Relationship between Efficiency, Innovative Capabilities and Export Performance from the Perspective of the Coffee Agroindustry in East Java

A new stage of intense competition will soon begin in the coffee agroindustry, where all business actors will concentrate on becoming low-cost producers. When the East Java coffee agro-industry business unit shows a downward trend from year to year, the problem becomes more complicated. Although the number of coffee agro-industry business units was reported to be 78 units in 2019, ironically by mid-2023, this number will fall to only 62 units. A percentage of 80% of Robusta coffee bean production is exported and only 20% of the coffee beans enter the domestic industrial processing stage. Moreover, during the pandemic outbreak in 2019-2022, which was the background to the export restriction policy, it faced problems with the raw material procurement cycle being hampered and even problems with delivering products for consumption by exporters. Considering these conditions, the East Java coffee agroindustry can reorganize the use of distribution of production inputs and the level of innovative capabilities to build a profitable and sustainable position. The general aim of this research is to analyze the relationship between industrial efficiency variables, innovative capabilities, and coffee agro-industry performance, and formulate policies and strategic steps to increase coffee agro-industry exports in East Java. The selection of sample locations was based on the domicile of the coffee agro-industry in East Java which was recorded as active at the East Java Province Industry and Trade Service. Data collection techniques include interview techniques, observation techniques, free interviews with key informants, and field notes (documentation). The data analysis method uses SEM- Partial Least Square. This research goal will later become a reference for business actors or the coffee agroindustry as a tool for making appropriate production decisions in increasing innovative capabilities and maintaining or increasing efficiency for profit-oriented sustainability, coffee agroindustry.