AN Rahmadi, B. Dewandaru, Effect of Market Orientation and Innovation toward Competitive Advantage in Business Street Food at Jl. Pahlawan Kusuma Bangsa Kediri City 135135 Effect of Market Orientation and Innovation toward Competitive Advantage in Business Street Food at Jl. Pahlawan Kusuma Bangsa Kediri City AN Rahmadi, B. Dewandaru Faculty of Economics, University of Kadiri e-mail: afifnur@unik-kediri.ac.id Abstract: This study aims to determine the effect of market orientation and innovation on competi- tive advantage partially and simultaneously. The population in this study are MSME entrepreneurs who sell food on Pahlawan Kusuma Bangsa Street, Kediri, with a sample size of about 100 respon- dents. Based on the results of data analysis and discussion conclusions can be drawn that partially market orientation and innovation posited with the highest or dominant value is market orienta- tion. While simultaneously market orientation and innovation together affect competitive advan- tage. This is very good, by increasing market orientation and innovation, the company’s competi- tive advantage will also increase. Therefore, market orientation and innovation variables are always improved so that food entrepreneurs who are on the way of the Heroes of Kusuma Bangsa can survive and increase competitive advantage. Keywords: market orientation, innovation, competitive advantage INTRODUCTION Kediri City has become one of the cities that has succeeded in exploring the potential and excellence of the region to advance the welfare of the community and the area. Micro, small, and medium enterprises (MSMEs) have an essential contribution in helping to increase regional income and can improve the welfare of the people of Kediri City. Besides, MSMEs that are more flexible can help create jobs for the community so that they can reduce unemploy- ment. In 2018, the City of Kediri also managed to reduce the poverty rate by 7.68%. The re- duction in poverty in the City of Kediri is below the national achievements of 9.82% and the achievements of East Java by 10.98%. This shows that MSMEs in the City of Kediri is stretching and have a strategic role in fighting poverty and unemployment with a total of 38,806 businesses. “The large number of MSMEs that have similar products will un- doubtedly produce competition that cannot be avoided, especially in the culinary field. MSMEs must be able and ready to compete with many competitors, both inside and outside the region. Therefore, to win the competition, the com- pany must have the ability to create a competi- tive advantage. Competitive advantage relates to how a company chooses and implements business strategies in its business [1]. The development of market orientation and innovation is part of the main component in increasing competitive advantage. Market orientation requires adequate resources to cre- ate a sustainable competitive advantage. The market orientation, which includes customers and competitors, requires companies to under- stand customer needs and provide better value than competitors [2]. In addition to being mar- ket-oriented, companies must continue to inno- vate by making improvements and creating new ideas to stay ahead of the competition. Innova- tion is the key and source of strength to achieve a competitive advantage and become a winner Business and Finance Journal, Volume 6, No. 2, October 2021 136 in competition in the global market circle. This is supported by [3], which states that market orientation and product innovation together have a positive effect on competitive advantage. Prod- uct innovation has a positive impact on com- petitive advantage. The statement is following the results of research by [4], [5], [6], [7], [8], [2], [2] and [3] which show product innovation has a positive effect on competitive advantage. Based on the background described above, the purpose of this research is to find out the influence of market orientation and innovation on competitive advantage in the Street Food business on Jl. Pahlawan Kusuma Bangsa Kediri City. THEORY STUDY Competitive Advantage Competitive Advantage According to [9], competitive advantage is an advantage over com- petitors obtained by offering more value to consumers, either through lower prices or by providing more benefits that support higher pricing. [9] explains that a competitive advan- tage is the heart of marketing performance to face competition. Competitive advantage de- fined as a benefits strategy of companies that collaborate to create competitive advantages that are more effective in their markets. Com- petitive advantage grows from the values or benefits created by the company for its buyers. Customers generally prefer to buy products that have more value than they want or expect. Market Orientation Market orientation is a business culture where the company commits to continue to be creative in creating superior value for custom- ers. According to Bharadwaj Varadarajan and Jayachandran [4], market orientation is a set of concrete actions that enable companies to main- tain variations in market demand and supply and provide appropriate responses to various changes that occur. [10] defines market orien- tation as a process and activity related to cus- tomer creation and satisfaction by continuing to assess customer needs and wants. Market-ori- ented companies will continue to seek effi- ciency and create more value for buyers in the hope of creating a competitive advantage and providing long-term benefits for the company. According to [11], market orientation consists of three indicators, namely: Customer orienta- tion defined as an adequate understanding of customer purchase targets to create superior value for buyers continuously. The Knowledge here includes an understanding of the entire value chain of the buyer, both at the latest and at the time of its development in the future. This effort can achieve through the process of finding information about customers [11]. Based on some of the opinions above, the researcher concluded to measure market orientation, the indicators used in this study were customer orientation, competitor orientation, and market information according to [11] theory. Innovation Innovation is the process of changing trans- form creative ideas into a product or method useful work, [12] . Innovate a company that will guarantee the company’s ability to com- pete, [13]. From some of the above understanding, in- novation can be interpreting as a breakthrough in products or services implemented by a com- pany for the sustainability of its business. Com- panies that can innovate highly will be more suc- cessful in adapting to their environment and con- AN Rahmadi, B. Dewandaru, Effect of Market Orientation and Innovation toward Competitive Advantage in Business Street Food at Jl. Pahlawan Kusuma Bangsa Kediri City 137 tinue to develop new capabilities to compete su- periorly. Product innovation is a combination of various processes that affect one another [14]. RESEARCH METHODS The method used in this research is quan- titative research methods. The population in this study is MSME entrepreneurs in street food, Jl. PK Bangsa Kediri City. Data collection techniques using probability sampling [15] In obtaining data from respondents used inter- views, literature studies, observations, and dis- tributing questionnaires based on indicators of each variable using a Likert measurement scale 1-5. From the data collected, data analysis car- ried out using the SPSS (Statistical Package for Social Science) program. This analysis is car- ried on in several stages of multiple linear regression analysis is a means of forecasting the influence of two or more independent variables on the dependent variable to prove the pres- ence or absence of a functioning relationship or causal relationship between two or more inde- pendent variables with one dependent vari- able[15]. The purpose of this analysis tool is to determine the magnitude of the effect caused by market orientation and innovation on com- petitive advantage using multiple regression equations. Furthermore, the hypothesis test uses the t-test and the F-test. RESULTS AND DISCUSSION This study uses 100 respondents taken from MSME entrepreneurs who sell perma- nently along the PK Bangsa road. The City of Kediri both sells during the day and night. This research was conducted from February to March 2020. The results of the validity test of this study showed that the results of the questionnaire from the variables of market orientation, inno- vation, and competitive advantage were declared valid. The reliability test of all questionnaires showed a fairly large alpha coefficient where the alpha coefficient was above 0.60, so that it could be said that all measurement concepts from the questionnaire were reliable. Data pro- cessing that has been obtained is tested using multiple linear regression. Then several steps are carried out to find the relationship between the independent variable and the dependent variable through the relationship between Mar- ket Orientation and Innovation to competitive advantage. So we can get the multiple regres- sion coefficient value where an equation Y = 5.710 + 0.727 X 1 + 0.308 X 2 + e appears. From the above equation, it can be interpreted that constant á = 5,710 means that if there is no change in market orientation, innovation, and competitive advantage, the competitive ad- vantage variable will increase by 5,710 units. If the market orientation variable rises by one group, competitive advantage will increase by 0.727 units. Next, if innovation rises by one unit, competitive advantage will increase by 0.308 units. Table 1 t-Test Coefficientsa Model Unstandardized Coefficients Standardized Coefficients T Sig. B Std. Error Beta 1 (Constant) 5.710 1.154 4.947 .000 X1 .727 .063 .686 11.496 .000 X2 .308 .063 .291 4.882 .000 a. Dependent Variable: Y Source: Primary data by research (2020) The next results of the partial test or t-test can be concluded that the variables consisting of market orientation and innovation have a Business and Finance Journal, Volume 6, No. 2, October 2021 138 partially positive effect on competitive advan- tage in the street food business in PK Bangsa Kediri City. Of the variables that influence dominantly is market orientation. The previous analysis of supports this research, [16], where the results of his study show that market orien- tation and innovation influence competitive ad- vantage. To test the next hypothesis, which is to determine the effect of market orientation and innovation simultaneously influence competi- tive advantage, the results of the independent variables are less than significant á (0.05). This shows that the hypothesis is accepted. 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