The effect of leadership orientation on innovation and its relationship with competitive advantages of small and medium enterprises in Indonesia

The purpose of this study is to investigate the influence of leadership orientation on competitive advantage with innovation as a mediating (intervening) variable.

Quantitative methods (Creswell, 2010) are used as the study design. It is an explanatory research with the purpose of explaining the phenomenon or pattern of correlation between concepts (Kothary, 2004). SMEs (small and medium entrepreneurs) of typical food products of Riau domiciled in Kepulauan Meranti Regency are the focus of this study; the sample size included 258 respondents.

There is a significant effect of leadership orientation on innovation. Higher leadership orientation will result in higher innovation. There is a significant effect of innovation on competitive advantage. Higher innovation will result in higher competitive advantage. Innovation as a mediation variable in the relationship between leadership orientation and competitive advantage indicates that higher leadership orientation will cause a higher competitive advantage, if the mediated innovation is also higher.

The originality of this research lies in innovation as a mediating (intervening) variable and a complement of a previous study by including the indicator that measures the variables of the research so that research results can be completed and detailed.