Enhancing small and medium enterprises performance through innovation in Indonesia

Purpose This study aims to identify the effect of entrepreneurial orientation and organizational culture on organizational innovation and organizational performance among small- and medium-sized enterprises (SMEs) on the creative industry which is supporting tourism in Indonesia. Design/methodology/approach A quantitative approach was used to distribute questionnaires using a purposive sampling technique to 183 SME’s owners of the creative industry that produce and trade the products directly to the customers. A partial least square (PLS) was conducted to analyze the data. Findings Entrepreneurial orientation and organizational culture have a significant effect on innovation, which in turn, influences the performance. Interestingly, innovation does not have a significant influence on performance as well as does not mediate the influence between entrepreneurial orientation and organizational performance. Research limitations/implications The issue of innovation in this study was measured by many indicators that reflected the organizational innovation. Further studies may investigate other specific types of innovation. Practical implications Both entrepreneurs and government should establish more technological support, business incubation centers and counseling organizations to encourage performance in the future. Originality/value Socio-cultural diversity such as entrepreneurial orientation and natural resources especially the culture of Indonesia can inspire creative industries to continue to innovate and after that can lead them to improve their performance, especially in the tourism area.