The impacts of marketing and supply chain operational capabilities on business performance in Indonesian creative industry

Abstract

This study aims to investigate further with the empirical data is associated with the theory of marketing capability and supply chain operational capabilities and its impact on business performance in Indonesian creative industry. Articles related to marketing, supply chain operational capabilities, and business performance were collected and analyzed. The study literature shows that there are less studies investigate the relationship between marketing, supply chain operational capabilities and business performance in creative industry. This study involved 350 respondents with the main focus on Indonesia creative industry, such as publishing / printing, advertising and handcraft. This study found that marketing capability is not correlated to business performance in Indonesia creative industry. Similarly, the results also suggest that marketing capability has not significantly affect to supply chain operational capabilities and not fully mediates the relationship between marketing capability and business performance in Indonesian creative industry. Meanwhile, the supply chain operational capabilities are related to improve their business performance. The results of the investigation in this study will create a major contribution to the development of Indonesian creative industry to identify which functions need to be developed.

Full text

133 International Journal of Economic Research
The Impacts of Marketing and Supply Chain Operational Capabilities on Business Performance in Indonesian Creative Industry
International Journal of Economic Research
ISSN : 0972-9380
available at http: www.serialsjournal.com
© Serials Publications Pvt. Ltd.
Volume 14 • Number 12 • 2017
The Impacts of Marketing and Supply Chain Operational Capabilities
on Business Performance in Indonesian Creative Industry
Muslimin1, Benyamin Parubak2, Muhammad Natsir3 and Suryadi Hadi4
1,2,3,4 Faculty of Economics and Business, Tadulako University Palu, 94118 Indonesia
Correspondent author: suryadihadi@untad.ac.id
Abstract: This study aims to investigate further with the empirical data is associated with the theory of
marketing capability and supply chain operational capabilities and its impact on business performance in
Indonesian creative industry. Articles related to marketing, supply chain operational capabilities, and business
performance were collected and analyzed. The study literature shows that there are less studies investigate the
relationship between marketing, supply chain operational capabilities and business performance in creative
industry. This study involved 350 respondents with the main focus on Indonesia creative industry, such as
publishing / printing, advertising and handcraft. This study found that marketing capability is not correlated to
business performance in Indonesia creative industry. Similarly, the results also suggest that marketing capability
has not significantly affect to supply chain operational capabilities and not fully mediates the relationship
between marketing capability and business performance in Indonesian creative industry. Meanwhile, the supply
chain operational capabilities are related to improve their business performance. The results of the investigation
in this study will create a major contribution to the development of Indonesian creative industry to identify
which functions need to be developed.
Keywords: marketing capability, supply chain operational capabilities, business performance, creative industry
INTRODUCTION
Creative industry has been nominated as one of the most important sectors in Indonesia since 2000s.
According to Simatupang (2008), the creative industry is the industry that is capable of producing well-
being by offering intellectual work with the main supporting elements include: creativity, expertise and
talents. The development of creative industry had been contributed to support the economy of Indonesia.
Despite their small scale of economic, creative industry could be sustained, saved job opportunities and
preserve the culture of Indonesia. The advantages of creative industry compare to other sector are the raw
materials could be obtained in domestic market and the level of organization. However, creative industry

International Journal of Economic Research 134
Muslimin, Benyamin Parubak, Muhammad Natsir and Suryadi Hadi
also has disadvantages in several issues, such as, human resource management, finance and marketing. The
incapability to overcome these issues might impact on the performance of creative industry.
Some researchers conclude that the relationship between marketing and supply chain operational
capabilities have positive impact on improving business performance. Some researchers have previously
been examined this relationship in other sectors, but there has been less investigation of this relationship in
creative industry. In addition, these two marketing and supply chain operational capability issues have been
studied separately. The different groups of researches have been connected the two issues to business
performance. Furthermore, some researchers believe that the role of marketing and supply chain operational
capability could impact on business performance. Therefore, this study investigated the relationship between
marketing and supply chain operational capability on business performance and identified which have
significant role to business performance in Indonesia creative industry. We adopt previous research model
of Yu et al. (2014), as they suggested that their model should be further investigated with more functional
capabilities. Therefore, we also adopt a construct from the previous research of Zulkifli (2010), which
introduce the relationship of supply chain operational capabilities and business performance in Malaysian
SMEs. The results of this study are expected to provide an input to the model of improving the performance
of creative industry.
LITERATURE REVIEW
Marketing Capability and Business Performance
The function of marketing in short and long term is increasing the revenue through improving satisfaction
of customer. Song et al. (2007) claim that all activities in a company will be integrated to provide satisfaction
to the customer. The role of employees to apply their marketing knowledge and combine with other
resource is critical. If a company has high marketing capability, the loyalty of customers and networks
could be sustained (Nath et al., 2010). In addition, the marketing capability will help the company to build
strong image of product, which in turn to increase business performance. Some previous research show
that marketing capability has a significant impact on business performance (Nath et al. 2010; Vorhies and
Morgan, 2003). However, Yu et al. (2014) found that marketing capability has not a significant impact on
business performance in UK retail. Therefore, this study proposes a hypothesis as follow.
H1: Marketing capability has a positive impact on business performance
Marketing and Supply Chain Operational Capabilities
There are few empirical researches investigate the relationship between marketing and operations capability
Yu et al. (2014). Some researchers believe that marketing capability is an antecedent of operations capability.
When a company could improve their marketing capability so that this will also lead to improve operations
capabilities. For example, customers have strong image because the product has been processed in high
quality control. This will impact on the customers’ decision to repurchase the product. The market knowledge
will impact on the supply chain operational capabilities in terms of repositioning their structural capability
to provide the customer needs. The marketing capability will impact on the logistical capability in terms of
reducing costs and improving the time of delivery. In addition, the marketing capability will support the
firm to apply better technology to provide high quality of product and improve the integration between

135 International Journal of Economic Research
The Impacts of Marketing and Supply Chain Operational Capabilities on Business Performance in Indonesian Creative Industry
functional areas within the firm. As the company aims to satisfy their customers, all activities in supply
chain operational capabilities will be integrated to provide high quality products. For this reason, a company
needs to improve their innovative process, such as, new product development, delivery process, and flexibility.
Innovative process will lead to reduce waste and costs. Therefore, the relationship between marketing
capability and supply chain operational capabilities to business performance needs to further investigation.
Based on those arguments, this study proposes a hypothesis as follow.
H2: Marketing capability has a positive impact on supply chain operational capabilities
Supply Chain Operational Capabilities and Business Performance
Supply chain operational capabilities include structural capability, logistical capability and technological
capability. A firm could obtain more benefits from applying superior supply chain operational capabilities.
The benefits of having high capability in supply chain are the process will be more efficient, reduce costs,
increase flexibility, and improve quality. The capability of a firm to manage supply chain activities has a
positive relationship to the whole activities in upstream and downstream sides (Cho et al., 2008). A manager
should apply the knowledge to manage the relationship both internal and external organization (Bowersox
and Daugherty, 1995). In addition, the logistical capability will help to integrate marketing, finance and
operations functional areas to achieve high business performance (Ellinger et al., 2000). In line with this,
technological capability play an important role to improve the relationship between functional areas inside
the firm as well as outside, such as suppliers and customers. These capabilities will lead to become the
source of competitive advantages for a company (Morash, 2001). There are some previous researchers
found that there is significant relationship between supply chain operational capability and business
performance. According to those point of views, this study proposes a hypothesis as follow.
H3: Supply chain operational capabilities has a positive impact on business performance
Figure 1: Conceptual Framework
Marketing
capability
Business
Performance
Supply Chain
Operational
Capabilities
H1
H2
H3
RESEARCH METHOD
The population of this study is creative industry in Indonesia which are involved in the area of advertising,
publishing and handcraft. The sample was target the owner as well act as manager of creative industry.
There were 500 questionnaires sent out, 150 were in completed so that 350 questionnaires were further
analyzed. Thus, the response rate of this study is 70 percent and it is considered as high response rate. The
results of demographic characteristics of these 350 respondents are reported in Table 1. The five Likert

International Journal of Economic Research 136
Muslimin, Benyamin Parubak, Muhammad Natsir and Suryadi Hadi
scale is applied in the questionnaires. The literature review was conducted to support the final questionnaire.
This study analyzes the relationship between three constructs and each construct has three observed so
that the total is nine observed variables.
Table 1
Profile of 350 respondents
Number of firms Percent
Less than 5 years 85 24.3
6 – 10 years 215 61.3
More than 10 years 50 14.3
Less than 5 employees 150 42.9
6-10 employees 190 54.3
More than 10 employees 10 10
The measures used in this study for marketing capability, supply chain operational capabilities, and
financial capability are reported in Table 2 as follow.
Table 2
Measurement Scales
Marketing Capability (MC) The volume of sales (MC1)
Knowledge of market interest (MC2)
Forecasting (MC3)
Supply chain operational capabilities (SCOC) Knowledge of supply chain operational capabilities (SCOC1)
Logistics process (SCOC2)
Technology use (SCOC3)
Business Performance (BP) The growth of market share (BP1)
The revenue (BP2)
The quality of product (BP3)
RESULTS AND DISCUSSION
Structural equation model (SEM) was used in this study to test the hypothesized in our conceptual framework.
The results of structural model using AMOS 20 are reported in Table3. The overall fits of the structural
model are good, the RMSEA less than 0.10 (Kline, 1998), CFI and TLI well above the recommended
threshold of 0.90 (Hu and Bentler, 1999).
Table 3
Results of hypotheses using SEM
Structural Paths Regression Critical Probability Hypothesis test
Weight Ratio (p)
Marketing Capability � Business Performance -0.014 -0.175 0.861 Not supported
Marketing Capability � Supply chain operational capability 0.059 0.240 0.810 Not supported
Supply chain operational capability � Business Performance 0.600 2.708 0.007 Supported
Model fit statistics: CMIN/DF = 1.917 RMSEA = 0.051 TLI = 0.922 CFI = 0.915

137 International Journal of Economic Research
The Impacts of Marketing and Supply Chain Operational Capabilities on Business Performance in Indonesian Creative Industry
As shown in Table 3, the results indicate that marketing capability has not a significant and negatively
related to business performance, which lends not support H1. As having few resources in managing marketing
activities, creative industry could not recognize the relationship between marketing capability and business
performance. They have some obstacles to integrate their activities if the owner or manager have lack of
knowledge in marketing. In line to this, Yu et al., (2014) found that marketing capability has no direct
relationship to business performance. The result shows that the relationship between marketing capability
is indirect so that it is possible that this marketing capability should be mediated by other constructs to
improve the business performance. The result also show that marketing capability enable other functional
to enhance business performance.
Similarly, the structural model shows that marketing capability has not a significant impact on
supply chain operational capabilities. Hence, H2 is not fully supported. Most of the marketing and
supply chain activities are done by the owner or manager of creative industry but could not recognize
the relationship between the two constructs. This result also depicts that interorganizational and
interpersonal are not fully adopted in Indonesia creative industry. Logistical activities are mostly done by
creative industry so that they have no strong relationship with 3PL. Lack of resources will lead to
inability to identify the current customer needs as well as forecast their demand. Furthermore, creative
industry is difficult to apply such high technology in their operations because of lack of resources. In
other words, as Indonesian creative industry has lack of knowledge in improving strong marketing
capability and supply chain operational capabilities so that they have difficult to examine the relationship
between the two constructs.
However, supply chain operational capabilities have significant direct effect on business performance.
As such, H3 is accepted. The result shows that business performance of creative industry can be achieved
with the help of a strongly supply chain operational capabilities. It indicates that creative industry focus on
this supply chain operational capabilities to enhance their overall business performance. Previous research
shows that structural and technological have a significant impact, but logistical capability has not significant
impact on business performance (Zulkifli, 2010). In addition, Yu et al., (2014) found that operations capability
has positive impact on the financial performance in the UK retail. The last research also investigated that
operations capability has mediated the relationship between marketing capability and financial performance.
However, this research found that supply chain operational capability has not successfully mediated the
relationship between marketing capability and business performance. Therefore, this research need to
further study with the aim to investigate this relationship.
CONCLUSION
Based on this research model, we concluded that the marketing capability has not direct relationship to the
business performance in Indonesian creative industry. This result support the previous researches as well
as investigated this relationship. Marketing capability has not significant impact on supply chain operational
capabilities. However, supply chain operational capabilities have significant impact on business performance.
Furthermore, supply chain operational capabilities mediate the relationship between marketing capability
and business performance. The results of this study suggest several points: 1) the further study need to
investigate this model to other sectors for generalization of the model; 2) this study has limitation to adopt
control variables in the stage of analysis, which can enrich the result of the study; 3) the constructs used in

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Muslimin, Benyamin Parubak, Muhammad Natsir and Suryadi Hadi
this study should be added and examined using different approaches to enhance the model and generalizability
of theory.
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