Entrepreneurial Orientation and Firm Performance in Horticultural MSMEs in East Java: The Mediating Role of Value Innovation and Knowledge Management

Abstract : Entrepreneurial orientation is an important intangible asset for a firm to develop. On the other hand, intense competition has implications for the utilization of this asset, especially for MSMEs in the agricultural sector. Both variables, such as value innovation and knowledge management, can bridge the utilization of entrepreneurial orientation to enhance firm performance. On the other hand, several previous studies have produced different findings in various contexts. This study aims to examine the influence of entrepreneurial orientation on the performance of horticultural MSMEs in East Java. Covariance-Based Structural Equation Modeling (CB-SEM) was used in this study, covering 126 horticultural MSMEs. The results showed that entrepreneurial orientation significantly affected toward firm performance, but only knowledge management was found to mediate the effect between entrepreneurial orientation and firm performance. Conversely, value innovation was unable to mediate the effect between the two. Therefore, knowledge management is one of the aspect that horticultural MSMEs in East Java should rely on to improve firm performance.