SPIRITUAL INNOVATION CAPABILITY AS A MEDIATOR IN MARKET ORIENTATION AND MARKETING PERFORMANCE

Abstract

Objective: This study aims to investigate the mediating role of spiritual innovation capability (SIC) in the relationship between market orientation (MO) and marketing performance (MP) within religious small and medium-sized enterprises (SMEs). Research Design & Methods: A quantitative research approach was employed, utilizing purposive sampling to select 245 owners and managers of religious SMEs located across Java, Indonesia. Data were gathered through structured questionnaires and analyzed using Structural Equation Modelling with Partial Least Squares (SEM-PLS) to examine the relationships among MO, SIC, and MP. Findings: The analysis revealed that higher market orientation significantly enhances spiritual innovation capability, which in turn positively influences marketing performance. SIC serves as a crucial mediator, demonstrating that religious SMEs achieve competitive advantages by embedding spiritual values into their innovation processes, thereby fostering customer loyalty and market differentiation. Implications and Recommendations:Managers in religious SMEs are encouraged to strengthen their market orientation and integrate spiritual innovation into their strategic planning to boost competitiveness. Additionally, policymakers should advocate for value-based innovation initiatives to support the sustainable growth of religious SMEs. Contribution & Value Added: This research contributes to academic literature by introducing spiritual innovation capability as a novel determinant of marketing performance in religious SMEs. It also extends the Resource Advantage Theory of Competition (RATOC) by emphasizing the pivotal role of spiritual values in driving business success.