Human capital readiness and global market orientation in Indonesian Micro-, Small- and-Medium-sized Enterprises business performance

Abstract

Purpose

This study aims to investigate whether human capital readiness affects business performance, and if so, whether the effect is mediated by global market orientation.

Design/methodology/approach

This is a quantitative study employing partial least square structural equation modeling (PLS-SEM) to test the hypotheses. Using a survey method, the data were collected using both online and offline questionnaires. As many as 433 owners/managers of micro-, small- and-medium-sized enterprises (MSMEs) in the East Java Province of Indonesia participated in this study. A mediating research framework was developed to investigate the mediating role of global marketing orientation on the human capital readiness–business performance relationship.

Findings

The results show that human capital readiness has a direct and positive effect on business performance. Further analysis reveals that global market orientation partially mediates the effect of human capital readiness on business performance.

Research limitations/implications

First, this study focuses on the MSMEs in the East Java Province of Indonesia. Caution needs to be taken if the results are generalized to other regions. Second, it employed a survey method that is commonly criticized as having the potential to be biased.

Practical implications

The findings provide a more comprehensive understanding of owners/managers of human capital readiness and how it should be improved to better execute global market orientation strategies to achieve the desired business performance.

Social implications

Because MSMEs play a crucial role in society, this study provides a general model to improve the welfare of society by enhancing the MSMEs' business performance. By understanding its antecedents, namely, human capital readiness and the global market orientation, improvements can be made.

Originality/value

Human capital readiness has been rarely examined in previous studies. This is the only study applying the constructs of human capital readiness, global market orientation and business performance to the Indonesian MSME research setting.

Citation

Tjahjadi, B., Soewarno, N., Nadyaningrum, V. and Aminy, A. (2022), "Human capital readiness and global market orientation in Indonesian Micro-, Small- and-Medium-sized Enterprises business performance", International Journal of Productivity and Performance Management, Vol. 71 No. 1, pp. 79-99. https://doi.org/10.1108/IJPPM-04-2020-0181