ABSTRACT
The aims of this research were to find out and analyze the relationship between innovation capacity and creative industry performance in Indonesia. This study is based on the contribution of the creative industry in the national economy. The method used in this study was quantitative method through causal explanatory survey research. The innovative capacity measurements included product innovation and process innovation, while company performance was measured through financial perspective, customer perspective, internal business process perspective, as well as learning and growth perspective. The population of this research was 368 businesspeople in the leather industry, leather goods and footwear in Bandung City, West Java, Indonesia, with a sample size referring to Slovin’s Formula: as many as 192 respondents. All research variables were measured using Likert scale, and the data were collected through questionnaires on the SMEs (Small-to-Medium Enterprises). This research used Structural Equation Modeling (SEM) for the data analysis. The results showed that innovation capacity had a significant influence on the company performance. This study implies that to improve the performance of creative industry, businesspeople need to optimize the innovation capacity through product innovation and process innovation by producing superior and innovative products as well as becoming leaders of process innovation using the latest technology.
