ANALYSIS OF INNOVATION CAPABILITY AND TECHNOLOGICAL INNOVATION ON THE BUSINESS PERFORMANCE OF SME IN BATAM CITY

Abstract

This study attempts to examine how innovation capability and technological innovation affect the business performance of SMEs. because with the increase in competitors which is the biggest challenge for business people, SMEs must improve their quality. This study has 1 dependent variable, namely the performance of SMEs and uses 2 independent variables, namely innovation capability and technological innovation This study uses primary data. This study collected data from 96 respondents from service sector SMEs in Batam City, using purposive sampling. Batam City is an international shipping lane and its strategic location, thus inviting many tourists to visit Batam. Data collection through questionnaires distributed online. Hypothesis testing and multiple regression analysis were used to evaluate the research equipment and show the results of data processing. The results of the data analysis show that the ability to innovate and technological innovation positively and significantly affect the performance of SMEs. SMEs with higher levels of innovation have a greater chance of initiating and sustaining innovative projects. This affects performance, competitive advantage, and overall business operations.