ANALYSIS OF MOTIVATION, PRODUCT INNOVATION, AND BUSINESS STRATEGY ON THE BUSINESS PERFORMANCE OF MICRO AND SMALL ENTERPRISES IN MALANG CITY

Abstract

Micro and Small Enterprises (MSEs) play a vital role in regional economic development, particularly in urban areas such as Malang City, which is known for its dynamic growth in culinary, creative, trade, and service sectors. Despite their significant contribution, many MSEs continue to face challenges in achieving and sustaining optimal business performance. These challenges are commonly associated with limited managerial capability, low innovation intensity, and the absence of clear and structured business strategies. This study aims to examine and analyze the influence of motivation, product innovation, and business strategy on the business performance of micro and small enterprises in Malang City.

This research adopts a quantitative approach using primary data collected through structured questionnaires distributed to owners or managers of MSEs operating in Malang City. The data were analyzed using multiple linear regression analysis to test both partial and simultaneous effects of the independent variables on business performance. The findings reveal that motivation, product innovation, and business strategy each have a positive and significant effect on business performance. These results indicate that motivated entrepreneurs, continuous product innovation, and wellformulated business strategies are key drivers of improved sales growth, profitability, and market expansion. The study provides both theoretical contributions to the literature on small business performance and practical implications for policymakers and practitioners in designing effective empowerment programs for MSEs