Innovation Capability and Open Innovation for Small and Medium Enterprises (SMEs) Performance: Response in Dealing with the COVID-19 Pandemic

Augustina Asih Rumanti, Afrin Fauzya Rizana, Lutfia Septiningrum, Rocky Reynaldo and Mohammad Mi’radj Isnaini
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Augustina Asih Rumanti: School of Industrial and System Engineering, Telkom University, Bandung 40257, Indonesia
Afrin Fauzya Rizana: School of Industrial and System Engineering, Telkom University, Bandung 40257, Indonesia
Lutfia Septiningrum: School of Information System, Telkom University, Bandung 40257, Indonesia
Rocky Reynaldo: Faculty of Business and Economics, University of Melbourne, Melbourne, VIC 3051, Australia
Mohammad Mi’radj Isnaini: Industrial Engineering Department, Bandung Institute of Technology, Bandung 40132, Indonesia

Sustainability, 2022, vol. 14, issue 10, 1-21

Abstract: The current business environment requires every organization or company to achieve optimal performance and maintain it. Innovation capability and open innovation practices play a critical role in improving organizational performance. However, their role in improving Small and Medium Enterprises (SMEs)’s performance, especially during the COVID-19 pandemic, still needs to be identified further. Thus, this study conducts empirical research elaborating intrinsic factors of innovation capability, as well as the influence of open innovation on organizational efforts, i.e., how SMEs achieve optimal performance during the COVID-19 pandemic. In this research model, 206 respondents were gathered and given a reearch questionnaire. The respondents are the owner of batik SMEs located in several regions in Indonesia. PLS-SEM is used to test the data, and the result of this study shows that all hypotheses developed in this study are accepted, i.e., SMEs’ innovation capability and open innovation practices significantly influence financial and operational performance. The results show that in batik SMEs, the ability to innovate and open innovation, especially open entry innovation, can facilitate greater organizational performance. Therefore, batik SMEs woud benefit from initiatives and opportunities that improve their abilities in open innovation.

Keywords: innovation capability; open innovation; organizational performance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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