Market Orientation and Business Performance: The Mediating Networking and Innovation

Abstract

This study aims to identify and develop the concept of market orientation on business performance both directly and through networking and innovation. Questionnaires and interviews were conducted with SME owners in the creative craft industry, especially textile-based crafts (IKK), as well as non-textile creative Craft Industries in Malang, Indonesia, whose marketing has spread to various countries. The sampling technique was purposive sampling with certain respondent criteria. The data analysis technique was carried out using the Partial Least Square method. The study revealed that while market orientation positively influences networking and innovation, it has a negative impact on business performance when directly measured. However, networking and innovation, when considered together, can positively impact performance. Additionally, networking and innovation can both mediate the relationship between market orientation and business performance. This study offers a comprehensive model of the determinants of business performance success by considering aspects of networking and innovation in improving business performance.