Enni Savitria, Emrinaldi Nur DP, and Almasdi Syahza

Business performance is one of the entrepreneurial behavior benchmarks. Small, and Medium Enterprises (SMEs) are required to have dynamic capabilities and strategies that can seize opportunities and improve the market. The aim of this paper is to analyze the effect of adaptability and entrepreneurial orientation on business performance through innovation as mediation. Based on interviews and questionnaires distributed to 115 SMEs in coastal areas. The research results show that adaptability and entrepreneurial orientation have effects on innovation. Adaptability and entrepreneurial orientation have no effects on business performance. Innovation has effects on business performance. Adaptability and entrepreneurial orientation have effects on business performance through innovation as mediation. This study enriches the current literature by providing a contribution and insights to understanding how Resources Based View (RBV) theory affects business performance and innovation on SMEs in coastal areas in Indonesia. The implications of this study on entrepreneurship orientation in SMEs will help to increase resources for innovation. This emphasizes how the RBV approach used in this research helps improve business efficiency by leveraging existing capital in microbusinesses into a source of excellence. The government is working on policies to enhance the efficiency of SMEs in Indonesia.

Citation: Savitria, E.,  Nur DP, E., Syahza, A., (2021). Can innovation mediate the effect of adaptability, entrepreneurial orientation on business performance? Management Science Letters, Volume 11 Number 8, pages 2301-2312. https://doi.org/10.5267/j.msl.2021.3.014