UNDERSTANDING HOW SMEs CREATIVE INDUSTRIES CAN IMPROVE INNOVATION PERFORMANCE

This study aims to understand factors which affecting innovation performance in SMEs creative industries. SMEs in Indonesia have proved its existence. SMEs were able to survive in the financial crisis of 1998 and the economic crisis of 2008 while many large companies being collapse. Literature review from previous studies found that the innovation performance can be formed if an organization adopts a market-oriented strategy, an innovation-oriented strategy and a service-oriented strategy in their business models. The third strategy can not be realized if SMEs does not have an excellence in term of service culture. This study seeks to interpret causal correlation that shape innovation performance into a structural relationship model. Model testing is done using a sample of 300 respondents’ of SMEs creative industries in Bengkulu Province. The data were obtained using a questionnaire instrument distributed by purposive sampling. The results showed that only market orientation strategy and service innovation strategy which effectively impacting on innovation performance. This study is also proved that market orientation can be created if an organization having good service culture. The significance of this relationship shows that SMEs that have a strong service culture tend to be market oriented. Market orientation and service orientation conducted by SMEs will affect innovation performance