Research Article: 2021 Vol: 20 Issue: 3
Bagus Putu Yudhia Kurniawan, State Polytechnic of Jember
Andarula Galushasti, State Polytechnic of Jember
This study was conducted to fill the research gaps on inconsistent findings about entrepreneurial culture in improving organizational performance by including effectively smooth motion values as a factor that can improve organizational performance. This study was also undertaken to build a conceptual model of organizational performance from an entrepreneurial culture through an effectively smooth motion values synthesis. Four hypotheses were developed and tested within the samples framework of 110 coffee processing industries in Jember, Indonesia. The findings of this study indicate the important role of the effectively smooth motion values which has been proven to be able to mediate entrepreneurial culture in improving organizational performance.
Entrepreneurial Culture, Effectively Smooth Motion Values, Organizational Performance, Jember Coffee Processing Industry.
Coffee is a beverage brewed coffee beans that have undergone a process of roasting and pulverized into powder form. Coffee is the second most popular drink in the world after tea. Coffee is not merely a beverage, but has become part of lifestyle as well, so it is not surprising that this commodity is one of the most exported and traded in the world.
Coffee is one of the plantation mainstay commodities that have a significant contribution to the Indonesian economy. It also becomes the government’s priority in Indonesia's future agricultural development. Indonesia ranks fourth as the world's largest producer and exporter of coffee after Brazil, Vietnam and Colombia.
According to data reported by Indonesia Statistics, the coffee production by provinces in Indonesia in 2016-2020 continuously increased. Indonesia coffee production in 2016 reached 663,871 tons, 718,962 in 2017, 756,051 tons in 2018, and 760,963 tons in 2019. Coffee production in Indonesia in 2020 was estimated to continuously increase to 773,409 tons. Viewed based on the province, the highest coffee production produced by large plantations in 2019 came from East Java reaching 8,650 tons or 1.17 percent of Indonesia's total production. Coffee production in Jember also continued to increase up to three times reaching 11,863 tons (Putu Yudhia Kurniawan et al., 2020).
Problem national and global digital economy is very serious, and it can be completely attributed to the global problems of mankind in the era of the cybernetic revolution. In the process of digitalization as global, the following key interrelated problems can be distinguished, which have vivid personnel projections: 1) the problem of information quality; 2) the problem of limited human resources, including a high level, due to a slowdown in the population of the planet; 3) the problem of personality in a fully transparent digital world (Andreev et al., 2021). The development of millennial lifestyle and digital industry has resulted in an increase in the coffee processing and marketing industry which is now attractively packaged and innovative in the form of a coffee shop. There were more than 2,950 coffee shops reported in Indonesia until August 2019, a sharp increase compared to 2016.
In line with the increase in coffee processing and marketing production, there are still national problems encountered by Indonesia today, which is the handling of the low human resources quality. Until now, the ability of human resources is still low, both in terms of intellectual abilities and technical skills (Koesmono, 2005). Beugelsdijk (2010) linked the regional economic development with non-economic elements in which the role of entrepreneurial culture is mentioned. Research conducted by Amuda (2020), identified the rate of unemployment among the team youth as a necessary factor for the need to cultivate entrepreneurial skills in them in order to fulfill the demand of the workforce as response to global economic competitiveness of the contemporary time. It has been elucidated that, entrepreneurship education should develop the spirit of creation of large of small scale enterprise predominant with creative and innovative ideas the education should be cultivated in learners before joining the workforce of which literature contends. Silpcharu & Thaisom (2020), stated that to construct stability of the business organization, it is necessary to run the business with integrity by integrating good governance principles including honesty, endurance, perseverance, and carefulness will lead to business operation balance as well as constructing and delivering the values in concrete which are morale principles and business ethics for business sustainability.
Research conducted by Welsa (2006), found that entrepreneurial culture has a significant effect on performance. However, in research conducted by Sengke (2016), it shows the opposite result, in which the organizational culture (entrepreneurial cultural dimension) insignificantly affected the organizational performance. Differences in these results are better known as a performance paradox of entrepreneurial culture. The inconsistent findings about entrepreneurial culture on performance gave an idea to conduct further empirical research on what processes should be developed to improve the entrepreneurial culture that can improve the organizational performance.
This research was conducted to solve the research gap by adopting the planned behavior theory. Planned behavior theory is a theory that emphasizes a person's beliefs and behavior. This theory states that attitudes, norms, and perceived behavioral control, together forming intentions and behavior of individuals. Entrepreneurial intentions are largely shaped by factors that influence planned behavior resulting from perceived behavioral control, personal attitudes, and social norms (Ajzen, 1991). In line with the previously stated opinion (Bandura, 1977) proposing self-efficacy theory, as the main component in cognitive social theory or social learning theory which refers to belief that a person is able to do a task and motivated him in order to achieve the desired result. Feist et al. (2007) also stated that self-efficacy is the belief of individuals, that they have the ability to hold control over the working environment to the events encountered. High self-efficacy cannot be separated from its factors, such as the individual's previous experience, other people’s similar experience, social persuasion, as well as physiological and emotional conditions (Masraroh, 2012).
Value is a concept that is hidden in the human mind, not in an empirical world. Basically, value is a standard of behavior, a measure that determines a criterion, so that the standard will color a person's behavior. One's commitment to a particular value occurs through the formation or mental attitude, the tendency of a person to an object. Reasoning level towards an object and the ability to act towards it, help determine a person's attitude towards the object concerned. Attitude formation can be done through modeling, which is the process of giving advice, the process of assimilation, or giving examples and orders.
Effectiveness in providing new and unique strategy, as well as rapid growth, is necessary so that entrepreneurial culture can affect the organizational performance (Sengke, 2016). The formation of a value system, attitude and mentality in entrepreneurship, can be influenced by the suggestion, independence, courage, creativity, responsibility, honesty, patience, and making an exemplary through smooth motion approach through advice, giving example, command, and support from other parties (Rahmawati, 2017) .
This empirical study provides an idea to propose the concept of the effectively smooth motion valued to mediate the influence of entrepreneurial culture to improve the organizational performance. The current research filled the research gaps in empirical studies to develop a conceptual model consisting of an entrepreneurial culture, effectively smooth motion values and organizational performance on research subject of industrial coffee processing Jember, Indonesia.
The Effectively Smooth Motion Values in the Framework of Planned Behavior Theory
Value is a concept that is hidden in the human mind, not in an empirical world. Value is a standard of behavior, a measure that determines a criterion, so that the standard will color a person's behavior. Studies showed that the cultivation of values starting from the teaching of the knowledge of those values, then giving a good example, getting used to doing things that are right and appropriate, as well as providing an opportunity to analyze the problems aiming to add insight to be able to weigh certain attitude certain according to the values they have, and encourage them to formulate their own actions that must be taken according to their choices (Sitompul, 2016).
Entrepreneurial values must be developed to create a good order of behavior, such as their role in influencing entrepreneurial behavior and business independence (Sukirman, 2017). Adopting the perspective of planned behavior theory (Ajzen, 1991), summarized briefly in psychology, this theory links a person's beliefs and behavior. The theory holds that attitudes, subject norms, and perceived behavioral control, together forming intentions and behavior of individuals. This concept was proposed by Icek Ajzen to increase the predictive power of the theoryof reasoned action by incorporating perceived behavioral control. It has been applied to the study of the relationship between beliefs, attitudes, behavioral intentions, and behaviors in various fields, such as advertising campaigns, public relations, health care, sports management and sustainability (Ajzen, 1991).
Efforts to cultivate intentions on entrepreneurial values are largely shaped by factors regarding the effectiveness of planned behavior resulting from behavioral control, personal attitudes and social norms. The effectiveness of values and relevant behaviors must be through an exemplary behavioral approach that is expected to influence entrepreneurs effectively. The study of the effectiveness of behavioral and exemplary values has roots in various fields, such as in psychology and planned behavior theory (Ramdhani, 2011), social psychology (Rahmawati, 2017), sociology (Jonnius, 2013), as well as economics and business (Yulanda, 2015); (Sengke, 2016); (Sukirman, 2017). This is in accordance with conclusion drawn by Rahmawati (2017) in the social psychology, that growing mental entrepreneurship can be done through the establishment of the values of independence, courage, creativity, responsibility, honesty, patience, and making exemplary with a subtle approach or movement.
Jonnius (2013) & Owusu Ansah et al. (2019) in their study agreed that currently, the entrepreneurial culture was still the main choice as a profession in society, so that the entrepreneurial values and culture should be fostered in the community as early as possible starting from the family environment, and require effectiveness in delivering the new strategy and unique. The adoption of an exemplary element approach (Rahmawati, 2017) creates a way to incorporate the values of entrepreneurial culture effectively (Sukirman, 2017). The effectively smooth motion values act as the concept of the effectiveness of new strategies, the inculcation of exemplary value systems of behavior, and approaches with smooth motion.
The study of entrepreneurial culture has developed since the emergence of Kirzerian theory of entrepreneurship which explains about economic entrepreneurship, sociological entrepreneur, psychological entrepreneur, and entrepreneurial behavior in a complex manner (Kirzner, 1973), which was then complemented by the conceptual culture as shared beliefs and values in organizations that help shape behavioral patterns (Kotter & Heskett, 1992). Paramita et al. (2015) explained that entrepreneurship is formed in a long process, the form of business that is continuously pursued can also be influenced by social and cultural values. Ermawati et al. (2017) also argued that competition willingness, individual perceptions of personal control, and attitudes have a significant effect on entrepreneurial intentions. Another study was also suggested by (Danish et al., 2019), that openness to change, self-efficacy, and creativity have a significant influence on entrepreneurial culture.
Entrepreneurial culture may be a strategic instrument to accentuate the social value of entrepreneurial culture and self-control for the entrepreneurial intentions through the effectiveness of entrepreneurial strategy values completed by smooth motioning exemplary. Therefore the following hypothesis was proposed:
H1 Entrepreneurial culture significantly and positively affects the effectively smooth motion values.
Effectively Smooth Motion Values and Organizational Performance
Research on the ineffectiveness of entrepreneurial culture provides a way to address new and unique strategies, as well as rapid growth in performance support. Raja & Sinurat (2020), suggested that value of work effectiveness influences retention of employees not equal to zero by entering the variable Engagement and Work Discipline. It can mean that the Job Effectiveness to be influenced by retention of employees must be assisted first by the variables of organizational engagement and job discipline. There are drawbacks in this analysis that are not the reward of questionnaire respondents but that can be solved. Welsa (2006) suggested that trait of the individual as exemplary values are reflected in the management and development of his own company's performance while creating jobs for other people. Djodjobo & Tawas (2014) suggested that the value of entrepreneurship has significant influence and positively to the independence effort. The value of a business activity contains an element of consideration that expands a person's ideas, so that it is a form of behavior in running a company towards business independence. The basis for understanding the attitudes and motivation of entrepreneurial values is able to influence behavior in running a business, so that value is a very important behavior in managing business independence (Tewal et al., 2017). Rahmawati (2017) argued that mother’s action in growing and building an entrepreneurial culture through the implementation of an exemplary towards her child in the family was very effectively done to improve the child's ability to see business opportunities, availability of good facilities and support the child’s good talent and creativity, thereby creating high-performing entrepreneurial behavior. Thus, the following hypothesis was proposed:
H2 The effectively smooth motion values significantly and positively affect the organizational performance
Considering the research gap on inconsistent findings on the influence of entrepreneurial culture on organizational performance suggests the idea of adding the effectively smooth motion values variable as a mediator to improve organizational performance. The effectively smooth moving values are designed as an intervening variable to improve organizational performance. The design of this study was based on the following reasons: entrepreneurial culture is considered important and strategic in explaining differences in the national economic success (Leff, 1979). Literature in the field of regional science and economic geography also links regional economic development with non-economic elements, which mentions the role of entrepreneurial culture (Beugelsdijk, 2010). Building an entrepreneurship mental include suggestions, independence, courage, creativity, responsibility, honesty, and patience. A previous study was conducted on the influence of organizational culture on organizational performance at the Department of Industry and Trade of North Sulawesi Province by Sengke (2016) concluding that entrepreneurial culture has no effect on organizational performance. This was due to the ineffectiveness in providing new and unique strategies as well as rapid growth.
The behavior and movement of values have a strategic role as cultural mediation towards performance, behavior has been able to evaluate a culture that is not appropriate in managing a business and provides meaningful support to transform culture into business performance (Rante, 2010). There are few formal rules to restrict behaviors. Flexible organizations enable the two- way communication and decentralized decision making. Due to the lack of explicit behavioral expectations, employees can determine their work-related behaviors by negotiating with each other (Kocyigit & Universtiy, 2020).
This idea leads to the conceptualization of the effectively smooth motion values as an alternative and strategic choice that has the potential to improve organizational performance. Therefore, the mediation hypothesis was proposed, because entrepreneurial culture is recognized as a strategic and effective input in improving organizational performance through self-efficacy, wild thinking strategy, behavioral value system, and exemplary in a smooth exemplary approach.
H3 Effectively smooth motion values significantly and positively contributes in mediating the effects of an entrepreneurial culture on organizational performance.
Furthermore, the causal relationship between entrepreneurial culture on the effectively smooth motion values and organizational performance is schematically shown in the following conceptual framework model (Figure 1).
This research was done through survey aiming to explain and confirm the influence among variables or causal relationships between variables or between variables through hypothesis testing.
This study uses a census or complete enumeration method, which was carried out on all 110 companies of the coffee processing industry in Jember, Indonesia, or in other words this research did not use samples so that the sampling technique in this study is also not necessary. The variables in the study were classified as follows: (1) entrepreneurial culture (EC) as the first exogenous variable, measured using indicators of innovation development, venturing, and strategic renewal; (2) the effectively smooth motion values (ESMV) as the first endogenous variable (Y1), and at the same time as an intervening variable that affects organizational performance (OP) and is influenced by entrepreneurial culture (EC), measured using indicators of self-efficacy, wild thinking strategy, behavioral value system, and exemplary; and (3) organizational performance (OP) as the second endogenous variable (Y2) which is influenced by entrepreneurial culture (EC) and the effectively smooth motion values (ESMV), measured using indicators of working objectives, service orientation, integrity, discipline, and cooperation. The variables of entrepreneurial culture (EC), the effectively smooth motion values (ESMV), and organizational performance (OP) was measured using a Likert scale or summated ratings method, and the measurement results were in the form of data with an interval scale.
Primary data collection was carried out through direct interviews with all management of the coffee processing industry in Jember, Indonesia, totaling 110 people. The questions posed have been systematically compiled and guided using valid and reliable questionnaires. Secondary data comes from information/data held by relevant agencies, as well as literature books, scientific journals and/or various forms of publications as listed in the Bibliography.
The data analysis was conducted through Structural Equation Modeling (SEM) by using LISREL 8.8 software, considering that SEM has the ability to test a relatively complicated set of relationships simultaneously (Nachtigall et al., 2003); (Tabachnick et al., 2017).
Validity and Reliability Test
The validity and reliability of the research instrument were tested on 110 respondents as primary data sources or actual respondents. Confirmatory factor analysis (CFA) used the Kaiser- Meyer-Olkin test (KMO) and Barlett's Test. If the Kaiser Meyer-Olkin Measure of Sampling Adequacy (KMO MSA) value is more than 0.50, the analysis process can be continued. The results of the KMO coefficient obtained were 0.650, 0.757, and 0.789 indicating that the variables were feasible to apply factor analysis. The significance of the Bartlett's test 0.00 (<0.05) identified that there was sufficient correlation between variables to be processed (Hair et al., 2014). The next process was to look at the Anti-image Matrix table, to determine which variables are suitable to be used in further analysis. MSA value of more than 0.50 indicates that the variable was feasible to be analyzed (Table 1).
|Table 1 Validity Test of Kmo-Msa and Bartlett's Test|
|KMO MSA and Bartlett's Test||Variable|
|Kaiser Meyer Olkin (KMO)||0.650||0.757||0.789|
|Bartlett's Test Sphericity||Approx. Chi Square||97,412||122,505||193,245|
|Measure of Sampling Adequacy (MSA) Anti-image Matrix||1||0.608||0.735||0.783|
Reliability tests were conducted to measure the consistency and reliability of questions contained in the research instrument by looking at coefficient of Cronbach's Alpha. If the Cronbach's Alpha coefficient value exceeds or equals to 0.60, then these questions are consistent and reliable to be applied to different samples, places, and times of data collection (Malhotra & Dash, 2016). The Cronbach's Alpha coefficient values obtained were 0.762, 0.774, and 0.798 indicating that the research instrument was consistent and reliable (Table 2).
|Table 2 Cronbach's Alpha Reliability Test|
|2||Smooth Moving Value Effectiveness(ESMV)||0.774|
The Assumption of N Orality
Normality is a form of data distribution on a single metric variable in producing a normal distribution. Researchers used the z statistical value for Skewness and Kurtosis in testing whether the normality assumption is violated or not. If the z value is significant (less than 0.05 at the 5% level it can be considered that the data distribution is not normal. Conversely, if the z value is not significant (greater than 0.05), the data distribution is normal.
Validity and Reliability Tests of the Measurement Model of Confirmatory Factor Analysis
Validity and reliability tests in SEM models on Lisrel program can be performed using the measurement model of confirmatory factor analysis (CFA) that would produce a path diagram.
The analysis of the measurement model validity was carried out by examining whether (a) the t-value of the observed variables in the model meets the good requirements, which is greater than the critical value (> 1.96); and (b) standardized loading factors from the observed variables in the model have met the good requirements, which is more than 0.70. Igbaria et al. (1997) stated that standardized loading factors of more than 0.50 were very significant, but if it is less than 0.30, then the related variables could be considered to not be removed.
The analysis measurement model reliability was performed by calculating the Construct Reliability (CR) and Variance Extracted (VE) values from the standardized loading factor values and the error variance. Hair et al. (2014) stated that although the requirement for a good Construct Reliability (CR) value is more than 0.70, if the CR value is at the range of 0.60 and 0.70, then the reliability is still in the good category. VE value of less than 0.50 is good for measuring reliability. However, this VE is usually an option in research, that may or may not be used in research, but it would be better if it was included (Table 3).
|Table 3 Validity and Reliability Measurement Model Confirmatory Factor Analysis (2nd CFA)|
|≥ 0.30||± 1.96||≥0.70||≥0.50|
|Smooth Moving Value Effectiveness||0.86||0.61||Good|
Results of validity and reliability tests of the measurement model of Confirmatory Factor Analysis (2nd CFA) showed that the overall observed variables declared valid and reliable, and fulfill all the requirements of test.
Goodness of Fit
The result of the CFA Goodness of Fit - 2nd test showed that there were two GoF measures that show a bad fit and thirteen measures showed a good fit, so it can be concluded that the overall fit of the model is good (good fit) (Table 4).
|Table 4 Goodness of Fit – 2nd CFA|
|No.||Size of Body of Fit||Target-Match Rate||Estimation Results||Match Rate|
|1||Chi-Square||Small value||χ2 = 57.79||Good|
|P||p> 0.05||(p = 0.135)|
|Interval||Narrow interval||(0,0; 34,22)|
|3||RMSEA||RMSEA ≤ 0.05||0.046||Close|
|P (close fit)||p ≥ 0.05||(p = 0.54)|
|4||ECVI||Small value||M * = 1.10||Good|
|close to||S * = 1.43|
|ECVI saturated||I * = 9.22|
|5||AIC||Small value||M * = 119.79||Good|
|close to||S * = 156.00|
|AIC saturated||I * = 1005.27|
|6||CAIC||Small value||M * = 234.50||Good|
|close to||S * = 444.64|
|CAIC saturated||I * = 1049.68|
|7||NFI||NFI ≥ 0.90||0.94||Good|
|8||NNFI||NNFI ≥ 0.90||0.98||Good|
|9||CFI||CFI ≥ 0.90||0.98||Good|
|10||IFI||IFI ≥ 0.90||0.98||Good|
|11||RFI||RFI ≥ 0.90||0.91||Good|
|12||CN||CN ≥ 200||130.14||Bad|
|RMR ≤ 0.05|
|14||GFI||GFI ≥ 0.90||0.92||Good|
|15||AGFI||AGFI ≥ 0.90||0.87||Marginal|
Structural Equation Modeling (SEM) through LISREL 8.8 software was used to test the model and all related hypotheses. The results are shown in Figure 2 and Table 5.
Figure 2 The Structural Model of Effectively Smooth Motion Values in the Development of Theoretical Model of Organizational Performance
|Table 5 Hypothesis Testing Criteria: Structural Model Coefficient Evaluation|
|H1||Entrepreneurial culture has a positive effect on the effectively smooth motion values||0.41||3.49||Supported|
|H2||The effectively smooth motion values ??has a positive effect on organizational performance||0.63||3.07||Supported|
|H3||The effectively smooth motion values can fully mediate theinfluence of entrepreneurial culture on organizational performance||The full mediation effect is appropriate: when mediation performance is inserted, the regression weight of entrepreneurial power to organizational performance is insignificant||Supported|
|P1:EC → OP||0.50||2.55||Supported|
|P2:EC → ESMV||0.42||3.51||Supported|
|P3:ESMVC → OP||0.73||3.11||Supported|
|P4:EC → OP||0.22||1.89||Not supported|
The first step was to test the goodness of fit model so that it produces a good acceptance model, as shown in Table 4, with a chi-square significance level = 0.135; RMSEA (0.046), GFI (0.92), NFI (0.94), CFI (0.98), RMR (0.042). All criteria are above the limit value level, which indicates the acceptance of the research model with the appropriate (fit) and ideal levels.
The second step was to test the mediation hypothesis, as shown in Figure 3 and Table 5, the critical t-value for all hypotheses is above the limit value of 1.96, therefore the hypothesis is well accepted.
The effectively smooth motion values was chosen as the mediating variable between entrepreneurial culture and organizational performance to address the research gap on the findings of the inconsistent influence of entrepreneurial culture on organizational performance, and therefore it is necessary to test the mediating effect hypothesis. Procedure (RM Baron & Kenny, 1986) was adopted to test the effect of mediation, namely : (1) there must be a significant regression coefficients of the independent variables to the dependent; (2) there must be a significant regression coefficient of the independent variable on the mediating variable; (3) there must be a regression coefficient from the mediating variable to the dependent variable; and (4) significant regression coefficients from the independent variable to the dependent variable must be reduced significantly or become insignificant when the media variable is included in the model. This is done by rerunning the model with four steps as has been shown at the bottom of Table 5. When the effectively smooth motion values incorporated into the model, the influence of the entrepreneurial culture to organizational performance turned lower (0.50 decreased to 0.22) and is insignificant, suggesting a full mediating effect of the effectively smooth motion values to fill the research gap between entrepreneurial culture and organizational performance.
This study has several limitations: first, the results of model goodness of fit test of research showed that not all criteria meet the required standard of value, as the result of marginal fit on AGFI value by 0.87. Therefore, the model needs further refinement by adding some new variables and/or replicating this study to a larger sample size; secondly, research on the effectively smooth motion values is still at the stage of early, replication is an alternative cross- industry study to test the concept and model.
Encouraging the planned behavior theory, the culture of entrepreneurship as a strategic input proved to be an effective variable in improving the effectively smooth motion values, as well as strengthening the value system formation studies, attitude and mentality in entrepreneurship to improve organizational performance. The logic behind this pathway is that entrepreneurial culture is the first step to improve the value system, attitudes and mental attitude in entrepreneurship as a means of displaying the effectiveness of certain behaviors through a rational process oriented to exemplary values.
Entrepreneur, who is oriented on progress, needs a way to implement the effectively smooth motion values as a strategic step to improve the organizational performance.