Market and Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility

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1

HISTORY OF MANUSCRIPT PUBLICATION (JSBE/Journal of Small Business & Entrepreneurship)

Market and Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility

Mulyana, Hendar

Dept. of Management, Faculty of Economics

Universitas Islam Sultan Agung Semarang

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2

DAFTAR ISI

1. Notice of Manuscript Number (20 Juni 2019) ... 3

2. Submission Confirmation (20 Juni 2019) ... 5

3. Revision Required: First Round (19 Maret 2019) ... 7

3.1. Reviewer’s Comments ... 10

4. Response to Reviewer and Revised Version (5 May 2020) ... 13

4.1. Cover Letter ... 13

4.2. Revised Manuscript submission ... 14

5. Submission Confirmation of Revision (5 Mei 2020) ... 44

6. Asking for Information (Status Progress of Manuscript) (26 Oktober, 2020) ... 46

7. Response by Editor (26 Oktober 2020) ... 47

8. Manuscript Acceptance (20 November 2020) ... 49

8.1. Decision from Email ... 49

8.2. Decision from System ... 50

9. Published Manuscript (12 Desember 2020)... 51

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3 1. Notice of Manuscript Number (20 Juni 2019)

Dr. Mulyana, SE, MSi <[email protected]>

Notice of manuscript number for/ Assignation d'un numéro pour "Market and Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility"

1 message

Journal of Small Business & Entrepreneurship <[email protected]> Thu, Jun 20, 2019 at 9:50 AM Reply-To: Journal of Small Business & Entrepreneurship <[email protected]>

To: Mulyana Mulyana <[email protected]>

La version française suit

Ref.: Manuscript #RSBE-2019-0061

Market and Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility by Mr. Mulyana Mulyana

submitted to the Journal of Small Business and Entrepreneurship (JSBE) Dear Mr. Mulyana,

Your submission entitled "Market and Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility" has been assigned the following manuscript number: RSBE-2019-0061.

You will be able to check the progress of your paper by logging on to

https://www.editorialmanager.com/rsbe/ as an author with the following credentials:

- User Name: mulyana

- your password can be set at this link:

https://www.editorialmanager.com/rsbe/l.asp?i=40337&l=2X0C0BHY

Please ensure the information below is correct:

ISNI:

ORCID:

PubMed Author ID:

Researcher ID:

Scopus ID:

You can correct the errors and fill in the missing information by logging onto your JSBE account with the credentials above.

Thank you for submitting your work to JSBE.

Kind regards,

Mai Thai, Editor-in-chief ---

Objet: Manuscrit #RSBE-2019-0061

Market and Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility par Mr. Mulyana Mulyana

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4 soumis au Journal of Small Business and Entrepreneurship (JSBE)

Bonjour Mr. Mulyana,

Votre manuscrit intitulé "Market and Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility" est enregistré au JSBE sous le numéro: RSBE-2019-0061.

Vous pouvez suivre l'état de votre soumission en vous connectant au https://www.editorialmanager.com/rsbe/

comme auteur(e) à l'aide des informations suivantes:

- Nom d'utilisateur: mulyana

- Mot de passe: https://www.editorialmanager.com/rsbe/l.asp?i=40337&l=2X0C0BHY Veuillez vous assurer que les informations suivantes sont exactes:

ISNI:

ORCID:

PubMed Author ID:

Researcher ID:

Scopus ID:

Vous pouvez corriger les erreurs et fournir les informations manquantes en vous connectant à votre compte JSBE.

Nous vous remercions pour votre collaboration, Mai Thai, rédactrice en chef

__________________________________________________

In compliance with data protection regulations, you may request that we remove your personal registration details at any time. (Use the following URL: https://www.editorialmanager.com/rsbe/login.asp?a=r). Please contact the publication office if you have any questions.

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5 2. Submission Confirmation (20 Juni 2019)

Submission confirmation for/ Confirmation pour "Market and

Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility"

1 message

Journal of Small Business & Entrepreneurship <[email protected]> Thu, Jun 20, 2019 at 9:50 AM Reply-To: Journal of Small Business & Entrepreneurship <[email protected]>

La version française suit

Ref.: Manuscript #RSBE-2019-0061

Market and Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility by Mr. Mulyana Mulyana

submitted to the Journal of Small Business and Entrepreneurship (JSBE)

Dear Mr. Mulyana,

Your submission entitled "Market and Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility" has been received by journal Journal of Small Business & Entrepreneurship You will be able to check the status of your paper by logging on to https://www.editorialmanager.com/rsbe/

as an author with the following credentials:

- User Name: mulyana

- your password can be set at this link: https://www.editorialmanager.com/rsbe/l.asp?i=40338&l=H7GI1Z5E Your manuscript will be given a reference number once an Editor has been assigned.

Thank you for submitting your work to the Journal of Small Business & Entrepreneurship.

Kind regards,

Journal of Small Business & Entrepreneurship ---

Objet: Manuscrit #RSBE-2019-0061

Market and Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility par Mr. Mulyana Mulyana

soumis au Journal of Small Business and Entrepreneurship (JSBE) Bonjour Mr. Mulyana,

Le JSBE a reçu votre manuscrit intitulé "Market and Entrepreneurial Orientation on Business Performance:

Role of Network Innovation Agility".

Vous pouvez suivre l'état de votre soumission en vous connectant au https://www.editorialmanager.com/rsbe/

comme auteur(e) à l'aide des informations suivantes:

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6 - Nom d'utilisateur: mulyana

- Mot de passe: https://www.editorialmanager.com/rsbe/l.asp?i=40338&l=H7GI1Z5E

Vous recevrez le numéro de référence de ce manuscrit lorsque ce dernier sera assigné à un éditeur.

Merci d'avoir soumis votre manuscrit au Journal of Small Business & Entrepreneurship.

Cordialement,

Journal of Small Business & Entrepreneurship

__________________________________________________

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7 3. Revision Required: First Round (19 Maret 2019)

Invitation to revise your manuscript RSBE-2019-0061

1 message

Ekaterina Turkina <[email protected]> Thu, Mar 19, 2020 at 9:59 AM Reply-To: Ekaterina Turkina <[email protected]>

CC: [email protected], [email protected]

Dear Authors of ``Market and Entrepreneurial Orientation on Business Performance: Role of Network Innovation Agility Journal of Small Business & Entrepreneurship``

Thank you for submitting your manuscript to JSBE. The paper went through the review process and our reviewers have recommended that you revise your manuscript for further consideration.

If you decide to revise the work, please (1) submit a new manuscript with a list of changes or a rebuttal against each point which is being raised and (2) highlight all the changes you make to the manuscript so that reviewers can quickly see your changes. When you attach your files during re-submission, the system will automatically load your old files. Please keep the files that are unchanged and delete all other files in order to be sure that reviewers can only view your latest version.

Please pay careful attention to all the comments of the reviewers (which are appended below).

I find the thrust of your paper interesting and hope you will be able to make the revisions needed to make in publishable. I certainly appreciate your willingness to submit your work to the JSBE.

Your revision is due by 06-16-2020. If you need more time, please let us know so that we can extend the deadline.

If you decide not to revise your manuscript, please let us know so that we can remove it from the system.

To submit a revision, please log onto https://www.editorialmanager.com/rsbe/ as an author with the following credentials:

- User name: mulyana

- your password can be set at this link:

https://www.editorialmanager.com/rsbe/l.asp?i=59263&l=1J5YQ8AS

IMPORTANT: Your original files are available to you when you upload your revised manuscript. Please delete any redundant files before completing the submission.

You will see a menu item call Submission Needing Revision. You will find your submission record there.

Yours sincerely

Ekaterina Turkina, Ph.D Associate Editor

Journal of Small Business & Entrepreneurship Reviewers' comments:

Reviewer #1: Thanks for sharing your work on the role of innovation agility in mediating the contribution of entrepreneurial orientation and market orientation to SMEs' market performance. The research question is

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8 novel and interesting. Meanwhile, the Indonesian context also adds enriched contextual flavor to the

research. The well-built SEM model provides rigorous methodological approach to analyze the relationship among the variables and support your claims with convincing evidence. Overall, I believe your research has high potential to contribute the existing entrepreneurship research.

Nonetheless, the elaboration of the paragraphs at the current stage is very ambiguous - it is very difficult to figure out the how your theoretical framework is established and how your empirical analysis is pertinent to the research question:

1 In the introduction, you highlight the research question "this study wants to examine the role of network innovation agility in mediating the relationship between entrepreneurial orientation and market orientation with business performance". Moreover, you provide abundant literature to support the long list of hypotheses.

Nonetheless, you need to be aware of which hypotheses are more relevant to the research question and the logical relationships between these hypotheses. At current stage, I rather see the seven hypotheses as separate statements, while you need to make more efforts integrating them together in a comprehensive conceptual framework that directly tackles your research question.

2. The literature review part needs fundamental revision. You've provided long lists of literature on the definitions of each conceptual construct. Nonetheless, you miss identifying how previous literature studies their inter-relationships and where the research gaps are - in this sense, you should consider moving some paragraphs in section "Hypotheses Development" back to the literature review. Moreover, I still don't quite get what "network innovation agility", how it matters to affect the contributions of MO and EO to the business performance, and how practically it is measured. If "network innovation agility" is the highlight of the paper, definitely, you need to call your readers' attention.

3. In terms of the methodology, I believe the dataset is unique and SEM is the correct model to apply here.

Nonetheless, the empirical part of the paper is completed too much in a rush. It is very difficulty to figure out (1) whether your data collection is unbiased and representative

(2) whether the survey sufficiently measures the key constructs in the hypotheses (3) whether the measures are in coherent with existing empirical analysis

(4) how we can interpret the numerical testing results from business senses - do they support or contradict the arguments of existing literature? (You should consider combining your "Results" and "Discussion" together 4. Although the study itself is very interesting, its overall contributions to entrepreneurship are not clearly stated. Without clear identification of existing research gaps, which should be more that "having

contradictory results" in empirical terms, the 2-paragraph conclusion is very weak without highlighting the value of the research.

Overall, I believe the great potential of this paper, but the logical development of the conceptual framework, as well as the empirical analysis needs substantial development.

Reviewer #2: Review report - RSBE-2019-0061_reviewer

This manuscript considers the mediating effect of network innovation agility (NIA) on the relationship between market orientation (MO), entrepreneurial orientation (EO) and the business performance. What impress me so much is the data collection and analyses in this article. And the comments are more about the use of concepts, logic connections between sentences and the argument structure in a paragraph or a part. The following comments listed parts by parts (abstract, introduction, literature review, hypotheses development, materials and method, result, and discussion).

Comment 1: it will be better that adding something about the main theoretical construct before the description of the research method in this article.

Comment 2: disordered use of concepts especially in the introduction part. Such as, in the first paragraph of the introduction, disordered of concepts and lack of explanations complicate the argument in the introduction and does not justify the aim and scope of this article. disordered use of concepts refers to the use of

"network", "network innovation", and "network innovation agility". All these concepts are directly used in a paragraph without concrete definition and explanation. For instance, the "network" is used in the first an second sentences, and the "network innovation" becomes the main concept immediately in the successive sentence. Furthermore, Because of the missing explanation of concepts, author(s) did not sufficiently justify this research. Since the "network", "network innovation", and "network innovation agility" are the main

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9 keyworks and the core word of the aim and scope of this article. The disorder use of these concepts even confuse reader in

understanding the positioning of this article.

Comment 3: lack of arguments especially in the literature review part. Especially, in the literature review of business performance, network innovation agility, these parts are more like a list of definitions and

measurements. in the 2.1, it is composed by the objective description of previous measurement of business performance. and there is even no argument about the development of study on the business performance.

therefore, there is review about previous literatures and extent studies. meanwhile, author(s) does not argue the choice of business performance measurement in this article.

Suggestion: add lines and sentences between literatures to argue and explain the logic connections.

Meanwhile, add several lines to introduce the argument structure at the beginning of a part.

Comment 4: the theoretical construct is kind of strange. because it did not really frame this part with the traditional argument structure of mediation effect. traditionally, the structure is generally presented as From A to B to C in proposing the mediating effect of B. specially, the first part is about the relationship between A and C. then, we argue the connection between A and B, next will be the connection between B and C. if we follow this logic flows, the "hypotheses development" seems argue about the mediation effect of EO and MO on the relationship between NIA and firm performance.

Comment 5: for the materials and method part, the response rate is not so low. could author(s) give more information about data collection to explain the high response rate? meanwhile, author(s) also can choose to give some evidences or references to explain that the response is validate.

Comment 6: the argument in the discussion part does not argue the mediating effect of network innovation agility on the relationship between EO, MO and the business performance. because there is almost no argument about "network innovation agility" but the combination of "network innovation" and "organization agility". That is to say, we can find the discussion about the effect of "network innovation" and MO, and the effect of " organization agility " on MO, but there is not argument about the effect of NIA on MO. The argument about MO is kind of same as the argument of EO. it makes the following paragraph become a little redundancy and author(s) need prepare another paragraph to discuss the mediating effect of network

innovation agility on the relationship between EO and the business performance. Moreover, the discussion part does not revisit the study's original theoretical motivation.

Minor comment 1: the page number is missing.

Minor comment 2: the citation is not fit the citation format required by the Journal of Small Business &

Entrepreneurship. Such as (Stanley F. Slater & John C. Narver, 1995); (Naala Mohammad & Rosli Mahmood, 2016); Ravi S. Achrol & Philip Kotler (1999).

Entrepreneurship. The main examples are listed as following:

Chen, W., & Chiang, A. (2011). Industrial Marketing Management Network agility as a trigger for enhancing fi rm performance : A case study of a high-tech fi rm implementing the mixed channel strategy. Industrial Marketing Management, 40(4), 643-651.https://doi.org/10.1016/j.indmarman.2011.01.001

Covin, J. G., & Slevin, D. P. (1991). A Conceptual Model of Entrepreneurship as Firm Behavior.

Entrepreneurship Theory and Practice, 7-26.

Dess, G. T. L. and G. G. (1996). Clariting the Entrepreneurial Clarifying IT Construct and Linking Orientation. Academic of Management Review, 21(1), 135-172.

Hassan Saleh Al-Dhaafri Abdullah Kaid Al-Swidi Rushami Zien Bin Yusoff. (2016). The Mediating Role of Total Quality Management between the Entrepreneurial Orientation and the Organizational Performance. The TQM Journal, 28(1).

Hughes, M., Eggers, F., Kraus, S., & Hughes, P. (2015). The relevance of slack resource availability and networking effectiveness for entrepreneurial orientation. International Journal of Entrepreneurship and Small Business, 26(1), 116. https://doi.org/10.1504/ijesb.2015.071323

Khalili, H., nejadhussein, syyedhamzeh, & Fazel, A. (2013). The influence of entrepreneurial orientation on innovative performance. Journal of Knowledge-Based Innovation in China, 5(3), 262-278.

https://doi.org/10.1108/jkic-09-2013-0017.

Kohli, B. J. J. ; A. K. (1993). Market Orientation : antecendents and Consequences. Journal of Marketing, 57(Julyi), 53-70.

Leal-rodriguez, A. L. (2016). Linking Market Orientation , Innovation and Performance : an Empirical Study

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10 on S .... Journal of Small Business Strategy, 26(1), 37-50. https://doi.org/10.13140/RG.2.1.2862.9523

__________________________________________________

3.1. Reviewer’s Comments

Reviewers' comments:

Reviewer #1: Thanks for sharing your work on the role of innovation agility in mediating the contribution of entrepreneurial orientation and market orientation to SMEs' market performance. The research question is novel and interesting. Meanwhile, the Indonesian context also adds enriched contextual flavor to the research. The well-built SEM model provides rigorous methodological approach to analyze the relationship among the variables and support your claims with convincing evidence.

Overall, I believe your research has high potential to contribute the existing entrepreneurship research.

Nonetheless, the elaboration of the paragraphs at the current stage is very ambiguous - it is very difficult to figure out the how your theoretical framework is established and how your empirical analysis is pertinent to the research question:

1 In the introduction, you highlight the research question "this study wants to examine the role of network innovation agility in mediating the relationship between entrepreneurial orientation and market orientation with business performance". Moreover, you provide abundant literature to support the long list of hypotheses. Nonetheless, you need to be aware of which hypotheses are more relevant to the research question and the logical relationships between these hypotheses. At current stage, I rather see the seven hypotheses as separate statements, while you need to make more efforts integrating them together in a comprehensive conceptual framework that directly tackles your research question.

2. The literature review part needs fundamental revision. You've provided long lists of literature on the definitions of each conceptual construct. Nonetheless, you miss identifying how previous literature studies their inter-relationships and where the research gaps are - in this sense, you should consider moving some paragraphs in section "Hypotheses Development" back to the literature review. Moreover, I still don't quite get what "network innovation agility", how it matters to affect the contributions of MO and EO to the business performance, and how practically it is measured. If "network innovation agility"

is the highlight of the paper, definitely, you need to call your readers' attention.

3. In terms of the methodology, I believe the dataset is unique and SEM is the correct model to apply here. Nonetheless, the empirical part of the paper is completed too much in a rush. It is very difficulty to figure out

(1) whether your data collection is unbiased and representative

(2) whether the survey sufficiently measures the key constructs in the hypotheses (3) whether the measures are in coherent with existing empirical analysis

(4) how we can interpret the numerical testing results from business senses - do they support or contradict the arguments of existing literature? (You should consider combining your "Results" and

"Discussion" together

4. Although the study itself is very interesting, its overall contributions to entrepreneurship are not clearly stated. Without clear identification of existing research gaps, which should be more that "having contradictory results" in empirical terms, the 2-paragraph conclusion is very weak without highlighting the value of the research.

Overall, I believe the great potential of this paper, but the logical development of the conceptual framework, as well as the empirical analysis needs substantial development.

Reviewer #2: Review report - RSBE-2019-0061_reviewer

This manuscript considers the mediating effect of network innovation agility (NIA) on the relationship between market orientation (MO), entrepreneurial orientation (EO) and the business performance. What impress me so much is the data collection and analyses in this article. And the comments are more about

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11 the use of concepts, logic connections between sentences and the argument structure in a paragraph or a part. The following comments listed parts by parts (abstract, introduction, literature review, hypotheses development, materials and method, result, and discussion).

Comment 1: it will be better that adding something about the main theoretical construct before the description of the research method in this article.

Comment 2: disordered use of concepts especially in the introduction part. Such as, in the first paragraph of the introduction, disordered of concepts and lack of explanations complicate the argument in the introduction and does not justify the aim and scope of this article. disordered use of concepts refers to the use of "network", "network innovation", and "network innovation agility". All these concepts are directly used in a paragraph without concrete definition and explanation. For instance, the "network" is used in the first an second sentences, and the "network innovation" becomes the main concept immediately in the successive sentence. Furthermore, Because of the missing explanation of concepts, author(s) did not sufficiently justify this research. Since the "network", "network innovation", and "network innovation agility" are the main keyworks and the core word of the aim and scope of this article. The disorder use of these concepts even confuse reader in

understanding the positioning of this article.

Comment 3: lack of arguments especially in the literature review part. Especially, in the literature review of business performance, network innovation agility, these parts are more like a list of definitions and measurements. in the 2.1, it is composed by the objective description of previous measurement of business performance. and there is even no argument about the development of study on the business performance. therefore, there is review about previous literatures and extent studies. meanwhile, author(s) does not argue the choice of business performance measurement in this article.

Suggestion: add lines and sentences between literatures to argue and explain the logic connections.

Meanwhile, add several lines to introduce the argument structure at the beginning of a part.

Comment 4: the theoretical construct is kind of strange. because it did not really frame this part with the traditional argument structure of mediation effect. traditionally, the structure is generally presented as From A to B to C in proposing the mediating effect of B. specially, the first part is about the relationship between A and C. then, we argue the connection between A and B, next will be the connection between B and C. if we follow this logic flows, the "hypotheses development" seems argue about the mediation effect of EO and MO on the relationship between NIA and firm performance.

Comment 5: for the materials and method part, the response rate is not so low. could author(s) give more information about data collection to explain the high response rate? meanwhile, author(s) also can choose to give some evidences or references to explain that the response is validate.

Comment 6: the argument in the discussion part does not argue the mediating effect of network innovation agility on the relationship between EO, MO and the business performance. because there is almost no argument about "network innovation agility" but the combination of "network innovation" and

"organization agility". That is to say, we can find the discussion about the effect of "network

innovation" and MO, and the effect of " organization agility " on MO, but there is not argument about the effect of NIA on MO. The argument about MO is kind of same as the argument of EO. it makes the following paragraph become a little redundancy and author(s) need prepare another paragraph to discuss the mediating effect of network innovation agility on the relationship between EO and the business performance. Moreover, the discussion part does not revisit the study's original theoretical motivation.

Minor comment 1: the page number is missing.

Entrepreneurship. Such as (Stanley F. Slater & John C. Narver, 1995); (Naala Mohammad & Rosli Mahmood, 2016); Ravi S. Achrol & Philip Kotler (1999).

Entrepreneurship. The main examples are listed as following:

Chen, W., & Chiang, A. (2011). Industrial Marketing Management Network agility as a trigger for enhancing fi rm performance : A case study of a high-tech fi rm implementing the mixed channel strategy. Industrial Marketing Management, 40(4), 643-

651.https://doi.org/10.1016/j.indmarman.2011.01.001

Covin, J. G., & Slevin, D. P. (1991). A Conceptual Model of Entrepreneurship as Firm Behavior.

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12 Entrepreneurship Theory and Practice, 7-26.

Dess, G. T. L. and G. G. (1996). Clariting the Entrepreneurial Clarifying IT Construct and Linking Orientation. Academic of Management Review, 21(1), 135-172.

Hassan Saleh Al-Dhaafri Abdullah Kaid Al-Swidi Rushami Zien Bin Yusoff. (2016). The Mediating Role of Total Quality Management between the Entrepreneurial Orientation and the Organizational Performance. The TQM Journal, 28(1).

Hughes, M., Eggers, F., Kraus, S., & Hughes, P. (2015). The relevance of slack resource availability and networking effectiveness for entrepreneurial orientation. International Journal of Entrepreneurship and Small Business, 26(1), 116. https://doi.org/10.1504/ijesb.2015.071323

Khalili, H., nejadhussein, syyedhamzeh, & Fazel, A. (2013). The influence of entrepreneurial orientation on innovative performance. Journal of Knowledge-Based Innovation in China, 5(3), 262-278.

https://doi.org/10.1108/jkic-09-2013-0017.

Kohli, B. J. J. ; A. K. (1993). Market Orientation : antecendents and Consequences. Journal of Marketing, 57(Julyi), 53-70.

Leal-rodriguez, A. L. (2016). Linking Market Orientation , Innovation and Performance : an Empirical Study on S .... Journal of Small Business Strategy, 26(1), 37-50.

https://doi.org/10.13140/RG.2.1.2862.9523

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13 4. Response to Reviewer and Revised Version (5 May 2020)

4.1. Cover Letter

Dear Editor of Journal of Small Business and Entrepreneurship,

At the outset we would like to thank you and the reviewers for having our manuscript reviewed. We have gone through your, and the reviewers’ insightful comments and suggestions, and have made appropriate revisions. We are attaching our response on how the suggestions by the reviewers, and by you have been addressed in the revised version of our manuscript.

We would like to thank the reviewers and yourself extremely for your time and look forward to hearing from you soon.

Sincerely,

The Authors

For: Reviewer 1

Thank you very much for your input. We have improved it by red marking.

1. We have improved the introduction (in red), pages: 1 2. We have improved the literature review (in red), page 2 3. We have added the non-response bias test (in red), page 7

4. The contribution for entrepreneurs and conclusion have been amended (in red), page 12

For: Reviewer 2.

Thank you very much for your valuable comments. We have improved it by red marking.

1. Add theory ideas: we have added on page 3 (in red) 2. We have improved the introduction, page 1 (in red) 3. We have amended the literature review on page 2 (in red)

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14 4. We have added the mediation effect construct (in red), page 3

5. We have inserted the non-response bias test in red, page 7 6. We have improved the mediation effect (in red), page 11

4.2. Revised Manuscript submission

MARKET AND ENTREPRENEURIAL ORIENTATION ON BUSINESS PERFORMANCE: ROLE OF NETWORKS INNOVATION AGILITY

Abstract

This paper aims to examine the effect of market orientation (MO) and entrepreneurial orientation (EO) on business performance (BP) with network innovation agility (NIA) as mediating variable.

The respondents were 302 owners or leaders of fashion SMEs in Central Java, Indonesia. This study used Structural Equation Modeling (SEM) as data analysis. The results showed that market orientation, entrepreneurial orientation, and network innovation agility have a significant effect on business performance. Furthermore, network innovation agility mediates the relationship between market orientation and entrepreneurial orientation on business performance.

Keywords: market orientation, entrepreneurial orientation, networks innovation agility, business performance

1. Introduction

Recently, market orientation has been the focus of marketing literature (Smirnova et

al., 2011). Market orientation is examined with a cultural perspective that focuses on

organizational norms and values that drive behavior including customer orientation,

competitor orientation and inter-functional coordination (Slater & Never, 1990). This market

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orientation is expected to be able to understand customer needs timely, obtain information on the strengths and weaknesses of competitors and coordinate resources effectively to create corporate profits. The market orientation culture is developed by the company to improve business performance.

The relationship between market orientation and business performance has been widely studied by previous researchers, but the results are still contradictory. Some previous studies have found market orientation to be a determinant of business performance (Wiklund

& Shepherd, 2005; Laukkanen et al, 2013; Hussain, 2016; Vega-vázquez, 2016; Buli, 2017;

Naala & Mahmood, 2016). The dimension of market orientation that include customer orientation and inter-functional coordination affect business performance while competitor orientation does not (Wan Daud, Remli, & Muhammad, 2013). Other studies show different results that market orientation does not affect business performance (Leal-rodríguez, 2016;

Mahmoud et al., 2016).

Furthermore, previous studies on the relationship between entrepreneurial orientation and business performance also showed inconsistent results, for example, entrepreneurial orientation can improve business performance (Laukkanen et al, 2013; Zhang et al, 2016;

Lee & Sardeshmukh, 2016; Naala M. I. & Mahmood R. 2016; Hassan et al., 2016) and financial performance (Zehir et al, 2016). Other studies show different results, that entrepreneurial orientation negatively affects financial and operational performance (Vega- vázquez et al, 2016). Innovativeness as a dimension of entrepreneurial orientation also does not affect business performance (Buli, 2017).

Fashion SMEs with limited resources and knowledge are always having difficulty

accessing the market, so it is necessary to build networks to be able to improve their

performance. Business networks have changed very dynamically, thus creativity is needed

to innovate networks to respond quickly to the needs of customers and business partners.

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Therefore, network innovation agility is important to create network value that can respond quickly to the expectations of customers and business partners so that it has an impact on improving business performance. This study tries to add network innovation agility as a mediating variable between entrepreneurial orientation and market orientation on business performance. The results of this study are expected to be a solution to the differences from previous studies.

2. Literature Review 2.1. Business Performance

According to Tzokas et al. (2015), measuring business performance covers broad aspects, including the capabilities of new product performance, market performance, and financial performance. The performance of new product development (NPD) will be successful when the new product meets the objectives, is profitable and successful compared to competing products. Market performance will be successful when it can provide customer satisfaction and value, able to meet the needs and maintain customers, while financial performance is measured through Return on Investment (ROI) and Return on Sales (ROS).

Nuryakin et al. (2018) stated that business performance was the result of the organization's

operational activities which included internal and external results, measured through ROA,

sales growth, market share growth, and profit growth. Furthermore, Sin & Tse (2006)

explained that business performance can be measured through aspects of customer retention,

market share, sales results, sales growth, Return on Investment (ROI), customer satisfaction

and customer confidence. The success of business performance can be influenced by market

orientation (Julia et al, 2008; Yadav & Tripathi, 2014). If market orientation culture that

includes customer orientation, competitor orientation, and inter-functional coordination is

managed properly, it can create superior company performance (Jaiyeoba, 2014; Jogaratnam,

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2017). In this study, business performance is measured based on the perceptions of respondents regarding the financial and marketing conditions. Therefore, business performance is the company's ability to achieve financial performance and marketing performance, this is measured through the indicators of Return on Asset, sales growth, market share growth, profit growth.

2.2. Market Orientation

According to Slater & Naver (1990), a market orientation that includes customer

orientation, competitor orientation, and inter-functional coordination can be used to predict

corporate profits. Customer orientation is directed to understand the target buyer in order to

provide better customer value than competitors. Competitor orientation is intended to

understand the strengths and weaknesses of competitors, both main competitors, and

potential competitors. Inter-functional coordination is used to coordinate resources well in

order to excel in the market. Market orientation emphasizes the extent to which companies

establish customer satisfaction, needs, and desires as the principle of organizing the company

(Kohli & Jarwoski, 1993 ; Kohli, Jaworski, & Kumar, 1993). Furthermore, Yadav & Tripathi

(2014) explained the dimensions of market orientation that include customer orientation,

competitor orientation, and inter-functional coordination have an important role in

improving company performance. In this study, market orientation is the ability to

understand the market that is directed at customer orientation, competitor orientation, and

inter-functional coordination in order to meet the target market. Market orientation is

measured through indicators of focusing on customer needs, observing market changes,

customer satisfaction, sharing competitor information, responding quickly to competitor

strategies, sharing market information between departments, and participating in developing

strategies.

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2.3. Entrepreneurial Orientation

Entrepreneurial orientation becomes the main focus of entrepreneurs (Covin &

Slevin, 1991; Wiklund & Shepherd, 2003). Entrepreneurial orientation has a major contribution to improving company performance (Kusumawardhani & Perera, 2009; Felı &

Rodrigues, 2012; Shehu & Mahmood, 2014). The study of entrepreneurial orientation can be explained through three dimensions of innovativeness, risk-taking, and proactiveness (Miller, 2008). Innovativeness shows the tendency to do new activities and innovation breakthroughs by conducting experiments that are able to produce products and processes with new technology (Lumpkin & Dess, 1996). Risk-taking shows a tendency to devote resources voluntarily to seizing opportunities that might fail (Naman & Slevin, 1993).

Proactiveness shows a tendency to act and anticipate to seek new opportunities in the future, as well as being proactive towards new opportunities to create new products and services for customers who are better than competitors (Lumpkin & Dess, 1996). In this study, entrepreneurial orientation is a managerial strategy that focuses primarily on innovativeness, risk-taking, and proactiveness, as measured through indicators of business innovation with IT based, trying new operating methods, introducing new products and services, the courage to take risks, responding to competing actions, and taking opportunities in uncertainty.

2.4. Network Innovation Agility as a Mediating Variable

Möller & Halinen (2000) argue that relationship marketing theory can be examined

through networks, channels, data-based, and services. Furthermore, Håkansson & Ford

(2002) describe a network-based approach that will create interaction and exchange of

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resources, social exchange, and adaptation among network partners to achieve mutual benefits. Thus, each of them can use their resources by utilizing the network to meet the needs of partners. The network changes very dynamically due to environmental changes, so network actors must be creative in innovating networks to respond quickly to the needs of partners.

Network innovation is a means to obtain efficient new knowledge from business partners (Ahuja, 2000; Kale & Perlmutter, 2000), while agility is very closely related to fast response, time-based competition, flexible maneuverability and unplanned response speed to produce products economically (Sahin, 2000). According to Ravichandran (2018), agility is a company's capability to respond to the speed of environmental change, and agility will be created if there is creativity (Nemkova, 2017). The essence of network innovation agility is not limited to product offerings but includes a broader range of issues related to providing total solutions to customers and partners on a mutually beneficial platform.

According to Baron & Kenny (1986), a variable is called a mediator if it influences the relationship between the independent variable and the dependent variable. This research network innovation agility becomes a mediator when it can influence the relationship between market orientation and entrepreneurial orientation on business performance.

According to Lin (2004), network innovation agility is influenced by a market orientation by

utilizing the network to use resources to meet customer needs. The ability to build wide and

dynamic networks can improve company performance (Mitrega et al., 2017). Creativity to

innovate the network to suit the needs of partners and customers will facilitate the exchange

of resources, and be able to respond quickly to customer needs. Meeting the needs of

customers by utilizing the network will encourage the realization of network innovation

agility. Furthermore, the implementation of the network innovation agility component which

includes speed of responding to market changes, having a network in meeting market

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demand for the products produced, and offering new products faster than competitors will potentially increase business performance.

Environmental uncertainty requires flexibility to respond adaptively to changes in the environment. According to Kusumawardhani & Perera (2009), the dimension of entrepreneurship orientation that includes innovativeness, risk-taking, and proactiveness is not enough to respond to market changes rapidly, due to limited knowledge and resources.

Therefore, it is necessary to build networks with customers and partners to gain access to resources and knowledge. The ability to build a wide and dynamic network is a determinant of business performance (Zhang, 2012; Bucktowar, Kocak, & Padachi, 2015). The implementation of the dimension of entrepreneurship orientation by utilizing a network of entrepreneurs can share risks, gain new knowledge for innovation, be proactive in looking for new opportunities that will encourage the realization of network innovation agility. Thus, network innovation agility which includes speed of responding to market changes, having a network to meet market demand for products, and offering new products faster than competitors, has the potential to improve business performance.

3. Hypothesis Development

3.1. Market Orientation and Networks Innovation Agility

Ravi & Kotler (1999) stated that network marketing aims to provide resources and information flow facilities, coordinate and expand networks with business partners, and maintain a culture of cooperation in business networks. By integrating activity sharing, this will adjust customer competencies and preferences. The involvement of all parties in the network is very necessary to support network innovation in order to suit its competencies.

The network is used as an effort to empower resources owned to meet customer needs.

According to Ravi & Kotler, (1999), company participation in networks began to shift from

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the product concept to marketing orientation. Furthermore, network competence is needed to achieve greater market opportunities, while the performance of innovation is determined by the market orientation in the organization (Han & Srivastava, 1998). Market orientation can improve network innovation agility by utilizing networks to use resources to meet customer needs (Lin, 2004). The developed market orientation culture makes creative companies innovate so that they become more responsive, competent, flexible and act faster (Kuleelung, 2015). An increasingly broad market orientation requires dynamic networks so creativity to innovate networks is urgently needed to be able to respond quickly to the needs of network partners and produce mutually beneficial network values. Hence, market orientation is possible to trigger the realization of network innovation agility.

H1: The higher the MO, the higher the NIA

3.2. Entrepreneurial Orientation and Network Innovation Agility

Entrepreneurial orientation is related to business networks (Madsen, 2007).

Entrepreneurial orientation has limited knowledge and market access so that the ability to build networks is needed (Welch & Welch, 2004; Zain & Ng, 2006; Kusumawardhani &

Perera, 2009). The needs of customers and partners change so dynamically, hence,

companies must develop networks to provide the best service. Creative entrepreneurs who

do network innovation according to the needs of partners will establish an ideal network with

business partners and gain new knowledge (Ahuja, 2000; Kale et al., 2000) and overcome

innovation problems (Gilsing & Nooteboom, 2004). Entrepreneurial orientation that

includes innovativeness, risk-taking and proactiveness requires dynamic networking

according to the needs of customers and partners to share risks, share knowledge for

innovation and be able to be more proactive. Creativity in network innovation encourages

the agility of network innovation and generates network value for customers and partners.

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Thus, the stronger entrepreneurship orientation is possible to increase network innovation agility.

H2: The higher the EO, the higher the NIA

3.3. Market Orientation and Business Performance

Some previous studies showed that market orientation can improve business performance (Yadav & Tripathi, 2014; Widana & Toha, 2015;Takata, 2016). A study in small and medium enterprises showed that market orientation has a large role in improving business performance (Julia et al, 2008). Likewise, market orientation can be used to predict business performance (Julia et al., 2008; Yadav & Tripathi, 2014). If marketing policies that focus primarily on customer orientation, competitor orientation, and inter-functional coordination are managed properly, it can create superior company performance (Jaiyeoba, 2014;

Jogaratnam, 2017). Previous studies showed that market orientation can improve market performance (Peter & Danskin, 2010;Oudan, 2012). Companies that are able to understand customer needs, observe market dynamics, respond to competitor strategies and share resources and information between functions will be better equipped to face business challenges and create customer value. Hence, market orientation has the potential to improve business performance.

H3: The higher the MO, the higher the BP.

3.4. Entrepreneurial Orientation and Business Performance

Superior business performance in a turbulent environment is largely determined by

the company's ability to integrate market orientation and entrepreneurial orientation in

business operations (Buli, 2017). The higher the entrepreneurial orientation, the higher

business performance (Zhang, 2012; Farsi et al., 2013; Shehu & Mahmood, 2014; Gupta &

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Batra, 2016; Naala M.. I. & Mahmood R., 2016) and higher financial performance (Jiang &

Wang, 2016). Furthermore, entrepreneurial orientation can improve business performance quickly when the intensity of competition is low (Gupta & Batra, 2016), as well as entrepreneurial orientation which is carried out proactively on external stimuli that can improve business performance (Ribau & Moreira, 2017). Therefore, an entrepreneurial orientation which includes innovation, risk-taking, and proactiveness has the potential to improve business performance.

H4: The higher the EO, the higher the BP

3.5. Networks Innovation Agility and Business Performance

Creative and innovative is one of the determinants of organizational performance (Liao, Chang & Katrichis, 2011) while innovation performance will affect organizational performance improvement (Salim & Sulaiman, 2011). Companies that can develop networks with partners effectively can encourage company growth (Širec & Bradač, 2009). There is a strong relationship between innovation capability and organizational agility to improve company performance (Ravichandran, 2018). High innovation capability will encourage companies to be more creative in utilizing equipment and networks to be able to respond quickly to the needs of partners so that the impact on improving company performance (Ravichandran, 2018). Agility is needed by the company so that it can respond quickly to customer demand and can improve organizational performance, such as sales growth, market share, ROI, and profit growth (Chen et al., 2013).Therefore, if a creative company innovates a network to fit the needs of partners, it will be able to respond quickly to the needs of network partners and customers so that it has the potential to improve business performance.

H5: The stronger the NIA, the higher the BP

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3.6. Network Innovation Agility, Market Orientation, and Business Performance

Networks innovation becomes a means for obtaining new knowledge from business partners and a means for adapting quickly to market changes (Ahuja, 2000; Kale et al., 2000).

Companies that are creative in doing network innovation according to the needs of partners will be able to respond quickly to market changes. Furthermore, the information system developed by the company can strengthen networks and improve company performance when the company has a network innovation agility (Chen & Chiang, 2011). According to Lin (2004), market orientation influences networks innovation agility by utilizing networks to meet customer needs. The ability to build a wide and dynamic network is one of the determinants of company performance (Mitrega et al., 2017). A market orientation that is directed to meet customer needs by effectively utilizing the network can meet the needs of network partners and customers. Companies that want to respond quickly to customer needs must be more creative through network innovation according to the needs of partners and customers. Furthermore, network innovation agility developed through network effectiveness in meeting product demand in the market, speed of responding to market changes, speed of offering new products compared to competitors will potentially increase business performance.

H6: NIA mediates the relationship between MO and BP.

3.7. Networks Innovation Agility, Entrepreneurial Orientation, and Business Performance

A strong entrepreneurial orientation requires broad network support and the success of

building a broad network will have an impact on improving organizational performance

(Ofem, 2014). Likewise, a strong entrepreneurial orientation will encourage increased

innovation capabilities so that it impacts on company success (Parkman, Holloway, &

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Sebastiao, 2012). The relationship between entrepreneurial orientation and business performance is largely determined by network capability (Zhang, 2012). Whereas the dimension of entrepreneurial orientation which includes innovation, risk-taking, and proactiveness has a relationship with the network Slevin & Covin (1988). According to Hughes et al. (2015), entrepreneurial orientation that is supported by effective networking can improve company performance, while creativity is the driving force for creating organizational agility (Nemkova, 2017; Asad et al., 2016). Entrepreneurial orientation can utilize networks to meet customer needs. The ability to use the network with partners can be used to share risks, gain new knowledge for innovation, and be more proactive in seeking new opportunities. The network changes very dynamically, so companies must be creative in doing network innovations to meet the needs of network partners and customers to have an impact on improving business performance. Hence, a strong entrepreneurial orientation triggers the creation of networks innovation agility that has the potential to improve business performance.

H7: NIA mediates the relationship between EO and BP.

4. Research Method

4.1. Sample and data collection technique

This research was conducted in fashion SMEs in Central Java, Indonesia.

Respondents of this study are owners or leaders of fashion SMEs who had a minimum of 3 years business managing experience. Based on the observations of researchers, the owners or leaders had knowledge and insight about market orientation, entrepreneurial orientation, network innovation agility, and business performance. Data collection technique was done by distributing questionnaires and face to face with the owners or leaders of fashion SMEs.

Face-to-face interviews were conducted in order to obtain accurate information and facilitate

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understanding of questionnaires distributed to respondents. The researchers distributed 390 questionnaires but questionnaires which returned were 322 questionnaires and after being selected and validated, only 302 (77.4%) met the criteria. The respondents of this study were the owners or leaders of the fashion SMEs consisting of 60.4% women and 39.6% men and aged between 23 to 52 years. The experience in managing a business is on average 4 to 15 years.

4.2. Non-Bias Response Test

Non-response bias test is used to determine the consistency of the answers of respondents who return the questionnaire on time and late. Independent sample t-test was used to test 259 data returned on time and 43 data returned late. Table 4.1. shows that all variables have a p-value > 0.05, so it can be concluded that there is no biased response to the respondents' answers.

Table 1. Non-Bias Response Test Results Variable Returned

Questionnaire

Mean Std. Dev. Levene’s Test for Equality of Variance

F p_value

MO On time 53.24 4.324 0.634 0.634

Late 52.21 4.144

NIA On time 38.56 3.145 0.076 0.784

Late 37.33 3.212

EO On time 45.38 3.479 2.677 0,103

Late 44.38 2.760

BP On time 31.97 2.414 0.041 0.840

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Late 31.72 2.464

4.3. Measurement

Measurements of constructs used a scale of 1 to 5, score (1) for strongly disagree and score (5) for strongly agree. Market orientation is measured through eight indicators adopted from (Lin, 2004), namely focus on customer needs, observe market changes, customer satisfaction, share competitor information, quickly respond to competitors' strategies, share market information among departments, and participate in strategizing. Entrepreneurial orientation is measured through six indicators developed from Slevin & Covin (1988) and Miller (2008), namely business innovation according to IT, trying new operating methods, introducing new products and services, courage to take risks, responding to competitors' actions, and taking opportunities in uncertainty. Network innovation agility is measured through five indicators developed from Lin (2004), namely being responsive to market changes, entering the market with new products faster than competitors, having a new product network entering the market, having a network to meet market demand, and having a product network mass. Business performance is measured through four indicators adopted from Nuryakin at al. (2018), namely sales volume growth, profit growth, sales growth, and market share growth.

4.4. Data analysis and Measurement models

This study used the Structural Equation Model (SEM) approach to process the collected

data and test the hypotheses. Through the SEM approach, it will be easier for researchers to

test the relationship between MO, EO, NIA, and BP. SEM analysis is done through two types

of variables, namely latent variable and observed variable. The measurement of latent

variable is done through indicators as a reflection of the construct developed while the

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observed variable can be known directly. While the model compatibility evaluation can be done through several goodness-of-fit indices, namely normal fit index (NFI); comparative comparison index (CFI); Tucker-Lewis Index (TLI); root mean square error of approximation (RMSEA); and the Chi-square statistic.

Table 2. Confirmatory Factor Analysis Result for the Measurement Model

Variable and Indicator Loading

factor

p- value Market orientation

The company focuses on customer needs and has knowledge about customers

Companies know the market structure and observe market dynamics

Companies have the same culture to satisfy customers The company has a variety of competitor information culture Companies quickly respond to competitors' strategies

Companies have a culture of sharing market information between departments (between members)

The company encourages all departments (among members) to participate in strategizing

Entrepreneurial orientation

The company always emphasizes the importance of business innovation according to technological developments

The company actively tries new operating methods

The company always introduces new products and services Companies dare to take calculated risks to realize new ideas.

The company actively responds to competitors' actions

Companies dare to take advantage of opportunities in uncertainty situations

Network Innovation Agility

The company is always responsive to market changes

Companies are able to enter the market with new products faster than competitors

The company has a network to introduce new products to the market

The company has a network that is able to meet market demand according to the customer's expectations

The company has a network of mass-produced new products.

Business Performance

In my company, every year experiences sales volume growth In my company, every year experiences profit growth

In my company, every year experiences sales growth

In my company, every year experiences market share growth

.661 .760 .676 .719 .676 .757 .687

.723 .697 .648 .664 .666 .689 .686 .675 .681 .689 .691 .775 .780 .663 .749

0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00

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X² = 224.183; df =203; Prob = .147 ; GFI = .936; AGFI = .920; TLI = .990; CFI =.991;

RMSEA = 0.019; CMIN/DF: 1.104

In table 2, it is explained that the value of the loading factor of all indicators is > 0.5 and p-value is < 0.05. Therefore, all indicators are valid. Table 3 describes that all constructs indicate reliable or all indicators of latent variables measured have internal consistency (Hair, 2010). The test results of all indicators measured are in accordance with internal consistency standards, namely reliability (CR) > 0.6, and Variance Extracted (VE) > 0.5. Furthermore, variables of market orientation, entrepreneurial orientation, network innovation agility, and business performance have AVE values > 0.5 and CR > 0.7.

Table 3. Construct Reliabilities and AVE

N = 302 1 2 3 4

Market orientation (MO) .876

Entrepreneurial Orientation (EO) .397 .860

Network Innovation Agility (NIA) .337 .389 .809

Business Performance (BP) .404 .391 .497 .827

Average Variance Extracted (AVE) .504 .506 .567 .545

5. Result

There are several recommendations that must be fulfilled in testing the full model through

the SEM approach. The test results for the Goodness-of-Fit index are good and in accordance

with the criteria recommended by SEM. X

²

value = 224,183 and not significant at α: 0.05,

GFI index: 0.936; AGFI: 0.920; TLI: 0.990; CFI: 0.991, all values meet the SEM

requirements as recommended, namely ≥ 0.90. RMSEA value: 0.019 smaller than 0.08 and

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CMIN / DF 1.104 less than 2.00. Therefore, a decent model is used to test the relationship between research variables.

Table 4. Hypothesis Test Relationship

specifications

Standardized β

Unstandardized β

SE C. R.

MO -> NIA .224 .239 .078 3.056

EO -> NIA .338 .340 .078 4.374

MO -> BP .203 .227 .079 2.883

EO ->BP .178 .118 .078 2.404

NIA -> BP .351 .368 .081 4.518

Figure 1 and table 4 show that MO has a significant effect on NIA (Std β = .239, CR = 3.056, p <0.05). Furthermore, the effect of EO on NIA (Std β = .340, CR = 4.374, p <0.05), then MO on BP (Std β = .227, CR = 2.883, p <0.05), EO on BP (Std β = .118, CR = 2,404, p

<0.05), NIA on BP (Std β = .268, CR = 4,518, p <0.05). Thus H1, H2, H3, H4, H5 are

accepted. Sobel test is used to test the influence of MO on BP mediated by NIA. The results

of Sobel test: 2.540 and p <0.05, this condition indicates that NIA mediates the effect of MO

on BP so that H6 is accepted. Furthermore, the effect of EO on BP mediated by NIA, the

results of Sobel test: 3.145 and p <0.05 can be concluded that NIA mediates the effect of EO

on BP so that H7 is accepted.

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Figure 1. Structural Model

6. Discussion

Increasingly market orientation requires dynamic network support to respond quickly to the needs of network partners and mutual benefits. Creativity in managing the network is very much needed so that the network can be utilized optimally to use its resources to meet customer expectations. A high market orientation encourages the realization of network innovation agility, so that it can respond quickly to market changes and create mutually beneficial network values. This is in line with the findings of Lin (2004) that market orientation can improve network innovation agility by utilizing networks to use resources to meet customer needs. The developed market orientation culture makes the company agile to innovate so that it becomes more responsive, competent, flexible and acts faster in responding to customer needs (Kuleelung, 2015).

Entrepreneurial orientation encourages the creation of dynamic networks that match

the needs of partners and by utilizing entrepreneurship networks, it can share risks, share

knowledge and be more proactive in seeking new opportunities. Creativity in carrying out

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network innovations to suit the needs of partners can produce network value for customers and partners. A high entrepreneurial orientation can encourage the realization of networks innovation agility. This result is in line with findings that networks innovation as a means to obtain new knowledge efficiently from business partners (Ahuja, 2000; Kale et al., 2000) and overcome innovation problems (Gilsing & Nooteboom, 2004). Good network intensity can increase innovation agility, both exploratory innovation and exploitative innovation (Bi, Hu, & Zhang, 2017).

Market orientation is directed with a focus on customer needs, observing market changes, customer satisfaction, sharing competitor information, responding quickly to competitor strategies, sharing market information among departments, and participation in developing strategies can improve business performance. Companies that can understand customer needs, competitors' strengths and weaknesses as well as inter-functional coordination will be better prepared to face the environmental changes and develop new strategies to win the competition and will drive business performance improvement. These results support findings that state market orientation can improve business performance (Julia et al, 2008; Yadav & Tripathi, 2014; Widana & Toha, 2015; Takata, 2016).

Entrepreneurial orientation owned by the leader or owner of fashion SMEs that are implemented through the dimensions of innovation, risk-taking, and proactiveness can improve business performance. Companies that want to innovate, try new ideas, provide new services, and are able to bid on new products in the market earlier than competitors according to customer needs, they will be able to improve business performance. These results support the findings of previous studies that entrepreneurial orientation is the main key that determines business performance (Mahmood, 2013). The higher the entrepreneurial orientation, the higher the business performance (Gupta & Batra, 2016; Naala M. I. &

Mahmood R., 2016).

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Network innovation agility can improve business performance. Creativity for network innovation is needed by companies to be able to respond to the needs of network partners quickly. Companies that are able to utilize business networks optimally will be able to respond to market demand quickly, both in demand for new products and existing products so that it has an impact on increasing business performance. These results are in line with findings that companies that are able to develop networks well can encourage company growth (Širec & Bradač, 2009) and organizational agility can improve company performance (Ravichandran, 2018).

Networks innovation agility is able to mediate the relationship between market orientation and business performance. Market orientation developed through customer orientation, competitor orientation, and inter-functional coordination requires broad and dynamic network support. Companies can use the network to use their resources to meet customer expectations. Networks can change dynamically, thus network innovation creativity is needed in order to respond quickly to customer needs. Networks innovation agility is also needed to gain new knowledge with partners and as a means of adapting to market changes so that they can respond quickly to market needs. Therefore, a high market orientation will encourage the realization of network innovation agility and have an impact on improving business performance. Companies can strengthen networks with partners and improve company performance when companies have network innovation agility (Chen &