E-Commerce as a Mediator of Market Orientation on MSME Performance in Kendari.

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E-Commerce as a Mediator of Market Orientation on MSME Performance in Kendari.

Abdul Razak â,1,*, Asraf â,2, Nofal Supriaddin â,3

a Sekolah Tinggi Ilmu Ekonomi Enam Enam, Kendari, Southeast Sulawesi, Indonesia

1 [email protected]* ; ²[email protected]; ³[email protected]

* corresponding author

I. Introduction

The existence of small and medium-sized enterprises does indeed make a considerable contribution in various aspects. However, the business activities carried out by MSMEs are not without problems. Currently, the development of small and medium industries is emerging but it is difficult to develop. Some industries have almost disappeared and are unable to compete with big businesses. The people's e-commerce capabilities in the demands of globalization open up opportunities for the business world to grow to become more qualified with efficiency and competitiveness. MSMEs have a large contribution to GDP, namely 61.97% of the total national GDP or equivalent to Rp. 8,500 trillion in 2020. MSMEs absorb a large number of workers, namely 97% of the absorption of the business world in 2020 (www.bkpm.go.id, 2021). Likewise, the condition of Micro, Small and Medium Enterprises (MSMEs) in Kendari City continues to grow. In 2021, MSMEs will reach 65,038, higher than in 2020, which was only 63,519 business units.

Fig. 1. Growth of SMEs in Kendari

ARTICLE INFO A B S T R A C T

Article history:

Received 28 Sept 2022 Revised 10 Oct 2022 Accepted 20 Nov 2022

The purpose of this study is to test the four hypotheses, namely to partially test and analyze the effect of market orientation, e- commerce on MSME performance, market orientation on e- commerce, and the mediating role of e-commerce on the effect of market orientation on MSME performance in Kendari City. The population in this study were all MSME owners with a sampling technique using proportional stratified random sampling, which is a technique for determining sample size when the population is proportionally stratified. The sample of this study was 100 respondents divided into 10 districts. The analytical method used is multiple linear regression analysis. The results showed that partially market orientation had a positive and significant effect on the performance of MSMEs, market orientation had a positive and significant effect on e-commerce, e-commerce had a positive and significant effect on the performance of MSMEs, and tested the role of e-commerce as a mediating variable in the relationship. market orientation towards the performance of MSMEs resulted that e- commerce as a perfect mediator.

Keywords:

Market Orientation E-Commerce MSME Performance

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The growth of MSMEs in Kendari City cannot be separated from the government's attention to provide training related to production and social media-based marketing systems to MSME actors (https://sultra.tribunnews.com, 2021). The growth of MSMEs is the result of good business performance. Business performance can be seen from the quality of service, service productivity, and profitability of a company [1]. While [2] states that the measurement of company performance is carried out to find out what the company has succeeded in achieving in a certain period both in the financial sector, about how the company can provide satisfaction to its customers, company productivity and to determine the company's e-commerce position as well as efficiency and effectiveness in the use of resources. the power it has. Performance is a reflection or reference of the existing activity processes in the company [3].

Digital business strategy has improved recently due to impressive improvements in information systems, communication and technology connectivity [4]. The emergence of social media technology has provided a platform for businesses and businesses to interact and communicate with customers, suppliers, retailers, and other stakeholders. [5]. Currently, information technology is being developed to penetrate all aspects of human life. This makes information technology a more dominant role, especially in the business and social fields. The rapid development of technology makes it easier for people to communicate and conduct business transactions [6]. Social media develops in line with the development of information technology that occurs in every line of business and business [7]. The doubling of the use of social media to improve the performance of MSMEs has been described as a persuasive problem in the process of growing entrepreneurial activity [8]. The use of social media emphasizes the importance of a digital business strategy that is oriented towards changing the way we communicate, collaborate, consume, and create products [4].

E-commerce will make it easier for producers in marketing activities and also cut operational costs for trading and marketing activities. So if MSME actors are able to optimally utilize e- commerce-based technology as a marketing medium, then this can be a solution to develop marketing in order to increase e-commerce for MSME products. [9]. According to [10], E- commerce is the activity of conducting online business transactions through internet media and devices that are integrated with the internet. E-commerce is business activities involving consumers, manufacturers, service providers and intermediary traders using computer networks, namely the internet. It can be concluded that the notion of e-commerce is all forms of trade / commerce trade of goods and services using electronic media [11]. E-Commerce has indicators [12]: online purchasing perspective, digital communication perspective, service perspective, and business process perspective. While [13] states that e-commerce is a dynamic set of technologies, applications and business processes that connect companies, consumers, and communities through electronic transactions and electronic trading of goods, services and information.

In research conducted by [14] regarding the adoption of E-commerce on the performance of MSMEs that e-commerce has a significant and positive effect on the performance of MSMEs, this means that if the adoption of e-commerce increases, the performance of MSMEs will increase.

However, contrary to the results of research [15] that the use of e-commerce has an insignificant relationship to the performance of MSMEs. it can be concluded that MSMEs have not fully utilized the functions of e-commerce platforms and other online media.

In addition to E-Commerce, market orientation is one of the important factors that must be considered by MSMEs because it has a positive link to business performance [16]. Market orientation relates to the behavior of entrepreneurs how they are able to provide superior value to customers, respond to competitors, and have internal communication skills. Previous research provides empirical evidence that market orientation has a positive effect on organizational or company performance [17], [18]. Other research states that market orientation and company performance have a strong relationship. A market-oriented company will be committed to creating a business culture that is oriented towards superior value, and creating value for customers so that the performance achieved becomes more optimal [19]. MSME actors are required to be creative, innovative and able to predict conditions of uncertainty in business, such as the occurrence of an economic crisis or natural disaster. The current phenomenon, countries in various parts of the world are hit by the Covid-19 pandemic. The Corona Virus or Covid-19 is a health crisis that affects all sectors, and one of the sectors that is feeling the impact is the economic sector. Since the outbreak of the Covid-19 pandemic has hampered the economy, especially in this case the continuity of the MSME business.

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The results of the study indicate that market orientation has a positive and significant effect on business performance. These results are in accordance with the research [20] and [21], which states that market-oriented companies will continuously scan and assess the disposition of customer preferences so as to create better business performance. Adopting a market-oriented marketing strategy is considered as a powerful way to manage and minimize the impact of changes in the external environment such as the development of information technology globally. The ability of market orientation can be transformed into customer value by utilizing resources whose implications can affect the performance of MSMEs [22].

II. Method

This type of research is an explanatory research, which aims to test and explain the influence or relationship between variables [23]. The population in this study were all MSME owners in Kendari City, while the sampling technique used Proportional stratified random sampling, which is a technique to determine the sample size when the population is proportionally stratified. The sample of this study was 100 respondents divided into 10 sub-districts in Kendari City. The method of analysis used multiple regression analysis, with the following equation:

Z = β0 + βX ………… Equation 1 Y = β0 + β1X +β2Z ………… Equation 2

III. Result and Discussion

The instrument in this study can be said to be valid if it is able to measure what it wants to measure and can reveal the data and variables studied consistently. Validity test is the accuracy of the scale on the measurement instrument that can be used with the intention of ensuring that the measuring instrument used, in the case of the questionnaire questions, matches the object being measured. The test criteria used in the instrument are said to be valid if the r value 0.30 and the correlation significance value of 95% or = 0.05.

Table 1. Validity and Reliability Test Results No. Statement r count Cronbach Alpha explanation

1 Market Orientation (X)

Item-1 0,574 0,782

Valid and Reliable Item-2 0,524

Item-3 0,461 Item-4 0,503 Item-5 0,593 Item-6 0,490

2 E-Commerce (Z)

Item-7 0,568 0,846 Valid and Reliable

Item-8 0,784 Item-9 0,642 Item-10 0,625

3 MSME Performance (Y)

Item-11 0,632 0,767 Valid and Reliable Item-12 0,505

Item-13 0,602 Item-14 0,736 Item-15 0,562

a. Source: Data processed, 2022

Based on the table above, it can be seen that the 15 statement items after the test are declared valid because the calculated r value seen from the corrected item total correlation is greater than r table 0.30 as explained by [24], where valid questionnaire items can be used as a reference for further research.

Reliability testing was carried out on the statement items used was the Cronbach alpha method with the acceptable/decent cut of point value 60 even though it was not an absolute standard. the

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instrument is considered to have an acceptable level of reliability, if the measured reliability coefficient is 60 [24].

Based on the summary of the reliability test results above, Cronbach's alpha value for market orientation is 0.782, e-commerce is 0.846, and MSME performance is 0.767. This means that all statements are reliable. This study uses descriptive statistical analysis and inferential statistical analysis through multiple linear regression with the help of SPSS 22.0 software. The results of the multiple linear regression inferential test are as follows:

Table 2. Multiple Regression Results Dependent Variable Y = MSME Performance

Independent Variable

Unstandardized Coefficients

Standardized

Coefficients T Sig.

B Beta

(Constant) 5,023 3,596 ,001

Market Orientation (X) ,268 ,342 2,813 ,007

E-Commerce (Z) ,270 ,331 2,725 ,008

Multiple R = 0,590 R Square (r²) = 0,348

From the data above, multiple linear regression equations can be made as follows:

Y = 5,023 + 0,342X +0,331Z+ e

e = Standar error ( ) = ( ) = 0,807

The analysis of the results of the F test (simultaneous test) is intended to prove from research which states that market orientation and e-commerce variables have a significant influence on the performance of MSMEs in the city of Kendari. The results of the F test obtained Fcount of 16.567 and p value of 0.000, so 0.000 <0.05, then Ho is rejected and Ha is accepted, or it can be concluded that there is a joint influence of market orientation and e-commerce variables on the performance of MSMEs in Kendari City.

By using the t-test, the t-value of the market orientation variable is 2.813 while the t-table is at the 95% confidence level (significance 5% or 0.05) and the significance value is 0.007 (sig <0.05).

Based on the analysis above, it is concluded that market orientation has a significant effect on the performance of MSMEs so that the null hypothesis (Ho) is rejected and Ha is accepted, so this hypothesis has been tested empirically. Meanwhile, the t-test of e-commerce is 2.725 and the significance value is 0.008 (sig < 0.05). Based on the analysis above, it is concluded that e- commerce has a significant effect on the performance of MSMEs so that the null hypothesis (Ho) is rejected and Ha is accepted, so this hypothesis has been tested empirically.

After testing the regression model with the F test with significant results and testing for each variable with the t test, all of which are significant, the results of the analysis can be interpreted as follows:

1) The constant of 5.023 states that if the market orientation (X) and e-commerce (Z) is the performance of MSMEs in the city of Kendari is 5.023.

2) The market orientation regression coefficient (X) of 0.342 states that every additional 1 point of market orientation will increase the performance of MSMEs in Kendari city by 0.342 with the assumption that e-commerce (Z) remains.

3) The e-commerce regression coefficient (Z) of 0.331 states that every additional 1 point of e- commerce will increase the performance capability of MSMEs by 0.331 with the assumption that market orientation (X) remains.

The coefficient of determination or the number of R square is 0.348. Adjusted R square is 0.327, this means that 32.7% of the variation in the dependent variable of MSME performance can be explained by the independent variables of market orientation and e-commerce, while the remaining 0.673 or 67.3% is explained by other variables outside of the existing variables.

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From the results of the path analysis, it can be determined the magnitude of the direct and indirect effects as follows:

a) Direct influence X to Z = 0,486 b) Direct influence Z to Y = 0,331

c) Indirect influence X to Z to Y = 0,468 x 0,265= 0,160 d) Direct influence X to Y = 0,342

e) Total Effect = 0,342 + 0,160= 0,502

Based on the path diagram, it can be seen that the effect of market orientation on e-commerce is significantly proven. This is evidenced by the path coefficient (Beta) of 0.486 and sig = 0.000 <0.05.

Likewise, the effect of e-commerce on the performance of MSMEs is proven to be significant, with a path coefficient (beta) of 0.331 and sig = 0.008 <0.05. These results indicate that market orientation has an indirect effect on the performance of MSMEs with an indirect path coefficient of 0.160. Based on the path analysis above, the hypothesis which states "market orientation affects the performance of MSMEs with e-commerce as a mediating variable" is supported.

Discussions

A. The Influence of Labor Market Orientation on MSME Performance

The first hypothesis states that market orientation has a direct effect on the performance of MSMEs. The results of the t-test on the path coefficient on the relationship between market orientation and MSME performance of 0.342 is significant (p-value = 0.007), so it can be concluded that the research data supports the first hypothesis that market orientation has a direct effect on MSME performance. The large contribution of the market orientation variable is because entrepreneurs tend to assess market orientation as being in the very good category, because entrepreneurs are able to understand and properly understand consumer desires. The results of this study are supported by [25]–[27] examining the relationship between market orientation and business performance, the results of the study prove that market orientation has a positive role in improving business performance.

B. The Effect of Job Market Orientation on E-Commerce

The second hypothesis states that market orientation has a direct effect on e-commerce. The t-test result of the path coefficient on the relationship between market orientation and e-commerce of 0.486 is significant (p-value = 0.000), so it can be concluded that the research data supports the second hypothesis that market orientation has a direct effect on e-commerce. This means that there is a positive and significant influence resulting from market orientation to e-marketing, where the higher the market orientation, the higher the e-marketing. [28]. This study is in line with the results of research conducted by [29] which states that there is a positive and significant direct effect generated by market orientation towards e-marketing on travel and tourism service providers in Greece. E-commerce behavior sustainability efforts to remain effective and competitive is a very important attribute of a successful organization.

C. The Effect of Work E-Commerce on MSME Performance

The third hypothesis states that e-commerce has a direct effect on the performance of MSMEs.

The results of the t-test on the path coefficient on the relationship of e-commerce to the performance of MSMEs of 0.331 is significant (p-value = 0.008), so it can be concluded that the research data supports the third hypothesis that e-commerce has a direct effect on the performance of MSMEs.

The results of this study are supported by [11], [13] that e-commerce has a positive and significant effect on company performance, the path coefficient marked positive can be interpreted that the high e-commerce can support increasing business performance, thus the higher the e-commerce, the business performance will increase. The findings of this study are able to prove the existence of the theory of competitive advantage by Porter that competition is the essence of the success and failure of the company, as well as determine the accuracy of the company's activities that can support the company's operational performance. However, some previous research results argue that E- Commerce does not have a significant effect on the performance of MSMEs [15], [30].

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D. The Effect of Labor Market Orientation on MSME Performance Mediated by E-Commerce Implementation

The fourth hypothesis will be seen how the indirect relationship between market orientation and MSME performance is where the market orientation relationship has an indirect effect on MSME performance through MSME e-commerce. These results indicate that market orientation has an indirect effect on the performance of MSMEs with an indirect path coefficient of 0.160. Based on the path analysis above, the hypothesis which states "market orientation affects the performance of the manufacturing industry with e-commerce as a mediating variable" is supported. The results of this study were strengthened by [28] prove that proves that e-marketing significantly mediates the effect of market orientation on business performance. The results of this study found that most of the tourist lodge business destinations were driven by customer satisfaction, besides the results of this study showed that the tourist lodges dominantly used internet media in transaction activities.

IV. Conclusion

The conclusion of this study is that market orientation has a direct effect on MSME business performance, so that the higher the market orientation of MSMEs, the higher the business performance. Likewise, the adoption of e-commerce has a direct effect on the business performance of MSMEs so that the increasing adoption of e-commerce by MSMEs will increase the business performance of these SMEs. Market orientation has a direct effect on e-commerce so that the better the market orientation, the better the adoption of e-commerce. Finally, e-commerce mediates the effect of market orientation on business performance. This means that market orientation has a positive and significant direct influence on business performance with e-commerce as a mediator.

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