Product Innovation as a Marketing Performance Catalyst: Relational and Entrepreneurial Perspectives of MSMEs in Indonesia

Abstract

Introduction: MSMEs play an important role in the country's economy because they are the driving force of the economy, provide employment, and contribute greatly to GDP (Gross Domestic Product) and economic stability. The rapid development of business today has an impact on the increasingly intense competition between MSMEs. Every MSME is required to be able to continue to develop to face opportunities, challenges, and competition between MSMEs.

Objectives: This study aims to investigate the impact of entrepreneurial marketing and relational capital on marketing performance with product innovation variables as intervening variables in Troso Weaving MSMEs in Jepara Regency, Central Java, Indonesia.

Methods: The method in this study uses a quantitative survey approach by distributing questionnaires to 100 owners of Troso Weaving MSMEs. The data collected were analysed using Structural Equation Modelling (SEM) techniques with the help of SMART PLS 4.0 statistical tools.  

Results: The results of this study found that entrepreneurial marketing has a positive and significant effect on product innovation but a negative and insignificant effect on marketing performance, relational capital has a positive and significant influence on product innovation and marketing performance. Product innovation has a positive and significant effect on Marketing performance and can mediate the effect of entrepreneurial marketing on Marketing performance and mediate the effect of Relational capital on marketing perfomance.

Conclusions: Marketing performance in MSMEs can be improved in various ways, one of which is by increasing entrepreneurial marketing, relational capital and product innovation. Efforts that can be made include being oriented towards market opportunities, focusing on creativity and innovation, increasing competitiveness through differentiation, building strong relationships with customers, suppliers and partners related to the business, creating relevant, attractive and innovative product updates that can increase trust and maintain customer loyalty.