P-ISSN: 2808-0467
E-ISSN: 2808-5051
Homepage: https://iss.internationaljournallabs.com/index.php/iss
1729
ENTREPRENEURSHIP ORIENTATION ON MSME’S
PERFORMANCE, COMPETITIVE ADVANTAGE AND INNOVATION
STRATEGIES AS MEDIATION
Muchammad Andrianto Wicaksono
1
, Wahdiyat Moko
2
, Rofiaty
3
Faculty of Economics and Business, University of Brawijaya, Malang, East Java, Indonesia
1
andrianto@student.ub.ac.id
2
3
PAPER INFO ABSTRACT
Received:
December 2022
Revised:
December 2022
Approved:
December 2022
Background: The agriculture industry in Indonesia produces a wide range
of goods. Coffee is one of them. One of Indonesia's biggest exports to the rest
of the world is coffee. Indonesia, the third-largest producer of coffee
worldwide, has acknowledged coffee as a staple good. According to
Pertanian.go.id, there are 1.2 million hectares of coffee plantations in
Indonesia. Community coffee plantation land makes up 96% of the plantation
area, while private firms own the remaining 4%. This demonstrates the
importance of smallholder plantings to Indonesia's coffee industry.
Aim: This study aims to assess the extent of the implementation of
entrepreneurial orientation in plantations and post-harvest processing of
coffee commodities through the mediating role of competitive advantage and
innovation strategies to improve the performance of MSMEs in the plantation
agro-industry and post-harvest coffee in Malang Raya. research methods
used survey methods.
Method: The data were obtained from questionnaires and necessary
documents. Testing using partial Least square (PLS-SEM) and bootstrap.
Findings: The findings of this study reveal that entrepreneurial orientation
has a positive and significant direct effect on the performance of MSMEs
while the role of competitive advantage and innovation strategy as a
mediation of entrepreneurial orientation is not able to have a positive and
significant influence on the performance of MSMEs in the plantation agro-
industry and post-harvest coffee in Malang Raya.
KEYWORDS
entrepreneurial orientation, innovation strategy, competitive advantage, MSME
performance, post-harvest coffee
© The author(s). This work is distributed under the terms of the Creative
Commons Attribution-ShareAlike 4.0 International License (CC BY-SA 4.0)
INTRODUCTION
As the largest island state, the agricultural sector of Indonesia is a strategic sector in the
national development structure. Gunawan (2021) reported that the Agricultural Data and
Information Center recorded a total area of Indonesia's productive agricultural land reaches to
25.1 million hectares. The majority of these productive lands are cultivated directly by the
people which has an impact on national development. History has recorded, through the
agricultural sector, Indonesia became an Asian Tiger during the New Order Era (Fareza, 2016).
Therefore, Asian Tiger may show its fangs again, because the great potential of the Indonesian
agricultural sector in national development is the DNA of the Indonesian nation.
Indonesia's agricultural sector produces a wide variety of commodities. One of them is
coffee. Coffee is one of Indonesia's mainstay commodities in the global arena (Alexander &
Nadapdap, 2019). As the third largest coffee producer in the world, Indonesia has reflected
coffee as a mainstay commodity (Irwanti, 2017). Based on Pertanian.go.id (2022), the area of
coffee plantations in Indonesia reaches 1.2 million hectares. 96% of the plantation area is
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1730 Interdisciplinary Social Studies, 2(3), Dec 2022
community coffee plantation land and the remaining 4% belongs to private companies. Thus,
this confirms that Indonesia's coffee production is highly dependent on smallholder plantations.
Based on data from the International Coffee Organization (ICO), coffee is one of the
commodities with a considerable import export value in the world. Indonesia is one of the
largest coffee exporting countries in the world with an average coffee exported of 282 thousand
tons in the last 4 years. In the last 4 years (2017-2021) world coffee consumption with an
average of 10 thousand tons, the largest coffee importing country is the European Union with
a need for 2.7 million tons per year and domestic consumption of about 300 tons per year.
Coffee is one of Indonesia's mainstay agricultural commodities. DaMatta et al. (2019)
explained that coffee is still one of the most traded agricultural commodities in the world.
Furthermore, coffee has developed into a high-end product where its quality and origin are the
key factors governing its value (Harith et al., 2014).
Based on data from the Central Statistics Agency (BPS) in 2018 the Indonesian state for
coffee plantation products is estimated to have a yield of 620.42 thousand tons, with coffee
plantation land area ranging from 22.36 thousand hectares for large state plantations, 18.90
thousand hectares for large private plantations and 1.181 million hectares for community
plantations. With the area of Indonesian coffee plantations with productivity that is majority
owned by farmers, it can be concluded that the potential for human resource development (HR)
in the field of coffee plantations is a special concern to improve the quality of coffee
productivity. Based on data from BPS in 2019, the number of farmers in Indonesia decreased
by 415,789 people from 2017 to 2018. The Head of the Agricultural Human Resources
Extension and Development Agency noted that young farmers aged 20-39 years only amounted
to 3 million people or only about 12% of the total number of Indonesian farmers, namely 33.4
million people.
The majority of community coffee plantation managers are still dominated by human
resources with insufficient quality and limited knowledge (Santoso et al., 2017). In addition to
not being balanced with the regeneration of young farmers, opportunities that can actually be
maximized, human resources are dominated by elderly farmers who in terms of understanding
entrepreneurship are underdeveloped, then how to maintain or increase the country's
competitive advantage through this potentially large commodity?
The industrial revolution 4.0 affected the situation and market conditions in the agricultural
sector. These situations and conditions require agricultural actors, especially farmers, to be
more prepared in terms of land management based on an understanding of information
disclosure in accessing the market. In this era, the market reach will be wider since the ease of
free market access makes the competition more intense. In order to support the sustainability
and development of the business, special attention and land management capabilities are
needed in order to maximize the potential that Indonesian farmers already have.
Coffee farmland management can be classified based on the scale of MSMEs. Hanggraeni
et al. (2019) revealed that the performance of MSMEs can be measured by various
environmental aspects, namely internal and external factors. Internal factors include human
resource aspects, financial aspects, production aspects, and marketing aspects. Meanwhile,
external factors include technoligical aspects, government policies and related institutional
aspects. The development of MSME performance can be seen from the success of the business,
namely sales growth, labor growth, profit growth, and market growth (Riwayati, 2017).
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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
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Plantations (2022), the productive forest area in Malang regency has an area of around 46,195
hectare. Thus, the data shows that there is still an opportunity for smallholder coffee plantation
processors to expand their plantations in the hope of being able to increase coffee production
in the Malang regency area so as to increase the income of plantation processors and post-
harvest coffee.
The research is focused on the greater Malang area and the phenomenon that occurs in the
object of research is the clash of traditional cultures that are closed with the openness of
technological developments. The majority of farmers who are domesticated by the elderly
group mostly only apply what their predecessors have taught or traditional methods and tend
to be closed to change. This is what happens due to the progress of the times and has a
dependence on chemical fertilizers sold en masse in the market or subsidized fertilizers whose
existence is fairly limited. Therefore, farmers tend to have the result as long as it is sold so that
the products produced lack competitiveness.
The fact is that there is a lack of optimal performance due to the lack of efforts to present
a culture of innovation by farmers. This is because the majority of farmers still use traditional
coffee and post-harvest plantation processing methods which results in inefficient performance
and instability of taste and quality of the products produced so that there is less development
of sales, capital, absorbed labor and increased profits.
This research focuses on observing the influence of competitive advantage and innovation
strategy as a mediating variable on entrepreneurial orientation on the performance of MSMEs
owned and managed by MSME entrepreneurs in coffee plantations and post-harvest in Malang.
Because Malang Raya regency is one of the regions with high coffee commodity producers in
Indonesia, especially in East Java.
METHOD
This research using explanatory quantitative research methods aims to find out and explain
the influence of entrepreneurial orientation on competitive advantage through MSME
performance and innovation strategies. The sampling method used in this study was a saturated
sampling method. This study took a total of 31 research samples of Coffee Agroindustry
MSMEs in Malang Regency which have been established for a year and have a diverse post-
harvest process. Based on the number of respondents found in the field who met the criteria.
The research location is located in Malang raya which includes Malang Regency and Batu
Administrative City. The location covers several sub-districts, namely Lawang, Singosari,
Jabung, Taji, Batu, Karangploso, Dau, Bumiaji, Pujon, Ngantang, Tirto Yudho, Ampelgading,
Kawi, Sumbermanjing Wetan and Dampit districts. For the time of the study, the study began
in December 2020.
The primary data was obtained from the research questionnaire. Data collection techniques
were carried out using 2 ways, namely through the Google Form link and direct dissemination
at agricultural business locations. Furthermore, secondary data sources were books, articles,
the internet and previous research journals attached to the bibliography.
This study used a data analysis method using SmartPLS software version 3. The
descriptive statistical analysis method aims to describe the research respondents and describe
each research variable. Respondents were described through several characteristics, namely
gender, age, last education, length of work as a farmer. The elaboration of each research
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variable is indicated in minimum value, maximum value, average value. The inferential
analysis method used in this study is to test the structural model of the study. Based on this
explanation, the analysis and hypothesis testing in this study used a structural equation model
(SEM-PLS) with the help of the SmartPLS program version 3.0.
RESULTS AND DISCUSSION
The path analysis model on all latent variables in PLS consists of:
1) Outer model that explains the relationship between latent variables and their indicators
or manifest variables (measurement model) and Inner model that explains the
relationship between latent variables (structural model);
2) The fit test of measurement model is a fit test on the outer model by looking at the
convergent validity and the discriminant validity of the construct shown in the table:
Table 1. Outer Model Factor Loading Test Results
Item
Competitive
Advantage
MSME
Performance
Entrepreneurial
Orientation
X1.1
0,738
X1.2
0,746
X1.4
0,654
X1.5
0,633
X1.6
0,525
X1.7
0,644
X1.8
0,722
X1.9
0,616
Y1,2
0,857
Y1,3
0,813
Y1.1
0,697
Y1.4
0,614
Y1.5
0,623
Y1.6
0,769
Y1.8
0,714
Y1.9
0,570
Z1.1
0,625
Z1.10
0,813
Z1.2
0,800
Z1.3
0,825
Z1.4
0,506
Z1.5
0,581
Z1.6
0,495
Z1.8
0,790
Z1.9
0,709
Z2.1
Z2.2
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Z2.3
Z2.4
Z2.5
Z2.6
Z2.7
Z2.8
Source: Data Processed with PLS, 2022
Based on the table, the results of the factor loading test can be seen that most of the
indicators used in each of the variables of Entrepreneurial Orientation, Competitive Advantage,
Innovation Strategy, and MSME Performance in this study have a value of >0.45 with a
significance below 0.05. This shows that all indicators are said to be valid and have a good
convergent validity because they have met the requirements with a significance value below
0.05.
Average Variance Extracted (AVE)
The second stage carried out in testing the validity of a model in the study is Average
Variance Extracted (AVE). The results of the Average Variance Extracted (AVE) calculation
in this study are as follows:
Table 2. AVE Test Results
Variable
Average Variance Extracted (AVE)
Competitive Advantage
0,482
MSME Performance
0,509
Entrepreneurial Orientation
0,440
Innovation Strategy
0,600
Source: Data Processed with PLS, 2022
Based on table 2 of the Average Variance Extracted (AVE) test results, it can be seen that
each variable of work attitude, job satisfaction, and work productivity in this study has a >
value of 0.440. Another measurement that is. The minimum AVE value recommended is 0.5
but 0.4 is acceptable because if the AVE is less than 0.5, but the composite reliability is higher
than 0.6, and the convergent validity is qualified (Huang et al., 2013).
Discriminant Validity
The third stage carried out in testing the validity of a model in research is discriminant
validity. In this study, the discriminant validity test was carried out using a cross loading test.
The results of the discriminant validity calculation in this study are as follows:
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Table 3. Cross Loading Test Results
Item
Entrepreneurial
Orientation
Competitive
Advantage
Innovation
Strategy
MSME
Performance
X1.1
0,552
0,574
0,738
0,453
X1.2
0,460
0,629
0,746
0,458
X1.4
0,581
0,406
0,654
0,390
X1.5
0,378
0,380
0,633
0,307
X1.6
0,247
0,413
0,525
0,217
X1.7
0,227
0,512
0,644
0,336
X1.8
0,488
0,567
0,722
0,407
X1.9
0,338
0,430
0,616
0,292
Y1,2
0,657
0,857
0,549
0,567
Y1,3
0,660
0,813
0,666
0,614
Y1.1
0,554
0,697
0,542
0,319
Y1.4
0,204
0,614
0,567
0,376
Y1.5
0,321
0,623
0,580
0,380
Y1.6
0,481
0,769
0,602
0,499
Y1.8
0,554
0,714
0,396
0,526
Y1.9
0,235
0,570
0,229
0,305
Z1.1
0,625
0,486
0,461
0,583
Z1.10
0,813
0,495
0,493
0,398
Z1.2
0,800
0,353
0,412
0,659
Z1.3
0,825
0,556
0,654
0,475
Z1.4
0,506
0,272
0,252
0,506
Z1.5
0,581
0,344
0,114
0,448
Z1.6
0,495
0,321
0,190
0,261
Z1.8
0,790
0,570
0,536
0,479
Z1.9
0,709
0,612
0,519
0,427
Z2.1
0,455
0,401
0,407
0,775
Z2.2
0,436
0,482
0,451
0,762
Z2.3
0,435
0,427
0,424
0,814
Z2.4
0,401
0,434
0,357
0,785
Z2.5
0,628
0,437
0,411
0,766
Z2.6
0,626
0,587
0,512
0,827
Z2.7
0,384
0,645
0,412
0,691
Z2.8
0,733
0,504
0,424
0,772
Source: Data Processed with PLS, 2022
Based on the table above which shows the results of cross loading, it can be seen that all
indicators meet the requirements of discriminant validity because the value of the variable
indicator has the largest value of the others, so this qualifies the discriminant validity.
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Composite Reliability
The last stage carried out in testing the validity of a model in research is to conduct a
unidimensionality test. The unidimensionality test on the model was carried out using
composite reliability. The results of the composite reliability calculation in this study are as
follows:
Table 4. Composite Reliability Test Results
Variable
Composite Reliability
Competitive Advantage
0,890
MSME Performance
0,891
Entrepreneurial Orientation
0,861
Innovation Strategy
0,923
Source: Data Processed with PLS, 2022
Based on table 4 composite reliability test results, it can be seen that each variable of
Competitive Advantage, MSME Performance, Entrepreneurial Orientation and Innovation
Strategy in this study has a value of > 0.7. This shows that all variables used are said to be good
because they have qualified with a value of > 0.7.
Goodness of Fit Model
The goodness of fit model is used to determine the magnitude of the contribution made by
exogenous variables to endogenous variables in research. The Goodness of fit Model value in
this study is presented in the following table:
Testing on structural models is carried out by looking at the value of R Square which is
also a Goodness of Fit Model test. Table 5 provides the results of data processing in the form
of R Square values in this study.
Table 5. R-Square Values
Model
R Square
R Square Adjusted
Competitive Advantage
0,408
0,387
Innovation Strategy
0,307
0,283
MSME Performance
0,654
0,615
Source: Data Processed with PLS, 2022
Inner Model Test Results
Hypothesis Testing
Testing on the hypothesis can be done after evaluating the measurement model by testing
convergent validity, discriminant validity, and reliability. The significance of the estimated
parameters provides an overview of information related to the relationship between variables
in the study. The limit values for rejecting and accepting the hypothesis studied are the T-
Statistics value > 1.96 and the P Values value 0.05. In this step, bootstrap testing is carried
out which can also minimize the problem of abnormality of research data. The results of
bootstrapping testing via PLS application are as follows:
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Tabel 6. Path Coefficient (Mean, STDEV, T-Values)
Model
TStatistics (|
O/STDEV|)
P
Values
Information
Competitive Advantage -> MSME
Performance
1,102
0,271
Accepted
Entrepreneurial Orientation -> Competitive
Advantage
6,729
0,000
Accepted
Entrepreneurial Orientation -> MSME
Performance
2,891
0,004
Accepted
Entrepreneurial Orientation -> Innovation
Strategy
3,976
0,000
Rejected
Innovation Strategy -> MSME Performance
1,453
0,147
Rejected
Source: Data Processed with PLS, 2022
Direct Hypothesis Testing
Based on the table above, hypothesis testing can be carried out by looking at the
significance value through P Values as follows:
If the value of P Values ≤ 0.05, then H0 is accepted, H1- rejected
If the value of P Values > 0.05, then H0 is rejected, H1- is accepted
Indirect Hypothesis Testing
The table provides an overview of the results of data processing to determine the indirect
influence on the variables of Entrepreneurial Orientation (X1) on MSME Performance (Y)
through Competitive Advantage (Z1) and Entrepreneurship (X1) on MSME Performance (Y)
through the Inovas1 Strategy (Z2).
Table 7. Indirect Influence
Model
T Statistics (|
O/STDEV|)
P Values
Information
Entrepreneurial Orientation -> Competitive
Advantage -> MSME Performance
0,960
0,338
Rejected
Entrepreneurial Orientation -> Innovation
Strategy -> MSME Performance
1,261
0,208
Rejected
Source: Data Processed with PLS, 2022
The Entrepreneurial Orientation of the owner of the Coffee Agroindustry MSME in
Malang Regency which has been established for more than 1 year and has a post-harvest
process has a good category with the dominant indicator on the Entrepreneurship Orientation
is innovation. This shows that Coffee Agroindustry MSMEs in Malang Regency are interested
in always experimenting on things that have not been known before and trying to create new
products or services and come up with the latest technology. This condition is also strengthened
by conditions in the field where many Coffee Agroindustry MSMEs in Malang Regency have
begun to adapt technology and science in processing post-harvest coffee before being sold.
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The Effect of Entrepreneurial Orientation on the Performance of Coffee Agroindustry
MSMEs in Malang Regency
The results showed that Entrepreneurial Orientation has a positive and significant
influence on MSME Performance on Coffee Agroindustry MSME owners in Malang Regency.
Orientation is a review to determine the right attitudes (direction, place, and situation) and
views that underlie thoughts, concerns or tendencies (Covin & Slevin, 1991). Entrepreneurship
is a result of discipline and a systematic process of applying creativity and innovation in
meeting needs and opportunities in the market (Zimmerer & Scarborough, 2001). This is
because the tendency of the coffee agroindustry MSMEs in Malang Regency to seek
improvement in processing their business is something new with the aim of advancing their
business quite high which is described in related variables in entrepreneurial orientation
including innovation, risk taking, and activeness, having a positive and significant influence
on the performance of MSMEs. This makes the competitive climate in the environment of
MSMEs Agro-Industry Coffee in Malang Regency formed.
The Effect of Entrepreneurial Orientation on the Leading Competition in Coffee
Agroindustry MSMEs in Malang Regency
Hasil research shows that Entrepreneurial Orientation affects the competitive advantage of
Coffee Agroindustry MSMEs in Malang Regency. This is due to the tendency of the owners
of Coffee Agroindustry MSMEs in Malang Regency, to be able to realize the potential
possessed by the developed business and be active in pursuing the creation of a superior product
and superior production activities so as to create a good competitive climate in the Greater
Malang area, it is illustrated in the variable entrepreneurial orientation to have a positive and
significant influence on competitive advantage in MSMEs agro-industry coffee in the greater
Malang region. This is reinforced by Al Mamun and Fazal's research (2018) with their findings
showing that there is a positive and significant influence of entrepreneurial competence on
innovation and competitive advantage. Based on the research by Weerawerdana and Coote
(2001), it shows that entrepreneurial orientation has a positive and significant effect on
sustainable competitive advantage.
The Effect of Entrepreneurial Orientation on the Innovation Strategy of Coffee
Agroindustry MSMEs in Malang Regency
The results showed that Entrepreneurial Orientation had a positive effect on innovation
strategies for Coffee Agroindustry MSMEs in Malang Regency. This is due to the tendency
of the coffeeagroindustry MSMEs in Malang Regency, this is because the owners have a
tendency to try to find product innovations and process innovations and try to apply them well
in the hope that the products produced will have a good impact on the business being run as
well as more effective and efficient production activities, this is strengthened by the research
of Mirzaei et al. (2016) that proactive farmers significantly encourage the innovation of their
products, and to a lesser extent, the innovation of processes. This effect applies when
considering key control variables, such as access to key resources and related parties. Second,
more surprisingly, farmer innovation stifles market innovation. Thirdly, entrepreneurial
intentions do not play an important role in the innovation of farmers. The four risk-taking
measurements adapted from western literature do not fit into the context of Ugandan coffee
Entrepreneurship Orientation on MSME’s Performance, Competitive Advantage and Innovation Strategies as
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farming. Also, based on Cravalho et al. (2016)’s research, coffee is still one of the most traded
agricultural commodities in the world, developing into a high-end product where quality and
origin are the key factors that regulate its value. Although coffee has historically traded as an
undifferentiated commodity, it is now a highly deferentiated value chain. Most of the value
associated with coffee is determined by the practices of production, harvesting and processing
in its country of origin. What makes coffee a common commodity in developing countries is
its potential to be grown by smallholder farmers and provides significant benefits for them.
The Effect of Competitive Advantage on the Performance of Coffee Agroindustry
MSMEs in Malang Regency
The results showed that competitive advantage did not affect the performance of MSMEs
in the Coffee Agroindustry MSMEs in Malang. This is due to the inability of coffee agro-
industry MSME owners because most business actors are dominated by people over the age of
37 years by 70% with a minimal educational background so that it affects the ability of
respondents to manage excellence or lack of understanding of what advantages they have to
improve performance is not well accommodated so that the competitive advantage that
respondents have is not able to increase MSME performance applies each variable of
competitive advantage to improve the performance of MSMEs so that their advantages do not
have a significant influence on the performance of MSMEs in accordance with the results of
observations and data obtained which illustrate that there are problems that occur in the
performance of plantation processing businesses and post-harvest coffee agroindustry in
Malang raya which does not use competitive advantage as a variable that the majority of
research journals are able to significantly affect the performance of MSMEs. However, the
results of this study are reinforced by Prajogo & Mc Dermot (2011) who tested the differences
between high-performance and low-performing companies and showed that low-performing
companies generally place the same level of importance on ten competitive dimensions as high-
performing companies, but did not succeed in turning what is important into performance.
Based on the results of the study, it is in accordance with the occurrence based on the scale of
MSMEs in Malang Raya.
The Effect of Innovation Strategy on the Performance of Coffee Agroindustry MSMEs
in Malang Regency
The results showed that the innovation strategy did not affect the performance of MSMEs
in the Coffee Agroindustry MSMEs in Malang, this was illustrated by the related innovation
strategy indicators and did not have a positive impact on the performance of MSMEs. The
results show that process innovation and product innovation of MSME owners have not made
a good contribution to the performance of MSMEs. Lack of understanding to improve
effectiveness and efficiency in operational process activities, as well as creating new products
that suit consumer needs and lack of ability to implement innovations that they think of in the
giantness of the business being run because the majority of business actors run their business
only based on what they know or what they have received from their predecessors without any
effort to develop further what they can improve in running the business. Therefore,
collaborative efforts of related parties are needed to be able to overcome the distribution of
information needs to farmers or MSME business actors.
Entrepreneurship Orientation on MSME’s Performance, Competitive Advantage and Innovation Strategies as
Mediation
1740 Interdisciplinary Social Studies, 2(3), Dec 2022
The Effect of Entrepreneurial Orientation on MSME Performance through Competitive
Advantage in Coffee Agroindustry MSMEs in Malang Regency
The results showed that entrepreneurial orientation through competitive advantage did not
affect the performance of MSMEs in the Coffee Agroindustry MSMEs in Malang. This
happens because there is a lack of ability for business owners to optimize the influence of
entrepreneurship orientation mediated by their competitive advantage to improve the
performance of MSMEs with several obstacles found in the field. Based on the results of
observations, it was found that the inability of business owners to align entrepreneurial
orientation with competitive advantages to improve the performance of MSMEs can be seen in
research data which shows that business owners are mostly dominated by the level of old age
and lack of regeneration and educational background of the majority of high school graduates.
Thus, the results of this research illustrate the obstacles in the field that there is an HR issue in
seeking to improve the performance of coffee agribusiness MSMEs in Malang Regency
requires further handling for the sustainability of the upstream industry, especially in the
Malang Raya area. Prajogo & McDermott (2011) which tested the differences between high
and low performing companies and showed that low-performing companies generally place the
same level of importance on ten competitive dimensions as high-performing companies, yet do
not succeed in turning what matters into performance.
CONCLUSION
Based on the previous chapter, it can be concluded as follows, with the majority of
respondents over 35 years old and their average high school educational background showing
a picture of the relationship between several variables with positive influence results and no
effect on some variables. In entrepreneurial orientation towards the performance of MSMEs, it
has a positive and significant influence relationship that comes from efforts to improve in
processing their business. The variable of entrepreneurial orientation towards competitive
advantage has a positive and significant relationship that comes from an awareness of the
potential possessed. Entrepreneurial orientation towards innovation strategies has a positive
and significant impact due to the willingness to create innovations to facilitate operations.
However, the next few variables show no effect on the performance of MSMEs. Competitive
advantage over MSME performance. This illustrates that respondents have not been able to
take advantage of the competitive advantage they have to improve the performance of the
MSMEs they run. Innovation strategy on MSME performance. This illustrates that respondents
have not been able to apply existing innovative thinking to increase effectiveness and efficiency
in the performance of the MSMEs they run. for entrepreneurial orientation towards the
performance of MSMEs through competitive advantage is still unable to have a positive
influence. As well as entrepreneurial orientation towards performance through innovation
strategies is not able to have a positive and significant influence. With these results, it can be
seen that plantation and post-harvest agro-industrial business actors in Malang Raya require a
deeper understanding of competitive advantages and innovation strategies in order to have a
significant influence on their business performance so that the scale of the business they run
can be more developed.
This research enriches the study of the exploration of the relationship between
entrepreneurial orientation and MSME performance through innovation strategies and
Entrepreneurship Orientation on MSME’s Performance, Competitive Advantage and Innovation Strategies as
Mediation
1741 Interdisciplinary Social Studies, 2(3), Dec 2022
competitive advantages in plantation processing and post-harvest coffee in Malang Raya. This
research can also be used as a reference for subsequent researchers to develop and explore
theories of entrepreneurial orientation, competitive advantage, innovation strategies and
MSME performance. In practice, this research develops an understanding of entrepreneurial
orientation, competitive advantage, innovation strategies to improve the performance of
MSMEs.
MSMEs must always strive to improve their effectiveness in managing their business
which is part of an entrepreneurial orientation with the intention of improving the performance
of MSMEs and continue to strive to explore their competitive advantages and continue to look
for innovation strategies in order to be able to provide improvements to the performance of
MSMEs where the movement of the business environment continues to develop along with the
times so that this coffee commodity can be more developed sustainably.
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