The Strategy to Improve MSME Performance through Entrepreneurial Orientation, Organizational Readiness, Knowledge Management, and E-Commerce Adoption

  • Himmatul 'Aliyah Postgraduate Program in Strategic Management, Faculty of Economics and Business, University of Indonesia
  • Sari Wahyuni Postgraduate Program in Strategic Management, Faculty of Economics and Business, University of Indonesia
Keywords: entrepreneurial orientation, organizational readiness, knowledge management, e-commerce adoption, Micro, Small and Medium Enterprises, performance


Micro, Small and Medium Enterprises (MSMEs) are among the most important contributors to the Indonesian economy. In the digital era, using e-commerce is one of the strategies to face the increasing competition in the business world. However, MSMEs in Indonesia are still faced with various obstacles, primarily related to the lack of mastery of technology and the unoptimized utilization of e-commerce in business. Based on this, it is necessary to check the factors that can enhance MSME performance. This study aims to analyze the influence of entrepreneurial orientation, organizational readiness, knowledge management, and e-commerce adoption, which are expected to improve MSME performance in the digital era. Partial Least Squares Structural Equation Modeling (PLS-SEM) is used to test the relationship between these variables. This study involved 241 MSME owners/managers who have adopted e-commerce in their businesses in the food and beverage industry. The results showed that entrepreneurial orientation, organizational readiness, knowledge management, and e-commerce adoption can significantly improve the performance of MSMEs in food and beverage businesses. These findings better explain how MSME players can optimally improve capabilities and organizational resources to achieve sustainable competitive advantage and superior business performance.


Adhiatma, A., Fachrunnisa, O., & Rahayu, T. (2022). Creating digital ecosystem for small and medium enterprises: the role of dynamic capability, agile leadership and change readiness. Journal of Science and Technology Policy Management, ahead-of-print.

Aftab, J., Veneziani, M., Sarwar, H., & Ishaq, M. I. (2022). Entrepreneurial orientation and firm performance in SMEs: The mediating role of entrepreneurial competencies and moderating role of environmental dynamism. International Journal of Emerging Markets.

Akpan, I. J., Soopramanien, D., & Kwak, D.-H. (2021). Cutting-edge technologies for small business and innovation in the era of COVID-19 global health pandemic. Journal of Small Business & Entrepreneurship, 33(6), 607–617.

Al-Emran, M., Mezhuyev, V., Kamaludin, A., & Shaalan, K. (2018). The impact of knowledge management processes on information systems: A systematic review. International Journal of Information Management, 43, 173–187.

Al-Qirim, N. (2007). The adoption of eCommerce communications and applications technologies in small businesses in New Zealand. Electronic Commerce Research and Applications, 6(4), 462–473.

Avlonitis, G. J., & Salavou, H. E. (2007). Entrepreneurial orientation of SMEs, product innovativeness, and performance. Journal of Business Research, 60(5), 566–575.

Babu, K. (2012). Importance of Knowledge Management in Recent Business. Importance of Knowledge Management in Recent Business.

Bhat, S., Gijo, E. V., Rego, A. M., & Bhat, V. S. (2021). Lean Six Sigma competitiveness for micro, small and medium enterprises (MSME): an action research in the Indian context. The TQM Journal, 33(2), 379-406.

Cegarra-Navarro, J.-G., & Martelo-Landroguez, S. (2020). The effect of organizational memory on organizational agility: Testing the role of counter-knowledge and knowledge application. Journal of Intellectual Capital, 21(3), 459–479.

Chión, S. J., Charles, V., & Vásquez Luna, L. E. (2023). Knowledge transfer and entrepreneurial orientation: the mediating effect of the transactive memory system. Total Quality Management & Business Excellence, 34(13–14), 1797–1829.

Chong, A. Y.-L., Chan, F. T. S., Goh, M., & Tiwari, M. K. (2013). Do interorganisational relationships and knowledge-management practices enhance collaborative commerce adoption? International Journal of Production Research, 51(7), 2006–2018.

D’Souza, D. E., & Fan, G. (2022). A capability-anchored articulation of the EO-organizational performance relationship in emergent and post-emergent organizations. Journal of Business Research, 146, 107–117.

Damuri, Y. R. (2020). E-COMMERCE IN INDONESIA.

Dar, I. A., & Mishra, M. (2020). Dimensional impact of social capital on financial performance of SMEs. The Journal of Entrepreneurship, 29(1), 38–52.

Darroch, J., & McNaughton, R. (2003). Beyond market orientation: Knowledge management and the innovativeness of New Zealand firms. European Journal of Marketing, 37(3/4), 572–593.

Dess, G. G., & Lumpkin, G. T. (2005). The role of entrepreneurial orientation in stimulating effective corporate entrepreneurship. Academy of Management Perspectives, 19(1), 147–156.

Dijkstra, T. K., & Henseler, J. (2015). Consistent and asymptotically normal PLS estimators for linear structural equations. Computational Statistics & Data Analysis, 81, 10–23.

Duan, X., Deng, H., & Corbitt, B. (2012). Evaluating the critical determinants for adopting e‐market in Australian small‐and‐medium sized enterprises. Management Research Review, 35(3/4), 289–308.

Fang, G. G., Qalati, S. A., Ostic, D., Shah, S. M. M., & Mirani, M. A. (2022). Effects of entrepreneurial orientation, social media, and innovation capabilities on SME performance in emerging countries: a mediated–moderated model. Technology Analysis & Strategic Management, 34(11), 1326–1338.

Fonseka, K., Jaharadak, A. A., & Raman, M. (2022). Impact of E-commerce adoption on business performance of SMEs in Sri Lanka; moderating role of artificial intelligence. International Journal of Social Economics, 49(10), 1518–1531.

Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of marketing research, 18(1), 39-50.

Fuentes-Fuentes, M. del M., Bojica, A. M., & Ruiz-Arroyo, M. (2015). Entrepreneurial orientation and knowledge acquisition: effects on performance in the specific context of women-owned firms. International Entrepreneurship and Management Journal, 11, 695–717.

Garrido-Moreno, A., Lockett, N., & Garcia-Morales, V. (2015). Exploring the role of knowledge management practices in fostering customer relationship management as a catalyst of marketing innovation. Baltic Journal of Management, 10(4), 393–412.

Ghozali, I. (2016). Aplikasi analisis multivariete dengan program IBM SPSS 23.

Guntoro, R., & Widiyanti, M. (2021). The Role Of Distinct Competency And Learning Organization In Enhancing Firm’s Sustainable Competitive Advantage. International Journal of eBusiness and eGovernment Studies, 13(2), 103-122.

Gupta, V. K., Niranjan, S., Goktan, B. A., & Eriskon, J. (2016). Individual entrepreneurial orientation role in shaping reactions to new technologies. International Entrepreneurship and Management Journal, 12, 935–961.

Hair, J. F., Risher, J. J., Sarstedt, M., & Ringle, C. M. (2019). When to use and how to report the results of PLS-SEM. European Business Review, 31(1), 2–24.

Hameed, M. A., Counsell, S., & Swift, S. (2012). A meta-analysis of relationships between organizational characteristics and IT innovation adoption in organizations. Information & Management, 49(5), 218–232.

Hasani, T., Rezania, D., Levallet, N., O’Reilly, N., & Mohammadi, M. (2023). Privacy enhancing technology adoption and its impact on SMEs’ performance. International Journal of Engineering Business Management, 15, 18479790231172870.

Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The use of partial least squares path modeling in international marketing. In New challenges to international marketing (Vol. 20, pp. 277–319). Emerald Group Publishing Limited.

Hwang, E. H., & Krackhardt, D. (2020). Online knowledge communities: Breaking or sustaining knowledge silos? Production and Operations Management, 29(1), 138–155.

Iqbal, A., Latif, F., Marimon, F., Sahibzada, U. F., & Hussain, S. (2019). From knowledge management to organizational performance: Modelling the mediating role of innovation and intellectual capital in higher education. Journal of Enterprise Information Management, 32(1), 36–59.

Kamal, E. M., Yusof, N., & Iranmanesh, M. (2016). Innovation creation, innovation adoption, and firm characteristics in the construction industry. Journal of Science & Technology Policy Management, 7(1), 43–57.

Kurnia, S., Choudrie, J., Mahbubur, R. M., & Alzougool, B. (2015). E-commerce technology adoption: A Malaysian grocery SME retail sector study. Journal of Business Research, 68(9), 1906–1918.

Kusa, R., Suder, M., Duda, J., Czakon, W., & Juárez-Varón, D. (2023). Does knowledge management mediate the relationship between entrepreneurial orientation and firm performance? Journal of Knowledge Management.

Li, Y.-H., Huang, J.-W., & Tsai, M.-T. (2009). Entrepreneurial orientation and firm performance: The role of knowledge creation process. Industrial Marketing Management, 38(4), 440–449.

Lomberg, C., Urbig, D., Stöckmann, C., Marino, L. D., & Dickson, P. H. (2017). Entrepreneurial orientation: The dimensions’ shared effects in explaining firm performance. Entrepreneurship Theory and Practice, 41(6), 973–998.

Machine, M. (2019). Saturated Sectors: Finding Gaps In The Ecommerce Market.

Manyati, T. K., & Mutsau, M. (2021). Leveraging green skills in response to the COVID-19 crisis: a case study of small and medium enterprises in Harare, Zimbabwe. Journal of Entrepreneurship in Emerging Economies, 13(4), 673–697.

Mostafiz, M. I., Hughes, M., Simeonova, B., & Sambasivan, M. (2023). Entrepreneurial orientation and knowledge management: comparing configurations of native and immigrant entrepreneurial firms. International Journal of Entrepreneurial Behavior & Research, 29(5), 1099–1132.

Nah, F., Siau, K., Tian, Y., & Ling, M. (2002). Knowledge management mechanisms in e-commerce: A study of online retailing and auction sites. Journal of Computer Information Systems, 42(5), 119–128.

Nasution, M. D. T. P., Rafiki, A., Lubis, A., & Rossanty, Y. (2021). Entrepreneurial orientation, knowledge management, dynamic capabilities towards e-commerce adoption of SMEs in Indonesia. Journal of Science and Technology Policy Management, 12(2), 256–282.

Nugroho, A., Prijadi, R., & Kusumastuti, R. D. (2022). Strategic orientations and firm performance: the role of information technology adoption capability. Journal of Strategy and Management, 15(4), 691–717.

Ouédraogo, M., & Rinfret, N. (2019). The sharing and management of managers’ knowledge: A structured literature review. Knowledge and Process Management, 26(3), 244–261.

Papadopoulos, T., Baltas, K. N., & Balta, M. E. (2020). The use of digital technologies by small and medium enterprises during COVID-19: Implications for theory and practice. International Journal of Information Management, 55, 102192.

Ramanathan, R., Ramanathan, U., & Hsiao, H.-L. (2012). The impact of e-commerce on Taiwanese SMEs: Marketing and operations effects. International Journal of Production Economics, 140(2), 934–943.

Rauch, A., Wiklund, J., Lumpkin, G. T., & Frese, M. (2009). Entrepreneurial orientation and business performance: An assessment of past research and suggestions for the future. Entrepreneurship Theory and Practice, 33(3), 761–787.

Raymond, L., Bergeron, F., & Blili, S. (2005). The assimilation of E‐business in manufacturing SMEs: Determinants and effects on growth and internationalization. Electronic Markets, 15(2), 106–118.

Sopha, B. M., Jie, F., & Himadhani, M. (2021). Analysis of the uncertainty sources and SMEs’ performance. Journal of Small Business & Entrepreneurship, 33(1), 1–27.

Suci, N. M., Telagawathi, N. L. S., Yuliantini, N. N., & Susila, P. A. J. (2021, November). Prediction of Small and Medium Business (SME) Bankruptcy in Gianyar Regency During COVID-19. In 6th International Conference on Tourism, Economics, Accounting, Management, and Social Science (TEAMS 2021) (pp. 520-525). Atlantis Press.

Sugiyono. (2019). Metode Penelitian Kuantitatif. ALFABETA.

Susanto, P., Hoque, M. E., Shah, N. U., Candra, A. H., Hashim, N. M. H. N., & Abdullah, N. L. (2023). Entrepreneurial orientation and performance of SMEs: the roles of marketing capabilities and social media usage. Journal of Entrepreneurship in Emerging Economies, 15(2), 379–403.

Ta’Amnha, M. A., Magableh, I. K., Asad, M., & Al-Qudah, S. (2023). Open innovation: The missing link between synergetic effect of entrepreneurial orientation and knowledge management over product innovation performance. Journal of Open Innovation: Technology, Market, and Complexity, 9(4), 100147.

Tan, J., Tyler, K., & Manica, A. (2007). Business-to-business adoption of eCommerce in China. Information & Management, 44(3), 332–351.

Tarihoran, A. D. B., Hubeis, M., Jahroh, S., & Zulbainarni, N. (2023). Market-based dynamic capabilities for MSMEs: Evidence from Indonesia’s ornamental fish industry. Journal of Open Innovation: Technology, Market, and Complexity, 9(3), 100123.

Theodosiou, M., & Katsikea, E. (2012). Antecedents and performance of electronic business adoption in the hotel industry. European Journal of Marketing, 46(1/2), 258–283.

Wales, W. J. (2016). Entrepreneurial orientation: A review and synthesis of promising research directions. International Small Business Journal, 34(1), 3–15.

Walker, J. H., Saffu, K., & Mazurek, M. (2016). An empirical study of factors influencing e-commerce adoption/non-adoption in Slovakian SMEs. Journal of Internet Commerce, 15(3), 189–213.

Wang, H.-Y., & Wang, S.-H. (2010). User acceptance of mobile internet based on the unified theory of acceptance and use of technology: Investigating the determinants and gender differences. Social Behavior and Personality: An International Journal, 38(3), 415–426.

Wiig, K. M. (1999). Introducing Knowledge. Knowledge Management Handbook.

Wirdiyanti, R., Yusgiantoro, I., Sugiarto, A., Harjanti, A. D., Mambea, I. Y., Soekarno, S., & Damayanti, S. M. (2023). How does e-commerce adoption impact micro, small, and medium enterprises’ performance and financial inclusion? Evidence from Indonesia. Electronic Commerce Research, 23(4), 2485–2515.

Xin, X., Miao, X., Chen, Q., & Shang, T. (2022). User participation, knowledge management capability and service innovation: e-commerce enterprises in the digital age. Asia Pacific Journal of Marketing and Logistics, 34(4), 629–646.

Yacob, S., Sulistiyo, U., Erida, E., & Siregar, A. P. (2021). The importance of E-commerce adoption and entrepreneurship orientation for sustainable micro, small, and medium enterprises in Indonesia. Development Studies Research, 8(1), 244–252.

How to Cite
’Aliyah, H., & Wahyuni , S. (2024). The Strategy to Improve MSME Performance through Entrepreneurial Orientation, Organizational Readiness, Knowledge Management, and E-Commerce Adoption. Journal La Sociale, 5(5), 1204-1229.