Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight Capabilities as a Mediating Variable

Abstract

MSMEs have become the foundation for growth in various countries, including Indonesia. Especially in West Java, MSMEs play an essential role in absorbing labour. However, MSMEs in West Java face an uncertain business environment and difficulties in creating products that suit market needs. This research will use the Resource Based View (RBV) and Dynamic Capability View (DCV) theories. This research examines the influence of entrepreneurial orientation on the innovation performance of MSMEs by using foresight capabilities as a mediating variable. 245 MSMEs were collected as respondents to fill out the survey questionnaire. The MSMEs used in this research are from West Java, with the main characteristics of operating for more than one year and developing new products for at least two years. Structural equation modeling (SEM) was used to test the research framework. It was found that entrepreneurial orientation can influence the innovation performance of MSMEs positively and significantly. The influence of foresight capabilities on MSME product innovation performance has a positive effect. The mediating effect of foresight capabilities on the relationship between entrepreneurial orientation and product innovation performance was partially mediated. MSMEs that behave more entrepreneurially benefit from being more proactive, innovative, and risk-taking in an uncertain market environment. Product innovation can be achieved through a good understanding of entrepreneurial orientation mediated by an understanding of Foresight to process information for future decisions. Finally, managerial and theoretical implications and future research are presented.

Full text

Available online at: http://journal.uinsgd.ac.id/index.php/ks
Khazanah Sosial, Vol. 5 No. 3: 453-467
DOI: 10.15575/ks.v5i3.29485
*Copyright (c) 2023 Vigory Gloriman Manalu
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Received: September 08, 2023; Revised: October 23, 2023; Accepted: October 28, 2023
Entrepreneurial Orientation and Product Innovation Performance of
MSMEs in West Java: Foresight Capabilities as a Mediating Variable
Vigory Gloriman Manalu1,*, Faishal Rahimi2, Ilham Akbar3
1,2,3Faculty of Economics and Business, Kuningan University, Kuningan, Indonesia
*E-mail: igoryglo@uniku.ac.id
Abstract
MSMEs have become the foundation for growth in various countries, including Indonesia. Especially
in West Java, MSMEs play an essential role in absorbing labour. However, MSMEs in West Java face
an uncertain business environment and difficulties in creating products that suit market needs. This
research will use the Resource Based View (RBV) and Dynamic Capability View (DCV) theories. This
research examines the influence of entrepreneurial orientation on the innovation performance of
MSMEs by using foresight capabilities as a mediating variable. 245 MSMEs were collected as
respondents to fill out the survey questionnaire. The MSMEs used in this research are from West Java,
with the main characteristics of operating for more than one year and developing new products for
at least two years. Structural equation modeling (SEM) was used to test the research framework. It
was found that entrepreneurial orientation can influence the innovation performance of MSMEs
positively and significantly. The influence of foresight capabilities on MSME product innovation
performance has a positive effect. The mediating effect of foresight capabilities on the relationship
between entrepreneurial orientation and product innovation performance was partially mediated.
MSMEs that behave more entrepreneurially benefit from being more proactive, innovative, and risk-
taking in an uncertain market environment. Product innovation can be achieved through a good
understanding of entrepreneurial orientation mediated by an understanding of Foresight to process
information for future decisions. Finally, managerial and theoretical implications and future research
are presented.
Keywords: Entrepreneurial Orientation; Foresight; Product Innovation Performance; UMKM; West
Java.
Abstrak
UMKM telah menjadi tumpuan pertumbuhan di berbagai negara, termasuk Indonesia. Khususnya di
Jawa Barat, UMKM berperan penting dalam penyerapan tenaga kerja. Namun UMKM di Jawa Barat
menghadapi lingkungan bisnis yang tidak menentu dan kesulitan dalam menciptakan produk yang
sesuai dengan kebutuhan pasar. Penelitian ini akan menggunakan teori Resource Based View (RBV)
dan Dynamic Capability View (DCV). Penelitian ini menguji pengaruh orientasi kewirausahaan
terhadap kinerja inovasi UMKM dengan menggunakan kapabilitas foresight sebagai variabel mediasi.
Sebanyak 245 UMKM dikumpulkan sebagai responden untuk mengisi kuesioner survei. UMKM yang
digunakan dalam penelitian ini berasal dari Jawa Barat, dengan ciri utama beroperasi lebih dari satu
tahun dan mengembangkan produk baru minimal dua tahun. Structural Equation Modeling (SEM)
digunakan untuk menguji kerangka penelitian. Ditemukan bahwa orientasi kewirausahaan dapat
mempengaruhi kinerja inovasi UMKM secara positif dan signifikan. Pengaruh kapabilitas foresight
terhadap kinerja inovasi produk UMKM berpengaruh positif. Efek mediasi kemampuan pandangan
ke depan pada hubungan antara orientasi kewirausahaan dan kinerja inovasi produk dimediasi
secara parsial. UMKM yang berperilaku lebih berwirausaha mendapat manfaat dari sikap mereka
yang lebih proaktif, inovatif, dan berani mengambil risiko dalam lingkungan pasar yang tidak
menentu. Inovasi produk dapat dicapai melalui pemahaman yang baik tentang orientasi
kewirausahaan yang dimediasi oleh pemahaman untuk mengolah informasi untuk pengambilan
keputusan di masa depan. Penelitian ini menyajikan implikasi manajerial dan teoritis serta penelitian
masa depan disajikan.
Kata Kunci: Orientasi Kewirausahaan; Pandangan ke Depan; Kinerja Inovasi Produk; UMKM; Jawa
Barat.

Khazanah Sosial, Vol. 5 No. 3: 508-519
Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight
Capabilities as a Mediating Variable
Vigory Gloriman Manalu, Faishal Rahimi, Ilham Akbar
ISSN 2715-8071 (online)
│ 509
INTRODUCTION
With the rapid development of the business environment, companies are expected to be able
to compete with competitors. To survive in the cutthroat competition, companies must be more
innovative with their products (Manalu et al., 2023). Unlike large companies, MSMEs face
hypercompetitiveness, characterized by volatility, uncertainty, complexity, and ambiguity (VUCA)
(Semke & Tiberius, 2020). On the other hand, MSMEs often need more human resources, access to
capital, ease of access to information, and creativity to innovate compared to established
companies. So, the innovation by MSMEs will enable them to survive the cruel business
competition.
Product innovation is an important prerequisite for the sustainability of business activities
and organizational success (Madhoushi et al., 2011). Some researchers pay more attention to
entrepreneurial orientation in small companies' product innovation (Genc et al., 2019; Ibidunni et
al., 2020; Liao & Zhao, 2020; Shaher & Ali, 2020). Madhoushi et al. (2011) found that
entrepreneurial orientation can influence SMEs' innovation performance in industrial zones in Iran.
Furthermore, knowledge can play an important role in mediating the relationship between
entrepreneurial orientation and innovation performance.
Entrepreneurial orientation is a process, decision-making style, and principles representing
a company's strategic orientation (Lumpkin & Dess, 1996). Even though there is much research
related to entrepreneurial orientation and SME product innovation, it still has limitations. Several
researchers propose knowledge as a crucial factor in mediating this relationship (Liao & Zhao,
2020; Manalu et al., 2022). On the other hand, good knowledge of consumer desires and future
competitor maneuvers is needed for decision-making strategies to increase innovation. Thus, this
research will propose the concept of foresight as a mediating variable, potentially mediating this
relationship.
The foresight concept provides MSMEs with the ability to process the information they have
in the past and present for future decision-making. Although foresight has been applied to large
companies in various sectors, small companies can practice foresight through SWOT analysis,
interviews, and brainstorming (Vishnevskiy & Egorova, 2015).
Currently, MSMEs in Indonesia are experiencing a positive trend, with the number of MSMEs
continuing to increase every year. The positive growth of MSMEs will have an impact on improving
the Indonesian economy. Most of the MSMEs in Indonesia are household business activities that
can absorb much labour. According to the Indonesian Ministry of Cooperatives and SMEs, in 2019,
there were 65.4 million and 123.3 thousand workers (Tambunan, 2023). Especially in West Java,
MSMEs are also receiving significant attention to increasing labour absorption. Even though MSMEs
are often associated with economic growth in a country, they are not free from problems, one of
which is product suitability with market needs (Chusumastuti et al., 2023). Thus, product
innovation can be the key to surviving an uncertain business environment. On the other hand, the
entrepreneurial spirit of business actors also plays a vital role in forming MSMEs that have
competitiveness. Even though MSMEs have limited resources, the use of Foresight can be obtained
simply through brainstorming and desk reviews between owners and employees.
Resource-based View (RBV) and Dynamic Capability View (DCV) will be the theoretical basis
for this research. RBV views companies as having two types of tangible and intangible resources
(Barney, 1991). The high intensity of competition in the business environment requires companies

Khazanah Sosial, Vol. 5 No. 3: 508-519
Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight
Capabilities as a Mediating Variable
Vigory Gloriman Manalu, Faishal Rahimi, Ilham Akbar
ISSN 2715-8071 (online)
510 │
to adapt quickly and dynamically (Teece et al., 1997; Wilden et al., 2013). RBV is significantly
related to MSME performance because internal capabilities are assumed to be essential for
improving performance and competitive gaps (Newbert, 2007).
Entrepreneurial orientation can be defined as the strategic behavior of a company related to
risk-taking, innovation, and proactive (Covin & Slevin, 1989). Many studies show that
entrepreneurial orientation is important for achieving competitive advantage and increasing
maximum company profits (Zahra & Covin, 1995). First understood by Miller (1983) and then
expanded by Covin & Slevin (1989), entrepreneurial orientation is a company's behavioral
tendencies, managerial philosophy, or decision-making practices characterized by innovation,
proactiveness, and a willingness to take risks. The focus is not on the individual but the process
(Wiklund, 1999). Entrepreneurship researchers define companies that act on three dimensions
(risk-taking, innovative, and proactive) as 'entrepreneurial'. Entrepreneurial orientation is often
measured using unidimensional and multidimensional methods. The unidimensional concept
refers to (Miller, 1983) and the multidimensional concept (Lumpkin & Dess, 1996).
A collection of literature has examined the relationship between entrepreneurial orientation
and product innovation performance of MSMEs (Adams et al., 2019; Genc et al., 2019; Iqbal et al.,
2021; Liao & Zhao, 2020; Shaher & Ali, 2020; Zhai et al., 2018). In their research, Zhai et al. (2018)
found that entrepreneurial orientation has a significant positive impact on company innovation
performance. Furthermore, Iqbal et al. (2021) found that entrepreneurial orientation can
significantly strengthen innovation performance through risk-taking, reactiveness, and
innovativeness.
Entrepreneurial orientation can be seen as an intangible organizational resource that will
impact the courage to take risks, increase innovation, and proactively seek market-related
information (Manalu et al., 2022). Meanwhile, foresight is often explained as practices, behavior,
 et
al., 2014).
The foresight concept depends on the information collected and possessed for future
strategic decision-making. Entrepreneurial orientation plays a very important role in obtaining
information based on proactiveness, innovativeness, and risk-taking, strengthening the foresight of
MSMEs in networking, time horizons, and analysis.
The RBV explains that rare, difficult-to-imitate, and valuable capabilities will be the basis of
sustainable competitive advantage (Barney, 1991). Entrepreneurial orientation can be seen as an
intangible organizational resource that will impact the courage to take risks, increase innovation,
and proactively seek market-related information (Manalu et al., 2022). Meanwhile, foresight is
often explained as practices, behavior, processes, programs, techniques, tools, and orientation to
the future (Amsteus, 2011
past and present events and projects possible future events (Slaughter, 1996). Thus, foresight
through scenarios allows companies to reduce uncertainty and increase the ability to understand
changes and challenges in the future (Amer et al., 2013).
This research will use the concept of foresight, which is linked to the product innovation
performance of MSMEs. The ability of MSMEs to predict future events is needed to compete in an
uncertain business environment (Manalu et al., 2023; Rastegari et al., 2020). The information they
get from various parties will help develop future product innovation. MSMEs can focus on daily
business activities; they can support integrating external knowledge into developing innovation.

Khazanah Sosial, Vol. 5 No. 3: 508-519
Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight
Capabilities as a Mediating Variable
Vigory Gloriman Manalu, Faishal Rahimi, Ilham Akbar
ISSN 2715-8071 (online)
│ 511
So, it is important to know the foresight capabilities of MSMEs and their relationship to product
innovation.
Several previous studies have tried to link foresight with SME innovation performance
(Manalu et al., 2023; Milshina & Vishnevskiy, 2018). AlMujaini et al. (2021), in their research
examining the influence of foresight on SME innovation, were found to have a positive and
significant effect. This paper will use multidimensional formative measurements using three
dimensions: a. networking, b. time horizon, and 
This research examines the direct effect of entrepreneurial orientation on MSME product
innovation performance and uses foresight as mediation. The research population used in this
research is MSMEs located in the West Java region and only in the craft, fashion, and food sectors.
Finally, the methodology, results, discussion, conclusions, managerial implications, research
limitations, and future research will be discussed.
RESEARCH METHOD
Sample and data collection
This research adopts a quantitative method to test the direct and indirect effect hypothesis
between entrepreneurial orientation, foresight capabilities, and MSME product innovation
performance. A questionnaire survey approach will be used to collect data in this paper. A Likert
scale of 1, "strongly disagree" - 7, "strongly agree" is used to measure the dependent and
independent variables. The population in this research is MSME owners from the West Java region,
Indonesia. The main characteristics are that they have been conducting business activities for over
a year and have had new product innovations for less than two years. These general criteria are
used to ensure the accuracy of foresight capability and product innovation performance. Research
questionnaires were distributed using non-probability sampling techniques online and offline. The
period for distributing questionnaires is from March to June 2023. Three hundred questionnaires
have been distributed, 268 questionnaires have been returned, and 245 or 81.6% of questionnaires
can be continued at the testing stage.
Measurement
This paper employs three variables: entrepreneurial orientation, foresight capabilities, and
product innovation performance. Entrepreneurial orientation uses nine indicators: proactiveness,
risk-taking, and innovativeness (Manalu et al., 2022; Miller, 1983). Foresight capabilities employ
ten indicators consisting of three dimensions: networking, time horizon, and analyzing referring to
(Nyuur et al.
will use three indicators referring to (De Luca & Atuahene-Gima, 2007; Muñoz-Pascual et al., 2019).
RESULTS AND DISCUSSION
Demographic Respondent
Data was collected for almost four months (March to June). Based on Table 1, we propose
several general characteristics such as age, gender, education level, length of time MSMEs have been
operating, and product development. The total number of questionnaires that could be processed
was 240 respondents. The average age of those filling out the questionnaire was 31-40 (39%). It

Khazanah Sosial, Vol. 5 No. 3: 508-519
Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight
Capabilities as a Mediating Variable
Vigory Gloriman Manalu, Faishal Rahimi, Ilham Akbar
ISSN 2715-8071 (online)
512 │
was found that the average MSME owner was male, 192 (78%) of the respondents. MSME owners
who filled out the questionnaire had an average undergraduate education of 125 (51%)
respondents. The time that MSMEs have been carrying out business activities was found to be an
average of 1-3 years for 195 (80%) respondents. Finally, to measure that MSMEs are carrying out
product innovation by looking at the product development that has been carried out, the average
MSMEs have carried out product development in less than one year, 151(62%).
Table 1. Demographic Respondent


Age












Gender






Level of Education









MSME operated









New product develops






Source: Processed primary data, 2023
Convergent Validity
Validation Confirmatory factor analysis (CFA) was conducted to test the measurement
model. Overall, CFA was a satisfactory measurement model for measuring the variables of
entrepreneurial orientation, foresight capabilities, and product innovation performance. Based on

= 0.831, Agfi = 0.788, Tli = 0.873, Nfi = 0.820, Cfi = 0.889, Ifi = 0.890, Rmsea = 0.084. Next, the
Average Variance Extracted (AVE) and Composite Reliability (CR) tests were carried out. Table 2
shows the factor loadings, AVE, and CR values. MSMEs ' entrepreneurial orientation, foresight
capabilities, and product innovation performance were found to have loading factor values > 0.5,
AVE values > 0.5, and CR values > 0.7. These results are overall appropriate and adequate for
improving indicators (Bagozzi & Yi, 1988).

Khazanah Sosial, Vol. 5 No. 3: 508-519
Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight
Capabilities as a Mediating Variable
Vigory Gloriman Manalu, Faishal Rahimi, Ilham Akbar
ISSN 2715-8071 (online)
│ 513
Table 2. Loading Factor, AVE, CR, Mean and Standard Deviation
Indicators
Loading Factor
AVE
CR
Mean
SD
Eo1
0.793
0.60
0.90
3.51
119
Eo2
0.754
Eo3
0.759
Eo4
0.785
Eo5
0.729
Eo6
0.802
Eo7
0.802
Eo8
0.779
Eo9
0.763
Nt1
0.767
0.54
0.78
3.74
1.21
Nt2
0.725
Nt3
0.716
Th1
0.796
0.61
0.86
3.94
1.28
Th2
0.772
Th3
0.802
Th4
0.762
An1
0.749
0.58
0.80
3.97
1.29
An2
0.775
An3
0.752
Pip1
0.754
0.63
0.84
4.67
1.31
Pip2
0.820
Pip3
0.806
Source: Processed primary data, 2023
*Note. Eo: entrepreneurial orientation, Nt: networking, Th: time horizon, An: analyzing, Pip: product
innovation performance
Direct Effect Test
Hypothesis testing is carried out using Structural Equation Modeling (SEM). Direct
relationship testing was carried out, and it was found that entrepreneurial orientation influences
   
0.399, p = 0.01 < 0.05), entrepreneurial orientation influences time horizon positively and

time horizon influences the product innovation performance
               
             
entrepreneurial orientation can influence MSME product innovation performance positively and


Khazanah Sosial, Vol. 5 No. 3: 508-519
Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight
Capabilities as a Mediating Variable
Vigory Gloriman Manalu, Faishal Rahimi, Ilham Akbar
ISSN 2715-8071 (online)
514 │
Table 3 Path Testing
Path
Standardize Beta
T statistic
p
Result
Eo
→
Nt
0.511
5.579
0.001
Supported
Eo
→
An
0.399
4.508
0.001
Supported
Eo
→
Th
0.349
4.182
0.001
Supported
An
→
Pip
0.273
3.579
0.001
Supported
Th
→
Pip
0.597
7.055
0.001
Supported
Nt
→
Pip
0.182
2.239
0.025
Supported
Eo
→
Pip
0.320
3.634
0.001
Supported
Source: Processed primary data, 2023
Mediation Effect
Table 4. Mediation Results
Mediating effect
VAF value
Result
Eo
→
Nt
→
Pip
0.225
Supported
Eo
→
Th
→
Pip
0.394
Supported
Eo
→
An
→
Pip
0.254
Supported
Source: Processed primary data, 2023
Mediation effect testing will use the Variance Accounted For (VAF) technique by Preacher
and Hayes (2008) to determine full or partial mediation. Mediation effect testing can be carried out
if the direct and indirect effects are significant or the direct effect is not significant, but the indirect
effect is significant. Based on VAF calculations, it was found that networking can partially mediate
the relationship between entrepreneurial orientation and MSME product innovation performance
by 0.225 (> 0.20 and < 0.80). Furthermore, time horizon can partially mediate the relationship
between entrepreneurial orientation and MSME product innovation performance by 0.394 (> 0.20
and < 0.80). Finally, analysis can partially mediate the relationship between entrepreneurial
orientation and MSME product innovation performance by 0.254 (> 0.20 and < 0.80). Overall,
foresight capabilities using the three measurement dimensions of networking, time horizon, and
analysis were found to partially mediate the relationship between entrepreneurial orientation and
MSME product innovation performance (Table 4).
Entrepreneurial Orientation and Product Innovation Performance
The results of testing entrepreneurial orientation on MSME product innovation performance
were found to have a positive and significant influence. The results show that MSMEs in West Java
already have a good entrepreneurial orientation. MSME owners who have proactive,
innovativeness, and risk-taking behavior will be able to improve their performance in creating
product innovations.
This study's results align with previous research (Ato Sarsah et al., 2020; Tang et al., 2015;
Zhai et al., 2018). Zhai et al. (2018), using a sample of 324 manufacturing enterprises, found that
entrepreneurial orientation can improve technological innovation performance and ultimately can
impact company performance. Shaher and Ali (2020), using SMEs in Kuwait with 221 respondents,

Khazanah Sosial, Vol. 5 No. 3: 508-519
Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight
Capabilities as a Mediating Variable
Vigory Gloriman Manalu, Faishal Rahimi, Ilham Akbar
ISSN 2715-8071 (online)
│ 515
found that entrepreneurial orientation can influence innovation performance positively and
significantly.
Proactiveness provides a view for MSME owners to actively seek information for product
innovation needs. The innovativeness of MSMEs will provide their understanding so that they
continue to want to know new things through experimental processes and creativity to develop
new products. Risk-taking will enable MSMEs to make decisions by taking into account the risks
that come from the knowledge they have in order to determine product innovation.
Entrepreneurial Orientation and Foresight Capabilities
The results of entrepreneurial orientation testing can positively influence foresight
capabilities consisting of networking, time horizon, and analysis. This result is in line with the RBV
theory which explains that small companies lack tangible assets and need more tangible assets.
Entrepreneurial quality influences and is influenced by several internal factors (Fontela et al.,
2006). Abuzaid (2017) found that foresight and visioning can influence entrepreneurial orientation
positively and significantly.
Foresight is the ability to understand events that will occur in the future to find opportunities
and threats that might affect business activities. Based on the dynamic capability view theory,
companies must have dynamic capabilities to survive in an uncertain business environment. The
owner's proactiveness will provide foresight to seize opportunities and anticipate future demand
(Dess & Lumpkin, 2005). Thus, the entrepreneurial orientation of MSME owners will positively
impact foresight capabilities.
Foresight Capabilities and Product Innovation Performance
The results of this research found that foresight capabilities, namely networking, time
horizon, and analyzing, can influence the product innovation performance of MSMEs positively and
significantly. This study's results align with previous research in theory and testing (Havas et al.,
2010; Manalu et al., 2023; Sarpong & Meissner, 2018; Yoon et al., 2018).
Calof et al. (2020) found that open innovation can occur by combining the concepts of
foresight and foresight networks to explore and utilize corporate foresight. Innovation can be done
by using technology selection, scanning disruptions, and identifying future customer needs. Manalu
et al. (2023) found that foresight capabilities can positively influence product innovation
performance.
The network is developed by providing sufficient information for developing new products
in line with consumer needs in the future. The time horizon will provide the ability to determine
periods for analyzing events or changes in the market related to competitors and consumers.
Analysis carried out well by companies will be able to increase their ability to innovate in line with
consumer needs in the future (Martínez-Román et al., 2011). MSMEs need analysis to be able to
interpret the data that has been collected to determine potential conditions in the future.
Mediation effect of Foresight
This research found that network, time horizon, and analysis can mediate the relationship
between entrepreneurial orientation and MSME product innovation performance. This research
provides a new view that foresight capabilities can mediate MSMEs' entrepreneurial orientation

Khazanah Sosial, Vol. 5 No. 3: 508-519
Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight
Capabilities as a Mediating Variable
Vigory Gloriman Manalu, Faishal Rahimi, Ilham Akbar
ISSN 2715-8071 (online)
516 │
and product innovation performance. A good foresight concept will allow MSMEs to process current
and past data for future decision-making to improve their innovation performance. On the other
hand, the entrepreneurial orientation of MSMEs will strengthen the search for information related
to competitors and consumers to improve foresight capabilities.
Based on the Dynamic Capability View theory, companies in an uncertain business
environment need dynamic capabilities to quickly adapt to changes (Yoon et al., 2018).
Entrepreneurial orientation can influence product innovation performance mediated by foresight,
which has a strategic view to obtain superior competitive advantages through resources and
configuring knowledge based on the information held (Liao & Zhao, 2020).
The results of this research provide new theoretical and practical insights. It was found that
this research is in line with the RBV theory, where companies that do not have sufficient capital and
human resources tend to use intangible assets to gain competitive advantage. We propose foresight
capability as a mediating variable in line with the idea that companies must have dynamic
capabilities to face the uncertainty of the business environment. It was found that foresight
capability can mediate the relationship between entrepreneurial orientation and product
innovation performance, especially in MSMEs in West Java.
The results of the research can provide several new practical ideas. Firstly, it was found that
MSME owners in West Java already have a good entrepreneurial spirit. Entrepreneurial orientation
will provide new insight for each owner regarding being proactive in seeking information that will
be useful, innovative in solving any problems that will occur and braver in taking risks based on in-
depth structural and systematic considerations. We realize that foresight capability has only been
studied in large companies with good resources. However, based on our indicator measurements,
MSMEs can implement foresight capability well. These findings will be significant for MSMEs,
especially in West Java, because having foresight capabilities will help them predict competitor
maneuvers, consumer desires, and changes that will occur in the future. Having the ability to predict
the future it will help West Java MSMEs in determining the direction of their product innovation in
the future.
CONCLUSION
This research used a survey of 240 MSMEs from West Java, Indonesia. Theoretically, this
research proposes and tests the relationship between entrepreneurial orientation and product
innovation performance using foresight capabilities as a mediating variable. The research results
suggest that entrepreneurial orientation has a positive and significant effect on the innovation
performance of MSMEs, and foresight capabilities can mediate the relationship between
entrepreneurial orientation and product innovation performance. Strengthening the
entrepreneurial orientation of MSMEs will increase their ability to predict changes that will occur
in the future, ultimately impacting their innovation performance. MSMEs that are more
entrepreneurially oriented will provide more opportunities to obtain information from
competitors and consumers, the opportunity to develop and be more competitive. This research
found that MSMEs originating from West Java have implemented Foresight to improve product
innovation performance. MSME managers or owners must be able to utilize the information they
receive from consumers to carry out continuous innovation. The entrepreneurial orientation of
MSME owners will play an essential role in their ability to use foresight abilities that have an impact

Khazanah Sosial, Vol. 5 No. 3: 508-519
Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight
Capabilities as a Mediating Variable
Vigory Gloriman Manalu, Faishal Rahimi, Ilham Akbar
ISSN 2715-8071 (online)
│ 517
on product innovation. MSMEs are companies that have limited tangible assets. To be able to reduce
these obstacles, MSMEs must be able to strengthen their internal factors by emphasizing intangible
assets. Increasing their ability to be more proactive and innovative and act on risks will make it
easier for them to obtain information that will improve their innovation performance to survive
and develop in an uncertain business environment. Although the research results provide new
insights, this research is not free from various limitations. First, few have tested the concept of
foresight capabilities quantitatively. Second, this research only focuses on MSMEs operating in the
crafts, fashion, and food sectors. Third, we only use MSMEs from the West Java region. This research
still requires future research efforts, considering that developing foresight capabilities is necessary.
Furthermore, several industrial sectors are felt to provide new knowledge. Lastly, testing is still
needed in other areas.
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           

                

    


       




                
      

 



Khazanah Sosial, Vol. 5 No. 3: 508-519
Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight
Capabilities as a Mediating Variable
Vigory Gloriman Manalu, Faishal Rahimi, Ilham Akbar
ISSN 2715-8071 (online)
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
       

               


        


        

     
  

                
         
       



            
      

           
   


  

    


           
    


    



    
     

 



    

             
         

Khazanah Sosial, Vol. 5 No. 3: 508-519
Entrepreneurial Orientation and Product Innovation Performance of MSMEs in West Java: Foresight
Capabilities as a Mediating Variable
Vigory Gloriman Manalu, Faishal Rahimi, Ilham Akbar
ISSN 2715-8071 (online)
│ 519
     



              




      

            




 



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


  


    

              

        
      


        


         

             


                 
        
    
