Academic journal article Academy of Strategic Management Journal

The Influence of Competitive Pressure on Innovative Creativity

Academic journal article Academy of Strategic Management Journal

The Influence of Competitive Pressure on Innovative Creativity

Article excerpt

INTRODUCTION

Small to Medium sized Enterprises or SME is a part of economy protection in a country, including Indonesia. SME has an important role to improve economy development pace, enlarge job opening, improve domestic income and strengthen community empowering. Right now, SME in Indonesia represents about 90 percent of Indonesia's business and contribute about 57 percent of Bruto Domestic Product in Indonesia.

Economy crises in 1998 proved that SME is much tougher compared with larger industries and has higher rate of flexibility, uses local material and able to survive in economy crises. In 2015, ASEAN Economy Era will be applied and it will not only become an opportunity but also challenge for Indonesia's economy. By applying ASEAN Economy Community in the end of 2015, ASEAN members will have experienced the free flow of goods, services, investment and well educated person from and to each country. By performing this kind of activity there will be solid integration called as "free trade area", the omission of tariff rate among ASEAN members, free labor and capital market. These will influence on stronger competition of SME's product especially in creative industries in Indonesia. One creative industry in Indonesia that becomes unique feature is batik.

Batik is an artistic creation and local heritage in Indonesia. Batik is well known throughout the world. Batik is unique feature acknowledged by UNESCO as Intangible World Heritage in October 2009, besides kris and puppet. Batik has made Indonesia as one of the leader countries to produce the soft traditional fabric, origins from the old, artistic and rich tradition in Indonesia. One area in Indonesia that is well known as batik central is Pekalongan (Meutia, 2012).

Marketing development in facing globalization era becomes certain challenge for SME in developing its business. It needs innovative development and creativity to be able to survive and face the competition from foreign SME. SME needs to be more creative in producing products, and adapting with business environment change in Indonesia to keep marketing performance in line.

High rate of adaptive ability in business environment change and innovative creativity will become the strength that has to be owned by SME to face competition. Entrepreneur ability in adapting with business environment change will become internal resource that is imperfectly imitated by other company, and it will create competitive advantage in an organization. Krajewski & Ritzman (2003) stated that managing ability and adaptability will create competitive advantage oriented strategy.

Besides adaptability factor, innovative creativity also becomes one of the triggers to create SME's marketing performance. Formerly, innovation term can be meant as a new product related breakthrough. As the development goes on, innovation term also includes the application of new ideas and process. Innovation also viewed as organization's mechanism in adapting with dynamic environment. Innovative creativity is a strategy to put an organization one step ahead in competing with same field products from competitors.

Entrepreneurs' incompetence to maintain and preserve challenges will make performance declining and company's failure (Hill and McGowan, 1999). Study on marketing performance done by Menon et al. (1999) stated that marketing program creativity does not deeply influence marketing activities. Other stated that creativity provides important influence on marketing performance since it will be useful to develop certain product (Menon et al., 1999). Other study recommended that in developing countries, environment adaptability has an important role for performance improvement. Based on some previous results, problem for this study is to know and further analyze the influence of competitive pressure on business environment adaptability and innovative creativity to improve marketing performance. …

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