The Role of Differentiation in Mediating the Influence of Market Development and Product Development on Business Performance (Studies on Apparel SMEs in Denpasar City)

ABSTRACT : Business performance is the result of the implementation of activities carried out by allelements within the company as a process of achieving goals. Good business performance can be seen from theachievement of the targets they set during that time. To achieve good performance, many factors influence, suchas market development, product development, and differentiation. The purpose of this study is to explain therole of differentiation in mediating the influence of market development and product development on theperformance of the SMEs apparel business in Denpasar City. This research was conducted in Denpasar City.The sample size in this study was as many as 100 owners or managers of SMEs apparel. Data collection wascarried out by distributing questionnaires. Data analysis was performed using the Structural Equation Model(SEM) based on Partial Least Square (PLS). Based on the results of the research that has been done, thefollowing results are obtained: 1) Market development has a significant positive effect on business performance.2) Product development has a significant positive effect on business performance. 3) Market development has asignificant positive effect on differentiation. 4) Product development positively and significantly affectsdifferentiation 5) Differentiation significantly mediates the effect of market development on businessperformance. 6) Differentiation significantly mediates the effect of product development on businessperformance 7) Differentiation has a significant positive effect on business performance.

KEYWORDS : Market Development, Product Development, Differentiation, Business Performance