How does entrepreneurial orientation affect the business performance of coffee shop MSMEs in Indonesia?

Abstract

The increasing growth of the coffee shop business with a fast and attractive expansion as a food & beverage industry in urban areas of Indonesia, especially Special Region of Yogyakarta has led to business competition between micro, small, and medium enterprises (MSMEs) which are required to use their ability to adapt, be competitive and improve business performance. The entrepreneurial orientation is claimed to important contributions to business success. This study aims to analyze the effect of entrepreneurial orientation on business performance. Partial Least Square-Structural Equation Modeling (PLS-SEM) analysis method is used to examine the effect of five dimensions of entrepreneurial orientation (innovative, proactive, risk-taking, autonomy, and competitive aggressiveness) on business performance. This research was conducted at 80 coffee shop MSMEs with the sampling technique using convenience sampling. The results showed that the dimensions of proactive, autonomy, and competitive aggressiveness were found to have a positive and significant effect on business performance, while the innovative and risk-taking dimensions did not affect significantly on business performance.