The Effect of Entrepreneurial Orientation to Low Cost Strategy, Differentiation Strategy, Sustainable Innovation and Performance of Small and Medium Enterprises (Studies at Batik Small and Medium Enterprises in East Java Province, Indonesia)

Abstract

This study aims to examine, analyze and explain the Effect of Entrepreneurial Orientation to Low Cost Strategy, Differentiation Strategies, Sustainable Innovation and Performance of Batik Small and Medium Enterprises in East Java Province, Indonesia.This research is explanatory research and sampling was done by using multi- stage area sampling,which is done through three stages, first, the determination of purposive sampling area, with a population of 2685 business units. Second, the sample set that batik Small Medium Enterprises owners are determined based on Slovin formula by 190 people. Third, calculate the proportion of samples in the four study areas with proportional random sampling. Data collection done through questionnaires which distributed through enumerators services, email and sent through the post. in addition, the researchers also conducted interviews with respondents directly. Furthermore, the data collected were processed using analysis of variance -based SEM with PLS software .The findings of this study is the first, entrepreneurial orientation significantly influence low cost strategy and differentiation strategy, but the effect is not significant to the sustainable innovation Second, low cost strategies significantly influence the sustainable innovation. Third, differentiation strategy significantly influence to the sustainable innovation. Fourth , sustainable innovation significantly influence the performance of Small Medium Enterprises . Dominant variable that affecting the sustainable innovation is differentiation strategy , thus it can be said that in implementing sustainable innovation and improve the performance of Small Medium Enterprises , especially in batik industry is more suitable with differentiation strategy , because batik is an Indonesian cultural heritage artworks that highlight characteristic area of ​​origin . However, for batik industry, batik Small Medium Enterprises  can implement a hybrid strategy which is  differentiation strategy and low cost strategies.Contribution of this study to scientific development is enriched theory of strategic management in based resources perspective, market-based and knowledge-based. Sustainable innovation is part of the evolution to be executed by the company's organization. Innovation come from creativity which is a collection of good ideas of knowledge, and experience that are in the human mind and then mixed into useful innovations on an ongoing basis. But innovation also identify customer needs of the present, and the future as well as develop new solutions to customer needs. in order to make the sustainable innovation more complete, it is recommended for further researcher, to add a field of study related to market-based and knowledge-based view.

Keywords: Entrepreneurial Orientation, Low Cost Strategy, Differentiation Strategies, Sustainable Innovation, Performance Batik Small and Medium Enterprises