THE ROLE OF PRODUCT INNOVATION, PRODUCT QUALITY, AND MARKET ORIENTATION ON MSME BUSINESS PERFORMANCE WITH COMPETITIVE ADVANTAGES AS A MEDIATION VARIABLE

Abstract

MSME business growth can be seen from the business advantages and business performance of MSMEs. Business performance is a factor that is commonly used to measure the impact of a company's strategy in facing competition. This study aims to determine the effect of product innovation, product quality, and market orientation on the competitive advantage of MSMEs and MSME business performance. This research is explanative research with cross sectional design and quantitative approach. The population in this study were users of food and beverage MSME products in Surakarta with a sample of 120 respondents. Data collection through questionnaires. The collected data were analyzed using Structural Equation Modeling (SEM) analysis. The results of the study prove that there is an influence between product innovation, product quality, and market orientation on the competitive advantage of SMEs. Product innovation, product quality, and market orientation have a positive and significant impact on the competitive advantage of MSMEs. There is a direct influence of product quality, and market orientation on the performance of MSMEs. Meanwhile, product innovation has no effect on the performance of MSMEs. There is an influence of competitive advantage in mediating the variables of product innovation, product quality, and market orientation on MSME business performance through competitive advantage as a mediating variable. There is an influence of competitive advantage on MSME business performance