The Role of Market Orientation and Learning Orientation in Improving Innovativeness and Performance of Small and Medium Enterprises

The purpose of study is to describe contradiction relationship between market orientation toward organizational performance and to provide a quantitative analysis, in which learning orientation, market orientation, entrepreneurial orientation, and innovativeness function as the key success factors in technology-intensive firms. The authors formulate a structural equation model to examine the relationship among these constructs. A structural equation model was designed to examine the relationship. To test the model, the authors conducted covariance structural analyses of data collected from 150 small medium enterprises in Banyumas Regency. The central finding is that learning orientation plays a mediating role in the relationship between market orientation and innovativeness. The results indicate that innovativeness has effect on business performance. Market orientation can strengthen learning orientation and innovativeness. In the small medium enterprises, the market information obtained from customers and competitors helps firms to keep an eye on the market. For better competitive advantages and business performance, firms must have learning capabilities and employees ’ identity with organizational mission. The findings indicate that firms should strengthen their learning orientation and innovativeness to improve business performance