The Role of Product Innovation in Mediating Digital Marketing and Business Networks on MSME Performance

Abstract

Product innovation is a very important element in determining the performance of MSMEs. In a business world that continues to develop and is full of competition, the ability to innovate must be an important thing to consider in order to win the existing competition. In this research, testing was carried out to determine the effect of product innovation in mediating digital marketing and business networks on the performance of MSMEs in the food sector. The research method used is quantitative descriptive. The research sample used was 250 MSME respondents operating in the food sector in Pematang Siantar City. Data analysis used in this research uses a Structured Equation Model (SEM) based on Partial Least Square (PLS). The results of this research show that digital marketing and business networks directly have a positive and significant effect on product innovation. Furthermore, digital marketing variables, business networks and product innovation also have a positive and significant effect on MSME performance. Based on research, it is also known that product innovation fully mediates digital marketing and business network variables on the performance of MSMEs in Pematang Siantar City.