Moderating Effect of Innovation on Strategy-Financial Performance Relationship:Experience of 'Batik' SMEs

摘要

This study aims to prove empirically that innovation moderates the relationship between strategy and financial performance. The main contribution of this study is to provide evidence of the resource-based theory, especially in the context of small medium enterprises (SMEs) research setting involving three variables, namely: strategy, innovation, and financial performance. Mixed method is used in this study for the reason that it can reveal more in-depth explanation about the phenomena. As many as 71 managers of batik SMEs in Solo city participated. The result of this study shows that innovation significantly moderates strategy-financial performance relationship. Innovation is a pure moderating variable.