Innovation Capability and Business Performance: The Mediating Roles of Product Competitiveness and Partnership Relationship Quality
-
Hendrikus Jon Lenon
*
Universitas Widya Dharma Pontianak,
Indonesia
(*) Corresponding Author
Keywords:
Innovation Capability; Business Performance; Partnership Relationship Quality; Product Competitiveness.
Abstract
This study examines the influence of innovation capability on the business performance of micro, small, and medium
enterprises (MSMEs) in the food and beverage sector in West Kalimantan, Indonesia, by investigating the mediating roles of product
competitiveness and partnership relationship quality. The research was conducted within a unique structural context characterised by
geographic isolation, limited infrastructure, and constrained access to resources. A cross-sectional design was employed, with data
collected through self-reported questionnaires administered to F&B MSME owners and managers. Hypothesised relationships were
tested using Structural Equation Modeling (SEM). The findings reveal that innovation capability exerts no significant direct effect on
business performance (p = .255); however, full mediation was confirmed, with a total indirect effect of 2.177 (p = .042). Partnership
relationship quality emerged as the dominant mediator (indirect effect = 1.539; p = .015), while product competitiveness yielded no
significant mediation effect (p = .246), despite innovation capability demonstrating a strong direct effect on product competitiveness
(β = 1.303; p < .001). These results indicate that, for resource constrained MSMEs, the performance value of innovation is not realised
through product superiority alone but is contingent upon the quality of the surrounding partnership ecosystem. An ecosystem-oriented
approach prioritising trust and commitment within collaborative networks proves more effective in translating innovation capability
into measurable business outcomes than product-centric strategies alone. Future research is encouraged to employ longitudinal designs
and multi-contextual sampling to enhance the external validity of these findings.
Downloads
Download data is not yet available.
References
Alaskar, T. H. (2023). Innovation Capabilities as a Mediator between Business Analytics and Firm Performance.
Sustainability (Switzerland) , 15(6). https://doi.org/10.3390/su15065522
Anning-Dorson, T. (2018). Innovation and competitive advantage creation. International Marketing Review, 35(4),
580–600. https://doi.org/10.1108/IMR-11-2015-0262
APJII. (2025). SURVEI PENETRASI INTERNET DAN PERILAKU PENGGUNAAN INTERNET (Vol. 6, Number 2).
Castellion, G., & Markham, S. K. (2013). Perspective: New product failure rates: Influence of Argumentum ad populum
and self-interest. Journal of Product Innovation Management, 30(5), 976–979. https://doi.org/10.1111/j.1540-
5885.2012.01009.x
Cooper, R. G., & Kleinschmidt, E. J. (2007). Winning businesses in product development: The critical success factors.
Research Technology Management, 50(3), 52–66. https://doi.org/10.1080/08956308.2007.11657441
Dyer, J. H. (1997). Effective interim collaboration: how firms minimize transaction costs and maximise transaction
value. Strategic Management Journal, 18(7), 535–556. https://doi.org/10.1002/(sici)1097-
0266(199708)18:7<535::aid-smj885>3.0.co;2-z
Farida, I., & Setiawan, D. (2022). Business Strategies and Competitive Advantage: The Role of Performance and
Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 8(3), 163.
https://doi.org/10.3390/joitmc8030163
Ferdinand, P. D. A. (2016). Metode Penelitian Manajemen: Pedoman Penelitian untuk Penulisan Skripsi, Tesis, dan
Disertasi Ilmu Manajemen. Badan Penerbit Universitas Diponegoro (BP UNDIP) / AGF Books.
Gourville, J. T. (2005). Harvard Business School Marketing Research Papers The Curse of Innovation: A Theory of
Why Innovative New Products Fail in the Marketplace. HBS Marketing Research Paper, 02163(05), 1–36.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=777644
Guo, Y. (2018). Implementing Relationship Banking Strategies and Techniques and Improving Customer Value.
Finance and Market, 2(2), 1–13. https://doi.org/10.18686/fm.v2i2.980
Guzman, G., Garza-Reyes, J. A., Pinzón-Castro, S., & Kumar, V. (2019). Innovation capabilities and performance: are
they truly linked in SMEs? International Journal of Innovation Science, 11, 48–62. https://doi.org/10.1108/IJIS-
12-2017-0139
Hair, J. F. , H. M. C. and N. C. (2020). Assessing Measurement Model Quality in PLS-SEM Using Confirmatory
Composite Analysis. Short-Term Financial Management Practices and SME Performance in Ghana: A Case
Study of Effutu Municipality.
https://ppid.kalbarprov.go.id/. (2024). Informasi Jumlah UMKM di Kalimantan Barat Triwulan 1 Tahun 2024.
Https://Ppid.Kalbarprov.Go.Id/. https://ppid.kalbarprov.go.id/informasi-khusus-yang-berkaitan-dengan-hak-hak-
masyarakat/informasi-jumlah-umkm-di-kalimantan-barat-triwulan-1-tahun-2024/
https://www.bls.gov/. (2024). U.S. Bureau of Labor Statistics. Https://Www.Bls.Gov/. https://www.bls.gov/
Hurley, R. F., & Hult, G. T. M. (1998). Innovation, Market Orientation, and Organizational Learning: An Integration
and Empirical Examination. Journal of Marketing, 62(3), 42–54. https://doi.org/10.1177/002224299806200303
Indrawati Prasetyo Rusdiyanto. (2026). The role of innovation capability in mediating the effect of customer
relationship management and market orientation on SME performance. Problems and Perspectives in
Management (2026) 24(1) 274-291.
Ishtiaq, M. (2019). Book Review Creswell, JW (2014). Research Design: Qualitative, Quantitative and Mixed Methods
Approaches . Thousand Oaks, CA: Sage. English Language Teaching, 12(5), 40.
Jiwa, I. D. N. A., & Andika, A. W. (2025). Innovation Capability Model by Integrating Entrepreneurial Orientation,
Market Orientation, Empowerment and SME Business Performance. Dinasti International Journal of Economics,
Finance & Accounting, 6(4), 3681–3690. https://doi.org/10.38035/dijefa.v6i4.5404
Jolson, M. A. (1997). Broadening the scope of relationship selling. Journal of Personal Selling and Sales Management,
17(4), 75–88. https://doi.org/10.1080/08853134.1997.10754112
KEMENTERIAN KOORDINATOR BIDANG PEREKONOMIAN, & INDONESIA, R. (2025). Pemerintah Dorong
UMKM Naik Kelas, Tingkatkan Kontribusi terhadap Ekspor Indonesia. Https://Www.Ekon.Go.Id/.
https://www.ekon.go.id/publikasi/detail/6152/pemerintah-dorong-umkm-naik-kelas-tingkatkan-kontribusi-
terhadap-ekspor-indonesia
Kirca, Ahmet H, Jayachandran, Satish, & Bearden, William O. (2005). Market Orientation: A Meta-Analytic Review
and Assessment of its Antecedents and Impact on Performance. Journal of Marketing, 69(2), 24–41.
https://doi.org/10.1509/jmkg.69.2.24.60761
Mardanugraha, E., & Akhmad, J. (2023). Ketahanan UMKM di Indonesia menghadapi Resesi Ekonomi. Jurnal
Ekonomi Dan Pembangunan, 30(2), 101–114. https://doi.org/10.14203/jep.30.2.2022.101-114
Morgan, R. M., & Hunt, S. D. (1994). The Commitment-Trust Theory of Relationship Marketing. Journal of
Marketing, 58(3), 20–38. https://doi.org/10.1177/002224299405800302
Muir, C., & Jackson, C. (2013). Getting to Right: How Do Managers Make Good Decisions about Customers? Academy
of Management Perspectives, 27(4), 1–3. https://doi.org/10.5465/amp.2013.0124
New, P., & Free, Y. (2003). Competitive Advantage by Michael Porter. Strategy, 26(February).
https://d1wqtxts1xzle7.cloudfront.net/2656020/5us3gd49c0xfiru.pdf?1737739269=&response-content-
disposition=inline%3B+filename%3DCompetitive_Advantage.pdf&Expires=1762436577&Signature=IgMoeTNb
BJfrjqO6NdD5uomVFvjp5C7SQJD3YusBvfPudYKQtJec54LybqLDDKfIgJMPzl5O
Ngo, L. V., & O’Cass, A. (2012). In search of innovation and customer-related performance superiority: The role of
market orientation, marketing capability, and innovation capability interactions. Journal of Product Innovation
Management, 29(5), 861–877. https://doi.org/10.1111/j.1540-5885.2012.00939.x
Nuryakin. (2018). Competitive advantage and product innovation: Key success of Batik SMEs marketing performance
in Indonesia. Academy of Strategic Management Journal, 17(2), 1–17.
Porter, M. E. ; K. M. R. (2011). Creating Shared Value. Harvard Business Review, 89(1/2)
Rajapathirana, R. P. J., & Hui, Y. (2018). Relationship between innovation capability, innovation type, and firm
performance. Journal of Innovation and Knowledge, 3(1), 44–55. https://doi.org/10.1016/j.jik.2017.06.002
Rupianti, R., Hussein, A. S., & Firdaus, F. (2022). The Influence of Entrepreneurial Orientation an Innovation
Capability by Absorptive and Networking Capability: A Case Study of Tempe Chips SMES in Malang. Journal
of Social Science, 3(5), 1157–1168. https://doi.org/10.46799/jss.v3i5.417
Rutkowski, I. P. (2022). Success and failure rates of new food and non-food products introduced on the market. Journal
of Marketing and Consumer Behaviour in Emerging Markets, 2022(1(14)), 52–61. https://doi.org/10.7172/2449-
6634.jmcbem.2022.1.4
Santoso, S. (2016). Panduan Lengkap SPSS Versi 23 - Singgih Santoso - Google Buku. In PT Elex Media
Komputindo :Jakarta. Elex Media Komputindo.
sidbi.in. (2025). Understanding_Indian_MSME_sector_Progress_and_Challenges_13_05_25_Final. Sidbi.In.
https://www.sidbi.in/uploads/Understanding_Indian_MSME_sector_Progress_and_Challenges_13_05_25_Final.p
df
Singgih Santoso. (2005). Latihan Statistik Parametrik. Elex Media Komputindo.
Site Pontianak. (2025). Kalbar Dorong Transformasi Digital Lewat Forum Smart Province 2025. 2025.
https://sitepontianak.com/2025/11/25/kalbar-dorong-transformasi-digital-lewat-forum-smart-province-2025/
Sugiyono, P. D. (2017). Metode penelitian bisnis: pendekatan kuantitatif, kualitatif, kombinasi, dan R&D (P. D.
Sugiyono, Ed.; Vol. 225). CV. Alfabeta.
Wiley, J., & Sons. (2016). Research Methods For Business: A Skill Building Approach. Research Methods for
Business: A Skill Building Approach., 143.
Zhao, X. , L. J. G. and C. Q. (2020). Reconsidering Baron and Kenny: Myths and Truths about Mediation Analysis.
Journal of Consumer Research, 4, 197–206
Sustainability (Switzerland) , 15(6). https://doi.org/10.3390/su15065522
Anning-Dorson, T. (2018). Innovation and competitive advantage creation. International Marketing Review, 35(4),
580–600. https://doi.org/10.1108/IMR-11-2015-0262
APJII. (2025). SURVEI PENETRASI INTERNET DAN PERILAKU PENGGUNAAN INTERNET (Vol. 6, Number 2).
Castellion, G., & Markham, S. K. (2013). Perspective: New product failure rates: Influence of Argumentum ad populum
and self-interest. Journal of Product Innovation Management, 30(5), 976–979. https://doi.org/10.1111/j.1540-
5885.2012.01009.x
Cooper, R. G., & Kleinschmidt, E. J. (2007). Winning businesses in product development: The critical success factors.
Research Technology Management, 50(3), 52–66. https://doi.org/10.1080/08956308.2007.11657441
Dyer, J. H. (1997). Effective interim collaboration: how firms minimize transaction costs and maximise transaction
value. Strategic Management Journal, 18(7), 535–556. https://doi.org/10.1002/(sici)1097-
0266(199708)18:7<535::aid-smj885>3.0.co;2-z
Farida, I., & Setiawan, D. (2022). Business Strategies and Competitive Advantage: The Role of Performance and
Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 8(3), 163.
https://doi.org/10.3390/joitmc8030163
Ferdinand, P. D. A. (2016). Metode Penelitian Manajemen: Pedoman Penelitian untuk Penulisan Skripsi, Tesis, dan
Disertasi Ilmu Manajemen. Badan Penerbit Universitas Diponegoro (BP UNDIP) / AGF Books.
Gourville, J. T. (2005). Harvard Business School Marketing Research Papers The Curse of Innovation: A Theory of
Why Innovative New Products Fail in the Marketplace. HBS Marketing Research Paper, 02163(05), 1–36.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=777644
Guo, Y. (2018). Implementing Relationship Banking Strategies and Techniques and Improving Customer Value.
Finance and Market, 2(2), 1–13. https://doi.org/10.18686/fm.v2i2.980
Guzman, G., Garza-Reyes, J. A., Pinzón-Castro, S., & Kumar, V. (2019). Innovation capabilities and performance: are
they truly linked in SMEs? International Journal of Innovation Science, 11, 48–62. https://doi.org/10.1108/IJIS-
12-2017-0139
Hair, J. F. , H. M. C. and N. C. (2020). Assessing Measurement Model Quality in PLS-SEM Using Confirmatory
Composite Analysis. Short-Term Financial Management Practices and SME Performance in Ghana: A Case
Study of Effutu Municipality.
https://ppid.kalbarprov.go.id/. (2024). Informasi Jumlah UMKM di Kalimantan Barat Triwulan 1 Tahun 2024.
Https://Ppid.Kalbarprov.Go.Id/. https://ppid.kalbarprov.go.id/informasi-khusus-yang-berkaitan-dengan-hak-hak-
masyarakat/informasi-jumlah-umkm-di-kalimantan-barat-triwulan-1-tahun-2024/
https://www.bls.gov/. (2024). U.S. Bureau of Labor Statistics. Https://Www.Bls.Gov/. https://www.bls.gov/
Hurley, R. F., & Hult, G. T. M. (1998). Innovation, Market Orientation, and Organizational Learning: An Integration
and Empirical Examination. Journal of Marketing, 62(3), 42–54. https://doi.org/10.1177/002224299806200303
Indrawati Prasetyo Rusdiyanto. (2026). The role of innovation capability in mediating the effect of customer
relationship management and market orientation on SME performance. Problems and Perspectives in
Management (2026) 24(1) 274-291.
Ishtiaq, M. (2019). Book Review Creswell, JW (2014). Research Design: Qualitative, Quantitative and Mixed Methods
Approaches . Thousand Oaks, CA: Sage. English Language Teaching, 12(5), 40.
Jiwa, I. D. N. A., & Andika, A. W. (2025). Innovation Capability Model by Integrating Entrepreneurial Orientation,
Market Orientation, Empowerment and SME Business Performance. Dinasti International Journal of Economics,
Finance & Accounting, 6(4), 3681–3690. https://doi.org/10.38035/dijefa.v6i4.5404
Jolson, M. A. (1997). Broadening the scope of relationship selling. Journal of Personal Selling and Sales Management,
17(4), 75–88. https://doi.org/10.1080/08853134.1997.10754112
KEMENTERIAN KOORDINATOR BIDANG PEREKONOMIAN, & INDONESIA, R. (2025). Pemerintah Dorong
UMKM Naik Kelas, Tingkatkan Kontribusi terhadap Ekspor Indonesia. Https://Www.Ekon.Go.Id/.
https://www.ekon.go.id/publikasi/detail/6152/pemerintah-dorong-umkm-naik-kelas-tingkatkan-kontribusi-
terhadap-ekspor-indonesia
Kirca, Ahmet H, Jayachandran, Satish, & Bearden, William O. (2005). Market Orientation: A Meta-Analytic Review
and Assessment of its Antecedents and Impact on Performance. Journal of Marketing, 69(2), 24–41.
https://doi.org/10.1509/jmkg.69.2.24.60761
Mardanugraha, E., & Akhmad, J. (2023). Ketahanan UMKM di Indonesia menghadapi Resesi Ekonomi. Jurnal
Ekonomi Dan Pembangunan, 30(2), 101–114. https://doi.org/10.14203/jep.30.2.2022.101-114
Morgan, R. M., & Hunt, S. D. (1994). The Commitment-Trust Theory of Relationship Marketing. Journal of
Marketing, 58(3), 20–38. https://doi.org/10.1177/002224299405800302
Muir, C., & Jackson, C. (2013). Getting to Right: How Do Managers Make Good Decisions about Customers? Academy
of Management Perspectives, 27(4), 1–3. https://doi.org/10.5465/amp.2013.0124
New, P., & Free, Y. (2003). Competitive Advantage by Michael Porter. Strategy, 26(February).
https://d1wqtxts1xzle7.cloudfront.net/2656020/5us3gd49c0xfiru.pdf?1737739269=&response-content-
disposition=inline%3B+filename%3DCompetitive_Advantage.pdf&Expires=1762436577&Signature=IgMoeTNb
BJfrjqO6NdD5uomVFvjp5C7SQJD3YusBvfPudYKQtJec54LybqLDDKfIgJMPzl5O
Ngo, L. V., & O’Cass, A. (2012). In search of innovation and customer-related performance superiority: The role of
market orientation, marketing capability, and innovation capability interactions. Journal of Product Innovation
Management, 29(5), 861–877. https://doi.org/10.1111/j.1540-5885.2012.00939.x
Nuryakin. (2018). Competitive advantage and product innovation: Key success of Batik SMEs marketing performance
in Indonesia. Academy of Strategic Management Journal, 17(2), 1–17.
Porter, M. E. ; K. M. R. (2011). Creating Shared Value. Harvard Business Review, 89(1/2)
Rajapathirana, R. P. J., & Hui, Y. (2018). Relationship between innovation capability, innovation type, and firm
performance. Journal of Innovation and Knowledge, 3(1), 44–55. https://doi.org/10.1016/j.jik.2017.06.002
Rupianti, R., Hussein, A. S., & Firdaus, F. (2022). The Influence of Entrepreneurial Orientation an Innovation
Capability by Absorptive and Networking Capability: A Case Study of Tempe Chips SMES in Malang. Journal
of Social Science, 3(5), 1157–1168. https://doi.org/10.46799/jss.v3i5.417
Rutkowski, I. P. (2022). Success and failure rates of new food and non-food products introduced on the market. Journal
of Marketing and Consumer Behaviour in Emerging Markets, 2022(1(14)), 52–61. https://doi.org/10.7172/2449-
6634.jmcbem.2022.1.4
Santoso, S. (2016). Panduan Lengkap SPSS Versi 23 - Singgih Santoso - Google Buku. In PT Elex Media
Komputindo :Jakarta. Elex Media Komputindo.
sidbi.in. (2025). Understanding_Indian_MSME_sector_Progress_and_Challenges_13_05_25_Final. Sidbi.In.
https://www.sidbi.in/uploads/Understanding_Indian_MSME_sector_Progress_and_Challenges_13_05_25_Final.p
df
Singgih Santoso. (2005). Latihan Statistik Parametrik. Elex Media Komputindo.
Site Pontianak. (2025). Kalbar Dorong Transformasi Digital Lewat Forum Smart Province 2025. 2025.
https://sitepontianak.com/2025/11/25/kalbar-dorong-transformasi-digital-lewat-forum-smart-province-2025/
Sugiyono, P. D. (2017). Metode penelitian bisnis: pendekatan kuantitatif, kualitatif, kombinasi, dan R&D (P. D.
Sugiyono, Ed.; Vol. 225). CV. Alfabeta.
Wiley, J., & Sons. (2016). Research Methods For Business: A Skill Building Approach. Research Methods for
Business: A Skill Building Approach., 143.
Zhao, X. , L. J. G. and C. Q. (2020). Reconsidering Baron and Kenny: Myths and Truths about Mediation Analysis.
Journal of Consumer Research, 4, 197–206
Bila bermanfaat silahkan share artikel ini
Berikan Komentar Anda terhadap artikel Innovation Capability and Business Performance: The Mediating Roles of Product Competitiveness and Partnership Relationship Quality
Dimensions Badge
Article History
Submitted: 2026-09-05
Published: 2026-10-04
Abstract View: 54 times
PDF Download: 22
times
How to Cite
Lenon, H. J. (2026). Innovation Capability and Business Performance: The Mediating Roles of Product Competitiveness and Partnership Relationship Quality. Journal of Business and Economics Research (JBE), 7(3), 648-658. https://doi.org/10.47065/jbe.v7i3.11140
Issue
Vol 7 No 3 (2026): October 2026
Pages: 648-658
Pages: 648-658
Section
Articles
Copyright (c) 2026 Hendrikus Jon Lenon
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under Creative Commons Attribution 4.0 International License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (Refer to The Effect of Open Access).
