What should companies consider to improve their performance?

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Illustration by Feri Fenoria

UNAIR NEWS – It is natural for companies to measure their level of performance because it is closely related to the company’s process to achieve its goals. The performance includes how the company optimally manages financial, material, and human resources.

The topic of measuring the company’s performance interests Prof. Dr. I Made Narsa., SE., M.Si., Ak., CA. from Faculty of Economics and Business, Universitas Airlangga to conduct a study with his team. The study entitled”The Effect of Market Orientation, Innovation, Organizational Learning and Entrepreneurship on Firm Performance” uses a survey method involving 63 respondents.

A total of 92.06% of the respondents served as managers while the rest were directors of the company. The respondents’ work experience is also an important point in this study. This point shows the level of respondents’ understanding on the strategy carried out by the company. The majority of respondents, 39.68% of them have work experience of more than 10 years, 36.51% with working period 6-10 years, and 23.81% with working period less than 5 years.

Made considers that companies do not prioritize performance measurement because of the limited knowledge of managers. When the solution to the company performance’s problem is to recruit reliable resources in carrying out strategic activities which one of the most important is about the company’s capabilities.

“Thus, a question arises, do the company’s capabilities are the main source to achieve optimal company performance? Focusing on company capability and performance, in our research, capability is seen as a strength that can improve overall performance, “explained Made.

Therefore, Made narrowed the capability points in his study into four, market orientation, innovation, organizational learning, and entrepreneurship. Market orientation emphasizes the needs of consumers in the long run. Meanwhile, innovation is considered very important especially if the company wants to survive in the rigors and competitive world of business. The more a company can develop its competitive advantage, the more optimal its performance level will be.

Organizational learning is how companies respond to the development of science. The focus in organizational learning is being an important component in implementing the company’s vision and missions.

The last point, a reliable entrepreneurial orientation is also needed by the company. Entrepreneurial orientation is an important tool that can lead companies to increase profitability.

In the end of this study, the results showed that organizational learning and entrepreneurship affect company performance. On the other hand, market orientation and innovation do not affect company performance.

“The results of this study have implications that companies must prioritize organizational learning and entrepreneurship because it is one of the strengths that can improve company performance. In addition, the company should continue to improve market orientation and continue to innovate so that the company can achieve the expected goals, “he concluded.

Author: Tsania Ysnaini Mawardi

Editor: Nuri Hermawan

Details of this research available at:

https://www.abacademies.org/articles/The-effect-of-market-orientation-innovation-organizational-learning-and-1528-2651-22-3-365.pdf

Ismail, I Made Narsa, and Basuki (2019). The Effect of Market Orientation, Innovation, Organizational Learning and Entrepreneurship on Firm Performance. Journal of Entrepreneurship Education, vol. 22 (3): 1-13

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