Culinary Purchasing Intention in MSMEs: IT Capability, Innovation

Capability

Virgo Simamora

, Lani Diana Wijaya and Khoirunnisa

Faculty of Economics, Business and Social Science, Universitas 17 Agustus 1945 Jakarta, Indonesia

Keywords: Information Technology Capability, Innovation Capability, Purchasing Intentions, MSMEs Culinary.

Abstract: Many previous research has found the importance of information technology and innovation capabilities to

survive during difficult times. This study aims to examine the influence of information technology and

innovation capabilities on customer purchase intentions in Jakarta micro-culinary businesses. The population

of this study is all the consumers who have bought food from the micro-culinary company at least once and

whose number is unknown. Purposive sampling is used in this study to identify 415 eligible customers to

participate in this study. The researcher distributed surveys both online and offline in order to collect data.

The data were processed using the Partial Least Squares (PLS) and discovered the influence of customers'

information technology capacity and innovation capabilities on their purchasing intentions. This finding

supports prior research that discovered the impact of information technology on innovation.

1 INTRODUCTION

The worldwide COVID-19 pandemic has impacted

many aspects of human life, including consumer

behaviour. People have become more interested in

purchasing items or services online since the

government has restricted outdoor activity to avoid

spreading the Covid-19 pandemic. However,

according to the ministry of cooperatives and micro,

small and medium enterprises (2022), only 8% of

micro, small and medium-sized enterprises (MSMEs)

are digitally based, indicating that they are not ready

to offer their products online and find it challenging

to adapt to changes. As a result, their sales decreased

dramatically during the COVID-19 pandemic, and

many had to close their businesses. As a result, during

the COVID-19 pandemic, the number of MSMEs has

decreased dramatically from 64.7 million in 2019 to

34 million in 2020 (Consumer News and Business

Channel Indonesia, 2020).

The situation illustrates the power of how

information technology has forced businesses to

adopt digital business practices, as it affects a

company's performance. Therefore, enterprises need

to develop their information technology capability as

it affects consumers' purchasing intention (Liu et al.,

https://orcid.org/0000-0001-6452-5090

2013; Aydiner, 2017). Zhang et al. (2008) defined

information technology capability as an

organization's capacity to mobilize and deploy

information technology-based resources in

conjunction with other business resources and

competencies. In addition, several earlier studies have

found the impact of information technology

capability on customer purchase intentions (Al-

Abdallah and Bataineh, 2018; Andrina et al., 2022;

Hausman and Siekpe, 2009).

Innovation capability is a further factor that

influences consumers' purchasing intentions.

According to Slater et al. (2014), innovation is the

firms' capability to provide new benefits that

consumers have never consumed, reduce substantial

costs, and create unique products that meet customer

needs. Slater et al. (2014), explain how valuable

innovation capability is in dealing with a highly

competitive market. Previous studies have found that

innovation capability has impacted consumers'

purchasing intentions (Benachenhou et al., 2018;

Carlina and Ekowati, 2022; Wu and Chen, 2014).

Based on the prior studies, this research develops

a prepositional model about the relationship between

information technology and innovation capability on

consumer purchase intentions. This study aims to

128

Simamora, V., Wijaya, L. and Khoirunnisa, .

Culinary Purchasing Intention in MSMEs: IT Capability, Innovation Capability.

DOI: 10.5220/0011977100003582

In Proceedings of the 3rd International Seminar and Call for Paper (ISCP) UTA â

Z45 Jakarta (ISCP UTA’45 Jakarta 2022), pages 128-134

ISBN: 978-989-758-654-5; ISSN: 2828-853X

 2023 by SCITEPRESS – Science and Technology Publications, Lda. Under CC license (CC BY-NC-ND 4.0)

examine the effect of information technology

capability and innovation capability on consumer

purchase intentions in MSMEs culinary. The findings

of this study can provide helpful information on how

MSMEs might improve their competitiveness by

becoming more adept at innovation and information

technology.

This study replicates the research of Simamora

and Wijaya (2022), which examines the effect of

information technology and innovation capabilities

on consumers' purchasing intentions based on coffee

drinkers' perspectives. According to the study by

Simamora and Wijaya (2022), information

technology and innovation capability are determinant

factors in increasing coffee drinkers' purchasing

intentions to buy coffee from MSMEs' coffee shops.

In this study, the model is retested empirically to

examine the effect of information technology and

innovation capabilities on consumers' purchasing

intention in micro-culinary enterprises in Jakarta.

2 LITERATURE REVIEW

2.1 Information Technology Capability

Information technology capability is defined by

Zhang et al. (2008) as the capability of an

organization to mobilize and deploy information

technology-based resources in combination with

other firm resources and capabilities. Saunders and

Brynjolfsson (2016) explain the information

technology capabilities in terms of how management

and human resource capabilities facilitate

information technology investments, how

information technology is used for internal

communication and with suppliers, and how firms

provide internet capability. By providing internet

capability, firms may utilize e-promotion tools such

as reputation communication forums (Simamora et

al., 2021); e-catalogues (Rustiarini et al., 2021); e-

marketing, and online reviews (Salqaura et al., 2021)

to promote their products. With internet capability

and e-promotional tools, firms can market their

products and services in a broader market and make

them more available. Furthermore, Troise et al.

(2022) state that having digital technology capability

is crucial for micro-enterprises to start a micro

business successfully.

In this study, information technology capability

explains the MSMEs' culinary capability in providing

internet capability and e-promotional tools to make

them able to engage in business digital practices.

Hence, indicators used to measure information

technology capability are (1) the availability of

MSMEs' culinary on internet capability (2) and the

availability of e-promotional tools of MSMEs

capability. Those indicators were adopted from the

research of Simamora and Wijaya (2022), which was

replicated by this study.

2.2 Innovation Capability

Innovation capability is a valuable organizational

asset as it contributes to the success of organizations

(Donkor et al., 2018; Naala et al., 2017). When

dealing with a highly competitive market, innovation

capability becomes a source of innovative ideas for

processes, products, and services (Aas and Breunig,

2017; Chang et al., 2012) and; a source of new

products with new benefits and a source of costs'

reduction (Slater et al., 2014). According to

Rajapathirana and Hui (2018), innovation capability

refers to the organizational capability to develop new

products that meet market demands, implement

appropriate information technology-based processes,

adapt to competitors' intentional technological

activity and cope with unexpected opportunities.

The innovation capability concept in this research

is adopted from Simamora and Wijaya (2022), which

was replicated by this study. In this study, innovation

capability is defined as a firm's capability to provide

a good quality product and unique product based on

consumers' perspectives. In this research, the

indicators to measure innovation capability are (1) the

ability of MSMEs culinary enterprises to provide

high-quality food, (2) and the ability of MSMEs

culinary to provide a unique taste of food.

2.3 Purchasing Intentions

Purchasing intentions are consumers' desire to buy a

product in response to a product. Consumers who

have a favourable view of a particular product show

their intentions to buy it (Nulufi and Murwatiningsih,

2018). They have a favourable view as they believe

the products are valuable; thus, they are interested in

buying and recommending the products to others

(Roozy et al., 2014). According to Rahim et al.

(2016), various sources of value include product

features, brand name, social influence and the cost of

buying the product. Each customer has a differing

preference in factors that impact consumers'

purchasing intentions (Lee, 2009).

The concept of purchasing intentions in this

research came from Simamora and Wijaya (2022),

which was replicated by this study. This study defines

purchasing intentions as customers' positive views in

Culinary Purchasing Intention in MSMEs: IT Capability, Innovation Capability

129

responding to a particular product. The indicators

used to measure purchasing intentions include (1)

consumers' intention to find more information about

the foods provided by the MSMEs culinary, (2)

consumers' intention to buy food from the MSMEs

culinary, and (3) consumers' intentention to

recommend others, customers, to buy food from the

MSMEs culinary.

2.4 The Effect of Information

Technology Capability on

Purchasing Intention

Many previous studies have explained the effect of

innovation capability on purchasing intentions

(Hausman and Siekpe, 2009; Troise et al., 2022;

Zvarikova et al. (2022)). The study of Hausman and

Siekpe (2009) has found the impact of a company's

website on consumers' purchasing intentions. Troise

et al. (2022) s show the impact of digital technology

capability on successfully starting the MSMEs'.

Zvarikova et al. (2022) found that online food

delivery services during the Covid19 outbreak have

improved consumer engagement and loyalty.

Moreover, the study by Andrina et al. (2022) found

information technology capability's effect on

consumers' purchasing intentions in e-commerce

2.5 The Effect of Innovation Capability

on Purchasing Intentions

Previous research has found the influence of

innovation capability on purchasing (Amoako et al.,

2021; Benachenhou et al., 2018; Wu and Chen,

2014). For example, according to Wu and Chen

(2014), innovation in saving energy affects

consumers' purchasing intentions. Furthermore,

Benachenhou et al. (2018) found that innovation in a

unique logo impacts consumers' purchasing

intentions. Moreover, Amoako et al. (2021) show that

innovation in online marketing influences consumers'

purchasing intentions.

Based on the previous studies, this research has

developed a hypothesis as follows : H1: There is an

effect of information technology capability on

consumers' purchasing intentions in MSMEs culinary

in Jakarta.

3 METHODS

This research is designed to assess the impact of

information technology and innovation capabilities

on customers' purchase intentions in micro-culinary

businesses in Jakarta. The population of this study

consists of consumers of MSMEs culinary, whose

number is unknown. The sample was selected using a

purposive sampling technique that selected the

respondents based on specific criteria. The data is

collected using a questionnaire distributed online.

The number of samples in this study was 415, which

is higher than 96, the minimum number of

respondents based on the Lemeshow formula. Then,

the data were analyzed using partial least squares

structural equation modeling (PLS-SEM).

4 RESULT AND DISCUSSION

4.1 The Profile of Respondents

In this study, 415 millennials who are eligible have

participated in this survey. According to the

demographic profile, most respondents were female

(55.6%) and males 44.3%. In addition, the majority

of respondents are between the ages of 20 and 30

(33.73%), followed by those between the ages of 30

and 40 (32.53%), over 40 (21.70%), and under 20

(12.04%). Moreover, based on their educational

background, the majority of respondents (37.83%)

hold a bachelor's degree (37.59); and a diploma

degree (24.58%).

Table 1: The Profile of Respondent.

Variable Total %

Gender

-Female 231 55,6

-Male 184 44,3

Age

<20 years 50 12,04

20 – 30 years 140 33,73

>30 – 40 years 135 32,53

>40 years 90 21,70

Education

-High School 157 37,83

-Diploma 102 24,58

-Bachelor 156 37,59

Source: Processed data (2022)

Based on their demographic profile and

educational background, all respondents are qualified

to answer each question in the questionnaire (See

table 1).

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Then, the data is processed using the smart partial

least squares (PLS) application, and generated the

PLS Algorithm Model generated as follows:

Figure 1: The PLS Algorithm Model.

4.2 The Evaluation of the Outer Model

The evaluation of the outer model is the first stage

conducted in partial least squares (PLS) analysis. The

outer model assessment describes the relationship

between latent variables and their indicators (Ghozali,

2015). Validity and reliability were used to assess the

measurement model.

4.2.1 Validity Test

Because all indicators in this study are reflective,

convergent and discriminant validity are used to

examine the measurement model's validity. To satisfy

the convergent validity requirement, the value of the

loading factor must be greater than 0.7 (Ghozali,

2021). According to the results, the convergent

validity requirements have been satisfied since all

indicators have loading factors greater than 0.7. (see

table 2.)

Table 2: Outer loading and cross loading.

ITC IC PI

IC1 0,155 0,911 0,385

IC2 0,251 0,942 0,474

ITC2 0,902 0,242 0,277

ITC1 0,932 0,175 0,329

PI1 0,285 0,390 0,851

PI2 0,314 0,442 0,884

PI3 0,269 0,390 0,886

Source: Processes data (2022)

In addition, the outer model is examined by

examining the discriminant validity using the loading

value and Fornell Larcker criterion. According to

Ghozali (2021), the discriminant validity

requirements are satisfied if (1) the cross-loading

value is less than the correlation of constructs with its

indicators, (2) the square root of the AVE of each

construct is more than the correlation with other

constructs (Fornell-Larcker criterion) and (3) the

value of AVE is higher than 0.5. The results indicate

that the value of cross is less than the correlation of

constructs with its indicators (See Table 2.) indicating

that the items load and assess the construct

appropriately. Furthermore, the square root of the

AVE of each construct is more than the correlation

with other constructs (Fornell-Larcker criterion) (See

table 3.), and the value of AVE is greater than 0.5 (see

table 4)

Table 3: Fornell Larcker Criterion.

ITC IC PI

ITC

0,917

0,224 0,926

0,333 0,468 0,874

Source: Processes data (2022)

Table 4: AVE.

Average Variance

Extracted (AVE)

Information Technology

Capability (ITC)

0,841

Innovation Capability (IC) 0,858

Purchasing Intention (PI) 0,763

Source: Processes data (2022)

4.2.2 Reliability Test

The purpose of the reliability test is to determine the

degree of reliability of the measuring instruments.

This study conducted reliability assessments using

Cronbach's alpha and composite reliability. The

lowest value of Cronbach's alpha and composite

reliability necessary to meet the reliability

requirements, according to Ghozali (2021), is 0.70.

Based on the results, this research explains that the

reliability test in this research is satisfied.

Table 5: Reliability Test

Cronbach's

Alpha

Composite

Reliability

Information Technology

Capability (ITC)

0,917 0,914

Innovation Capability (IC) 0,224 0,924

Purchasing Intention (PI) 0,333 0,906

4.2.3 The Evaluation of the Inner Model

The inner model test is conducted to determine

whether the relationship between exogenous latent

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131

variables and endogenous latent variables can answer

the questions regarding the relationship between

latent variables previously hypothesized. This

research evaluates the inner model based on the

estimated value of the path coefficient, the value of R

square, and the Goodness of Fit.

Table 6: Path Coefficient.

Original Sample (O) T Statistic P-value

ITC -> PI 0,240 5,046 0,000

IC -> PI 0,414 8,238 0,000

Source: Processes data (2022)

The results show that the value of the path

coefficient of information technology capability

(ITC) and purchasing intentions (PI) is 0,240 with a

p-value is 0,000, meaning that there is a significant

effect of ITC on PI. Moreover, the results show that

the value of the path coefficient of innovation

capability (IC) and purchasing intentions (PI) is 0,414

with a p-value is 0,000, meaning that there is a

significant effect of ITC on PI. (see table 6. )

Table 7: R

Adjusted

Purchasing

Intentions (PI)

0,274 0,270

Source: Processes data (2022)

The value of R square reflects how well the

exogenous latent variables (information technology

capability (ITC) and innovation ability (IC)) explain

the changes in the endogenous variable purchase

intentions (PI). According to Chin (2010), the value

R-square for the latent variables is 0.67, 0.33, and

0.19, indicating that the proportion of changes is

substantial, moderate, and weak, respectively.

According to Chin (2010), the R2 value discovered in

this research was 0.274, suggesting that the

proportion of changes in PI caused to ITC and IC is

not statistically significant (See table 7.).

4.3 Hypothesis Testing

This study found the effect of information technology

capability (ITC) on consumers' purchasing intentions

(PI) in the culinary MSMEs in Jakarta, as the p-value

is 0.000 < 0.005. Furthermore, the p-value for the

effect of innovation capability (IC) on consumer

purchasing intentions (PI) in MSMEs culinary in

Jakarta is also 0.000 < 0.05 (see table 6).

4.4 Discussion

This study found that information technology

capability (ITC) and innovation capability (ICI) have

an effect on consumers' purchase intentions (PI) for

MSMEs in the culinary industry in Jakarta. The

results of this study agree with research that has been

done by Simamora and Wijaya (2022), which states

that consumers' intentions to buy coffee from

MSMEs coffee shops are affected by how well a

company handles information technology and new

ideas (Simamora and Wijaya, 2022). The results of

this study are also in line with the earliner studies of

Hausman and Siekpe, (2009; Abdallah and Bataineh,

(2018) and Andrina et al., (2020). According to

Hausman and Siekpe (2009), the information

technology capability is a company's capability to

design web interface features, and it was proven that

this capability impacts a customer's purchasing

intention. Furthermore, according to Abdallah and

Bataineh (2018), information technology is a

company's capability to support social networking

sites, such as e-word of mouth and e-reference

groups, and impact buying intentions. Lastly,

Andrina et al.(2021) describe information technology

capacity as a company's ability to supply easy-to-use

technology, and it was discovered that this

competence influences consumers' buying choices. In

addition, this research discovered that innovation

capability is essential as it favourably improves

customers' purchase intentions. The findings support

the findings of Wu and Chen (2014), Benachenhou et

al. (2018), and Amoako et al. (2021) that innovation

capacity impacts consumers' purchase intentions.

According to Wu and Chen's research, items that

address environmental challenges, such as energy

efficiency and environmentally friendly products, are

likely to improve consumers' purchase intentions with

a high level of green marketing knowledge. In the

study by Benachenhou et al. (2018), innovation

capability refers to Coca-ability Cola's to develop a

visual element and informative text for Coca-Cola

packaging that impacts consumer purchase interest in

Tlemcen. In the 2021 research by Amoako et al.,

"innovative capacity" refers to the hotel industry's

digital platform, which improved online purchasing

in Ghana.

Based on this findings, to develop information and

innovation capabilities are important to help MSMEs

culinary in responding to customer behaviour

changes who prefer to buy product online.

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5 CONCLUSION

According to the results of this research, information

technology capability and innovation capability are

significant factors affecting consumers' to purchase

from MSMEs culinary. Thus, strengthening

information technology and innovation capabilities

are strategic actions to survive in during the COVID-

19 pandemic and in highly competitive market.

In this case, the government's role is crucial in

helping culinary MSMEs develop their capabilities in

information technology. For example, the

government may assist culinary MSMEs to have

more access to financial institutions and give them

free training to develop their digital technology

capabilities. Also, the government might help them

work together with food-related groups so that they

can learn how to improve the quality of food and

make a new way to test it.

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