CREATING AN INNOVATIVE CULTURE IN AGRIBUSINESS OF MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES

Abstract

Purpose. This research aims to assess the motivational factors in creating an innovation culture in agribusiness of micro, small, and medium-sized enterprises (MSMEs) by examining the organizational perspective, including organizational culture, organizational learning, market orientation, and attitude to innovation culture. Methodology/approach. A random cluster sampling method was used to select 100 agribusiness MSMEs in Sukoharjo Regency. This research considered exogenous latent variables, such as organizational culture, organizational learning, market orientation, and attitudes toward intention to innovate. The endogenous latent variables used were innovation intentions and innovation culture. Data were collected through an online survey and analyzed using Structural Equation Modeling (SEM) and Partial Least Square (PLS) analysis tools. Results. The results showed that organizational culture, market orientation, and attitudes influenced the intention to innovate, while the level of organizational learning did not. The intention to innovate, in turn, had a significant effect on innovative behavior, as shown in the performance of agribusiness companies. This innovative behavior was reflected in the emergence of new ideas to enhance the business, including the development of new product variants, the utilization of e-commerce for sales, and the improvement of production technology to increase cost efficiency. Therefore, there was a relationship between cultural innovation and company performance. Originality/scientific novelty. This research model was built based on behavioral theory and organizational culture, taking into account the difficulty and time required to develop an innovative culture within agribusiness MSMEs. These enterprises have organizational features different from medium and large companies. The objective of this research was to change the mindset of agribusiness MSMEs towards innovation, where innovation was no longer viewed as an option but rather a condition for success. Innovation became a value in fostering organizational culture. Practical value/implications. The practical implications of the findings were that agribusiness MSMEs should focus on efforts such as adapting to external changes, involving all employees, consistency, and a clear and long-term business vision to promote innovation. This positive attitude towards innovation could create a culture of innovation within the company, enabling MSME agribusiness to compete and develop into a better company.