The central role of business model innovation on firm performance in the creative industry

This study examines variables that are within the organization, namely transformational leadership, innovation culture and information technology as antecedents of business model innovation and measures their impact on firm performance.
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The central role of business model innovation on firm performance in the creative industry International Journal of Mechanical Engineering and Technology (IJMET) Volume 10, Issue 03, March 2019, pp. 457-465. Article ID: IJMET_10_03_047 Available online at http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=10&IType=3 ISSN Print: 0976-6340 and ISSN Online: 0976-6359 © IAEME Publication Scopus Indexed THE CENTRAL ROLE OF BUSINESS MODEL INNOVATION ON FIRM PERFORMANCE IN THE CREATIVE INDUSTRY Indrawan Nugroho BINUS Business School, Doctor of Research in Management Bina Nusantara University, Jakarta Indonesia Harjanto Prabowo BINUS Business School, Doctor of Research in Management Bina Nusantara University, Jakarta Indonesia Firdaus Alamsjah BINUS Business School, Doctor of Research in Management Bina Nusantara University, Jakarta Indonesia Mohammad Hamsal BINUS Business School, Doctor of Research in Management Bina Nusantara University, Jakarta Indonesia ABSTRACT Previous studies on business model innovation were considered to have several problems specifically related to the clarity of the construct and gaps with antecedents, contingency and results. Most researches focused on variables outside the organization as antecedents of business model innovation. This study examines variables that are within the organization, namely transformational leadership, innovation culture and information technology as antecedents of business model innovation and measures their impact on firm performance. The study was conducted on 196 firms in the creative industry in Indonesia. Structural Equation Model was used to analyse statistical data. The result shows that transformational leadership, innovation culture and information technology do not directly impact firm performance. They need to be mediated by business model innovation. Keywords: Transformational Leadership, Innovation Culture, Information Technology, Business Model Innovation, Firm Performance http://www.iaeme.com/IJMET/index.asp 457 editor@iaeme.com The Central Role Of Business Model Innovation On Firm Performance In The Creative Industry Cite this Article: Indrawan Nugroho, Harjanto Prabowo Firdaus Alamsjah, and Mohammad Hamsal, The Central Role of Business Model Innovation on Firm Performance in The Creative Industry, International Journal of Mechanical Engineering and Technology, 10(3), 2019, pp. 457-465. http://www.iaeme.com/IJMET/issues.asp?JType=IJMET&VType=10&IType=3 1. INTRODUCTION In recent years, research examining the role of business model innovation on firm performance has emerged [1-3]. However, analysis on 150 scientific studies related to business model innovations published between 2000 and 2015 concluded that those studies had several problems specifically related to the clarity of the construct of business model innovation and having gaps with antecedents, contingency and the results [4]. In regard to antecedents, previous researches focused on variables outside the organization as antecedents of business model innovation, such as competitors' business strategy and environmental constraints [5], disruptions and increasingly intense global competition [6], shifting of the basis of competition [7] and unexpected changes to the business environment [8]. Different from those previous researches, this study seeks to examine the variables that are within the organization, also called internal drivers, namely transformational leadership, innovation culture and information technology as antecedents of business model innovation and measure their impact on firm performance. Research on the internal drivers of business model innovations such as these are still very rarely done [4]. This research was conducted on 196 firms in the creative industry in Indonesia. Creative industry was chosen for its strategic contribution to the economic growth of a region or country [9-11]. From the point of view of scientific studies, currently researches carried out in the creative industry are still very few compared to researches in other industrial sectors [12]. In addition, existing those researches focus more on the role of government policy on the growth of creative industries [13-17]. Other studies focus on the technical aspects of creative industries, such as online sales [18], information technology utilization [19], cultural features [20] or marketing [21]. Hence, this research is expected to contribute to the study of business model innovation along with its internal drivers and its impact on firm performance in the creative industry in Indonesia. 2. LITERATURE REVIEW Transformational leadership is a leadership style where leaders encourage their team members to give their best efforts in achieving something higher than what they previously set for themselves [22]. Transformational leadership has positive and significant influence on employee empowerment and organizational climate that supports innovation [23]. This influence creates strong cultural consensus that may encourage or inhibit innovation in the company [24]. Previous study showed that corporate leaders with transformational leadership style have significant influence on employees' innovative behavior [25]. They trigger employee creativity both at the individual and organizational level [26]. While previous studies confirm positive influence of transformational leadership on innovation in the organization [27-28], studies that specifically measured the influence of transformational leadership on busine ...