Innovation capability as a mediation in the relationship of social capital and entrepreneurial leadership behavior on the performance of culinary and hospitality sectors’ SMEs in Pekanbaru, Indonesia

Abstract

The main objective of the research is to evaluate SME performance issues in the Culinary and Hospitality sectors in Pekanbaru via utilizing a number of company internal environmental parameters to develop the dynamic procedure for improving the efficacy. The purpose of this study is to investigate the relationship between social capital and entrepreneurship with respect to the mediating role of organizational innovation capabilities. The present study is applied in terms of purpose and descriptive-survey in terms of data collection. The statistical population of this study includes faculty members that the study population in this study is 2116 people. The method of cluster and random sampling is simple. The sample size according to Morgan table and Cochran’s formula with an error of 0.05 is equal to 325 people. Structural equation modeling technique and PLS Smart software have been used to investigate the causal relationships between variables in a coherent manner. The findings showed that there was not direct link between social capital and culinary and hospitality SMEs’ business performance in Pekanbaru. Problems related to strong social capital, such as over-information, problems due to recklessness, and myopia, along with investing a lot of time and money to maintain relationships, can affect the development of entrepreneurial orientation. Based on the research findings in this regard (social capital and entrepreneurial orientation), the structural dimension of social capital (relational and cognitive) has a negative relationship and other dimensions have a positive relationship with entrepreneurial orientation. In this regard (social capital and entrepreneurial orientation) organizational innovation capabilities play a mediating role.