Indonesian Journal of Innovation and Applied Sciences (IJIAS), 1 (1), 19-30

Volume 1 Issue 1 February (2021) DOI: 10.47540/ijias.v1i1.158 Page: 19 – 30

The Effect of Business Orientation on Small Business Performance in
Kendari City

Riski Amalia Madi1, Buyung Sarita2, Agustinus Tangalayuk3, Ece Yulianti4
1,2,3,4Department of Management, Universitas Halu Oleo, Indonesia
Corresponding Author: Riski Amalia Madi; Email: riski.amalia98@yahoo.com

A R T I C L E I N F O A B S T R A C T

Keywords: Entrepreneurship
Orientation, Innovation, Performance,
Small Business.

Received : 18 October 2020
Revised : 28 January 2021
Accepted : 08 February 2021

Small businesses engaged in the food industry sector in the city of Kendari is a
business activity that is broadly classified as small and is built by individuals or
middle-to-lower groups. The purpose of business development is to earn profits
with different levels of performance. One factor that can affect performance is the
dimension of entrepreneurial orientation which consists of innovation, proactivity,
risk-taking, competitive aggressiveness, and autonomy. The purpose of this study is
to examine and provide empirical evidence about the effect of entrepreneurial
orientation on the performance of small businesses. The sampling technique in this
study uses the probability sampling technique. The analysis used is quantitative
analysis using multiple linear regression analysis and quantitative data processing
using SPSS 24.0. The results of the analysis using multiple linear regressions found
that innovation, proactivity, risk-taking, and competitive aggressiveness have a
positive and significant effect on the performance of Small and Medium
Enterprises. While autonomy has a positive and not significant effect on the
performance of small businesses.

INTRODUCTION
The company was founded to increase the

welfare of the owners. To achieve these objectives
the company must be managed properly so that
expectations can be realized. One way to find out
the achievement of company goals is to look at the
company's performance. Company performance is a
level of work results achieved by an organization in
an operational period compared to the
predetermined targets, standards, and criteria
(Siegel and Marconi, 1989). Company performance
is known through the disclosure of company
performance contained in the company's financial
statements generated within a certain period.
Chakravarthy and Balaji (1986) stated that company
performance is a construct that is commonly used to
measure the impact of a corporate strategy
orientation.

Economic globalization that occurs has an
impact on changes in the business environment and

increasingly rapid competition and the emergence
of new competitors have changed the market
dynamically, accordingly companies are required to
always be proactive in responding to various
dynamic changes, by creating and developing
business strategies. Such dynamic conditions are
only companies that can produce quality goods and
services that can be accepted by the global market.
Important issues related to these conditions include
the fast-changing market, the strategic process must
be designed for continuous change and rapid
adjustment, speed and assertiveness are key
qualities for success (Means and Faulkner, 2000).
Porter (1980) said that competitive advantage is at
the heart of a company's performance to compete
and develop from the value that a company can
create for its customers and can defend itself from
market competitive pressures.

One sector that supports the economy in
Indonesia is small and medium enterprises (SMEs)

INDONESIAN JOURNAL OF INNOVATION AND APPLIED SCIENCES (IJIAS)
Journal Homepage: https://ojs.literacyinstitute.org/index.php/ijias
ISSN: 2775-4162 (Online)
Research Article

https://doi.org/10.47540/ijias.v1i1.158
https://doi.org/10.47540/ijias.v1i1.158
https://doi.org/10.47540/ijias.v1i1.158
https://doi.org/10.47540/ijias.v1i1.158
mailto:riski.amalia98@yahoo.com
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http://issn.pdii.lipi.go.id/issn.cgi?daftar&1587190067&1&&2020

Indonesian Journal of Innovation and Applied Sciences (IJIAS), 1 (1), 19-30

because through this sector all aspects related to
human life patterns are sourced, starting from the
consumption, food, and housing sector. In terms of
consumption, SMEs are increasingly involved in an
active role, such as the processing of agricultural
products, grain, food production, and so on. And
many other sectors fill the production traffic
activities.

Small and medium enterprises are always
described as a sector that has an important role in
economic development in Indonesia because it can
absorb a lot of labor. The role of SMEs becomes a
priority part in every development planning stage
which is managed by two ministries, namely the
Ministry of Industry, and the Ministry of
Cooperatives and SMEs.

Small and medium enterprises (SMEs) are
catalysts for national economic growth and
development because of their significant
contribution to poverty alleviation and GDP growth,
production diversification, and job creation in
developed and developing countries. SMEs are
expected to increasingly play a role in reducing
unemployment and can help the economy of a
region to increase income and income distribution.
Although SMEs play an important role in the
development of a country's economy, SMEs are still
vulnerable because of limited resources if compared
to larger companies (Carland et. al, 1984).

For a successful business to run well, an
entrepreneur is expected to have entrepreneurial
abilities that are in line with the concept of entre-
preneurial orientation. Approach in entrepreneurial
orientation based on Resource-Based View (RBV),
namely all resources (resources) such as expertise,
organizational processes, attributes, information,
and knowledge that are controlled by the company
so that the company can compile and implement
strategies to improve efficiency and effectiveness
(Barney, 2001).

Several previous studies have shown that the
role of resources as a determinant of business
performance has been well proven (Nasution et al.,
2011). Zulfadil further (2010) explains the findings
of his research that business success certainly

requires the ability of an entrepreneur (entre-
preneur) to run his business. For the business to run
successfully, an entrepreneur is expected to have the
ability to apply entrepreneurial knowledge that is in
line with the concept of entrepreneurial orientation.

Entrepreneurial action has been believed in the
RBV as an additional capability that can provide
diversity and value to the company, as well as
making an important contribution to the creation of
a competitive advantage of the company (Barney,
2001; Edelman et al., 2005 and Covin et al., 2006).
This conception is related to entrepreneurial
strategies that focus more on the entrepreneurial
process (Wiklund, 1999). The essence of this
conception, that companies that have been
entrepreneurially oriented, always innovate
products, processes, and managerial consistently, be
autonomous, dare to take business risks, and be
proactive in facing competition.

Covin and Slevin (1991) and Miller et al.
(2005) also added that entrepreneurial-oriented
companies are always successful in finding new
opportunities in their business activities and
strengthening their competitive position in the
market. Zimmerer (2005) also adds that entre-
preneurial-oriented companies can potentially
produce more favorable work variations in the
length. Bearing in mind the importance of
implementing entrepreneurial orientation in
achieving competitive advantage and business
success, SMEs need to develop entrepreneurial
orientation in their business activities. Entre-
preneurial orientation can also directly impact the
improvement of business performance (Wiklund,
1999; Wiklund & Shepherd, 2003; Lumpkin et al.,
2005; Home, 2010; and Nasution et al., 2011).

Various concepts and research in the field of
entrepreneurship have been able to explain well the
importance of the role of entrepreneurial orientation
on business performance (Lumpkin et al., 2005; Li
& Huang, 2008). Nasution Research (2010)
examines the impact of entrepreneurial orientation
on business performance by identifying
entrepreneurial orientation consisting of elements
(1) autonomy (2) risk-taking and (3) proactiveness.

Indonesian Journal of Innovation and Applied Sciences (IJIAS), 1 (1), 19-30

In another study, the findings of Covin & Slevin
(1991) indicate that small entrepreneurial
companies are seen as more capable of producing
better business performance.

Research conducted by Home (2010) also
states that entrepreneurial ability as reflected by
managerial behavior is an important determinant for
increasing business growth or business perfor-
mance. Similar research was also carried out by
Hidayatullah (2011) and Chadwick et al (2004) but
the findings found that orientation entrepreneurship
has no significant effect on business performance.
Research by Wambugu and Wanja (2016) shows
that entrepreneurial orientation has a significant
effect on the performance of agro-SMEs in terms of

growth and profitability (β = 0.536, p <0.001, t =
7.1135).

Hughes and Morgan's research (2007) shows
the results that indicators of proactive attitude and
innovation have a positive effect on business
performance while indicators of courage to take
risks have a negative relationship on business
performance. However, the results of Raymond C.
Rody and Timothy M. Stearns (2013) research show
that innovation has a negative effect on company
performance, while taking risks has a positive effect
on company performance.

The results of previous studies that have not
been consistent are interesting research gaps for
further study. Fairoz & Hirobumi's research (2010)
about entrepreneurial orientation with indicators:
attitudes of autonomy, proactive attitudes, and
courage in taking risks. The results of research
conducted on 25 SMEs in Sri Lanka showed the
results that entrepreneurial orientation significantly
influences business performance. The same study
conducted by Etienne St-Jean and Luc LeBel (2014)
results of the study showed that managerial
autonomy had a positive effect on the performance
of SMEs in Canada. While research conducted by
Arshal et al., (2013) shows that autonomy has a
negative effect on business performance in
Malaysia.

Basically, entrepreneurship orientation is very
closely related to the ability of an entrepreneur. The

key to entrepreneurship is how decision-making is
done appropriately with various calculations and
thoughts (Hassim et al., 2011). Furthermore,
Solichin (2005) found that the variable
characteristics of entrepreneurship had a significant
influence on business progress, and it was found
that the contribution of the business climate was
greater than the characteristics of entrepreneurship
on business progress.

Small and medium businesses are also
scattered in Kendari City because they have good
growth opportunities including potential market
share, available raw materials, this is also supported
by Kendari City as the capital of the Southeast
Sulawesi Province, and the economic growth of
Kendari City experiencing a positive trend, where
for the period of 2015 economic growth reached
8.92 percent and in 2016 around 9.00 percent
(Kendari Pos, 2017).

According to Mardiyanto (Head of BPS Sultra)
that Based on the results of the 2016 Economic
Census (SE), SMEs in Southeast Sulawesi
dominated economic activity in terms of the number
of businesses with a proportion of around 99
percent. While the rest are Large Medium
Enterprises (UMB) (Penaaktual.com, 2017).

According to Syam Alam (Head of
Perindagkop Kendari City) that the number of
businesses in Kendari reached 14.68 percent of the
total number of business units in Southeast
Sulawesi, he said. Furthermore, in Kendari City in
2017, 41,908 business units were consisting of
40,664 units micro, small, and 1,244 businesses that
fall into the category of medium to large businesses
(AntaraSultra, 2017)

Based on the decision of the President of the
Republic of Indonesia No. 99/1998, UKM is a
small-scale enterprise with business fields that are
generally small business activities and need to be
protected to prevent unhealthy businesses and are
built by individuals or middle-low groups.

The development and growth of small
businesses in Kendari City from 2014-2016 can be
presented through the following table:

Indonesian Journal of Innovation and Applied Sciences (IJIAS), 1 (1), 19-30

Table 1. Development & Growth of Small Businesses in Kendari City

No. Bussiness Criteria
Total (Year) Growth %

2013 2014 2015 2016 2014 2015 2016
1 Bussiness Unit 3.350 3.545 3.812 4.271 6 8 12
2 Labour 12.642 13.227 13.868 15.718 5 5 13

3 Income 611.266 802.431 875.143 940.131 31 9 7
Source: Secondary data processed (2019).

Table 1. shows that the number of small
businesses in Kendari City from 2013 to 2016 has
increased every year both in terms of aspects,
business units, labor, and turnover. The highest
growth of small-scale business units occurred in
2016 with an average of 12%, as well as the highest
employment growth occurred in 2016, amounting to
13%. On the other hand, the growth of business
turnover in 2014 experienced a very high growth of
31% while in 2015 the level of small business
income experienced a decline with a revenue
growth rate of 9% and at 7% in 2016.

The growth in the number of small businesses
in 2013-2016 was caused by a promising market
share and supported by the growth of the Southeast
Sulawesi economy, especially in Kendari City. This
is as revealed by Mr. Syam Alam (Head of
Perindagkop Kendari City) that the City of Kendari,
Southeast Sulawesi (Southeast Sulawesi) in recent
years has continued to experience rapid progress.
The level of tourist visits to the city also continues
to show a positive trend, both domestic and
international tourists. This condition was used by
several business operators in Kendari City to open a
unique souvenir sales center, one of which was
cashew nuts. For the last five years, the SME
products of Kendari City have been able to be
accepted by markets outside of Kendari City, even
outside Southeast Sulawesi. Its development has
also entered into modern markets due to the
dynamics of the Southeast Sulawesi economy that
continues to improve.

Researchers researched the food industry
sector business where based on the results of
research the business was dominated by small
businesses. The researchers' observations also show

that the growth of small businesses is driven by the
entrepreneurial nature of the perpetrators of their
life experiences when they are employees of small
businesses in their colleagues and families. With the
knowledge and work experience possessed to create
a new business, this is as done in small businesses
in the food industry sector such as the business of
bread, cakes, chips, shredded fish, meatballs/Somai.
The researchers' initial observations show that some
small businesses can survive and even develop such
as the business of bread, chips, and cashews and
some also cannot survive such as shredded fish and
other businesses. Small businesses that develop are
supported by quality products, availability of funds
for business development, and courage in making
bank loans and proactively selling their products.
On the other hand, small business problems are also
quite complex so that some are out of business.

Based on gap research and existing
phenomena, the researcher is interested in
researching with the title The Effect of Business
Orientation on Small Business Performance in
Kendari City.

METHODS
The object of research is the scope or things

that are the main problem in a study (Arikunto,
2001). Husein Umar (2005) explains that the object
of research explains what and who is the object of
research, where and when the research is conducted.
The object of this research is Small and Medium
Enterprises engaged in the manufacturing food
industry that is registered with the Department of
Industry, Trade, Cooperatives and SMEs in Kendari
City.

Indonesian Journal of Innovation and Applied Sciences (IJIAS), 1 (1), 19-30

Population is the total amount consisting of
objects or subjects that have certain characteristics
and qualities determined by researchers to be
investigated and then draw conclusions. Population
is a collection of objects that will be used as
research material with the same characteristics
(Andi Supangat, 2007). Thus, this study was
conducted in the city of Kendari with a population
of all small businesses engaged in the food industry
that has been operating and conducting production
processes with a minimum age of three years. The
population in this study was 100 companies
engaged in the food industry in the city of Kendari.

Samples are part of the population. If the
population is large and research is not possible to
study everything in the population, for example, due
to limited funds, time, and energy, the research can
use samples taken from the population (Sugiono,

2005). Samples are representative parts that are
used as sources of data or respondents (Saebani,
2008).

The use of samples in a study is intended to
make it easier for researchers to draw conclusions
that will be generalized to the population. To get a
sample that can describe the population, the
determination of the sample in this study uses the
Slovin formula.

From the total population with a level of
accuracy of 10% with a confidence level of 90%,
then using the formula above obtained a sample of
50 business units. Determination of the sample in
this study using probability sampling techniques,
namely proportional stratified random sampling,
strata conducted based on the type of business. Thus
the distribution of this research sample by type of
business is presented in Table 2.

Table 2. Distribution of Samples by Type of Business

No. Type of Business
Total Type of

Business
Calculation Sample (Person)

1
2
3
4
5
6
7
8
9
10
11
12

Roti
Abon
Coklat
Baruasa / Bagea
Kacang/Mete
Jahe / Dempo Pisang
Kue Pia/Bolu/semprong
Rumput laut
Kue kering
Rempeyek
Kripik/krupuk
Stik / Ice Cream

8
15
6
10
10
2
12
2
12
2
16
4

8/100*50 = 4
15/100*50 = 7,5
6/100*50 = 3
10/100*50 = 5
10/100*50 = 5
2/100*50 = 1
12/100*50 = 6
2/100*50 = 1
12/100*50 = 6
2/100*50 = 1
16/100*50 = 8
4/100*50 = 2

4
8
3
5
5
1
6
1
6
1
8
2

Total 100 0 50
Source: Primary data processed (2019).

Based on the type, the data used in this study
are qualitative and quantitative data. Qualitative
data is data presented in the form of verbal words
not in the form of numbers (Muhadjir, 1996).
Included in the qualitative data in this study are a
general description of the company and the
perceptions of respondents about their businesses
that match the statement on the questionnaire. With
quantitative data is data in the form of numbers
(Priyanto, 2010). Quantitative data in this study are

financial data of each industrial business unit in the
form of sales and net profits obtained by food
industry business owners in Kendari City.

Based on the purpose of this study, the data
collection methods used are questionnaires and
interviews. Arikunto (2010) states that the
questionnaire is a number of written questions that
are used to obtain information from respondents in
terms of reports about his personality, or things he
knows. In this case, the questionnaire is given in the

Indonesian Journal of Innovation and Applied Sciences (IJIAS), 1 (1), 19-30

form of a statement containing questions or related
statements with the characteristics of respondents
and indicators of entrepreneurial orientation
variables and the performance of small businesses.

The interview method is carried out to obtain
information directly and verbally from the parties
concerned by ensuring that the respondents
interviewed are managers/managers or business
owners who are directly involved in financial
decision making. This research was conducted to
gather theories that underlie research, which can be
used as guidelines in conducting an analysis of the
data and information obtained from the company. In

this research, the author studies books, articles, and
various other literatures related to this research.

RESULTS AND DISCUSSION
Multiple linear regression analysis

In this research, the hypothesis test uses
multiple linear regression which will be tested
empirically to find the functional relationship of
two or more independent variables with the
dependent variable, or to predict two or more
independent variables with respect to the dependent
variable. The results of multiple linear regression
tests in this study can be seen in Table 3 below:

Table 3. Multiple Linear Regression Test Results

Coefficientsa

Model

Unstanda rdized
Coefficients

Standardized
Coefficients t Sig.

B Std. Error Beta 0 0

Constant -0,92 0,33 -2,78 0,008
Innovation 0,44 0,09 0,38 5,16 0,000
Proactive 0,44 0,08 0,38 5,57 0,000
Taking Risk 0,56 0,08 0,48 6,82 0,000
Competitive
Aggressiveness 0,22 0,08 0,21 2,71 0,010
Autonomy 0,15 0,09 0,15 1,68 0,101

Source: SPSS output 24.0, primary data processed 2019
Based on the results of the Coefficientsa above

can be developed using the multiple linear
regression equation model as follows:

Small business performance = β1 Innovation + β2

Proactive + β3 Taking Risks + β4 Competitive

Aggressiveness + β5 Autonomy + э

If the β value in the above table is substituted, the
following values will be obtained:
Small business performance (Y) = 0,377 X1 +
0,380 X2 + 0,476 X3 + 0,210 X4 + 0,148 X5
1. Regression Coefficient X1 of 0.377 means that

every increase of one Innovation unit will
improve business performance small amount of
0.377. Conversely, each reduction of one
innovation unit will reduce the performance of
small businesses by 0.377, assuming that X2,
X3, X4, and X5 remain.

The results of this study support the opinion of
Wiklund and Shepherd (2005) which states that
innovation through the creation of new products and
technologies can produce competitive advantages
because it can outperform competitors, to create
financial results, productivity, and be able to
produce new products and services (services) to the
market ahead of competitors.

The results of the study support the opinion
(Leonard-Barton 1991) that innovation emphasizes
new methods of operation by making new
technology or developing existing technology. This
process innovation includes reengineering business
processes that are not directly related to the
production process (Cumming, 1998).

The results of this study support the opinion
expressed by Baldwin (2000) that innovation affects
business performance because the discovery of new
production techniques allows companies to operate

Indonesian Journal of Innovation and Applied Sciences (IJIAS), 1 (1), 19-30

more efficiently. Innovation is a means to increase
productivity which affects product quality and
reduces unit production costs.

Kim and Manborgue (1999) also revealed that
innovation strategies will influence financial
performance if companies can create value
innovation in the innovation process. Likewise,
Femandez (2001) emphasizes innovation as a
determinant of corporate innovation success.
Furthermore, Desphande et al (1993) stated that
companies that want to be successful in their
innovation process must integrate with product
innovation and process innovation.

The results of this study support the research
of Suseno and Suddin (2019), Mulyani (2016),
Wambugu and Wanjau (2016) Arshal et al., (2013),
Kusumawardhani and Perera (2012) that innovation
has a positive and significant effect on small
business performance. This is because product
innovation increases product sales which in turn
have an impact on the return on assets to increase.
2. Regression coefficient X2 of 0.380 means that

every increase of one proactive unit will
increase the performance of small businesses by
0.380. Conversely, every reduction of one
proactive unit will reduce the performance of
small businesses by 0.380, assuming that X1,
X3, X4, and X5 remain.
The results of this study support the opinion of

Zahra (1995), Lumpkin & Dess (1996) that is
highly proactive can improve business performance
related to sales growth, company profits, and labour
productivity. The results of this study also support
the opinion of Kotler (2005) that if the company is
proactive, it means that a company has entered the
market first from its competitors, then the company
will always be the market leader.

The results of this study support the opinion of
Zahra and Covin (2005) that a proactive attitude can
target market segments, move faster than
competitors and respond quickly through the
determination of company strategies that are based
on market changes and therefore can take advantage
of opportunities that arise.

Research supports research conducted by
Platin and Ergun (2018), Le Roux and Bengesi
(2013) that proactivity has a positive and significant
effect on business performance in terms of sales
growth.
3. Regression coefficient X3 of 0.476 means that

every increase of one unit to take risks will
increase the performance of small businesses by
0.476. Conversely, every reduction of one unit
takes a risk will reduce the performance of
small businesses by 0.476, assuming that X1,
X2, X4, and X5 remain.
The results of this study support the opinion of

Zahra (1995) that companies that are willing to take
risks at the expense of costs to get the benefits
(cost-benefit) of each alternative in decision making
will make the company stronger against economic
changes.

The results of this study support the opinion of
Keh et al (2002), Wiklund (1999) that taking risks is
an entrepreneurial attitude that involves his
willingness to tie up resources and be courageous in
facing challenges by engaging in business strategies
so that an entrepreneur has the opportunity to take
advantage and the emergence of these opportunities,
which in the end positive effect on business
performance.

The results of this study support the opinion of
Wiklund and Shepherd (2005) that risk-taking is
related to the desire to commit that resources are
used on projects where the cost of failure is high,
reflecting managers' preferences for courageous
actions to achieve organizational goals, thus the
desire to take risks will encourage the company. to
develop and generate new ideas to produce products
(services).

The results of this study support research
conducted by Wambugu and Wanjau (2016), Ranto
(2016), Haryadi (2015), Arshal et al., (2013) that
the attitude of courage to take risks has a positive
and significant effect on small business
performance because small businesses Those who
dare to take risks will increase their motivation in
trying and find new ideas to develop their business

Indonesian Journal of Innovation and Applied Sciences (IJIAS), 1 (1), 19-30

and increase their sales, thereby increasing the
performance of small businesses.
4. Regression coefficient X4 of 0.210 means that

each increase of one unit of Competitive
Aggressiveness will increase the performance
of small businesses by 0.210. Conversely, each
reduction of one competitive aggressiveness
unit will reduce the performance of small
businesses by 0.210, assuming that X1, X2, X3,
and X5 remain.
The results show that the owners/managers of

small businesses establish good relationships with
customers to market their products and introduce
their products to customers so that small business
products can be absorbed by the market, thereby
increasing the performance of small businesses.

The results of this study support the opinion of
Lumpkin and Dess (2001) that competitive
aggressiveness has a positive and significant effect
on company performance. This research is also in
line with Wulandari and Priatna (2018) states that
competitive aggressiveness has a positive and
significant effect on business performance.
5. Regression coefficient X5 of 0.148 means that

every increase of one Autonomous unit will
improve the performance of small businesses
by 0.148. On the contrary, every decrease of
one autonomy unit will reduce the performance
of small businesses by 0.148, assuming that X1,
X2, X3, and X4 are fixed.
The results showed that small businesses in

Kendari City developed various types of product
components regardless of organizational
boundaries. Besides that, small business managers
in making decisions still involve other parties in the
internal of small businesses.

Autonomy refers to the independent action of a
person or team to align an idea to complete its
mission, regardless of organizational boundaries.
When applied in the context of an organization,
especially business, autonomy refers to the freedom
to take action related to business.

The results show that small business managers
are free to develop products creatively but are still

tied to other parties (their families) in making
product development decisions, freedom to run a
business independently does not affect improving
the performance of small businesses. This means
that the high autonomy attitude of small business
owners is lacking affect the performance of small
businesses.

The role of autonomy in this study does not
affect the performance of small businesses. Because
based on the results of observations made, most of
the employees who work for small businesses are
based on instructions from the owners/managers of
small businesses. In this case, employees are not
free to explore the knowledge they have because
they see organizational boundaries that are applied
by the company. Based on the study conducted,
most business owners in Kendari City are not free
to make decisions. This is because the size of the
business that is owned is a family business and
decision making in terms of product development is
largely determined by the manager or manager who
is the owner's family or relatives.

The results of the study support the research
conducted by Wulandari and Priatna (2018) which
found that autonomy does not affect the
performance of MSMEs. The results of this study
support the research of Arshal et al., (2013), Arshal
et al., (2013) explaining that autonomy has no
significant effect on the performance of small
businesses.

The sign (+) indicates the direction of a direct
relationship between the independent variable (X)
and the dependent variable (Y). Whereas the sign
(-) shows the direction of the inverse relationship
between the independent variable (X) and the
dependent variable (Y).
Coefficient of determination of the regression
model

The coefficient of determination (R2) is used
to measure the ability of the model to explain the
variation of independent variables. Here are the
results of calculating the hypothesis determination
coefficient.

Indonesian Journal of Innovation and Applied Sciences (IJIAS), 1 (1), 19-30

Table 4. Coefficient Determination Regression Model

Model Summaryb

Model R R Square Adjusted R Square Std. Error of the Estimate

1 ,902a 0,814 0,793 0,366
a. Predictors: (Constant), Innovation, Proactive, Taking Risk, Competitive Aggressiveness, Autonomy,
Performance.
b. Dependent Variable: Small business performance

Source: SPSS output 24.0, primary data processed (2019)
In the coefficient of determination of the

regression model 1 obtained Adjusted R square
value of 0.902. This means that 90.2% of small
business performance variations can be explained
by Innovation, Proactivity, Risk Taking,
Competitive Aggressiveness, and Autonomy as
independent variables, while 9.8% can be explained
by other factors outside the regression model
analyzed.

CONCLUSION
The purpose of this study is to examine and

provide empirical evidence about the influence of
innovation, proactivity, risk-taking, competitive
aggressiveness, and autonomy on the performance
of small businesses in the food industry sector
recorded in the Department of Industry, Trade,
Cooperatives, and SMEs in Kendari City in 2018.
From five hypotheses were proposed, four of them
i.e. innovation (H1), proactivity (H2), taking risks
(H3), and competitive aggressiveness (H4) are
accepted. Whereas one other hypothesis namely
autonomy (H5) is rejected. Based on the results of
the analysis, the conclusions that can be drawn from
this study are as follows: 1) Innovation has a
positive and significant effect on the performance of
small and medium businesses in the food industry
sector recorded in the Department of Industry,
Trade, Cooperatives, and SMEs in Kendari City in
2017.

This is indicated based on the results of the
calculation of the regression coefficient of 0.440
and t value of 5.164 with a significance of 0.000.
The significance value of the test is less than 0.05
(Ha accepted), 2) Proactive has a positive and
significant effect on the performance of small and

medium businesses in the food industry sector
recorded in the Department of Industry, Trade,
Cooperatives, and SMEs in Kendari City 2017. This
is indicated based on the calculation of the
regression coefficient of 0.435 and t value of 5.574
with a significance of 0,000. The significance value
of the test is less than 0.05 (Ha accepted), 3) Taking
the risk of a positive and significant effect on the
performance of small and medium businesses in the
food industry sector recorded in the Department of
Industry, Trade, Cooperatives, and SMEs in
Kendari City in 2017.

This is shown based on the calculation of the
regression coefficient of 0.560 and t value of 6.818
with a significance of 0.000. The significance value
of the test is less than 0.05 (Ha accepted), 4)
Competitive aggressiveness has a positive and
significant impact on the performance of small and
medium businesses in the food industry sector
recorded in the Department of Industry, Trade,
Cooperatives, and SMEs in Kendari City 2017. This
matter indicated by the results of the calculation of
the regression coefficient of 0.216 with a count of
2.708 with a significance of 0.010 less than 0.05
(Ha accepted), 5) Autonomy has a positive and
insignificant effect on the performance of small and
medium businesses in the food industry sector
recorded in the Department of Industry, Trade,
Cooperatives, and UMKM of Kendari City in 2017.

This is shown from the results of the
calculation of the value of the regression coefficient
of 0.154 with a t value of 1.657 with a significance
of 0.101 greater from 0.05 (Ha refused) .6. The
coefficient of determination of the regression model
1 of this study obtained an adjusted R square value
of 0.836. This means that 83.6% of the variation in

Indonesian Journal of Innovation and Applied Sciences (IJIAS), 1 (1), 19-30

business performance can be explained by
innovation, proactivity, risk-taking, competitive
aggressiveness, and autonomy as independent
variables, while the remaining 16.4% can be
explained by other factors outside the regression
model analyzed.

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