Abstract

This study investigates the influence of market orientation, social media adoption, and employee empowerment on innovation capability and business performance among Micro and Small Enterprises (MSEs) in the creative economy sector of Padang, Indonesia. A total of 87 respondents were analyzed using Structural Equation Modeling with Partial Least Squares (SEM-PLS). The findings reveal that market orientation and employee empowerment significantly enhance innovation capability, while social media adoption shows no effect on either innovation capability or business performance. Additionally, none of the three independent variables directly improves business performance. Instead, innovation capability emerges as the only significant predictor of business performance, indicating its mediating role in translating organizational capabilities into competitive outcomes. These results underscore the gap between awareness of strategic business practices and their effective implementation among creative MSEs. The study provides theoretical contributions by challenging the assumption that digital adoption and market awareness automatically lead to performance improvement and confirms the central role of innovation capability in developing competitive advantage. Practical implications highlight the need for structured innovation programs, digital strategy training, and managerial capacity-building to support sustainable growth in the creative economy sector.

Keywords

  • Market Orientation
  • Social Media Adoption
  • Employee Empowerment
  • Innovation Capability
  • Business Per

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