Innovative Entrepreneur in a Developing Country: The Case of SMEs in Indonesia

Indirect and direct effects of entrepreneurial orientation (EO) on the performance of SME are the focus of this study. The extent to which exploitative and exploratory innovation impact the performance of SMEs is also examined in this study. Additionally, as a mediator between EO and SMEs’ performance, this study assesses exploratory and exploitative innovation. All SMEs in Indonesia engaged in five different culinary-related business sectors—clothing, trade, services, and tourism—make up the study’s population. Samples were taken from the islands of Sumatra, Java, Sulawesi, and Bali, among other sampling regions and a sample size of 298 units. The management or owner of the SMEs is the analytical unit. Using structured surveys distributed on social media, data were gathered (WhatsApp and Instagram). The results demonstrate that EO directly affects SMEs’ performance in a positive and meaningful way. Exploitative and exploratory innovation also has a positive influence on SME’s performance. SMEs’ performance will be higher if the entrepreneurial orientation and exploitative and exploratory innovation of small and medium entrepreneurs increase simultaneously. Exploitative innovation has the greatest influence on MSE’s performance. This study is in line with the theory of strategic agility, namely the Company’s performance is determined by managers who have a high entrepreneurial orientation, are able to see the money from rapid external changes and are accompanied by both exploitative and explorative innovation capabilities.