ABSTRACT
The business environment of the wood and furniture industry is growing rapidly. In addition to the basic functions, many consumers are increasingly considering furniture designs that represent their personal identity, thus avoiding products that have the same design as others. Eco-labeling and environmental issues are also making the business environment increasingly complex. Changes in the business environment require the industry to improve quality and design, and incorporate eco-labeling standards through innovation strategies that assure sustainable competitiveness. The dilemma on innovation is that on the one hand a company should improve efficiency through the optimization of resources, but on the other hand a company should also look to invest in new opportunities or products. Previous research shows that successful companies have the innovation ability to optimize resources, as well as seek new ways, markets, opportunities, and products. The study examines the antecedents of innovation of the wood and furniture companies in Central Java, and whether innovation influences the companies’ performances. The survey result is analyzed using partial least squares structural equation method (PLS-SEM). The results show that the business environment, organizational structure, human resources, and inter-firm linkage influence innovation, and innovation influences the performance of the wood and furniture companies in Central Java.
