IDEAS home Printed from https://ideas.repec.org/a/uii/jsbuii/v29y2025i1p41-57id35560.html
   My bibliography  Save this article

Increasing the MSMEs performance through cutting edge innovation capability

Author

Listed:
  • Muhammad Yamin Siregar
  • Warsani
  • Ahmad Prayudi
  • Alfifto

Abstract

Purpose – This paper analyzes how to increase micro, small and medium-sized enterprises (MSMEs) performance through Cutting Edge Innovation Capability. Design/methodology/approach – This study’s population consists of all 84,758 MSMEs in North Sumatera. A purposive sampling approach was used to select the respondents, with closed question for a sample of 218 leading MSME owner-managers in North Sumatera using the structural equation modelling technique (PLS-SEM). The main MSMEs in North Sumatra with the the following the categories of products: culinary, handicrafts, fashion, coffee shops, bakeries, garment, and services.Findings – The findings of this study show that Cutting Edge Innova¬tion Capability has positive and significant effect on performance of MSMEs from data processing and hypothesis testing results. Cutting Edge Inno¬vation Capability is innovation capabilities that combine product innovation, process innovation, market innovation, and organi¬zation innovation as: Sensing Capability, Seizing Capability, Trans¬forming Capability, Break¬through Concept Capability, and Superior Marketing Capability.Research limitations/implications – There needs to be a more balanced composition of leading MSMEs data, not too much many in food and beverage MEMEs. The research data for this category is 103 MSMEs (47%) while others MSME categories are also in need innovation capabilities such as souvenirs, agribusiness, and services. Practical implications – Based on research results, as input for MSME manager, MSME business actors in efforts increasing the innovation capabilities of MSMEs in line with the Government’s wishes the Republic of Indonesia through the Ministry of Cooperatives and SMEs, target MSMEs can move up a class (scaling up), MEMEs can go international.Originality/value – Cutting Edge Innovation Capability is needed to improve the MSMEs performance. In line with previous research, Market Orientation and SME Performance needed to be mediated by marketing capabilities.

Suggested Citation

  • Muhammad Yamin Siregar & Warsani & Ahmad Prayudi & Alfifto, 2025. "Increasing the MSMEs performance through cutting edge innovation capability," Jurnal Siasat Bisnis, Management Development Centre (MDC) Department of Management, Faculty of Business and Economics Universitas Islam Indonesia, vol. 29(1), pages 41-57.
  • Handle: RePEc:uii:jsbuii:v:29:y:2025:i:1:p:41-57:id:35560
    as

    Download full text from publisher

    File URL: https://journal.uii.ac.id/JSB/article/view/35560
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Muslim Amin & Ramayah Thurasamy & Abdullah M. Aldakhil & Aznur Hafeez Bin Kaswuri, 2016. "The effect of market orientation as a mediating variable in the relationship between entrepreneurial orientation and SMEs performance," Nankai Business Review International, Emerald Group Publishing Limited, vol. 7(1), pages 39-59, March.
    2. Richard C. Becherer & Marilyn M. Helms & John P. McDonald, 2012. "The effect of entrepreneurial marketing on outcome goals in SMEs," New England Journal of Entrepreneurship, Emerald Group Publishing Limited, vol. 15(1), pages 7-18, March.
    3. Sarstedt, Marko & Ringle, Christian M. & Smith, Donna & Reams, Russell & Hair, Joseph F., 2014. "Partial least squares structural equation modeling (PLS-SEM): A useful tool for family business researchers," Journal of Family Business Strategy, Elsevier, vol. 5(1), pages 105-115.
    4. Kibaek Lee & Jaeheung Yoo, 2019. "How does open innovation lead competitive advantage? A dynamic capability view perspective," PLOS ONE, Public Library of Science, vol. 14(11), pages 1-18, November.
    5. G. Tomas M. Hult & David J. Ketchen, 2001. "Does market orientation matter?: a test of the relationship between positional advantage and performance," Strategic Management Journal, Wiley Blackwell, vol. 22(9), pages 899-906, September.
    6. Zhang, Man & Hartley, Janet L., 2018. "Guanxi, IT systems, and innovation capability: The moderating role of proactiveness," Journal of Business Research, Elsevier, vol. 90(C), pages 75-86.
    7. Tina Gruber-Muecke & Katharina Maria Hofer, 2015. "Market orientation, entrepreneurial orientation and performance in emerging markets," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 10(3), pages 560-571, July.
    8. Hendar Hendar & Ferdinand Augusti Tae & Nurhayati Tatiek, 2017. "Introducing the religio-centric positional advantage to Indonesian small businesses," Management & Marketing, Sciendo, vol. 12(1), pages 78-102, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. José Roberto Frega & Alex Antonio Ferraresi & Carlos Olavo Quandt & Claudimar Pereira da Veiga, 2018. "Relationships Among Knowledge Management, Organisational Innovativeness and Performance: Covariance-Based Versus Partial Least-Squares Structural Equation Modelling," Journal of Information & Knowledge Management (JIKM), World Scientific Publishing Co. Pte. Ltd., vol. 17(01), pages 1-19, March.
    2. Muhammad Anwar & Thomas Clauss & Wunnam Basit Issah, 2022. "Entrepreneurial orientation and new venture performance in emerging markets: the mediating role of opportunity recognition," Review of Managerial Science, Springer, vol. 16(3), pages 769-796, April.
    3. AlNuaimi, Bader K. & Singh, Sanjay Kumar & Harney, Brian, 2021. "Unpacking the role of innovation capability: Exploring the impact of leadership style on green procurement via a natural resource-based perspective," Journal of Business Research, Elsevier, vol. 134(C), pages 78-88.
    4. Nour El Houda Ben Amor & Mohamed Nabil Mzoughi, 2023. "Do Millennials’ Motives for Using Snapchat Influence the Effectiveness of Snap Ads?," SAGE Open, , vol. 13(3), pages 21582440231, July.
    5. Ioana Gutu & Daniela Tatiana Agheorghiesei & Alexandru Tugui, 2023. "Assessment of a Workforce Sustainability Tool through Leadership and Digitalization," IJERPH, MDPI, vol. 20(2), pages 1-30, January.
    6. Al-Baraa Abdulrahman Al-Mekhlafi & Ahmad Shahrul Nizam Isha & Nicholas Chileshe & Mohammed Abdulrab & Anwar Ameen Hezam Saeed & Ahmed Farouk Kineber, 2021. "Modelling the Relationship between the Nature of Work Factors and Driving Performance Mediating by Role of Fatigue," IJERPH, MDPI, vol. 18(13), pages 1-17, June.
    7. Aziz Barhmi & Omar Hajaji, 2023. "Multidisciplinary Approach to Supply Chain Resilience: Conceptualization and Scale Development," Central European Business Review, Prague University of Economics and Business, vol. 2023(5), pages 43-69.
    8. Baier-Fuentes, Hugo & Andrade-Valbuena, Nelson A. & Huertas Gonzalez-Serrano, Maria & Gaviria-Marin, Magaly, 2023. "Bricolage as an effective tool for the survival of owner-managed SMEs during crises," Journal of Business Research, Elsevier, vol. 157(C).
    9. Harmancioglu, Nukhet & Grinstein, Amir & Goldman, Arieh, 2010. "Innovation and performance outcomes of market information collection efforts: The role of top management team involvement," International Journal of Research in Marketing, Elsevier, vol. 27(1), pages 33-43.
    10. Dominik M. Wielgos & Christian Homburg & Christina Kuehnl, 2021. "Digital business capability: its impact on firm and customer performance," Journal of the Academy of Marketing Science, Springer, vol. 49(4), pages 762-789, July.
    11. Ayodeji Emmanuel Oke & Ahmed Farouk Kineber & Mohamed Elseknidy & Fakunle Samuel Kayode, 2023. "Radio frequency identification implementation model for sustainable development: A structural equation modeling approach," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(3), pages 1824-1844, June.
    12. Ilenia Bravo & Ilenia Colamatteo & Simona Balzano & Lucio Cappelli & Enrica Iannucci, 2024. "Consumer Behaviour Regarding Certified Food," Sustainability, MDPI, vol. 16(9), pages 1-12, April.
    13. Asif Khan & Chih-Cheng Chen & Kwanrat Suanpong & Athapol Ruangkanjanases & Santhaya Kittikowit & Shih-Chih Chen, 2021. "The Impact of CSR on Sustainable Innovation Ambidexterity: The Mediating Role of Sustainable Supply Chain Management and Second-Order Social Capital," Sustainability, MDPI, vol. 13(21), pages 1-25, November.
    14. Diego Norena-Chavez, 2022. "Influence of SARS-CoV-2 on the Mediating Effect of Entrepreneurial Passion in the Relationship between Entrepreneurial Self-Efficacy and Innovative Behavior," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 125-139.
    15. Chen, Shih-Chih & Hung, Chung-Wen, 2016. "Elucidating the factors influencing the acceptance of green products: An extension of theory of planned behavior," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 155-163.
    16. Mahadzirah Mohamad & Asyraf Afthanorhan* & Zainudin Awang & Morliyati Mohammad, 2019. "Comparison Between CB-SEM and PLS-SEM: Testing and Confirming the Maqasid Syariah Quality of Life Measurement Model," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 5(3), pages 608-614, 03-2019.
    17. Hsien-Tsung Chang & Nilamadhab Mishra & Chung-Chih Lin, 2015. "IoT Big-Data Centred Knowledge Granule Analytic and Cluster Framework for BI Applications: A Case Base Analysis," PLOS ONE, Public Library of Science, vol. 10(11), pages 1-23, November.
    18. Hock-Doepgen, Marianne & Clauss, Thomas & Kraus, Sascha & Cheng, Cheng-Feng, 2021. "Knowledge management capabilities and organizational risk-taking for business model innovation in SMEs," Journal of Business Research, Elsevier, vol. 130(C), pages 683-697.
    19. Cliff R. Kikawa & Charity Kiconco & Moses Agaba & Dimas Ntirampeba & Amos Ssematimba & Billy M. Kalema, 2022. "Social Media Marketing for Small and Medium Enterprise Performance in Uganda: A Structural Equation Model," Sustainability, MDPI, vol. 14(21), pages 1-20, November.
    20. Mkedder, Nadjim & Jain, Varsha & Salunke, Parth, 2024. "Determinants of virtual reality stores influencing purchase intention: An interpretive structural modeling approach," Journal of Retailing and Consumer Services, Elsevier, vol. 78(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uii:jsbuii:v:29:y:2025:i:1:p:41-57:id:35560. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ana Yuliani (email available below). General contact details of provider: https://journal.uii.ac.id/JSB/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.