Indra Muis

Universitas Pasundan, Doctoral Program in Management

Jl. Sumatra No 41 Bandung, Jawa Barat 40014, Indonesia

Email: indra_muis@yahoo.com

The 1st International Conference For Interdiciplinary Studies (ICIS)

Youngsan University, Busan, South Korea , September 22-23, 2014

Small-Medium Enterprises (SMEs) are national

assets when having a superior business

performance

Factors influencing Business Performance

Organizational Learning and innovation

Global Market: Chinese Dominant

Domestic Market: The undesirable rattan

products

Organizational Learning, Innovation and Business

Performance

Conceptual Framework

Business

Performance

Organizational

Learning

Innovation

Figure 1 : Conceptual Framework

Organizational Learning has a positive effect on

Business Performance

Innovation has a positive effect on Business

Performance

Organizational has a positive effect on Innovation

Organizational Learning and innovation as independent variable and Business Performance as a dependent variable

Organizational Learning indicators: information acquisition, Information Distribution, Information Interpretation, Behavioral and Cognitive Changes

Innovation indicators: Product and Service Innovation, Process Innovation, and Innovation Culture

Business performance indicators: financial and non financial indicators

Using 5-level LIKERT scale

Using Structural Equation Model (SEM)

109 sample of 149 SMEs’ Owner

Measurement & Instrumentation: Business Performance: 4 statements for Financial performance and 16 statements for Non Financial Performance (Fairoz et al, 2010)

Organizational Learning: Information Acquisition with 15 statements, Information Distribution with 4 statements, Information Interpretation with 11 statements and Cognitive and Behavioural Change with 14 statements, (Huber, 1991)

Innovation; Product and Service Innovation with 9 statements, Process Innovation with 4 statements and Innovation Culture with 5 statements (Piroozfar, et al, 2012)

The instrument validity and reliability by SPSS 21: Valid 0.4 Pearson’s product moment and reliable 0.7 Cronbach’sAlpha)

Structural Equation Modeling (SEM) with IBM SPSS AMOS 21 software

Satisfactorily met criteria of GOF.

Chi-Square (χ²) 101,554 with 0.00 p-value. The Chi-Square score is then divided by the degree of freedom; 101,554 / 24 = 4,23. The calculation indicates that the model fits if referred to the criteria in which 1.0 is below limit and > 2 is above limit.

Goodness of fit indices (GFI). GFI shows that the model fits. The score of GFI is 0.851. The model fits when GFI score is in 0.80 GFI < 0.90.

Non-Centrally Parameter (NCP) that scores 77.554 and indicates the model fit because is in the scale of 47.334 NCP < 146.511.

Adjusted Goodness of Fit Value (AGFI) scores 0.72 and is considered fit because it is in the scale of 0.666 AGFI < 0.807

Unsatisfactorily met model criteria of GOF

RMSEA with 0.173 score should be 0,08 (good fit).

ECVI default model with 1.329 score should be lower than its saturated model (0.833) and its independence model (3.431).

CFI with 0,755 should be > 0.9.

PNFI with 0.475 score should be > 0.7.

NNFI with 0.633 should be > 0.9.

Root Mean Square Error of Approximation (RMSEA), Expected Cross Validation Index (ECVI), Comparative Fit Index (CFI), Incremental Fit Index, ParsimoniusGoodness of fit (PGFI), Parsimonious Normed Fit Index (PNFI), and Non-Normed Fit Index (NNFI).

Organizational Learning affects the business

performance (0.07 co-efficient)

Innovation has a positive effect on the

business performance (0.4 co-efficient)

organizational learning and innovation has a

positive correlation (0.4 co-efficient)

The study has found significant results of

association of all three variables studied. It

has found a positive effect of organizational

learning on Business Performance

The stronger the organizational learning thehigher the business performance will be.Incorporating new knowledge and using it inSMEs leads to more business performance.

The present of innovation also strongly affectsbusiness performance. The more innovative theenterprise is, the better its businessperformance will be.

The presence of organizational learning andinnovation are proven to be affected oneanother

Reinforcing the implementation of organizational learning and innovation

in order to increase the business performance.

The managers are suggested to :

1. boost learning atmosphere and culture in their organizations

2. acquire information from various sources and in various ways

3. distribute and interpret the information in order to create

cognitive and behavioral changes in their entire organization.

4. boost product and service innovation in an attempt to create high

quality products and services and process innovation to create

efficiency in the business process.

5. to create innovation culture in their organization to help an

organization cope with customers’ need and wants.

6. create organizational innovation by improving organizational

learning because great innovation is created through great

learning and learning drives people to innovate

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Journal of Basic and Applied Scientific Research, Vol 3 No 5 ,

2013, ISSN 2090-4304 P. 159-169