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第 48 卷 第 6 期 湖 南 大 学 学 报( 自 然 科学版 ) Vol. 48. No. 6.

2021 年 6 月 Journal of Hunan University(Natural Sciences) June 2021

Open Access Article

The Role of Absorptive Capacity and Organizational Innovation in Culinary Business


Zoel Hutabarat1,2, Willy Arafah1, Farida Jasfar1
1
Doctoral Program, Trisakti University, Jakarta, Indonesia
2
Faculty of Economics and Business, Pelita Harapan University, Jakarta, Indonesia
Abstract: The growth of micro and small businesses in the culinary sector in Jakarta and Tangerang is quite
significant. Changes in the way to market the products and payment systems that force an entrepreneur to switch to
e-commerce and digital payment systems have made many entrepreneurs not ready or able to adapt quickly. For this
reason, this study wants to examine the influence of organizational culture and absorptive capacity on
organizational performance mediated by organizational innovation in micro and small business actors in the
culinary field in the Jakarta and Tangerang areas. This study indicates that the mediating role of organizational
innovation in the relationship of organizational culture and absorptive capacity on organizational performance is not
supported by micro and small business actors in the culinary field in the Jakarta and Tangerang areas. However, the
direct effect of organizational learning on organizational innovation and organizational performance is proven to be
supported in this study. Meanwhile, the influence of absorptive capacity on organizational performance is not
supported, either directly or indirectly. The ability to adapt by identifying and assimilating new information to
produce innovations that can improve company performance is still very low. However, the entrepreneur's
awareness of the importance of speed in adapting to changes in companies and markets is good enough.
Keywords: organizational culture, absorptive capacity, organizational innovation, organizational
performance, strategic flexibility, micro and small enterprises.

吸收能力和组织创新在烹饪业务中的作用

摘要:雅加达和丹格朗烹饪行业的微型和小型企业的增长非常显着。迫使企业家转向电
子商务和数字支付系统的产品和支付系统营销方式的变化使许多企业家没有准备好或无法快
速适应。因此,本研究希望通过雅加达和丹格朗地区烹饪领域的微型和小型企业参与者的组
织创新来检验组织文化和吸收能力对组织绩效的影响。本研究表明,雅加达和丹格朗地区烹
饪领域的微型和小型企业参与者不支持组织创新在组织文化和吸收能力对组织绩效的关系中
的中介作用。然而,本研究证明了组织学习对组织创新和组织绩效的直接影响。同时,吸收
能力对组织绩效的影响没有得到直接或间接的支持。通过识别和吸收新信息来产生可以提高
公司绩效的创新的适应能力仍然很低。但是,企业家对于速度在适应公司和市场变化中的重
要性的认识已经足够好了。
关键词:组织文化、吸收能力、组织创新、组织绩效、战略灵活性、小微企业。

1. Background changes in market structures that force business actors


Current business competition is not limited by the to adapt [1]. The same applies to owners of micro,
space that separates business actors and consumers small and medium enterprises (SMEs). Data from the
from which part of the world. All business lines are Ministry of Cooperatives and Small and Medium
connected by information technology, resulting in Enterprises shows that in 2018 there were around 64
Received: March 16, 2021 / Revised: April 14, 2021 / Accepted: May 19, 2021 / Published: June 28, 2021
About the authors: Zoel Hutabarat, Doctoral Program, Trisakti University, Jakarta, Indonesia; Faculty of Economics and
Business, Pelita Harapan University, Jakarta, Indonesia; Willy Arafah, Farida Jasfar, Doctoral Program, Trisakti University,
Jakarta, Indonesia
213

million registered micro-, small and medium running a business online (23.8%). Some say that
enterprises (99%) and employed around 117 million workers who work in companies are not ready to go
workers (97%). A large number of SME entrepreneurs digital (19.9%), and the rest rely more on inadequate
in Indonesia is inversely proportional to the infrastructure, lack of funds, and are still comfortable
contribution of the economy. SMEs only contributed selling offline. When business actors are faced with
42%, while medium and large enterprises contributed pandemic conditions like today, MSEs are forced to
57%. sell on e-commerce to survive. In fact, from the results
In the Jakarta and Tangerang areas, around 1.1 of a survey conducted by the International for Labor
million SME actors are registered. Of these, 381,324 Organization (ILO), almost 70% of MSEs in Indonesia
registered micro and small businesses in the culinary have closed due to their inability to survive and adapt
sector. More than 63% of business actors experienced a to changes in how to sell online.
decrease in turnover, and only 3% of business To innovate and be competitive in the market, one
operators maintained their business. Market movement of the variables that have been studied is organizational
from offline to online is one of the biggest contributors learning. According to this perspective, organizational
to SMEs' failure to maintain their business. It is known innovation will grow stronger if supported by
that around 8.5% of micro and small business actors organizational culture [8]. Organizational innovation
can use computers, and only about 16% use the supported by strong organizational learning will
internet. The introduction and use of internet produce good organizational performance in companies
technology in developing your own business cannot [9, 49]. In addition, Zerwas [10] emphasizes the
guarantee that the business will develop. E-commerce importance of knowledge for company activities during
accommodates all business actors from micro to large its learning process towards company growth. Zerwas
in Indonesia. For this reason, micro and small business stated that the company's resources and the resulting
actors need to be given knowledge and training to get productivity are functions of knowledge. This view
to know the business competition in the electronic affects the relevance of the absorption of new
market. Currently, the government, assisted by the knowledge and information because absorptive
private sector, is trying to digitize MSEs. Until now, capacity is the company's ability to recognize the value
only 14% of MSEs are ready to enter the digital of new external information, assimilate it, and apply it
platform. to commercial purposes [10]. Therefore, absorptive
Several factors slow down the development of capacity is very important to develop and improve the
MSEs in Indonesia, such as a lack of knowledge company's knowledge base, which can become the
resources, especially the use of information technology company's resource strength to produce innovation
to obtain new information, market developments, or [11], [12]. The ability to innovate based on company
changes in consumer desires. Knowledge is a absorptive capacity will also create good organizational
prerequisite for generating innovation so that performance [7, 50]. In addition, the ability to be
companies can produce long-term competitive flexible and quick in making decisions to compete in
advantages through innovations made by them [2]. the market is a key factor. In general, the ability to be
Similar research has also been carried out on frozen flexible and speed in decision-making can be measured
food businesses in Thailand [3]. In general, innovation in large companies. However, in the case of MSEs, this
is shown in the form of changes that the company has not been done. Therefore, the strategic flexibility
introduces to the market, be it products or services [4]. variable that affects the relationship between
The company's ability to introduce new products or organizational innovation on organizational
services that can meet market needs [5], [6] by using performance is a new contribution in this study.
new technology to commercialize it reflects its ability
to innovate. In general, MSEs carry out a closed 2. Organizational Culture
innovation process using their resources and focus Culture is one of the unique characteristics of
more on internal research and development, with humans, based on the ability to consciously look at
boundaries within the company [7]. As a result, oneself and others from each other's point of view. This
company knowledge can only be developed and reflexive capacity of man is what makes culture
applied on a home industry scale while the transfer of possible. Developing a mutually acceptable meaning of
knowledge between companies is relatively limited. how to perceive, categorize, and think about what is
The ability to absorb new information in terms of happening around us is necessary to avoid the
the use of technology, especially due to educational catastrophic anxiety that will result from reacting to
background and the desire to receive new information everything as if it were a new phenomenon [13].
for MSEs in Indonesia, is still very low. This is Schein [14] defines organizational learning as a pattern
supported by a survey conducted by the Katadata or habit found or developed by certain groups in the
Insight Center, which mentions several obstacles to learning process to adapt and deal with problems in an
going global, such as not being able to use and utilize integrated manner in external and internal factors and
the internet (34%). There is also a lack of knowledge in have been tested to work well enough to be considered
214

valid. Then it is taught to new members as a correct benefit from absorbing and using new knowledge, the
way to see, think, and feel connected to the problem. less the company will be motivated to increase the
Zandi et al. [15] support this understanding by looking absorption of new knowledge.
at organizational culture as a pattern and perspective of
companies seeing and solving problems to achieve 4. Organizational Innovation
goals and maintain the company over time. Efendi [16] Many studies claim that absorptive capacity is
emphasizes that continuous learning and improvement formed from knowledge. According to Cohen &
is a culture where people are incentivized to share Levinthal [48], companies that invest in R&D not only
knowledge with colleagues and take advantage of pursue innovation in production processes but also
learning from others rather than hoarding information develop and maintain the absorptive capacity to
and reinventing new knowledge. It is a culture assimilate, transform and exploit external knowledge
committed to improving itself and the businesses it [19] to generate long-term competitive advantage [20].
serves. According to Fitriati [4], knowledge Companies must innovate processes and products and
management is basically about sharing knowledge, shift from a traditional closed innovation model to an
highlighting trust, openness, and collaboration to build open innovation model. In a closed innovation model,
the foundation for sharing. Chercione and Esposito [17] companies generate, develop, and commercialize their
confirm that knowledge creation is associated with knowledge and ideas, and in an open innovation model,
cultural factors such as collaboration, trust, and knowledge and ideas flow in and out of the company
learning, the most creative group when its members [20]. Currently, the term innovation means open-ended
collaborate. nature, given the demands of rapidly changing markets,
and companies can no longer survive relying on
3. Absorptive Capacity internal strength alone. The term open innovation was
The concept of absorptive capacity was first coined by Henry William Chesbrough to describe the
introduced and applied at the company level by Cohen old paradigm shift, namely closed innovation, in which
and Levinthal [48]. Zerwas [10] defines absorptive companies are very independent in terms of creating
capacity as the company's ability to recognize the value knowledge and introducing it to the market in the form
of new external information, assimilate it, and apply it of new products and services because they cannot
to commercial purposes. Zahra and George [18] view ensure the quality, availability, and capability of other
absorptive capacity as a series of organizational people's ideas [21] as well as accelerating internal
routines and processes in which companies acquire, innovation and expanding markets [22]. Rigby & Zook
assimilate, transform, and exploit knowledge to [21] offer four reasons why companies are increasingly
produce dynamic organizational capabilities. This following the principle of open innovation. First,
theory assumes that absorbing new knowledge can help importing new ideas is a good way to multiply
companies be more innovative and flexible and achieve innovation capabilities, which means that companies
higher performance levels. The theory also assumes can potentially offer more and better output by
that companies with a higher ability to absorb new accessing external inputs. This is because if people
knowledge will have a competitive advantage [10]. A have many ideas to choose from, the cost, quality, and
company's technical knowledge tends to come from speed of innovation increase. Second, exporting ideas
four sources. Namely, first, the company carries out its is a good way to raise money because ideas have a
research and development. Second, the company market value that can be exploited through sales,
acquires new knowledge from its manufacturing licensing, etc. Third, exporting ideas means measuring
operations. Third, the company borrows new the real value of innovation to determine whether the
knowledge from the company. Fourth, companies buy R&D investment can pay off. Selling an idea
new knowledge through purchasing new equipment, developed internally to the market can be a yardstick
hiring new knowledgeable people, or paying for companies to capitalize on the idea. Fourth,
consultants to train individuals to use new methods exporting and importing ideas, helping companies
[18]. Most company innovations come from borrowing clarify what they are doing, and market knowledge
ideas from others, not through discovery [19]. helps companies find positions that are stronger and
However, the company must know how the new weaker than thought. An open innovation model is an
borrowed knowledge can be applied for the process to approach for overcoming challenges and can be
be successful. Two factors will affect a company's complementary to the steps needed to solve the basic
incentives to acquire new knowledge: the quantity of problems of innovation, how to build, and how to run a
knowledge available to absorb and exploit and the costs company openly to explore new ideas and support
incurred in absorbing that new knowledge. Some types promising ideas [20]. Managing open innovation
of new knowledge and skills are more expensive to enhances concepts that can support collaboration,
assimilate than others. Therefore, companies will tend management, and absorption of new knowledge.
to absorb new knowledge when it costs little and less
likely to do so if it is expensive. The more competitors 5. Organizational Performance
215

Research on strategic management and nature of resources, whereas coordination flexibility


entrepreneurship gets more attention on organizational reflects the company's ability to apply these resources
performance [20], [23]. Newbert [24] defines [32]. Coordination flexibility has three main
organizational performance as the economic value dimensions. First, it defines the use of company
obtained from the commercialization carried out by resources that will be applied. Second, identify and
companies. Measuring organizational performance in compile a resource chain that can be applied in the
companies is a challenge, given the availability of data targeted use by a company; and third, disseminating
and guidelines about the performance to be measured resources through company systems and processes that
[25]. Richard et al. [24] stated that the size of implement available resources for targeted uses [31].
organizational performance is highly context- Martínez-Sánchez et al. [33] show that strategically
dependent. Research in different contexts with different flexible companies are usually in a good position to
theories has different measures. In addition, the anticipate market demands and respond to them by
problem of subjective measures for organizational developing innovative products and services. However,
performance is also widely discussed. Although although strategic flexibility has begun to be glimpsed
objective financial data is preferred in measuring by researchers [29], [32], [33], the function of strategic
organizational performance, Huber et al. [21] argue flexibility when commercializing organizational
that subjective measures can be a viable substitute if innovation products has not been critically examined,
objective data are not available. Experts conclude that leaving significant research gaps.
subjective performance measures reflect a firm's actual
performance. In the context of SMEs, subjective 7. Hypothesis and Measurement
measurement of organizational performance for In general, there has been a lot of literature that
research is a more feasible choice compared to states that organizational innovation requires
objective accounting data [26]. This is due to problems organizational learning that can increase creativity and
with the availability and accuracy of the accounting innovative behavior in employees [16], [34], [35].
data maintained by the SME. It is recommended to According to this perspective, organizational
obtain information about performance relative to innovation will have no equality if supported by
competitors or industry averages [20], [23]. This innovative organizational learning [8]. Other empirical
review suggests a measure of organizational research has also provided evidence of a significant
performance to include multidimensional and relationship between culture and organizational
subjective involvement in the company. Organizational innovation [12], [21]. Thus, the hypothesis proposed in
performance emphasizes the economic value generated this study are as follows:
by the company, a competitive advantage that shows H1: There is an influence of organizational culture
the creation of economic value [24]. Although Yao- on organizational innovation.
Ping [27] states that studies in strategic management do Liao et al. [19] suggest that absorptive capacity can
not differentiate competitive advantage from increase organizational innovation capabilities. Not
organizational performance, Sharif et al. [28] argue that surprisingly, many absorptive capacity studies using
differences are important from a resource-based view. organizational innovation as its major impact [12], [21]
also state that internal development does not guarantee
6. Flexibility Strategy a sustainable competitive advantage due to the
The flexibility strategy is the company's ability to increasing movement of knowledge workers and the
identify quick changes within the company and the difficulty of controlling intangible resources for
surrounding environment, immediately deciding which companies. So, companies certainly need to absorb
resources to use in response to these changes. [29], knowledge and information from external sources of
[30]. Organizations need to develop flexibility at the absorptive capacity [36], [37], [38]. Thus, the
strategic level to deal with external pressures caused by hypothesis proposed in this study are as follows:
frequent changes in customer expectations, changing H2: There is an effect of absorptive capacity on
market trends, and the actions of competitors. Bag et al. organizational innovation.
[31] states that flexibility strategy is divided into According to Sadri & Lees [23] and Yarbrough et
flexibility over resources and flexibility over al. [39], a positive organizational culture and its
coordination, which means that companies have implementation are good enough to make ordinary
flexibility over access to resources and flexibly employees become high-performing ones.
empower these resources in various uses. Resource Organizational culture has an active role and direct
flexibility can be characterized by three dimensions of influence on the organizational performance of an
resource use potential. First, alternative use sources organization [13], [40]. Gorondutse & Hilman [23] also
that can be applied. Second, the costs and processes of found that organizations with a supportive culture
moving from one resource use to another. Third, the recorded superior performance. Thus, the hypothesis
time needed to shift the use of one resource to another proposed in this study are as follows:
[31]. Resource flexibility is determined by the inherent
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H3: There is an influence of organizational culture the achievement of competitive advantage [18], [36].
on organizational performance. Thus, the processing and assimilation of new
Absorptive capacity applies information obtained knowledge, without the introduction and effective
externally for commercial purposes and helps generate commercialization of certain organizational innovation
competitive advantage [18], [36], the results of which outputs, cannot produce tangible performance results
can be seen in organizational performance. Although for the company over time [21]. Thus, the hypothesis
this relationship has been demonstrated in previous proposed in this study are as follows:
studies [41], several studies have applied a H7: There is an effect of absorptive capacity on
multidimensional approach, making it possible to organizational performance mediated by organizational
analyze each dimension of absorptive capacity [19]. innovation.
There is not much information about the effects of During the product commercialization process,
absorptive capacity associated with small and medium organizational innovation must be utilized in
enterprises or newly established companies [18], [19], conjunction with other resources [47]. Thus, company
[37]. Thus, the hypothesis proposed in this study are as resources play an important role in benefiting from
follows: organizational innovation. When the flexibility of
H4: There is an effect of absorptive capacity on resource utilization is low, companies cannot use
organizational performance. existing resources to support the commercialization of
Organizational innovation is considered an organizational innovation due to tight resource
important strategic tool for all companies in today's allocations. With increased resource flexibility,
business environment characterized by intense existing resources can be used more easily for new
competition [20], [32]. Some academics argue that the purposes. The time and costs spent finding new
tight business environment and fast competition in resources and switching from one use to another are
which businesses operate require companies to reduced. Thus, it can help companies to commercialize
continue to innovate to create new competitive values organizational innovation quickly [31]. For this reason,
that will improve performance [9]. In the literature, flexible resources tend to be valuable and have strong
product innovation is one of the forms of innovation implications for the commercialization of
that attracts the most attention [42], which is directly organizational innovation. Thus, the hypothesis
related to organizational performance [4], [43]. This proposed in this study are as follows:
shows that organizational innovation can increase H8: There is the influence of organizational
organizational performance measures, both financial innovation on organizational performance, moderated
and non-financial [4], [43], [44]. Thus, the hypothesis by a flexibility strategy.
proposed in this study are as follows: Research respondents were 224 micro and small
H5: There is an influence of organizational business actors in the culinary sector in Jakarta and
innovation on organizational performance. Tangerang. The criteria used in this study are that they
The indirect effect of culture on performance have been carrying out culinary business activities for
through organizational innovation can be predicted at least two years, located in the Jakarta and Tangerang
because - depending on the value it drives - culture can areas, with at least two employees.
encourage or limit organizational innovation activities.
In line with this, the fact that some types of culture can Table 1 Original sample, P-values, and result (Processed by
indirectly affect performance through organizational researcher, 2020)
Original Sample (O) P Values Result
innovation because it encourages or limits it is OC a ->OI b 0.592 0.000 Supported
debatable [12]. Organizational performance with a AC c ->OI 0.266 0.000 Supported
proactive culture that stimulates risk-taking activities, OC ->OP d 0.421 0.000 Supported
creativity, and fault tolerance is superior to AC -> OP 0.069 0.256 Not Supported
performance in companies that do not. This is because OI ->OP 0.032 0.745 Not Supported
OC ->OI ->OP 0.019 0.748 Not Supported
such companies can develop organizational innovation AC ->OI ->OP 0.009 0.752 Not Supported
that is more differentiated, better, and faster than SF e ->OP 0.197 0.000 Supported
competitors. Thus, the hypothesis proposed in this a Organizational Culture
study are as follows: b Organizational Innovation
H6: There is an influence of organizational culture c Absorptive Capacity
d Organizational Performance
on organizational performance mediated by
e Strategic Flexibility
organizational innovation.
Absorptive capacity facilitates the development of
new cognitive schemes and modification of existing 8. Conclusion
company practices. Through these changes, companies The results in this study a direct relationship
are better able to pursue new product developments and between organizational learning variables and
product line expansion [45], [46], which, in turn, can absorptive capacity on organizational innovation is
improve organizational performance and contribute to accepted. The results of this study are in line with
217

previous studies [8], [12]. Although previous research will form new mutually beneficial strengths, which will
was conducted on large companies, the same results improve their respective companies' performance.
were obtained when the respondents were SME players
in the culinary field. This shows the awareness of SME 10. Limitation and Future Research
actors to learn new things so as not to miss information The variables in this study were limited to
on market changes and awareness of the importance of organizational learning, absorptive capacity,
a sustainable learning culture to equip their knowledge organizational innovation, organizational performance,
to produce innovation. However, when viewed from and strategic flexibility. Then the object of research is
the indirect relationship between organizational limited to micro- and small businesses in the culinary
learning and absorptive capacity on organizational field, which are limited to the Jakarta and Tangerang
performance, the results of this study are different from areas. For this reason, further research is expected to
previous studies. The existence of organizational include criteria for business actors from other fields,
innovation as a mediator variable in an indirect such as a minimum business that has been running for
relationship weakens this relationship. Low seven years and is owned by business actors of a
organizational innovation has an impact on weak certain gender. Subsequent research can also include
organizational performance in culinary SMEs. This is entrepreneurship and transformational leadership
in line with the information conveyed by the Minister variables to see the impact of individuals on
of Finance Sri Mulyaniwho stated the low productivity organizational innovation and strategic flexibility and
factor for Indonesian SME players. This productivity be carried out outside Jakarta and Tangerang.
factor shows the country's level of innovation that
contributes to the government's economic growth.
SMEs in Indonesia absorb a large amount of capital
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