Entrepreneurship Orientation on MSME’s Performance, Competitive Advantage and Innovation Strategies as
Mediation
1731 Interdisciplinary Social Studies, 2(3), Dec 2022
To improve business performance, an MSME must be able to adapt and innovate to face
changing times and a turbulent business environment (Pudjiarti & Putranti, 2020). According
to Luecke (2003), innovation is giving birth to a process to realize, combine, or mature an idea,
then adjust it to bring new value to a product, process, or service. On the other hand, Zimmerer
and Scarborough (2001) said innovation is the ability to apply creativity in the process of
solving problems and find opportunities to increase usefulness in life. Thus, it can be said that
innovation is the application of new ideas or breakthroughs that have value so that they provide
benefits and are used by the surrounding environment.
Innovation comes through various stages until later it can be realized. According to Luecke
(2003), there are five innovation processes, namely ideas generation, opportunity recognition,
development, commercialization, and ideas evaluation. Innovation is refined through repeated
research and experimentation activities which are often referred to as trial and error activities
(Rui et al., 2016). Thus, innovation in the management of coffee farming is greatly explored in
the sustainability of coffee farming.
The industrial revolution 4.0 demands such a competitive environment. To survive in
today's competitive business environment, a company/business entity must be able to develop
strong relationships with their customers and suppliers to ensure a sustainable competitive
advantage, which can improve the company's performance (Jawaid, 2010). Based on Rofiaty's
research (2019), the higher the orientation of entrepreneurship, knowledge management and
application of strategies, the better the performance will be. Therefore, how farmers debrief
about understanding their business management is a special concern for the sustainability of
their business.
Another significant barrier that affects the success for smallholders as usual is capital and
adaptation to technological complexity, for smallholders to access a premium market where
their coffee products get higher profits. Based on data released by the Directorate General of
Plantations (2022). In 2017 East Java province had a coffee plantation area of 106,951 hectares
and in the latest data in 2021 it was estimated that the area of coffee plantations was 89,894
hectares based on this data there was a narrowing of 16% of land. The productivity of coffee
plantations in 2017 was 64,711 tons and in 2021 it is assumed that 48,675 tons of production
decreased by 23%. With a yield of 605 kg/hectare in 2017, and in 2021 it was 541 kg/hectare.
For the land area and productivity of coffee commodities in Malang Raya refers to the latest
data from BPS, namely in 2016-2018, the land area in 2016 was 16,217 hectares with a yield
of 9,613 tons and a yield of 564 kg / hectare, the land area in 2017 was 16,218 hectares, with a
yield of 10,559 tons with a productivity of 503 kg / hectare and in 2018 an area of 16,356
hectares of 10,772 tons and productivity of 532 kg / hectare. Based on the following data, it
shows that there was a slight increase in land area and however, there was a decrease in
productivity capacity in 2018 compared to 2016.
Based on data in recent years, the proportion of young farmers in 2021 has decreased to
around 20% of the total youth force working based on employment compared to 2011 which
was still around 30% of the total labor force. The total population based on the latest data,
namely in 2018 farmers in East Java farmers under the age of 35 years are only 370 thousand
people or equivalent to 4% of the total population of 9 million people. Based on data from the
central statistics agency of Malang Regency, the area contributed 32% of the total coffee
production of East Java in 2018. Meanwhile, according to the Directorate General of