrepreneurial orientation and competitiveness. Competitiveness completely mediates the influence of product and green innovation on craft MSMEs' financial performance. Meanwhile, process innovation significantly impacts financial performance both directly and indirectly, emphasizing its importance in enhancing competitiveness and financial outcomes. Continuous improvement and innovation are crucial for boosting competitiveness and financial performance.

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How to Cite

Soesetio, Y. (2024) “Innovation and Firm Competitiveness as Intervening Variables in Improving Financial Performance of MSMEs”, Jurnal Aplikasi Manajemen, 22(2), p. 524â€“546. doi:10.21776/ub.jam.2024.022.02.16.

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Innovation and Firm Competitiveness as Intervening Variables in Improving Financial Performance of MSMEs

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