P-ISSN: 2827-9832
E-ISSN: 2828-335x
http://ijsr.internationaljournallabs.com/index.php/ijsr
940
THE ROLE OF MARKET ORIENTATION IN MEDIATION THE
IMPACT OF ENTREPRENEURSHIP ORIENTATION ON COMPANY
PERFORMANCE AND COMPETITIVE ADVANTAGE
Laura Amelia Triani, Yulia Hendri Yeni
Faculty of Economics, Universitas Andalas
lauraamelia@eb.unand.ac.id, yuliahendriyeni.unand@gmail.com
ABSTRACT
The purpose of this research is to see how the SME Orientation Strategy is implemented in West Sumatra.
The strategy uses two parameters, namely entrepreneurial orientation and market orientation. The focus of
this research objective is to analyze the role of market orientation in mediating the effect of entrepreneurial
orientation on company performance and competitive advantage in SMEs, especially the food industry in
Rumah Makan Minang, West Sumatra. The subjects of this study were restaurants registered with the West
Sumatra BPS which were surveyed by the Googlemaps team in 11 cities. The sample of this research comes
from restaurant owners. Data collection was carried out by distributing 173 questionnaires to restaurant
owners or management. The data collection process was carried out by a team of five people who had
experience and received training and understanding of the questions in the survey. The data analysis
technique is SEM (Structural Equation Model) with the SmartPLS 3.2.8 professional application program.
This study found that market orientation plays a role in mediating the influence of entrepreneurial
orientation on company performance, but it is not proven to play a role in mediating the influence of
entrepreneurial orientation on competitive advantage in Minang Restaurant MSME in West Sumatra. Other
indicators will be discussed in this article.
Keywords: Entrepreneurial Orientation , Market Orientation , Company Performance , Competitive
Advantage
This article is licensed under CC BY-SA 4.0
INTRODUCTION
The development of the industrial world, business micro, small and medium experience
significant change (Maksum et al., 2020). Products and services produced are more diverse and
have good market value. Trusted that MSME is one method for changing the growth economy
of the public in search of sufficient wealth. Effort proactive going to independent public
expected could reduce total facing unemployment fieldwork compared to an increase in the
workforce that has not been absorbed entirely (Hilson et al., 2021).
This matter, supported by West Sumatra, has a high potential to force one city to have the
most interesting tours in Indonesia. So there is no close possibility that the development of
MSME is one solution for reducing unemployment. Therefore, the leadership and effort of
government must continue so you can survive and thrive (Siebel, 2019). Central Bureau of
StatisticsWest Sumatra mentioned that in 2017 there were 501,410 MSMEs, consisting of
423,280 businesses micro, 74,410 businesses small, and 3,720 businesses medium and large.
It means MSME growth will also help absorb power work from West Sumatra.
Nowadays, travel culinary is taken into account by tourists when they determine their aim
journey (Mak et al., 2012). This matter became a support unity for public locals for open effort,
specifically the Restaurant of West Sumatra. Home business seat typical of West Sumatra or
popular with the designation Restaurant Minang will this no again be looked at only as meet
The Role of Market Orientation in Mediation the Impact of Entrepreneurship Orientation on
Company Performance and Competitive Advantage
941 2., 3., February 2023
needs food and not only for attracting local market however now also can become aim tour
culinary tourists.
Restaurants generally belong to SMEs. This company is a business entity or business units
private growing productivity from the industry house ladder (Holton et al., 2010). In a long
period, restaurants had big impacts on the movement of small and medium enterprises in West
Sumatra, which later became an important engine economy area.
This does not only require the government to resolve challenges to change dynamics in
business. However, entrepreneurs should be able to see what strategy they have selected for
the business.
Study Munizu (2010) shows that there is influencing internal and external sources the
efficiency of the MSME. The internal factor seen from such fundamental aspects as resource
of human resources, fundamental aspects such as source financial, operational engineering and
target markets as well as method marketing. Temporary that factor external MSME is also
affected by implementation policy government, understanding social environment and culture
as well as associated regulatory role with this effort (Peñarroya-Farell & Miralles, 2022).
According to Sarwoko (2017), their research also confirmed that with shared role success
effort small and medium becomes two group main, that is group role external and group
internal role. Factor external for example e-government role in creating supportive
environment growth of MSME, meanwhile Internal factors refer to characteristics and skills
entrepreneur or owner effort.
From these internal factors could be read orientation individual that is orientation
influencing entrepreneurship success effort small and medium. According to Sarwoko (2017),
this orientation could identified through values individuals and characteristics entrepreneur
personality and also includes experience of owner or operators. With there by could showed
that level success small company could determined and influenced by the characteristics and
skills of company operators.
Yen's study (2015) on MSME in developing countries also strengthens this proof that
orientation entrepreneurship has a positive significant impact on MSME performance. There
is more and bigger orientation for entrepreneurship of someone, then bigger possibility an
MSMEs will succeed. Consider matter these and findings research that has described above,
then writer do study with title "The Role of Market Orientation in Mediating the Impact of
Entrepreneurial Orientation on Company Performance and Competitive Advantage "(Studies
on Small and Medium - MSME Restaurant Minangkabau in West Sumatra)”.
METHOD
Based on the background before, this aim is to research how strategic orientation will be
applied to the MSME Home entity Eat Minang to be created good business and excellence to
compete in West Sumatra. Therefore that approach is quantitatively used in the design of this
study. Approach quantitative defined as useful research in analyzing population and sample
certain with technique data collection using questionnaire for hypothesis test made in a manner
adequate.
A.Sample
Technique used for choosing a sample is purposive sampling. Is one of non random
sampling techniques where researchers determine samples with method to determine
The Role of Market Orientation in Mediation the Impact of Entrepreneurship Orientation on Company
Performance and Competitive Advantage
942 2., 3., February 2023
characteristic features certain in accordance with aim study so that expected results could
answer problem study.
So in study this as a research sample is an effort of micro, small and medium enterprises
of West Sumatra engaged in the sector in-agricultural industry category accommodation and
suppliers food and Drink sector Restaurant of Minang. Target sample is Restaurant of
Minangkabau which is registered at BPS Sumatera Barat , which is also a destination tour
collecting food from reviews on TripAdvisor, Jelajah Minang, Wisata Sumbar and other online
portals. For aim research, registered restaurants online on Google Maps are also listed.
There is research that this election total sample is studied with the use technique SEM-
PLS analysis that is five times the number of items in questionnaire (Hair et al., 2010)
multivariate data analysis. Amount question survey in study this is 33 items, so a minimum of
33 x 5 = 165 samples is required.
B. Variables operational
In accordance with the aim of research, variable free is orientation entrepreneurship.
Market orientation plays a role as a mediator while variable dependent MSME business
performance and excellence compete. Every variable tested the hypothesis with survey use
originating from a questionnaire from a previous study with scale 1-5 with the
number of the statement “absolutely not agree” to “strongly agree”.
Orientation Entrepreneur can be measured using three dimensions compiled by Lane &
Langkamp Bolton (2012), adapted by al-Mamun & Fazal (2018). Market orientation is
measured with MKTOR scale, meanwhile performance business be measured with Morgan
(2003) and adjusted with Al Mamun and Fazal (2018), meanwhile superiority competitive
adapted from Chen et al (2006), adapted again from (Syapsan, 2019).
RESULTS AND DISCUSSION
In general, the amount of respondents in study this a me with surveyed restaurants, that
is173 respondents.
This data collection done by the team researchers totaling 5 people from 11 regions in West
Sumatra. The process seat 17 days time because surveyors don't allowed retrieve current data
eat after noon because will bother visitors other. When data collection there are 4 restaurant
the owner could contacted as respondents and 4 restaurant already nooperate again. With this,
from a total of 173 restaurants, 8 restaurants issued and only 165 data can be processed more
carry on.
SmartPLS 3.2.8 was used for data processing in research. Two tests used are analysis factor
confirmatory or measurement of the outer model and then the Structural Equation Modeling
(SEM) or testing the inner structure of the model.
Variable
Dimensions
Indicators
Entrepreneurial
Orientation
1. Risk Taking
2. Innovative
3. Proactive
1. Take brave action
2. Investment time and money
3.Actbravein situation risky
4. Like _ try activity new ones don't
normal but no must risky
The Role of Market Orientation in Mediation the Impact of Entrepreneurship Orientation on
Company Performance and Competitive Advantage
943 2., 3., February 2023
5. Like unique approach
6. Liketry method alone when learn new
things
7. Like experiments and approaches
original for solving problem
8.Act Formerly in anticipation problem
9. Plan project forward
10. Remind and finish project than wait
-Customer
Orientation
-Competitor
Orientation
-Coordination
Between Functions
4. Competitive strategy based on
understanding of needs customer
5. I often measure satisfaction customer
6. I pay attention after-sales and service
my effort
7. Sales team share information about
competitor regularly
12. Me and the team communicate
information about our customers
14.All team understand how business
contribute fo rgive mark more on the
customer
Competitive
Advantage
The benefits of a
company strategy by
creating business
performance or
performance that is
higher and more
effective than
competitors in the
same industry or
market.
1. Good resources
2. Not easy to imitate
3. Different from others
Business
Performance
Company
performance
determines how the
company maintains
long-term
relationships with
customers
1. High customer satisfaction compared to
competitors
2. Being in a competitive position
3. Have enduring customers
4. Sales growth
5. Return on investment
In the structural model, endogenous latent variables with R2 = 0.67 indicate a "good" model,
R2 = 0.33 a "moderate" model, R2 = 0.19 a "weak" model (Urbach et al., 2010). Table 4.37
below shows the R-squared value of the research model.
R Square
The Role of Market Orientation in Mediation the Impact of Entrepreneurship Orientation on Company
Performance and Competitive Advantage
944 2., 3., February 2023
CA
0.130
COMPT
0.495
CUST
0.787
INTRVS
0.616
MO
0.222
PB
0.318
The original average construction samples show the coefficient values for each row. The
significance level of hypothesis testing is reflected in the path coefficient values or the internal
model. Coefficient path values or internal models are expressed as t-statistics. It must be greater
than 1.96 for the two-tailed hypothesis and greater than 1.64 for the one-tailed hypothesis to
test the hypothesis at an alpha of 5 percent (Hair et al., 2010).
Original
Sample (O)
Sample
Means
(M)
Standard
Deviation
(STDEV)
T Statistics
(|O/STDEV|)
EOs -> CAs
0.313
0.334
0.050
6,270
EO -> MO
0.471
0.498
0.042
11.319
EO -> PB
0.512
0.558
0.042
12,221
MO -> CA
0.204
0.240
0.131
1,560
MO -> PB
0.267
0.278
0.090
2,963
This study uses one of the moderating variables, namely market orientation (OM) to
examine the effect of entrepreneurial orientation on business performance and competitive
advantage in Minang restaurants in West Sumatra. This discussion presents the results of the
indirect effect which shows how the effect of MO mediates the relationship between the
independent variable and the dependent variable. The results are presented in the following
table:
Original
Sample (O)
Sample
Means (M)
Standard
Deviation
(STDEV)
T statistics
(|O/STDEV|)
EO -> MO -> CA
0.096
0.124
0.068
1,421
EO -> MO ->
COMPT
0.332
0.350
0.041
8,074
EO -> MO -> CUST
0.418
0.439
0.040
10.542
EO -> MO ->
INTRVS
0.370
0.389
0.035
10.673
EO -> MO -> PB
0.126
0.139
0.049
2,540
Therefore, based on the results of data processing it can be concluded that the results of this
research hypothesis are described in the table below:
The Role of Market Orientation in Mediation the Impact of Entrepreneurship Orientation on
Company Performance and Competitive Advantage
945 2., 3., February 2023
Direct Influence
hypothesis
T grade
Results
H1
Influential Entrepreneurial
Orientation positive for market
orientation
11.319
Significant
H2
Entrepreneurial orientation has a
positive effect on business results
12,221
Significant
H3
Entrepreneurial orientation has a
positive effect on competitive
advantage.
6,270
Significant
H4
Market orientation has a positive
effect on business performance
2,963
Significant
H5
Market orientation has a positive
effect on competitive advantage.
1,560
Not significant
Indirect Influence
hypothesis
T grade
Results
H6a
Market orientation mediates the
positive effect of entrepreneurial
orientation on business
performance.
2,540
Significant
H6b
Market orientation mediates the
positive effect of entrepreneurial
orientation on competitive
advantage.
1,421
Not significant
From the results of the indirect effect hypothesis above, it can be concluded that market
orientation does not have a mediating effect on the relationship between Market Orientation
and Competitive Advantage.
Based on the results of the hypothesis above, there is a positive correlation between
entrepreneurial orientation and market orientation. In other words, the more entrepreneurial
orientation a person has, the more market orientation is formed. This is because there will be
complementary factors between business orientation and market orientation, in this case, a
response to the market is needed to support the development of the business’s strategic
direction.
This study tests that entrepreneurial orientation has a significant positive effect on business
results. This means that if someone has an entrepreneurial-strategic orientation, the company's
performance is usually better. Looking more closely at the dimensions, the items with the
highest response test scores and validity in this study were those related to proactivity. This
The Role of Market Orientation in Mediation the Impact of Entrepreneurship Orientation on Company
Performance and Competitive Advantage
946 2., 3., February 2023
proactive dimension refers to an individual's ability to seize opportunities, have a clear vision
for the future, always be active and think about what they can do to improve themselves and
explore potential gains in the market.
The research conducted shows that there is a positive correlation between entrepreneurial
orientation and competitive advantage. In other words, if the company implements an
entrepreneurial strategy orientation, it can gain a competitive advantage. The competitive
advantage here means when a company is able to maintain characteristics or resources that
make it stand out in the same industry.
In field research, the respondents themselves justify the intense competition with the
emergence of restaurants with different tastes, so that their business is no longer the main
"choice". This is influenced by many factors, within the consumer. However, with this
competitive advantage comes the proactive factor of finding good business opportunities.
The results show that market orientation has a significant positive relationship with
company performance. That is when a businessman implements his business with market
orientation, the quality of business performance will increase. In market orientation, there are
3 dimensions, namely customers, competitors, and the coordination between these functions is
very consistent with how customer satisfaction can be achieved.
Market orientation has a strategic path from internal to external orientation. the point is how
an entrepreneur can develop a strategy for his business so that the benefits eventually flow to
his customers. If the customer is satisfied, a good business indicator is fulfilled. In the case
study of this research, returning to the context of the example, namely the Minang Restaurant,
the owner must know that when he gets a very reasonable price and taste, the customer will be
satisfied. Measured against indicators or variable positions of business performance, the
highest point is the level of surviving customers. In other words, business is good when a
restaurant has customers who either order from it or keep coming back to eat (repurchases).
From the profile of the company's founding period, it can be seen that the company has been
established on average for more than 3 years. Enough cycles to get repeat customers while
maintaining the quality and quantity of food served. But in reality, there are still many
restaurants in this industry whose business cycle curve is decreasing due to the increasing
competition around them. This can also be shown by the market orientation of competitors who
are very inferior. So it is not surprising that MSME restaurants cannot react actively to changes
in their competitors. Awareness among competitors is still quite low.
This study does not show any significant positive or negative effect of market orientation
on competitive advantage. That is, there is no correlation between the fact that restaurant
owners use market orientation to gain their competitive advantage. In line with the existing
market orientation dimension, competition orientation. Owners usually pay too little attention
to the growth of competitors in their market environment. So it cannot be denied that
competitive advantage will not be damaged as a result.
One indicator of competitive advantage is having good resources, including restaurant
workers. If the coordination of internal operations has the least value, it means that the owner
is not empowering his employees to respond to market changes.
The mediating role of market orientation in the relationship between entrepreneurial
orientation and overall success entrepreneurial is moderate. At a P value of 0.023 < 0.05,
market orientation moderately mediates entrepreneurial orientation on company performance.
The Role of Market Orientation in Mediation the Impact of Entrepreneurship Orientation on
Company Performance and Competitive Advantage
947 2., 3., February 2023
In other words, the role of business orientation becomes more important when the market
orientation strategy is revised first to show good business results.
Previous tests also prove that there is a significant relationship between the independent
variables and the mediator and a significant relationship between the mediator and the
dependent variable. From this, it can be concluded that the real role of market orientation in
the relationship between entrepreneurial orientation and business performance can be found in
Minang MSME restaurants in West Sumatra.
The results of this study indicate that market orientation as a mediator of entrepreneurial
orientation and competitive advantage does not play a role in this case study. There are several
factors that make this role non-existent. First, there is no significant relationship between the
mediator variable (market orientation) and the dependent variable (competitive advantage).
Thus it can be stated that market orientation does not play a mediating role between
entrepreneurial orientation and competitive advantage. Second, as discussed above, there are
several indicators of market orientation that are not fulfilled in terms of parameters that make
the Minang Restaurant MSME business a competitive advantage compared to industry
competitors.
CONCLUSION
Based on the questionnaire distributed to the owners of MSME Minang restaurants in West
Sumatra, it can be concluded that the results of this study indicate that 5 of the 7 proposed
hypotheses are accepted as significant. The accepted hypothesis indicates that there is a
significant positive relationship between entrepreneurial orientation and market orientation,
entrepreneurial orientation and entrepreneurial success, entrepreneurial orientation and
competitive advantage, market orientation and firm success, and market orientation as a
mediator between entrepreneurial orientation and firm success.
1. Market orientation variable that has the greatest influence on customer orientation. This
means that the owners of the Minang Restaurant in West Sumatra have made meeting the
needs of their customers one of their business goals. This understanding must be applied to
all business owners in order to continue to improve their business performance.
2. On the entrepreneurial orientation variable, the proactive dimension factor has the greatest
influence. In other words, there is an urgent need to understand how owners must be able to
react and anticipate market changes so that their businesses can survive long business cycles.
3. In the variable Business Performance, the most important reflection is the form of customer
satisfaction with the product/service received. The goal is to achieve good business
performance with customer satisfaction being very important.
4. Competitive Advantage
In this variable, the value of the competitiveness of MSME restaurants is a good resource.
Good measurement shows that the company is able to measure itself continuously against
other competitors in the same industry.
Given the role of market orientation as a mediator between entrepreneurial orientation and
firm performance, a related indicator is customer orientation, which can be correlated with
entrepreneurial orientation. The conclusion is that the company's business performance
increases when changes in customer needs are anticipated.
The Role of Market Orientation in Mediation the Impact of Entrepreneurship Orientation on Company
Performance and Competitive Advantage
948 2., 3., February 2023
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