Published date: Nov 12 2018

Journal Title: KnE Social Sciences

Issue title: The 2018 International Conference of Organizational Innovation (ICOI-2018)

Pages:

DOI: 10.18502/kss.v3i10.3432

B Tjahjadi

N Soewarnonoorlailie@gmail.com

This study aims to investigate the mediating effect of innovation capability and customer performance on the relationship between seniority-based management and financial performance. The main contribution of this study is to empirically test the resource-based theory using a structural equation model. This is designed as a quantitative study at explanatory level using a structural equation modelling. As many as 115 managers of state-owned enterprises (SOEs) and their subsidiaries in Indonesia participated. Results show the following: First, seniority-based management affects financial performance. Second, innovation capability does not mediate the relationship between seniority-based management and financial performance. Third, customer performance does not mediate the relationship between seniority-based management and financial performance. Finally, innovation capability and customer performance mediate the relationship between seniority-based management and financial performance. This study concludes the strategic roles of innovation capability and customer performance.

Keywords: seniority-based management, innovation capability, customer performance, financial performance

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