Creative destruction and knowledge creation as the mediation between innovation speed and competitiveness of food small and medium-sized enterprises in Malang, Indonesia

Abstract

Purpose This study aims to examine the role of creative destruction and knowledge creation which is a mediation between the speed of innovation and the competitiveness of food small- and medium-sized enterprises (SMEs). Creative destruction and the creation of competency-based and market-based knowledge are usually carried out by companies in power to create barriers to entry and expand distance with similar businesses, so the role of creative destruction and knowledge creation as mediation to strengthen competitiveness is investigated. Design/methodology/approach The data in this study were collected from 161 UKM which are the population of food UKM in Malang, covering three regions, namely, Malang City, Malang Regency and Batu City. Warp Partial Least Square-Structural Equation Modeling (WarpPLS-SEM) has greater statistical requirements than other covariance-based methods, which are more likely to give results that are in accordance with the conditions of the population (significant if it is actually significant in the population) so that it is very efficient. Findings It is very important for the pace of innovation development to improve the competitiveness of food SMEs. Innovation ideas are quickly realized and products that enter the market faster have greater opportunities to increase competitiveness through profits and productivity. The pace of innovation development increases the competitiveness of food SMEs. This study proves that competitiveness can be increased once the pace of innovation development is followed by creative destruction and knowledge creation. In this case, creative destruction is done through increased competence and maintain the innovations that have been achieved by food SMEs. Increasing business competence can be done through cost efficiency, improving product quality and improving worker skills. This is done while maintaining innovation achieved to strengthen market networks, customer service and innovation in product packaging. The basis of organizational learning is knowledge creation; this point is missing in organizational learning theories. The focus here is on the creation of knowledge as a process, a missing factor in theories about learning organizations. Research limitations/implications This study has limitations that this study analyzes processed foods and innovations in general. Future research should investigate one type of processed food based on an innovation typology so that it can provide more effective and efficient recommendations. Originality/value To the best of the authors’ knowledge, this is the first known analysis of innovation speed and creative destruction for SMEs of food sector.