INBOUND OPEN INNOVATION FOR SUSTAINABILITY PERFORMANCE OFTHE BATIK SMALL AND MEDIUM ENTERPRISES

• Main Author: Kurniawati, Amelia
• Format: Dissertations
• Language: Indonesia
• Subjects: Teknik (Rekayasa, enjinering dan kegiatan berkaitan)
• Online Access: https://digilib.itb.ac.id/gdl/view/79975
• Institution: Institut Teknologi Bandung

Sustainability has become a global development policy, included in the industrial sector. Sustainability is aimed at achieving profit for economic growth, community welfare, and environmental preservation in an integrated manner. The obligation of industry in Indonesia to implement the concept of sustainability is applied to large industries and Small and Medium Enterprises (SMEs). Large industries can enter an industrial area so that it will facilitate the provision of facilities, as well as supervision and control to ensure that the industry complies with sustainability provisions. Meanwhile, SMEs are unable to join the industrial area due to the cost constraints. Batik SMEs, a form of local wisdom, need to be maintained, but have problems in sustainability performance. Sustainability performance is organizational achievement in profit, community welfare, and environmental preservation in an integrated manner. Thus, other efforts are needed to achieve sustainability performance in batik SMEs. SMEs’ sustainability performance can be achieved through inbound open innovation, a distributed innovation process based on the inflow of knowledge across organizational boundaries that is managed intentionally to meet the organization’s needs in profit, social welfare, and environmental preservation. In this study, a model that represents the relationship between knowledge factors, organizational relationship factors, and inbound open innovation for sustainability performance in the batik SMEs is developed. Inbound open innovation for sustainability performance consists of sustainability performance, innovativeness, and inbound open innovation constructs. The knowledge factors include absorptive capacity, control of knowledge input, distribution of knowledge input, appropriation of knowledge output, desorptive capacity, transformative capacity, connective capacity, inventive capacity, and innovative capacity constructs. The organizational relationship factors consist of competence mapping, desorptive capability, networking capability, relational capability, network position, and network diversity constructs. The research model consists of eighteen constructs with 112 indicators. The measurement and structural model testing are carried out using Partial Least Square – Structural Equation Modeling (PLS-SEM) based on survey results from the batik SMEs’ leaders in Surakarta Municipality, Rembang Regency, Bangkalan Regency, Pamekasan Regency, and Sumenep Regency. The data collection step gains 203 total responses. The results show that the model's predictive accuracy is moderate and substantial. This is identified from the determination coefficient (R2) for sustainability performance, innovativeness, and inbound open innovation constructs 0,501; 0,541; and 0,661, respectively. The significant relationships between constructs are the influence of innovativeness toward sustainability performance (H1), the influence of inbound open innovation toward innovativeness (H2), the influence of competence mapping (H3), network position (H7), absorptive capacity (H9), appropriation of knowledge output (H12), connective capacity (H15), inventive capacity (H16), and innovative capacity (H17) toward inbound open innovation. The characterization of the batik SMEs in this study was carried out based on the level of sustainability performance and inbound open innovation, by mapping the batik SMEs into four quadrants. The Quadrant I is for the batik SMEs with low sustainability performance achievement and have not been able to carry out the inbound open innovation. The characteristics of the batik SMEs in the Quadrant I are using materials that have the potential to damage the environment, have low achievement in profits, and doing inbound open innovation only when there is an invitation from an external party. The batik SMEs in the Quadrant I are advised to actively discuss in training, as well as play an active role in certain communities that can guide the innovation process, so that they can move positions to the Quadrant III. The Quadrant II is for the batik SMEs with high sustainability performance achievement, but has not been carried out based on the inbound open innovation. The characteristics of the batik SMEs in the Quadrant II are having a high level of employee satisfaction and inbound open innovation only being carried out if there is an invitation from an external party. The batik SMEs in the Quadrant II are advised to actively discuss when participating in training, identify best practices from the other batik SMEs, as well as join and actively contribute to the local batik entrepreneur community, so that they can move to the Quadrant IV. The Quadrant III is for the batik SMEs that have been able to carry out the process of inbound open innovation, but have not supported the achievement of sustainability performance. The characteristics of the batik SMEs in the Quadrant III are using materials that have the potential to damage the environment, have not been able to keep production costs from exceeding the budget, and actively involve external parties in inbound open innovation. The batik SMEs in the Quadrant III are advised to be active and consistent in seeking inbound open innovation opportunities, as well as actively interact with external parties to obtain guidance in understanding and exploiting new knowledge, so that they can move positions to the Quadrant IV. The Quadrant IV is for the batik SMEs with high sustainability performance achievement and supported by the ability to carry out the process of inbound open innovation. The characteristics of the batik SMEs in the Quadrant IV are contributing to the activities of the surrounding community, high level of employee satisfaction, have efforts to treat waste, and actively participating in involving external parties and being knowledge source in inbound open innovation.