Role of Entrepreneurial Orientation, Social Capital and Competitive Advantage based Product Innovation in Developing Business Performance: An Empirical Study on Small Medium Enterprise of Semarang, Indonesia

Abstract

Semarang, as the capital of Java, Indonesia is trying hard to develop her economy by entrepreneurship.Entrepreneurship orientation, social capital and product innovation are important factors that can achive business performance of small medium enterprise. The objectives of this research are three folds. First, the research was designed to investigate the effects of entrepreneurship orientation, social capital (social network, trust) on product innovation. Second, it was to investigate the effect of entrepreneurial orientation and social capital on business performance. Finally, it was to analyze the effect of product innovation on business performance. The sample size was 220 small medium enterprise taking from various clusters in Semarang, Indonesia. The analysis employed a Structural Equation Modeling (SEM) using AMOS v 16.The results demonstrated that entrepreneurship orientation, social network and trust had a significantly and positively influenced on product innovation and business performance, while entreprenership orientaion and the product innovation showed significantly and positive influences on business performance.However, despite their positive influences, the effects of social network and trust on entrepreneurial intention were insignificant. The findings conclude that the entrepreneurial orientaion and product innovation are key factors in developing entrepreneurship in Semarang