Role Of Business Players In Moderating Market Orientation

And Technology Orientation To Product Innovation In Medan

City Culinary SMEs

Yusrita1, Yusniar Lubis2, Efendi Pakpahan3, Syaifuddin4

1Student of Management Doctoral Program, Universitas Prima Indonesia. Indonesia

2Agribusiness Program, Universitas Medan Area. Indonesia
3,4
Management Program, Universitas Prima Indonesia. Indonesia

Email: yusrita@[Link], lubisyusniar@[Link], [Link]@[Link]

Abstract
The purpose of this study is to determine the direct and indirect effects of Market
Orientation and Technology Orientation on Product Innovation through the Competence
of Business Actors. This study used a census or simple random sampling, determining
the number of samples in this study using the Slovin formula where the population of 21
sub-districts in the city of Medan was 8,104 so the sample using the Slovin formula was
381 if you don't want to use engineerings an mpel acc Idental sampling in a month an n
January 2023. The data analysis used is SEM-PLS. The results showed that market
orientation and technology orientation had a significant effect on the competence of
Culinary Small and Medium Enterprises (SMEs) in Medan City and market orientation,
technology orientation, and business competence had a significant effect on Product
Innovation in Culinary SMEs in Medan City. Then indirectly the Competence of Business
Actors is able to mediate Market Orientation and Technology Orientation towards Product
Innovation in Culinary MSMEs in Medan City.

Keyword: Business Players, Market Orientation, Technology Orientation, Product

Innovation, Culinary

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INTRODUCTION
At present the government is encouraging people to become entrepreneurs, a
concrete manifestation of the government wanting people to become entrepreneurs by
incorporating an entrepreneurial curriculum at certain levels of education.
Entrepreneurship education has been started from high school to university, it is hoped
that when people finish carrying out their education there will be a growing desire for
entrepreneurship and already have knowledge about entrepreneurship. Because with
entrepreneurship, school, and college graduates are not unemployed and can even open
jobs. By not being unemployed and opening up employment opportunities, the
government can reduce the problem of poverty. It is known that there is a significant
causal relationship between entrepreneurship, economic growth, and poverty alleviation
(Chowdhury, 2007 ; Siahaan et al., 2022 ; Lubis, & Syaifuddin, 2022). Micro, Small and
Medium Enterprises (MSMEs) owned by the community are a manifestation of the
implementation of entrepreneurial activities carried out by the community. MSMEs are an
effective way for the government to reduce unemployment that occurs. The contribution
of SMEs is very important for the country because in general 80–90 percent of small
businesses, generate 50–80 percent of total employment (Narain, 2003). Data shows that
more than 90% of the workforce in Indonesia is absorbed through MSMEs. The following
is an infographic on MSME absorption of labor in Indonesia in 2019:

Figure 1. The Contribution of MSMEs to Labor in Indonesia

Source: Center for Budget Studies, Ministry of Cooperatives and SMEs, 2021

Figure 1 clearly shows that MSMEs have recruited more than 100 million workers
or 96.92% in 2019. Even though there was a decrease compared to 2018 there was a
decrease of 0.08%. This means that MSMEs are business units that support Indonesia's

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economic conditions to continue to run as expected by the government. When viewed
from the contribution made by MSMEs to Indonesia's Gross Domestic Product (GDP) in
2019, as shown in the following figure:

Figure 2. MSME Contribution to Indonesia's GDP

Source: Center for Budget Studies, Ministry of Cooperatives and SMEs, 2021

Figure 2 provides information that in 2019 MSMEs contributed to Indonesia's

Gross Domestic Product (GDP) by 57.14%, meaning half of Indonesia's GDP for the
contribution of MSMEs. Thus, it is natural for the government to continue to encourage
MSMEs in Indonesia to continue to experience significant expected growth. This means
that Micro, Small, and Medium Enterprises are a solution to the economic problems of
society in Indonesia. North Sumatra Province as one of the provinces with the largest
number of MSMEs in Indonesia is expected to make a major contribution to the
development and economic growth of Indonesia in general and good economic growth
for the province. North Sumatra itself in particular. In North Sumatra Province there is
Medan City which is one of the big cities in Indonesia. As one of the big cities in Indonesia,
Medan faces the same problems as other big cities, namely as an economic center for
the surrounding areas, such as the City of Binjai and Deli Serdang. Data at the end of
September 2021 showed that there were 8,104 Ultra Micro, Small, and Medium
Enterprises (MSMEs) for all business sectors in 15 sub-districts of Medan City, culinary
business actors ( [Link] ), it is predicted that the number of culinary
business actors will keep growing. The high growth of the MSME business is of course
very encouraging because it can simultaneously reduce the unemployment rate.
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 Table 1. Research Population
No District Name Number of MSMEs
1 Sandpaper Field 536
2 Terrain Area 796
3 West Medan 661
4 New Field 372
5 Belawan Field 707
6 Medan Deli 1023
7 Denai Field 249
8 Helvetian Field 636
9 Medan Johore 327
10 City Field 236
11 Labuhan Field 657
12 Medan Maimun 322
13 Medan Marelan 555
14 Field of Struggle 539
15 Petition Field 488
Amount 8.104

Source: [Link] , 2022

Of the 8,104 culinary MSMEs in 15 Districts of Medan City, very few have a strong
business concept. Most culinary actors in Medan City are ultra and micro, and very few
are small and medium

LITERATURE REVIEW
Product Innovation
In general, the term innovation is defined as a breakthrough related to new
products. Thompson (1965) in Hurley and Hult (1998) defines innovation is a broader
concept that addresses the application of new ideas, products, or processes. Whereas
Hurley and Hult (1998) define innovation as a company mechanism to adapt in a dynamic
environment, therefore companies are required to be able to create new thoughts, new
ideas and offer innovative products and improve services that satisfy customers. Kasali
(2010) says that innovation is the ability to see things in a new way and sometimes out of
the box thinking. Not much different explained by Wahyuni & Sara (2020) that innovation
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is a company's ability to look for something new or better by identifying, obtaining, and
carrying out tasks related to products, services, processes, administration, management
systems, marketing methods, and organizational structure. Organizational trends to
innovate can be seen from indications of companies engaging in new ideas, novelty,
creative processes, and experiments that will create new products/services (Lin, et al.,
2008 ; Syaifuddin, 2021).

Competence of Business Actors

Competence according to Wibowo (2015) is an ability to carry out or perform a job
or task that is based on skills and knowledge and is supported by the work attitude
demanded by the job. Next according to Morgan et al., (2016) competence is the ability
to carry out a task, the ability to integrate knowledge, skills, attitudes, and personal values,
and the ability to build knowledge and skills based on experience and learning.
Competence according to Faustyna (2014) is a description of behavior. In more detail,
the description refers to the characteristics that underlie behavior which describes
motives, personal characteristics (characteristics), self-concept, values, knowledge or
expertise. Then according to Wibowo (2015), competence is also "the basic foundation
of people's characteristics and indicates how to behave or think, equate situations, and
support for a long time. Based on the opinions of the experts above, it can be concluded
that competence in this study is an ability to carry out or carry out a job or task that is
based on skills and knowledge and is supported by the work attitude demanded by the
job.

Market Orientation
Market orientation is a business culture where the organization has the
commitment to continue to create and innovate in creating superior value for buyers as
well as business performance. Market orientation is defined as an organizational culture
that places consumers as the main part in planning its business (Kara et al ., 2005 ; Purba
et al., 2019 ; Nurjaman et al., 2020). Where as Van and Stoelhorst (2008) define market
orientation as an organization-wide possession of market intelligence related to current
and future customer needs, the spread of this intelligence across departments.
Meanwhile, Movondo, et al., (2005) stated market orientation is an organizational culture
that most effectively and efficiently creates the behaviors necessary for superior value
creation for buyers and thus, sustainable superior performance for businesses. Market
orientation is a popular term used by practitioners in the field of marketing as the
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implementation of the marketing concept. In the seventies, a market-oriented corporate
strategy was seen as the main pillar to achieve superior corporate performance in
manufacturing companies, trading companies and service companies (Ndubisi, 2007;
Jain et al., 2007 ; Aswardi., 2019). An organization or company operating in a market may
find market orientation to be a valuable resource in discovering market opportunities
based on expressed needs or failure of competitors to meet expressed needs or both
Usein (2014).

Technology Orientation
Technology can be distinguished at least by conceptual, from common knowledge
although the line between the two is often unclear. In research by Capon and Glazer
(1987) technology No The same as knowledge knowledge It means in use, perhaps more
naturally If technology is seen as a sub of science, because of the many difficulties
encountered in describing Science as measurable resources. Understanding technology
in general is a facilitator in developing a product And help meet market needs and wants
because marketing information technology is one of the factors that influence the success
of product innovation. Technology orientation is seen as a strategic instrument,
technology-oriented product development policies can be used for competition
management, with the assumption that the higher the technology used, the more
innovative the product will be and the more likely it is that the product or service offered
can be sold to a particular target market. Use of da knowledge technology to produce
better and innovative products to provide solutions and meet new needs for the market
(Haug, et al., 2020).
Clemons and Row (1991) state that the existence of technology is the most
important part and source of achieving a competitive advantage. marketing information
technology plays a very important role and has an impact on business strategy,
furthermore the effect of information technology is to support competitive advantage
through continuous innovation by the company. Technology can be interpreted as an
information system that is valuable and much needed by companies related to information
that produces products or services. Therefore, technology is an important asset in an
organization or company. By using sophisticated technology, companies can create
better or more innovative products (Li and Calantone, 1998 ; Manalu et al., 2022). Day
and Wensley (1988) argue that, when marketing information technology changes rapidly,
it forces companies to interact with customers because customer needs and preferences
can provide direction for changing product markets. Jaworski and Kohli (1993); Rathnam,
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et al., (1995) showed that when marketing information technology evolves rapidly, and
companies feel it is important to obtain customer information, especially about what
customers want and need Relationship marketing and technology is a form of integration
strategy that forms a competitive advantage. Han, et al (1998), assume that the concept
and framework of technology presence (marketing information systems) are to create the
best relationship between companies and customers. Marketing information technology
provides value that is different from what competitors provide, so customers will feel the
difference in the value they get from competitors compared to what they get from the
company.

Kompotensi
Pelaku Usaha

Orientasi
Pasar

Inovasi
Produk

Orientasi
Tehnologi

Figure 3. frame work

From figure 3,
1. Market orientation has a positive and significant effect on product innovation in
Culinary SMEs in Medan City
2. Technology orientation has a positive and significant effect on Product Innovation in
Medan City Culinary SMEs
3. The competence of business people has a positive and significant effect on product
innovation in Culinary SMEs in Medan City

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 4. The Competence of Business Actors Can Moderate Market Orientation towards
Product Innovation and has a positive and significant influence on Culinary MSMEs
in Medan City
5. The Competence of Business Actors Can Moderate Technology Orientation towards
Product Innovation and has a positive and significant influence on Culinary MSMEs
in Medan City

RESEARCH METHODS
This study uses a quantitative approach. The data were obtained from
distributing questionnaires with a Likert scale with a total sample of 385
respondents. Research data were analyzed using structural equation model (SEM)
analysis based on partial least squares (PLS) which aims to examine the direct and
indirect effects of the research variables used.
RESULTS AND DISCUSSIONS
Measurement Model Analysis (Outer Model)

Figure 4. Measurement Model Analysis (Outer Model)

Based on Figure 4, it shows that all variables have met the validity requirements
with a loading factor value of all indicators worth > 0.7. Then the next test can be carried
out.

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Construct a Reliability Test

Figure 5. Construct a Reliability Test

The results of the analysis shown in figure 5 above show that the AVE value of
each latent variable has a value of > 0.5 and a composite reliability value and Cronbach's
alpha value every latent variable is more than 0.7, it can be concluded that variable
indicators can measure well.

Measurement Model Analysis (Inner Model)

Figure 6. Coefficient of Determination (R2)

Based on table 2 above, it is known that the adjusted R-Square value of the Product
Innovation variable is 0.917 or 91.70% and the remaining 8.30% is influenced by other
variables not examined in this study.
Predictive Relevance (Q2)
The Q2 value has the same meaning as the R-Square coefficient of determination.
Q- large square value (Q2) 0 indicates the model has predictive relevance otherwise if a
value (Q2) is less than 0 this indicates the model has less predictive relevance in other
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words where all Q2 values are higher, the model is considered to be more suitable with
the data considerations Q2 value can be done as follows.
Q2 = 1 – (1-R 2 1 )( 1-R 2 2 )… (R n 2 )
Q2 = 1- (1-0.917)
Q2 = 1-(0.083)
Q2 = 0.917

Based on these results the Q2 value is 0.917 so that it can be concluded that the
variables in this study are Product Innovation, Market Orientation, Technology
Orientation, Business Actors' Competence contributing original data in the existing
structural model of 91.7%, then the remaining 0.83% needs to be developed other than
this research variable.

Effect Size (F2)

Effect size (F2) determines the goodness of the model. Also to find out whether
the predictor variable has a weak influence, sufficient or strong influence at the structural
level.

Hypothesis Test

Figure 7. Direct Influence

The direct influence of the competence of business actors on product innovation

is the competence of business actors' positive and significant effect on Product
Innovation . This result can be seen from the significance value of 0.000 which is less
than 0.05. This means that the Competence of Actors is increasing Business then there
will be a significant increase in Product Innovation in Culinary MSMEs in Medan City. The

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results of this study are under the research conducted by Y. Christiana et al, in line with
research conducted by Nuraeni Nuraeni Nuraeni 2020 et al, in line with research
conducted by Chamdan Wahid Sobirin 2020 et al it is concluded that based on the
description above, it can be concluded that the competence of business actors has a
positive and significant effect on the innovation of MSME culinary products in the city of
Medan.
The competence of business actors can directly moderate market orientation
towards product innovation positive and significant effect on Product Innovation This
result can be seen from the significance value of 0.041 which is smaller than 0.05. This
means that the increasing Market Orientation will significantly increase Product
Innovation in Culinary MSMEs in Medan City. The market orientation possessed by
business people must be maximized for the benefit of the business development that is
being carried out, by innovating the products being marketed. Having a market orientation
will encourage business people to innovate their products so that they have more value
than competitors' similar products. However, business people must consider the
competence of themselves or their subordinates. The competence of business people
and their subordinates will cause product innovation to be successful and successful in
the market, or vice versa, product innovation can fail. Culinary business actors must be
able to understand market conditions, especially knowing and understanding what the
market wants in relation to the products they produce. For the market orientation that they
already have to have maximum impact, business people must make themselves
competent to innovate products as desired by the market. The competencies possessed
by business actors and their subordinates will encourage product innovation with high
value that cannot be competed with by similar products owned by competitors. Thus, it
can be concluded that based on the description above, the competence of business
people can significantly moderate the effect of market orientation on the culinary product
innovation of UMKM in Medan City.
The Competence of Business Actors Cannot Moderate Technology Orientation
towards Product Innovation This result can be seen from the significance value of 0.056
which is less than 0.05. This is at the Medan City Culinary UMKM. Technology orientation
towards product innovation indirectly. This means that the competence of business actors
cannot affect the orientation of technology toward product innovation in Culinary MSMEs
in Medan City. The technology orientation possessed by business actors must be
maximized for the benefit of the development of the business being carried out, by
innovating the products being marketed. Having a Technology orientation will encourage
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business people to innovate their products so that they have more value than similar
products owned by competitors. However, the competence of business actors does not
necessarily affect the orientation of technology towards product innovation because it
must also be considered or consider the competence of themselves or their subordinates.
The competence of business actors and their subordinates will cause product innovation
to be successful or not in the market, or conversely the product innovations that are
carried out fail. Culinary business actors must be able to understand market conditions,
especially knowing and understanding what the market wants concerning the products
they produce. For the market orientation that they already have to have maximum impact,
business actors do not have the competence to carry out product innovations as desired
by the market. Then the market orientation will not be able to Moderate the Business
Actor's Competence towards Business Innovation. Thus it can be concluded that it must
be noted that the Business Actor's Competence must be able to compete with the
surrounding conditions in this case the business actor cannot compete so he cannot
moderate the Product Innovation technology orientation Culinary UMKM in Medan City.
The Influence of Market Orientation on Product Innovation Directly Market
Orientation positive and significant effect on product innovation. This result can be seen
from the significance value of 0.000, which is less than 0.05. This means that as Market
Orientation increases significantly Product Innovation in Culinary SMEs in Medan City
The results of this study are under research conducted by Rogers (1983) that innovation
will occur when information about ideas, practices or objects that are perceived as
something new is appropriately communicated to all members of the social system. In
line with research conducted by Salman, 2015; Na, et al., (2019); Fitri, (2022);
Rachmasari & Suprapti, (2022) which states that market orientation significantly
influences product innovation by company management.
The Effect of Technology Orientation on the Competence of Business Actors
Directly Technology Orientation has a positive and significant effect on the Competence
of Business Actors. This result can be seen from the significance value of 0.000 which is
less than 0.05. This means that the increasing Technology Orientation will significantly
increase the Competence of Business Actors in Culinary MSMEs in Medan City The
results of this study are in accordance with research conducted by Davis (1989) who
stated in his theory called Technology Acceptance Model Theory which states that an
information technology system is designed to explain and make it easier for users to
understand and understand everything provided by this information technology. The basic
concept of the Technology Acceptance Model Theory is convenience and usefulness. In
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line with the research conducted by Capon et al., 1990; Zhou, et al., 2005; Zhou & Wu,
2009; Liu & Su, 2014; Syaifuddin, 2016 ; Deegahawature, 2018); Haug, et al., 2020 ;
Purba et al., 2018) and Qalati et al., (2021) shows empirically that the relationship
between technology and innovation is positive and significant. it can be concluded that
from the description above, it can be assumed that technology orientation has a positive
and significant effect on MSME culinary product innovation in Medan City.

CONCLUSION
The conclusion of the research is that there are three variables directly, namely,
Market Orientation, Technology Orientation and Business Actor Competence that have a
significant effect on Product Innovation in Culinary MSMEs in Medan City The
Competence of Business Actors can Moderate Market Orientation towards Product
Innovation, Then the Competence of Business Actors cannot Moderate Technology
Orientation towards Product Innovation in Culinary UMKM in Medan City

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