Mediation of digital innovation on digital marketing capabilities towards marketing performance (a study on food and beverage SMEs in Gedangan sub-district)

Abstract

Micro, Small, and Medium Enterprises (MSMEs) are one of the crucial sectors in the country's economy, contributing significantly, as evidenced by their share of 60.5% of the Republic of Indonesia's Gross Domestic Product.  The total number of MSMEs in Indonesia reached 65 million units, with the food and beverage sector dominating with 23 million units in 2022. Although the contribution of MSMEs to regional and provincial revenue continues to increase, their performance has yet to reach its full potential, as evident from the declining sales experienced by MSMEs that still operate offline.  To face market and technological developments, MSME actors must consider leveraging digital media in their marketing strategies.

This research aims to identify the influence of digital marketing capabilities and product innovation on the marketing performance of food and beverage MSMEs in the Gedangan sub-district of Sidoarjo. The research sample comprises 102 respondents selected through the nonprobability sampling technique with purposive sampling and collected data through questionnaires distributed to food and beverage MSMEs in the Gedangan sub-district of Sidoarjo. Data was analyzed using the Structural Equation Modeling-Partial Least Squares (SEM-PLS) method. The research results indicate that Digital Innovation is essential in mediating the influence between Digital Marketing Capabilities and Marketing Performance of food and beverage MSMEs in Gedangan, Sidoarjo.  The development of digital innovation can be an effective strategy for improving the marketing performance of MSMEs by utilizing digital marketing capabilities.  Therefore, MSME actors must enhance their digital marketing capabilities and adopt digital innovations to improve marketing performance. 

Keywords: 

Marketing performance; Digital marketing capabilities;Digital innovation;MSMEs