Track: Business Management

Abstract

Several studies state that innovation has a significant effect on company performance. Innovation can also increase the competence of an entrepreneurial spirit. PT Pegadaian (Persero) as a company engaged in finance has many agents as marketers. The success of an agent in managing his business depends on the creativity and entrepreneurial spirit of the owner. The purpose of this study was to see the impact of innovation on entrepreneurial spirit and its implications for business performance.  The survey was conducted on 215 PT Pegadaian (Persero) agents spread across South Sumatra Province, Indonesia. This research design uses a quantitative approach with structural equation models (SEM) analysis techniques. Data analysis was performed with the help of the LISREL program. The results of the study indicate that innovation has a dominant effect on entrepreneurial spirit, it also has a positive and significant effect on business performance. The entrepreneurial spirit is a good mediator for the relationship between innovation and business performance because the size of the indirect effect is stronger than the direct effect. Innovations that are developed in enhancing the entrepreneurial spirit are not only technological innovation but can also be management innovation. Meanwhile, product innovation is difficult to develop in business management by PT Pegadaian (Persero) agents because the product has been determined. This research provides managerial implications for service business managers, that management innovation can always be done because it will be followed by technological innovation which will ultimately lead to an entrepreneurial spirit. The high competition among similar companies encourages management to continue to innovate both management, technology, and products.