Isolating mechanism as a mean to improve performance of SMEs

Abstract

Entrepreneurship is a key factor determining the capability activities of the company. For small and medium firms, networking is considered as an important variable, particularly concerning the fact that the economic environment is becoming increasingly competitive and they are frequently having more dynamic environment uncertainty and limited resources to compete. This study examines the effect of entrepreneurial orientation, isolating mechanism, quality of strategy as independent variables, and networking capabilities as an intervening variable on marketing performance of batik Small and Medium-sized Enterprises (SMEs) in Central Java, Indonesia. The participants of this study were 160 owners and managers of batik SMEs. Data were collected using Likert scale questionnaire consisting of statements about variables. The data was analyzed using Structural Equation Modeling AMOS. The findings of the study show the direct positive effect of entrepreneurial orientation and quality of strategy on networking capabilities and networking capabilities on marketing performance. This study discusses important managerial and future research implications of findings. The originality of this study lies on the consideration of isolating mechanism and quality of strategy in improving networking capabilities of SMEs.