Small businesses contribute to the country's economy and employment (Autio, 2005; Ibarra, Bigdeli, Igartua, & Ganzarain, 2020; Nugroho, Utami, Akbar, & Arafah, 2017; Omri, Frikha, & Bouraoui, 2015; Susanto & Meiryani, 2019). Small business is a form of economic activity that is not too large, and its activities can be in the form of retail, production, trade, and services. Generally, small businesses are owned and run by the local communities. The characteristics of a small business are the employees come from immediate families, run independently, using simple technology, and the target market is the local market (Chaniago, 2020b; Ingram, Kraśnicka, & Głód, 2018; Patel, Pieper, & Hair, 2012).
Several studies have shown that small businesses in developing countries, including Indonesia, are much higher than medium and large enterprises. Small business grows naturally, and its growth is in line with population growth. Based on (UU_No_20, 2008), small businesses are divided into formal and non-formal/micro-groups. Non-formal small companies do not have legality and are not registered by the government.
In its activities, many small businesses in Indonesia face obstacles in terms of marketing, raw materials, capital, and technology (Ariani & Utomo, 2017; Maksum, Rahayu, & Kusumawardhani, 2020). Several obstacles come from the quality of human resources, which can be overcome by innovation. Innovation becomes an efficient alternative to solve business problems. (Pullen, Weerd-Nederhof, Groen, and Fisscher (2012). Everyone involved in small businesses needs to innovate, especially owners and leaders. It will increase business competitiveness. Leaders should provide examples of how to use innovation to solve company problems.
Sources of innovation come from the company's internal and external environment. Leaders study, imitate, develop and adapt to consumer needs. Such innovation is also called innovation cloning. Innovation cloning saves research costs, development costs and reduces the risk of failure (Braak & Deleersnyder, 2018). Innovation cloning is a practical way to achieve goals. Innovation cloning on a leader is included in individual innovation. There is little research on individual innovations (Baron & Tang, 2011). Likewise, research on cloning innovations for small business leaders has never been done, and the references are limited. The purpose of this study is to analyze the innovation cloning of small business leaders. However, because there are only a few references, the theories used will be closely related to innovation theories in general and occur in various business groups. The results of this study contribute to the theoretical framework of cloning innovation and its benefits for entrepreneurs.
Innovation Cloning, Creativity, and Implementation Cloning.
Innovation and creativity are two interrelated terms. Creativity is defined as the human ability to increase or add value, and it refers to individual abilities (Dobbins & Pettman, 1997). Creativity is a concept, idea, or imagination that has not yet been realized. On the other hand, innovation is an idea that has been applied. There is creative and innovative nature inside every individual. Humans will improve their situation if there is a will to use and develop their creative and innovative traits.
Innovation comes from ideas, past ideas, or people around. People imitate past products and re-engineer them to fit the present and the next few years. This condition continues from time to time based on the needs of the community. But some people do not do it, so they are left behind and are called not innovative. The law of habit reminds us that humans will improve because of practice (Dobbins & Pettman, 1997). The approach means wanting to use it repeatedly in life. Therefore, it is essential to get used to being creative and innovative.
According to (Dobbins & Pettman, 1997), there are three determinants of creativity: experience, present situation, and the self-concept in question. The combination of all three determines whether a small business leader is creative or not. Creativity is the fruit of human thought and imagination in concepts, ideas, plans, or combinations. Creativity is not yet tangible, and it is still a concept. When it is realized or implemented inactions, products, or others, it is called innovation. Therefore, innovation is also called the implementation of creativity.
Researchers often use several innovation terms from the literature, such as radical innovation versus incremental innovation and original innovation versus cloning innovation. Radical innovation is defined as a fundamental, comprehensive, essential, and revolutionary change. The characteristics are: tend to make total changes, use new paradigms, replace technology, markets, and consumer services. Innovation incremental changes only in certain parts and is done gradually, the opposite of the innovation radical. In comparison, original innovation is the originality of ideas, notions, and plans to be implemented in companies and organizations. Original innovation is rarely found. The opposite of original innovation is innovation cloning. Innovation cloning is interpreted as imitating various ideas and innovations outside the company, modifying them to be applied in their respective companies. Researchers also often do innovation cloning.
Leaders who can innovate will look for various ideas, adopt them and see innovation from multiple parties. This activity is called cloning (Braak & Deleersnyder, 2018). No creation is 100% original. Leaders try to perfectly adapt ideas to the conditions and needs of consumers so that it is suitable to be applied to a successful business. In the cloning literature, innovation is concluded as adopting ideas, adapting to needs, and developing them for implementation in the company. (Bhatnagar & Gopalaswamy, 2017; Braak & Deleersnyder, 2018; Dub´ et al., 2014). This study defines innovation cloning as adopting ideas, imitating, and modifying what other people or successful companies have done concerning making products, marketing strategies, sales, developing businesses, fulfilling owner interests, and customer service. Braak and Deleersnyder (2018) said innovation cloning is an attractive strategy with low cost and limited failure risk. Innovation cloning can occur in various technology and human cloning (Haran, Kitzinger, McNeil, & O’Riordan, 2008) and customer service. Cloning activities in the business world can be in the form of ideas, notions, or the implementation of innovations that other companies have carried out.
Innovation cloning needs to be customer-oriented and follow the owner's goals. Cloning innovations that often occur in the business world are related to product attributes (Braak & Deleersnyder, 2018), process, technology, organization, services, market share (Bhatnagar & Gopalaswamy, 2017), and services innovation (Berry, Shankar, Parish, Cadwallader, & Dotzel, 2006). Based on existing explanations and theories, innovation cloning consists of creativity cloning (CC) and implementation cloning (IC). CC is imitating and adopting ideas obtained from other people and other companies. In comparison, IC is defined as an activity to imitate innovation activities made by successful companies and is used in their own companies. In this research, CC is measured from idea adoption, idea development, and new activities. IC is calculated from the product, product attribute, process, technology, market, organization, and service.
Innovation cloning research in the business field is still rare. It is only found in Braak and Deleersnyder (2018) research. According to the author's knowledge, no study on innovation cloning divides cloning innovation into CC and IC applied to small businesses. In this study, each of these cloning innovations is investigated and linked to a small business's success.
Business Success, Financial and Owner's Interest.
Several researchers have proven that leaders determine business success (Amato, et al., 2016; Cooper, 2011; Huang, et al., 2014; Ibarra, et al., 2020). Business goals are achieved when the company is successful. Therefore, clear criteria for business success are needed. Among researchers, there is no agreement on the requirements for business success (Benzing, Chu, & Kara, 2009; Besser & Miller, 2010; Omri et al., 2015). Gorgievski, Ascalon, and Stephan (2011) proposed using multiple criteria to measure it. The requirements that can be used include finance, business growth, entrepreneurial goals, consumers, entrepreneur satisfaction, etc.
Several studies agreed that finance could measure business success (Carr and Pearson (2002); Cragg and King (1989). Benzing et al. (2009), researching MSME entrepreneurs in Turkey, concluded that the priority of business success is determined by honesty, friendliness, social skills, and customer service. Those findings are included in the consumer’s perspective. From the results of their research in Pakistan, Coy, Shipley, Omer, and Khan (2007) concluded that the criteria for the success of small businesses are determined by hard work, good customer service, and product quality. Coy et al., findings are in the interests of the owners. Paige and Littrell (2002) stated that business success is seen from the financial and owner interests, such as profits, business growth, and personal satisfaction. On SMEs in Australia, Walker and Brown (2004) provided information that financial and non-financial factors determine business success. According to him, non-financial factors such as personal satisfaction, pride, independence to be a boss, flexibility of time, and lifestyle are much more valuable.
Gorgievski et al. (2011) has also researched small businesses, and the results explained that the criteria for business success are profitability, personal satisfaction, and stakeholder satisfaction. The same thing was found by Simpson, Padmore, and Newman (2012) in their research on the business success of MSMEs. They concluded that factors from the external environment, the characteristics of owners and leaders, and organizational characteristics determine business success. In their research, Amato et al. (2017) proved business success consists of a financial perspective and an entrepreneur perspective, such as company age, perceived business success, and company performance (sales, shares, company size). Business success is determined by the extent to which goals are achieved. Business objectives include financial and non-financial goals. However, some literature warns not to measure success from the number of employees because Walker and Brown (2004) are not appropriate. Small businesses deliberately do not add employees because of efficiency.
From the literature and explanations of the results of previous researchers, it is concluded that business success can be seen from three perspectives: 1. Focusing on financial and organizational performance; 2. Consumer needs, which are related to consumer desires; 3. The interests of the owner and entrepreneur, in the form of the willingness of the entrepreneur/owner. Financial Perspective (Fn) sees business success in terms of economic and organizational performance (Amato et al., 2017; Carr & Pearson, 2002; Cragg & King, 1989; Gorgievski et al., 2011; Paige & Littrell, 2002; Simpson et al., 2012), such as turnover, profit, capital increase, market competition, planning, etc. Other researchers look at business success from the perspective of consumers, such as product quality, service, honesty, friendliness, price of goods, packaging, warranty, and discounts (Benzing et al., 2009; Chaniago, Mulyawan, Suhaeni, & Jumiyani, 2019; Coy, Shipley, Omer, & Khan, 2007). A group of researchers sees business success from the owner's interest (OI), and the indicators are owner satisfaction, stakeholder satisfaction, independence, innovative orientation, social impact, self-confidence, flexibility, and lifestyle (Coy et al., 2007; Gorgievski et al., 2011; Simpson et al., 2012; Walker & Brown, 2004).
Business success is defined as achieving the company's goals, owners, and consumers within a certain period. The period in question can be one year, five years, or ten years, adjusting to each company's strategic plans. Measuring a company's success from three aspects at once (company goals, interests of owners, and consumers) takes a lot of time and energy. As in small businesses, the leaders double as owners; it is possible to measure the business's success from a financial perspective (Fn) and the entrepreneur's interests (OI).
Based on the assumptions and the relationship between innovation cloning of small business leaders (creativity cloning and implementation cloning) and business success, the hypothesis to be tested is formulated as follows:
H1: Creativity cloning is positively related to financial performance.
H2: Creativity cloning is positively related to the owner's interest.
H3: Implementation cloning is positively related to financial performance.
H4: Implementation cloning is positively related to the owner's interest.
H5: Creativity cloning is positively related to implementation cloning.
H6: Financial performance is positively related to the owner's interest.
H7: Creativity cloning and implementation cloning simultaneously influencing financial performance.
H8: Creativity cloning and implementation cloning simultaneously affecting the owner's interest.
The relationship between the research concepts is depicted in Fig. 1.