Environmental Uncertainty and Market Orientation on Business Performance with Innovation as an Intervening Variable: A Survey of Banking Industry in Indonesia

Objective – This causal research is aimed at obtaining information related to the effect of uncertainty environment, market orientation, and innovation in direct and indirect effect on the business performance in a holistic co-alignment perspective. Methodology – In this research, 90 samples were randomly selected and the data were analysed by path analysis after all variables were put into the correlation matrix. Findings –The results showed that: (1) environment uncertainty has a significant direct effect of the innovation; (2) environment uncertainty has a significant direct effect on the business performance; (3) market orientation has a significant direct effect on the innovation; (4) market orientation doesn't have a significant direct effect on business performance; (5) innovation has a significant direct effect on the business performance; (6) environment uncertainty has a significant indirect effect on the business performance but through the innovation; and (7) market orientation has a significant indirect effect on the business performance but through the innovation. Novelty – Based on those findings, it could be concluded that any change or variation in the business performance was affected by environment uncertainty, market orientation, and innovation. Therefore, to improve variation in the business performance, environment uncertainty, market orientation, and innovation should be put into strategic planning in the banking industry in Indonesia. However, other variables are necessary to be taken into account in the next research. Type of Paper: Empirical