The Impact of Entrepreneurial Leadership on Innovation Process and Innovation Performance

Transcription

1 The Impact of Entrepreneurial Leadership on Innovation Process and Innovation Performance Nurul Indawati To Link this Article: DOI: /IJARBSS/v8-i9/4639 Received: 06 August 2018, Revised: 04 September 2018, Accepted: 29 September 2018 Published Online: 20 October 2018 In-Text Citation: (Indawati, 2018) To Cite this Article: Indawati, N. (2018). The Impact of Entrepreneurial Leadership on Innovation Process and Innovation Performance. International Journal of Academic Research in Business and Social Sciences, 8(9), Copyright: 2018 The Author(s) Published by Human Resource Management Academic Research Society ( This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: Vol. 8, No. 9, September 2018, Pg JOURNAL HOMEPAGE Full Terms & Conditions of access and use can be found at 573

2 The Impact of Entrepreneurial Leadership on Innovation Process and Innovation Performance Nurul Indawati Jurusan Manajemen, Universitas Negeri Surabaya, Surabaya Abstract purpose- The aim of this research to understand the impact of entrepreneurial leadership to innovation performance. The results of this study also will support or reject the results of the previous study by Musa and Fontana (2017). Conclusive is a design of this study and causal research became the type of this research. Samples from this study are employees of the government enterprise and the private company located in Surabaya. Design/methodology/approach- With convenience sampling technique obtained 50 respondents. The data analysis technique used is SEM PLS. Entrepreneurial leadership is measured by 10 statements from four (4) includes a strategic indicator (3 items), communicative (2 items), personal factors (3 items), as well as motivational factor (2 items). While innovation process variables measured through 8 statement by indicators: idea generation (2 items), idea of selection (2 items), idea of development (2 items), idea of diffusion (2 items). The last variable that innovation performance is measured through 10 items of questions through 5 following indicators: internal performance (2 items), technical performance (3 items), commercial performance (1 item), social performance (2 items), and economic performance (2 items). Result - The resluts of this study show that Hypotheses H1a-H1d showing positive relationship between EL and IP. The findings also support hypotheses H2b and H2c (between EL to Isel and EL to Idev). However, Hypotheses H2a and H2d were not supported. Keywords: Entrepreneurial Leadership, Innovation Process, Innovation Performance. Introduction In the globalization era, economy based entrepreneurial could be more effective, because everyone is given the opportunity to do the best and fastest. Changes in the business environment at the regional level together with the implementation of the AEC makes companies needed an entrepreneurial leadership (entrepreneurship based leadership). Entrepreneurial leadership is leadership that involves organizational changes, as opposed to the leadership to maintain the status quo. In addition, in order to win market competition both at national and international market, the 574

3 continuous innovation needs to be done by all companies in Indonesia. Innovation management have an important role in the growth of the company and control of competition. Innovative means someone who likes to make improvements, presenting something new/different unique with existing ones. Thus, innovative attitude is important to be owned by an entrepreneur. Several studies of entrepreneurial leadership as according to Currie, et al (2008) in the journal entitled "innovation, proactive, and vision are three integrated dimensions of leadership and entrepreneurship." Said product innovation and entrepreneurial leadership is a process that is holistic, complimentary life. According to Shane and Venkataraman (2000) in the journal entitled "Entrepreneurial Leadership: Developing cross-cultural constructs." Saying Entrepreneurial leadership and product innovation has a very close relationship in creating a superior product. Mehrad, et al (2011) says that the Entrepreneurial leadership is evident in product and process innovation. Basrowi (2009) says that the ability of people in creativity can also be applied in the entrepreneurial, a person's ability to lead should be offset by a particular behavior is also known as the entrepreneurial dimension of innovation. Entrepreneurial leadership aspects are Able to Motivate, Visionary, Proactive, innovativeness, Risk Taking, Achievement Oriented, Persistence. While aspects of the product innovation are radical and incremental innovation Innovation. Leaders must dare to think differently to create opportunities and realize the dream of the organization. Almost every aspect of work is influenced by, and dependent on the leadership. That is, the leadership determines the success of an organization in building the capability and competence to win the competition (sustainable competitive advantage). The purpose of this study to understand the impact of entrepreneurial leadership to innovation performance through innovation process. entrepreneurial leadership Innovation Process Figure 1. Research Model Innovation Performance Theory Development and Hypotheses Entrepreneurial Leadership (EL) Entrepreneurial leadership is the process of Influencing organization through direct involvement in leading and creating value for stakeholders by bringing together a unique innovation and package of resources to respond to a Recognized opportunity (Darling et al., 2007). Gupta et al., (2004) indicated resources EL that creates visionary scenarios to assemble and Mobilize a supporting cast of participants who become committed by the vision of the discovery and exploitation of strategic value creation. The following are dimensions of entrepreneurial leadership by Musa and Fontana (2017) : (i) Strategic dimension with the capability to offer section determine the organization system in a manner comprehensively taking into account its resources, people, and strategy, as well as the business model that an organization adopts. The strategic dimension indicates that entrepreneurial leadership, strategic thinking must have to make sure the vision of future possibilities that are shared so that the organization will have a sense of direction, destiny, and discovery. Afterwards, the 575

4 strategic dimension instills flexibility in making decisions and a willingness to face ambiguity. The ability to "think in time" by understanding the gap between the current reality and future possibilities would improve the quality of decision making and the speed of implementation. (ii) the offer section Communicative dimension with how such vision of future possibilities is shared throughout the organization. It deals with the capability to persuade members of the organization, to manage conflicts, and to foster knowledge management by understanding emotions in social interactions (Subramanian & Nilakanta, 1996; Szulanski, 1996). Communication is important for effective entrepreneurial leadership, the which it firstly offers section with influencing others toward a goal (Cogliser & Brigham, 2004) through persuasion for both upward, laterally, and downward influence (Yukl & Falbe, 1990). Secondly, entrepreneurial leadership shares the vision of future possibilities enabling organizations to transform its current transaction sets through adaptation and leading, through direct involvement, a process of value creation for its stakeholders Employing Innovation to Achieve competitive advantage, and a package of resources to respond to Recognized opportunity. (iii) Offer section with the motivational dimension of human action within the organization that Affects both motivation and cognition of people in the organization. Shane et al., (2001) indicated resources of human motivation that plays a critical role in the entrepreneurial process. It describes the ability to motivate people in the organization, to understand the needs of the organization, to maintain an entrepreneurial spirit in people within the organization, and to have the self-confidence to influence others. Gupta et al. (2004) stated that entrepreneurial leadership is all about managing and instituting transformational and social enactment through positive motivation. (iv) Personal and/or organizational dimension aimed at factors relating to creativity, stability, proper resource allocation (job fit), and discipline. Creativity offer section with the creative skills to organize the needed resources and enact the role of framing the challenge. Stability means emotional stability at the individual level, the passion and the commitment of the organization to entrepreneurial activities. Proper resource allocations refer to managing resources and maintaining dynamic capabilities to Enhance knowledge management within the organization, the which in turn could support efforts to recognize opportunities; while organizational discipline offer section with building a bridge that links entrepreneurship and strategic management. Innovation Management Innovation Management is the process of managing innovation in a company to be efficient for the creation of a sustainable competitive advantage for the company. Innovation management is necessary because to admit fresh ideas should continue to flow as soon as possible and at all times in anticipation of the development of more rapid, diverse, and dynamic. This is where the innovation management should play an important role. Furthermore, management innovation enhances an organization's capacity to create new business models, innovation roommates could lead to the creation of new industries (Teece, 2010). Adams et al. (2006) Also indicated resources that a competitive success is dependent upon an organization's management of the innovation process. 576

5 Innovation Process (IP) Hansen and Birkinshaw (2007) define innovation or innovation management process (IP) as an active and conscious process of an organization's control, and execution of activities that lead to innovation. Reviews These frameworks combining innovation process, this study views the innovation process as a four-phase process that involves idea generation, idea selection, development idea, and the idea of diffusion. Idea generation offer section with the process of generating ideas for new products (goods and/or services, in general). Ideas are the raw materials for innovation, and they can have a significant impact on the success or failure of innovation management. It deals with inputs in an organization such as slack resources roommates are regarded as an important catalyst for innovation (Adams et. Al., 2006); knowledge management within an organization, the which involves sourcing information through internal cross-collaboration and external sourcing; and organizational structure and culture, the which encourage information flow and foster creativity. Motivation IP Becomes important in this phase to Ensure that people in an organization are engaged. Idea selection offer section with the screening of Reviews those new concepts based on an organization of strategic orientation and taking into account the organization's resource allocation conditions and objectives. It involves strategy and portfolio management to select the best new idea for the organization. Portfolio management focuses on making strategic, technological and resource choices that govern the project selection and the future shape of the organization (Cooper et. Al., 1999). A clear vision, resource allocation, and long-term commitment to innovation are crucial in idea selection. Idea development offer section with converting ideas into viable products based on known best practices. It involves strong project management that supports the processes required to turn inputs into a marketable innovation. Internal and external communications are important in project management. Idea diffusion offer section with delivering new innovative products to end customers. Zaltman et al., (1973) Refers this innovation process as a commercialization phase of innovation. Commercialization is concerned with making an innovative process or product into a commercial success. It involves marketing, selling, distributing and creating joint ventures. Thus, diffusion stage is one of the fundamental aspects of the process of growth and transformation of the economics of an organization with respect to innovation (Silverberg et al., 1988). At this phase of the innovation process, strategy execution, "thinking in time", communication and organizational discipline are important factors to Ensure successful execution of idea-diffusion. The goal of innovation management/innovation process is to Ensure that an organization is Able to continuously provide new innovative products and services to end customers, as well as business model innovation to maintain the organization's competitiveness by having a sustained innovation performance. Innovation Performance Based on the definition of innovation in De Meyer and Garg (2005) that has been further developed to cover not only economic performance but Also social performance (Fontana, 2009), Fontana in 577

6 Aryanto, Fontana, Afiff (2015) Described and Examined innovation performance measurement based on the following dimensions: (i) Internal Aspect of Innovation Performance (Internal Performance) measures the perceptual organizational innovativeness before, during and after an innovation process. This dimension measures the contribution of internal tangible and intangible resources (such as climate, culture, and resources) to innovation performance. It basically shows that an organization has been successful in fostering innovativeness, knowledge management and a climate for generating new ideas, selecting, developing, and diffusing the resulting products from the process of innovation. (ii) Technical Performance Refers to the organization ability to Realize creative and innovative ideas into real products, goods and/or services. This dimension shows the capacity of an organization to manage the ideation, the selection and the development process of innovative products. The technical performance of innovation is an invention of the performance, that is a part of an innovation-process performance. At a minimum, the product has been in the prototype stage at the time of the measurement. Technical performance can be Viewed as measuring development process effectiveness, or the effectiveness of the innovation process. (iii) Commercial Performance Refers to the organization abilities in diffusing or distributing the innovative products in the market. It basically indicates that the innovation process has produced goods and/or services that can be sold to the market. Commercially successful products do not necessarily mean successful economically. In this sense, the economic performance, in terms of profit, must be measured, as it is a proxy for a successful commercialization of a product. (iv) Social Performance Refers to the positive impact that an organization creates through Reviews their innovation input, process, and output not only to the pertinent stakeholders in particular but Also to the community and society in general as part of Reviews their corporate social responsibility as well as Reviews their corporate-shared-values' actions toward the community and society at large. The Attainment of a social performance assumes that organization has at least fulfilled Reviews their obligations to Reviews their stakeholders. It is assumed here that social performance is attained before economic performance. Organizations Reviews their measure of economic performance, after having distributed the value created to relevant stakeholders. (v) Economic Performance offer section with the financial performance of an innovative output that has passed the commercialization phase in particular or in general the diffusion phase. Economic performance is measured by the organization's ability to create economic value added in terms of residual income or internal rates of returns that exceed the cost of capital. The economic performance of the innovation must be measured after social performance. This study Refers to the premise of innovation-system performance (Fontana, 2010, 2011, 2016) that measures innovation performance in the five-dimensions representing the input, process, output, and outcome aspects of the organization's innovation systems. Research Model Figure 1 shows the overall research models of the study; while Figure 1 indicates the relationships between variables that are Examined in the study. It is reasonable that entrepreneurial leadership's attributes, the which are embedded in its dimensions, can have positive relationships with the innovation process. The strategic dimension of entrepreneurial leadership 578

7 could certainly play an important role in the innovation process, specifically in the idea of selection and diffusion phases through its strategic thinking, and "thinking in time". The communicative dimension of entrepreneurial leadership could Enhance the innovation process, particularly subject to the idea generation and development phases. The motivational dimension of entrepreneurial leadership could support the innovation process, particularly subject to the idea generation and diffusion phases. Last but not least, the personal/organizational dimension of entrepreneurial leadership could have a positive relationship with the innovation process, particularly subject during the idea generation and diffusion phases. Based on Reviews those premises, we Make the following hypotheses: Based on theoretical basis, prior research and thinking framework, the hypothesis of this study are: Hypothesis 1a: Entrepreneurial leadership has a positive relationship with Idea Generation. Hypothesis 1b: Entrepreneurial leadership has a positive relationship with Idea Selection. Hypothesis 1c: Entrepreneurial leadership has a positive relationship with Idea Development. Hypothesis 1d: Entrepreneurial leadership has a positive relationship with Idea Diffusion. Innovation process could have an impact on the organization's innovation performance (P) that consists of five dimensions Discussed above. We make the following hypotheses: Hypothesis 2a: Idea Generation has a positive relationship with Performance. Hypothesis 2b: Idea Selection has a positive relationship with Performance. Hypothesis 2c: Idea Development has a positive relationship with Performance. Hypothesis 2d: Diffusion Idea has a positive relationship with Performance. Research Method Sample and Procedure The population used in this study is employees of enterprises, government employee-owned banking and private banking based in Surabaya. The sample in this study was taken by using a convenience sampling technique. Convenience sampling was non-probability sampling technique in which subjects have been selected for their convenient accessibility and proximity to the researchers. The Data for the study were collected from a sample of 50 employees. This study uses PLS SEM models and treated with SmartPLS version to evaluate research models. Testing the hypothesis through two stages of testing models outer and inner testing models. Outer testing the model aims to determine the value of the latent variable correlation, cross-loadings, construct validity and reliability as well as R Square (R2). The test aims to determine the model of the inner path coefficient values, inner model of the T-statistic, and the total value that indicates the degree of variation effect change in the independent variable on the dependent variable (Hartono and Abdillah, 2009). The results of the evaluation of the model presented in the appendix. Measurement All items measurements on each variable in this study using an item that has been used previously by Musa and Fontana on their study entitled "The impact of entrepreneurial leadership validation measurement on innovation management and its measurement validation". 579

8 Entrepreneurial Leadership (EL) EL is measured with 24 items of ELQ across the four dimensions of EL items, namely strategic dimension (STRAT) with 10 items, communicative dimension (COMM) with 5 items, motivational dimension (Motiv) with 5 items, and personal/organizational dimension (PRESS ) with 4 items. The ELQ was developed by Musa and Fontana (2014) to measure employees' perceptions of Reviews their organization's entrepreneurial leadership. The ELQ uses a five-point Likert scale (ie, from 1-Strongly Disagree to 5-Strongly Agree) for the ranking of agreement with each of the items. Sample items for STRAT include: "My leader or organizational leadership has the ability to see the big picture of the business opportunities"; for COMM: "My leader or organizational leadership has the ability to control feeling in managing conflict"; for Motiv: "My leader or organizational leadership has the ability to transfer positive affective to others in the organization"; for PRESS: "My leader or organizational leadership encourages creativity in developing and applying innovation in the organization". Innovation Process Hansen and Birkinshaw (2007) define management or process innovation as an activity and process control consciousness of the organization and implementation of activities that lead innovation. Hansen and Birkinshaw further describe the process of innovation as a result, a three-stage process that involves up with ideas, discuss ideas, and to spread the idea of the concept developed. This study combines innovation process framework that viewed the innovation process as a four-stage process that includes idea generation (Igen), idea selection (Isel), the idea of development (Idev), and the idea of diffusion (IDIFF). Innovation process was measured with thirteen items of IPQ across the four dimensions of innovation process. Innovation Performance Based on the definition of innovation De Meyer and Garg (2005) which was then developed to cover not only economic performance but also social performance (Fontana, 2009), in Aryanto Fontana, Fontana, Afiff (2015) describe and explain innovation performance is measured based on the following dimensions : (I) Internal Aspect of Innovation Performance (Internal Performance), (ii) Technical Performance, (iii) Commercial Performance, (iv) Social Performance, (v) Economic Performance Result Descriptive Statistics In this research, questionnaires were distributed online through google facility form. A number of questionnaires were eligible (complete response) a number of 50 questionnaires. Respondents of this study were employees of the government enterprise (SOE) as well as employees in the private company whose company located in Surabaya. The majority of respondents are in undergraduate education level, working in state-owned enterprises (SOEs), with gender dominated by males aged between years. 580

9 Construct Validity and Reliability Validity test used to measure invalid or not a questionnaire. A questionnaire considered valid if the questions in the questionnaire able to reveal something that will be measured (Ghozali, 2001: 47). The basis for a decision: If rvalue positive and rvalue> rtable then the item is valid. Reliability refers to the notion that a measuring instrument reliable enough to be used as a data collection tool because it is already a good measuring tool (Arikunto and Suharsimi, 2010). The reliability of a variable can be measured by measuring the correlation between answers to questions with statistical test Cronbach Alpha (α). A variable is said to be reliable if the value of Cronbach Alpha (α)> (Ghozali, 2013: 48) Construct validity and reliability of the examination carried out a number of ways. This test is used to assess convergent validity, discriminant validity, and reliability. A model has convergent validity if the value of the outer loading> 0.7, communality> 0.5, and the average variance extracted (AVE)> 0.5 (Hartono and Abdillah, 2015). However, the measurement model with outer loading value 0.5 to 0.6 is considered sufficient for research that is exploratory (Ghozali, 2011). Figure 2. Outer Model For Validitas Item The test results are reflective outer model in Figure 2 shows that not all items have outer loading of more than 0.50, such as EL.2, EL.4, EL.8, IP.1, IP.4, IP.7 and IP.9 so that these items were excluded from the analysis. In addition validity on each item also checked using the calculation results cross-loading. 581

10 Table 1. Loading Factor and Cross loading Item EL igen Isel Idev IDIFF IP EL.1 0, ,711 0, EL , EL EL EL , EL.6 0, , EL EL EL , EL IGEN ,765 0, IGEN , ISEL , ISEL IDEV , IDEV IDIFF IDIFF IP ,404 IP , IP IP IP IP.6 0,753 0, IP , ,249 0, IP IP ,217 0, IP , ,747 Description: EL = Entrepreneurial Leadership; Igen = Idea Generation; Isel = Idea Selection; Idev = Idea Development; IDIFF = Idea Diffusion; IP = Innovation Performance Validation item is high or if the coefficient crossloading meet is highest in konstruknya and lower in the other constructs. On the outer part of the whole construct of this model is designed first order in the sense that this construct directly explained by item. In Table 1 results crossloading explained that most of the items used have a high validation as explanatory constructs respectively. Crossloading coefficient of each item on the other constructs is lower than the loading factor on the relevant constructs. In addition to the validity of the test, a measurement model is said to be good if it has a sufficient level of reliability. Reliability indicates the level of accuracy, consistency, and accuracy of a measuring instrument to take measurements. A construct is said to be reliable if the Cronbach's alpha 582

11 coefficient values greater than 0.70, but 0.60 is still an acceptable value for the research that is exploratory (Hartono and Abdillah, 2009; Hair et al., 2010). The reliability of the measurement model can also be judged from the large composite reliability coefficient, included in both categories if this coefficient reached 0.70 or more. Two other ways of assessing reliabilities are the average coefficient of variance extracted (AVE) and communality, included in both categories if this coefficient reached 0.50 or more. Coefficient AVE will have exactly the same values of communality. The test results showed that all constructs reli3abilitas had a Cronbach's alpha coefficient of more than the composite reliability coefficient of more than 0.70, as well as the AVE and communality coefficient of more than Thus, all the measurement models used in this study already has a high reliability. Table 2. Results of Convergent Validity Construct Cronbach's composite alpha coefficient Reliability AVE entrepreneurial Leadership Idea Generation Idea Selection 0,625 0,747 0,597 Idea Development Idea Diffusion Innovation Performance 0, Besides meeting the convergent validity, a measurement model must have discriminant validity. A measurement model meets the discriminant validity if the root of AVE of a construct is greater than the correlation coefficient with other constructs. For example, the construct of entrepreneurial leadership has a coefficient of AVE AVE roots are obtained by Construct large correlation coefficient entrepreneurial leadership with other constructs range from to so that these analyzes provide a conclusion unfavorable discriminant validity. Table 3. Calculation Results Discriminant Validity Construct EL igen Isel Idev IDIFF IP entrepreneurial (0.614) Leadership Idea Generation (0.824) Idea Selection (0.773) Idea Development (0.820) Idea Diffusion (0.778) Innovation Performance 0, (0,641) Information: The coefficient on the diagonal is the root of AVE; Beyond the diagonal coefficient is a correlation coefficient between CONSTRUCTS; AVE = Average Variance Extracted Table 3 presents the calculation of a construct AVE roots and the correlation between the constructs. The test results show the value of a variable AVE root higher than the value of the correlation between variables. It can be concluded that the measurement model, this research has met the 583

12 discriminant validity. In various corners of the assessment carried out on the validity and reliability of the construct was concluded that not all items can be used as a measure questions variables in this study. Structural Equation Modelling PLS (SEM PLS) This study uses SEM PLS models and treated with SmartPLS version to evaluate research models. Testing the hypothesis through two stages of testing models outer and inner testing models. Outer testing the model aims to determine the value of the latent variable correlation, cross-loadings, construct validity and reliability as well as R Square (R 2 ). The test aims to determine the model of the inner path coefficient values, inner model of the T-statistic, and the total value that indicates the degree of variation effect change in the independent variable on the dependent variable (Hartono and Abdillah, 2009). The results of the evaluation of the model presented in the appendix. Examination of Linearity Assumption Before undertaking further evaluation of this analysis, it is necessary to first perform linearity assumption, namely that the relationship between the constructs will be tested have a linear relationship. Because it is the first step in the path analysis is to test the assumption of linearity. Relationships between variables in this analysis are linear. Testing this assumption of linearity test using a test of linearity. The assumption of linearity in the path analysis is only concerned with structural equation modeling and not related to the hypothesis, that the relationship between variables in the structural model is linear. That is an increase or decrease in variation in the criterion followed consistently by increasing or decreasing variation on the criterion of the predictors so that the relationship will be a straight line or linear. Table 4. Examination of Linearity Assumption Deviation from Linearity From To Linearity Information F P F P EL igen ,000 0,032 0,044 linear EL Isel ,000 0, linear EL Idev , linear EL IDIFF ,000 1, linear Igen IP , linear Isel IP ,000 3,049 0,027 linear Idev IP , ,000 linear IDIFF IP , linear Description: EL = Entrepreneurial Leadership; Igen = Idea Generation; Isel = Idea Selection; Idev = Idea Development; IDIFF = Idea Diffusion; IP = Innovation Performance 584

13 Results linearity explains that the entire track to meet the assumptions of linearity which results in part linearity F test was significant (p <0.05). There are test results supporting the other parts ie deviation from linearity which aims to test whether linearity fulfilled also supported by the low suitability of the model for non-linear relationship. If the test results from linearity deviation are not significant (p> 0.05), means the relationship between the two variables is linear. However, if the deviation from linearity test results were significant (p <0.05), means the relationship between the two variables can be linear and non-linear. So that this linearity assumption is met if the test results are a significant part linearity. This analysis concludes that the linearity requirements are met on all existing lines in the hypothetical model. In the linearity test, F-test was significant (p <0.05). Here are the results of analysis by not including the 8 items that are less qualified validity and reliability of the construct. Loading and cross-loading on each construct were qualified more than 0.50 and loading value more than its cross-loading. Figure 3. Outer Evaluation Model First To Validity Item 585

14 Figure 4. Outer Second Evaluation Model For Validity Item Table 5. Loading factor and Crossloading after Evaluation Item EL igen Isel Idev IDIFF IP EL.1 0, EL EL ,624 EL , EL , EL IGEN IGEN ISEL ,265 0, ISEL IDEV IDEV IDIFF , IDIFF ,260 0, IP , IP.3 0,844 0, IP , IP IP.8 0, IP.10 0,646 0, , ,

15 The reliability of the measurement model after evaluation also considered of great composite reliability coefficient, included in both categories if this coefficient reached 0.70 or more. Two other ways of assessing reliabililitas is the average coefficient of variance extracted (AVE) and communality, included in both categories if this coefficient reached 0.50 or more. Reliability testing results show that all constructs had a Cronbach's alpha coefficient is more than 0.60, the composite reliability coefficient of more than 0.70, as well as the AVE and communality coefficient of more than Thus, all the measurement models used in this study already has a high reliability. Table 6. Results Evaluation After Convergent Validity Construct Cronbach's composite alpha coefficient Reliability AVE entrepreneurial Leadership Idea Generation Idea Selection 0,625 0,747 0,597 Idea Development Idea Diffusion Innovation Performance Table 7. Calculation Results after Discriminant Validity Evaluation Construct EL igen Isel Idev IDIFF IP entrepreneurial Leadership (0.725) Idea Generation 0,795 (0.824) Idea Selection (0.773) Idea Development (0.820) Idea Diffusion , (0.778) Innovation Performance.954 0, ,782 (0.777) Information: The coefficient on the diagonal is the root of AVE; Beyond the diagonal coefficient is a correlation coefficient between CONSTRUCTS; AVE = Average Variance Extracted Table 6 and 7 presents the convergent validity and discriminant validity after evaluation. The various assessment conducted on the validity and reliability of the construct was concluded that the whole item after the evaluation can be used as a measurement variable in this study. Latent Variable Correlation Matrix In the sixth existing variables in the model have a marked positive correlation coefficient with a range of to The correlation coefficient in the relationship between variables is significant because the critical value of the correlation coefficient in the sample size of 50 is Table 8 is the matrix of correlations between variables. 587

16 Table 8. Matrix Correlation Between Variables EL igen Isel Idev IDIFF IP entrepreneurial Leadership - Idea Generation 0,795 - Idea Selection Idea Development Idea Diffusion , Innovation Performance.954 0, ,782 - Testing Structural Model (Inner Model) Results of testing the structural model (inner model) can be seen in the R-square (R2) in each constructs endogenous (innovation process and innovation performance), the path coefficient value, the value of t and p values for each relationship among construct path. Path coefficient value and the value of t at each track will be described in sub-discussion of hypothesis testing results. The R2 is used to measure the degree of variation in the endogenous variable is explained by a number of variables that affect (Hartono and Abdillah, 2009). The higher the value of R2 means the better the model predictions of the proposed model. Figure 5. Model Hypothesis 588

17 Hypothesis testing is based on the results of the analysis of SEM PLS models that contain all the variables supporting the hypothesis test. Table 9 describes the path coefficient test results contained in the study. Table 9.Hasil Coefficient Test Line On Inner Model To coefficient Standard P Information From Line deviation EL ==> Igen 0,795 0,031 <0.001 Significant EL ==> Isel ,025 <0.001 Significant EL ==> Idev ,022 <0.001 Significant EL ==> IDIFF.818 0,030 <0.001 Significant Igen ==> IP 0,002 0, Not significant Isel ==> IP <0.001 Significant Idev ==> IP <0.001 Significant IDIFF ==> IP 0,072 0, Not significant Description: EL = Entrepreneurial Leadership; Igen = Idea Generation; Isel = Idea Selection; Idev = Idea Development; IDIFF = Idea Diffusion; IP = Innovation Performance Interpretation of the table and the image that is the relationship between variables that are described as follows: 1. Entrepreneurial leadership to idea generation has a coefficient with positive directions. Statistical results show the path coefficient of (p <0.05) this proves that entrepreneurial leadership has significant effect on idea generation. It means the relationship between entrepreneurial leadership and idea generation is supported (H1a Supported). 2. Entrepreneurial leadership against the idea selection has a coefficient with positive directions. Statistical results indicate the path coefficient of (p <0.05) this proves that entrepreneurial leadership has significant effect on the idea selection. Thus the hypothesis H1b was supported. 3. Entrepreneurial leadership against the idea development has a coefficient with positive directions. Statistical results show that the path coefficient of (p <0.05) this proves that entrepreneurial leadership has significant effect on idea development. Thus the hypothesis H1c was supported. 4. Entrepreneurial leadership against the idea diffusion has coefficients with positive directions. Statistical results show that the path coefficient of (p <0.05) this show that entrepreneurial leadership has significant effect on the idea diffusion. (H1d supported) 5. Idea generation towards innovation performance has the path coefficient of (p> 0.05). This statistical result did not support the relationship between idea generation and innovation performance. Thus the hypothesis H2a was not supported. 6. Idea selection towards innovation performance has the path coefficient of (p <0.05) this proves that idea selection has significant effect on innovation performance. (H2b was supported) 7. Idea development towards innovation performance has the path coefficient of (p <0.05) it shows that idea development has significant effect on innovation performance. (H2C was supported). 589

18 8. Idea diffusion towards innovation performance has the path coefficient of (p> 0.05) it means H2d was not supported (the relationship between idea diffusion and innovation performance). Fit Model Compatibility of the model can be assessed from several calculation models such as the coefficient of determination (Rm 2 ), an index of the goodness of fit (GoF) and f squared value (f 2 ). The coefficient of determination calculated using the model of the entire coefficient of determination (R 2 ) that is in the model. R 2 calculation results are presented in Table 10. The R 2 value for the variable performance innovation is Value shows that the innovation performance variation explained by the four dimensions of the innovation process by 95.1%, while the rest is explained by other variables. The R 2 for the innovation process, which is divided into four variables: idea generation, idea selection, development idea and idea diffusion respectively were 0.633, 0.812, and This value indicates that the variation is explained by the innovation process that explained by entrepreneurial leadership range 63.3% %, while the rest is explained by other variables. Table 10. Measurement Results R-Square variables R 2 entrepreneurial Leadership - Idea Generation Idea Selection 0,812 Idea Development Idea Diffusion Innovation Performance Hair et.al (2014) states that coefficient of determination is low if the value is 0.20, while the results of this model for both coefficients is more than So based on this result, the fit model is quite good. The fit model can be calculated by the following formula: Rm 2 = 1 - (1 - R12)... (1 - Rn2) Rm 2 = 1 - (1 to 0.633) (1 to 0.812) ( ) ( ) (1-0,951) Rm 2 = 1 to Rm 2 = The result of calculation shows that the model inner value (Rm 2 ) is which means that the model of this study has a high fit model. The accuracy of the model of 94.6% explained that the contribution of the structural model to describe the relationship of the five variables studied amounted to 94.5% and the rest is explained by other variables that are not involved in the model. 590

19 Table 11. Goodness of Fit Index (GoF) variables Communality R2 entrepreneurial Leadership Idea Generation Idea Selection 0,597 0,812 Idea Development Idea Diffusion Innovation Performance Amount 3, Average.614 0,781 Goodness of Fit Index (GoF) 0,692 Matches can also be calculated using a model of goodness of fit index. Index goodness of fit (GoF) is defined as the geometric mean or average root of communality and the average R2 for all constructs of endogenous (Tenenhaus et al., 2005). GoF index shows the predictive power over the entire model. Value GoF has the interval between 0 and 1. The value GoF that close to 1 indicate a good model estimation path (Akter, D'Ambra, and Ray, 2011). GoF index for this research model for 0,692.Dengan Thus, the structural model that describes the relationship five variables have good predictive power (fit). Discussion The results of this study contribute to an intensive search of the entrepreneurial leadership. The findings of this study show that Hypotheses H1a-H1d showing positive relationship between EL and IP. The findings also support hyphotheses H2b and H2c (between EL to Isel and EL to Idev). However, Hypotheses H2a and H2d were not supported (between IGEN to IP and IDIFF to IP). Idea generation and idea diffusion have a negative relationship with innovation performance. This may occur because of idea generation and diffusion is not always applied optimally in the company. These findings support most the findings of previous research by Musa and Fontana which H1a-H1d, H2b, and H2c were supported but H2a and H2d were not supported. The difference between the findings of this study with the study by Musa and Fontana shown in H2b and H2c which supported in this study but not supported in Musa and Fontana study. Implications for Management The study suggests that the validated measurement of entrepreneurial leadership would help organization to measure their innovation process and its effects on innovation performance. The study shows that entrepreneurial leadership has the greatest impact on the idea development, Followed by the idea selection, idea diffusion and idea generation. This confirms that entrepreneurial leadership plays an important role in having innovative organizations. Furthermore, The findings suggest that the innovation process does not automatically result in innovation performance variables. In fact, the study indicates that the idea generation and diffusion have negative relationships toward innovation performance. Directions for Future Research The study shows that there could not be a direct relationship between idea generation and innovation process as well as idea diffusion and innovation performance. Thus, further research is 591

20 needed to identify what variables or factors could link innovation generation and diffusion as a proxy for innovation management, and innovation performance. Strengths and Limitations The findings show that idea selection and idea development have positive relationship to innovation performance which not found in the previous research. So, it could be the strengthen of this study by provided the validated instrument between ISEL and IDEV to IP. Limitation of this study is using the exact same instrument with previous studies made less enriching the findings. Conclusion Entrepreneurial leadership facilitates the innovation management/process innovation through its strategic, communicative, motivational, and personal/organizational discipline dimensions. It is important for organization to foster the development of reviews their entrepreneurial leadership at all levels within the organization to ensure that innovation management/innovation process is managed effectively. However, the study found that the positive relationship between idea generation to innovation performance as well as idea diffusion to innovation performance was not supported. Acknowledgement 1. Thank you to the Faculty of Economics who helped in financing this research. 2. Thanks to the respondents who participated in filling out the research questionnaire. 3. Thanks to all the research teams, colleagues, and all parties involved in the completion of this research. Corresponding Author Nurul Indawati Jurusan Manajemen, Universitas Negeri Surabaya Jl. Ketintang, Surabaya (60213) References Arikunto, S. (2010). Prosedur Penelitian Suatu Pendekatan Praktik, Jakarta : Penerbit Rineka Cipta. Cogliser, C.C., and Brigham, K.H. (2004). The intersection of leadership and entrepreneurship: Mutual lessons to be learned. The Leadership Quarterly, Covin, J.G., and Slevin, D.P.. (2002). The entrepreneurial imperatives of strategic leadership. In M.A. Hitt, R. D. Ireland, S.M. Camp, D.L. Sexton, Strategic entrepreneurship: Creating a new mindset (pp ). Oxford, UK: Blackwell Publishers. Fontana, A. (2009, 2010, 2011, 2016). Innovate We Can! Manajemen Inovasi dan Penciptaan Nilai. Jakarta: Gramedia Widiasarana Indonesia; Rev. Edition, Bekasi: Cipta Inovasi Sejahtera. Ghozali, Imam Applications Multivariate Analysis with IBM SPSS 21. Program Edition Seven. Semarang: Diponegoro Publisher Agency. Gupta, V., MacMillan, I., and Surie, G. (2004). Entrepreneurial leadership: developing and measuring a cross-cultural construct. Journal of Business Venturing, 19(2), (Darling et al., 2007). 592

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