The Impact of Information and Coordination Innovation on Relationship and Firm Performance: The Case of Small and Medium Enterprises in Indonesia

Abstract

It has been acknowledged that small and medium enterprises (SMEs) play essential for contributing economic growth. Previous findings indicated that networking among SMEs with business partners becomes a determinant factor for improving growth. The coordination capability among channel members in distribution channel for instance, suppliers, manufacturers, distributors, retailers, financial institutions, as well as other relevant agencies, brings competitiveness, which in turn enhances performance. As information sharing and coordination innovation possess a significantly positive influence in improving firm performance among the channel members, a few empirical evidences have been found on the effect of information and coordination innovation in lending on the relationship performance between SMEs and financial institutions (bankings) that led to SMEs’ growth. By using structural equation model (SEM) for 103 samples of respondents,it was found that relationship performance led to the growth of SMEs in Indonesia, which in turn contributed to economic growth.