Service Distribution Strategy on Business Performance of Padang Restaurants in North Jakarta

Abstract

Purpose: This study aims to measure whether the business performance of Padang restaurants in North Jakarta is primarily affected by service distribution strategy and other factors, specifically the local-based organizational culture and entrepreneurial orientation. Research design, data and methodology: This quantitative research has used Structural Model-Partial Least Square (PLS-SEM) with SMART PLS 3.0 as the analytical tool. The study's sample focus is the owner or person in charge of the Padang restaurant business in North Jakarta. Data has been collected using a questionnaire instrument with a Likert scale scale ('1-strongly disagree' to '5-strongly agree'). A total of 86 samples with a random technique were obtained from three areas in North Jakarta: Kelapa Gading, Pademangan, and Penjaringan. Results: Interestingly, this research finds that service distribution strategy does not affect business performance, either directly or indirectly. Business performance in this study is affected by entrepreneurial orientation. In additional results, the local organizational culture significantly affects the entrepreneurial orientation, but does not affect the business performance in terms of management process. Conclusions: This study provides practical implications for restaurant businesses regarding the use of local cultural concepts to consider strategies for survival in today's challenging times while continuing operations during limitations.

1. Introduction

The restaurant business in Indonesia is a favorite sector among prospective entrepreneurs, both those who already have sufficient skills and knowledge and those who do not. The large population in Indonesia is one of the industry success factors. Among the unique concepts of service strategy that use organizational culture is the Padang restaurant. This carries the concept of local cultural identity, namely Minangkabau, which originates from West Sumatra Province. The popularity can also be found in other countries in Asia, America, and Europe (Mardatillah, 2020). One of the famous menu mainstays is Rendang (meat, usually beef with a sauce mixture containing coconut milk) (Nurmufida, Wangrimen, Reinalta, & Leonardi, 2017).

Some of the cultural concepts used in such restaurants are the architectural design, which adapts the traditional housing form of the local community; traditional food menus; service methods that reflect local culture; and workers’ uniforms. The cultural hallmark can be observed in the arrangement of the menus, which are displayed arranged in tiered plates or bowls. Next, the menu of orders brought by the wait staff to the customer’s table is arranged as much as possible in the worker’s arms.

The Padang restaurant business has successfully spread to other areas in Indonesia, including Jakarta. Although there are no specific data available regarding the distribution of Padang restaurants in Jakarta, the Indonesian National Central Statistics Agency provides evidence that in 2019, restaurants in Jakarta made significant contributions to the government in terms of income and business expenses, as shown in Table 1. Through main activities revenue, main expenditures, and indirect tax, the data explain the existence of economic benefits for several parties, ranging from suppliers of food ingredients for the menu needs of restaurants to government revenue generated through taxes. In addition, the data show that the restaurant business can create new job opportunities.

Table 1: Distribution of restaurant business contribution in Jakarta (2019)

The number of restaurants in Jakarta is distributed as a result of the addition of restaurants or the development of existing restaurants—especially in areas that are famous as hawker centers, such as Kelapa Gading, Penjaringan, and Pademangan. In addition to being supported by the presence of several business centers, Jakarta’s restaurant industry is supported by a large population of 635, 000 people, as of 2020.

An organization’s performance can be influenced by various factors, one of which is the successful distribution of a service strategy. In the service industry, most studies use the concept of service quality to explain the impact of service strategy on business performance (Liu & Wang, 2017; Nair & Choudhary, 2016). Mesaros Carnicky, Mandicak, Habinakova, Mackova and Spisakova (2016) have explained that in order to achieve desirable organizational performance, an optimal process for strategizing, planning, and monitoring must be in place. As the times and dynamics of service-industry competition have shifted, the concept of service quality has undergone adjustments, both in terms of definition and function. Research from Nair and Choudhary (2016) on hospitality services in Qatar states that the dimensions of service quality, such as responsiveness and assurance, no longer fully affect business performance. Instead, competition and consumer tastes adjust behavioral intentions.

The wider approach to service is no longer fully focused upon quality; although quality is a result, measuring the optimization of service delivery is also necessary. ‘Optimizing, ’ in this context, aims to maintain the quality of each service concept. Based on the concept of service strategy from Shehadeh, Maqableh, Al-Zoubi, Akhorshaideh, and Al-Shami (2016), service distribution strategy is carried out in several aspects of overall service, to achieve the organizational goals for quality service. Meanwhile, Chang (2016) conceptualizes service strategy as a strategy provided by the company to meet customer expectations. Examining these service strategy concepts, it can also be explained that service strategy in an operational function refers to the strategy of distributing service aspects for customers, such as greetings strategies when customers enter or leave the restaurant; strategies to serve customers in placing orders; strategies for carrying customer orders; and strategies in serving customers’ food at the table. Therefore, this study uses the term ‘service distribution strategy.’ This is especially relevant in the hospitality-based service industry; for example, the restaurant business that uses cultural elements in the services provided.

In addition to the service distribution strategy, other important factors to shaping the success of customer service are service concept, service encounters, and service delivery (Shehadeh et al., 2016). Cultural aspects are also inseparable from the ability of business owners to manage a business which can be reflected in innovative, proactive, creative behavior or seeing market potential as an opportunity that provides benefits for the business. This is simply formed in an individual view in attitude or oriented toward entrepreneurship itself. Several studies, including Engelen, Gupta, Strenger, and Brettel (2012), have stated that to achieve the expected business performance, the role of entrepreneurial orientation must be fused in the implementation of behaviors such as accuracy in achieving the business vision, committing to maximum performance, and supportive leadership. Anderson, Kreiser, Kuratko, Hornsby, and Eshima (2014), and Kajalo and Lindblom (2015) have stated that forming an entrepreneurial orientation, including innovative, proactive behavior, and courage in taking risks, is important to supporting successful organizational performance. Ferreira, Coelho, and Moutinho, (2020) have even proven that entrepreneurial orientation has a moderating effect between innovation ability and business performance. However, this research suggests it is necessary to continue identifying entrepreneurial orientation, because entrepreneurship and the ability to creatively innovate continue to experience dynamic development. This study attempts to complete the study of service distribution strategies, especially in the restaurant business, by examining different aspects of organizational culture. This is in line with Phuong and Ahn (2021), who have suggested enriching studies by involving organizational cultures from different cultural backgrounds.

An organization’s culture can support its successful performance. Chatman and O’Reilly (2016) explain that organizational culture can be an important factor in management effectiveness, and in helping to find solutions to problems in an organization’s business. Organizational culture can be shaped by important aspects, including the culture adopted from lineage; the market; and flexible, open minded attitudes toward running a business (Fine & Hallett, 2014; Khedhaouria, Nakara, Gharbi, & Bahri, 2020; Schneider, González-Romá, Ostroff, & West, 2017). ‘Organizational culture’ refers to the norms that apply and can be distributed throughout an organization, such as approach to carrying out teamwork and innovation; commitment to achieving common goals; and fairness in the application of work rules. Studies including Chatman and O’Reilly (2016), and Miller and Prentice (2015) emphasize that further research should involve aspects of commitment to norms or cultural values in running a business. Fine and Hallett (2014) explain through their research individual characteristics related to those that have an impact on organizations, such as knowledge, beliefs, behavior, habits, traditions, shared references, or prevailing customs. In addition to being visible in the service strategy, restaurant business organizational culture can be reflected in other characteristics, such as the way food is processed, the number of menu items, the size of the food to be sold, the taste of the seasoning composition used, and the unique way of serving food and service (Mardatillah, 2020). These characteristics are part of the local culture which an organization adopts. Thus, local culture is among other elements contributing to organizational culture.

Adding to the explanations above, a service distribution strategy that is tangible, reliable, and empathetic has an impact on an organization’s business performance (Nair & Choudhary, 2016). As a selling point for success, a strategy for service distribution can be formed based on the organizational culture (Nakayama & Wan, 2018; Schneider et al., 2017); for example, the local culture, which comes from lineage culture, adopted by an organization. To carry out a service distribution strategy based on local culture, organizational management capabilities are needed to act creatively and innovatively, in a character called ‘entrepreneurial orientation’ (Anderson et al., 2014).

Although significant amounts of research have explained the concept and understanding of organizational culture and its impacts on organizational processes and performance, along with the dynamics of business competition, some organizations need an updated concept of organizational culture (Abreu-Cruz, Borges-Andrade, Porto, & Victorino, 2019). Cui, Fan, Guo, and Fan, (2017) have emphasized the need to increase understanding of the determinants of business performance; this can be achieved especially by involving special cultural aspects (Vig & Agarwal, 2021).

The current study’s novel approach and originality lies in its use of the service distribution strategy variable to explain the business performance of Padang restaurants in North Jakarta. Further, the variables of local-based organizational culture and entrepreneurial orientation in restaurant businesses add to the current study’s novel approach.

2. Literature Review

2.1. Business Performance: Management Process

Business performance in this study emphasizes management processes, such as planning, sharpening strategies, and supervising the strategies carried out. These are deemed necessary to support achievement of the expected business performance. This is in line with the view of Mesaros et al. (2016), who have prioritizes the process of strategizing, planning, and monitoring to establish desirable business performance. Regarding Padang restaurants, business performance results from restaurant achievements that are supported by the distribution of workers (number of workers and productivity) in providing services to achieve the sales management expects (Welsa & Lathifah, 2017).

Previous studies have attempted to examine the factors that can affect business performance in restaurants, including Chattopadhyay and Shah (2014) in a study of restaurants in India. They have explained that business performance is the result of business obtained due to several distributing processes to innovate; carry out operational effectiveness; achieve customer satisfaction; and maintain and improve customer service quality. In addition, Llach, Perramon, Alonso-Almeida, and Bagur-Femenías (2013) in a study of restaurants in Madrid, Spain have explained that business performance comprises a series of quality management practices, including environmental management and a financial performance which can be maintained. A further example incudes authentic restaurants in other countries, such as restaurants with Thai culture in the United Kingdom. Supawan and Deebhijarn (2020) have explained that business success can be achieved especially when the process and application of applicable norms in business can run well.

2.2. Local-based Organizational Culture

According to Schneider et al. (2017), organizational culture is an organizational identity that is reflected in several actions or strategies, such as ways of thinking or feeling confident in making decisions. ‘Culture’ itself explains several characteristics, such as local understanding, daily interaction patterns, and sustainable social relationships (Fine & Hallett, 2014). Fine and Hallett (2014) along with Schneider et al. (2017) have also explained the importance of certain aspects in organizational culture, especially those based locally, such as the ability of offspring to uphold culture in running a business; readiness for market competition; and openness to flexibility in running a business. Several studies on the food and beverage industry have attempted to use a perspective approach or mindset based on local culture to identify the implementation of organizational culture that has an impact on business success, including the role of local Japanese culture in assessing the dining experience (Nakayama & Wan, 2018); the use of local food cultural experiences for customer satisfaction and royalty (Kim, 2018); and Indian food that involves more than simply a taste that can be enjoyed, but also connotes caste, kinship, or ethnic identity (Srinivas, 2011).

Local-based organizational culture is an organizational identity that is reflected in how management runs a business and makes decisions based on local cultural backgrounds. The Padang restaurant business concept with embedded Minangkabau local culture can comprise entrepreneurial characteristics, such as self-confidence, flexibility in running a business, and focus on calculations related to the business budget (Hastuti, Thoyib, Troena, & Setiawan, 2015).

Other studies have explained the relationships between organizational culture and entrepreneurial orientation, and between organizational culture and business performance. Joseph and Kibera (2019) have explained that an organizational culture’s formation on market culture, hierarchical culture, clan culture, or adhocracy culture has an impact on performance. However, Calciolari, Prenestini, and Lega (2018), utilizing the Competing Values Framework, have found only that adhocracy culture and hierarchical culture influence performance.

Nevertheless, organizational culture can affect business performance, as long as the organization includes a role for distributing innovations as a reflection of entrepreneurially oriented actions (Khan, Hassan, Arshad, Arshad, Kashif, Aslam, & Azizi, 2020). In other words, entrepreneurial orientation can play a role in shaping the indirect effect of organizational culture on business performance. Meanwhile, Engelen, Flatten, Thalmann, and Brettel (2014) have stated that hierarchical organizational culture can have an impact on entrepreneurial orientation. In this case, clan culture, adhocracy culture, and market culture become obstacles to entrepreneurial orientation.

The explanations above lead this research to propose the following hypotheses (H) as follows:

H1: Local-based organizational culture affects the business performance of Padang food restaurants in North Jakarta

H2: Local-based organizational culture affects the entrepreneurial orientation of Padang food restaurants in North Jakarta

H3: Local-based organizational culture mediated by the entrepreneurial orientation affects the business performance of Padang food restaurants in North Jakarta

2.3. Entrepreneurial Orientation

In this study, ‘entrepreneurial orientation’ emphasizes a series of strategic actions that are carried out based on three principles: the creation of change and renewal; the desire to continue to excel in competition; and the daring to take risks. This concept is based on currently developing understandings of entrepreneurial orientation. Anderson et al. (2014), and Kajalo and Lindblom (2015) have both explained the concept of entrepreneurial orientation in two dimensions: entrepreneurial behavior (behavior to be innovative and proactive) and behavior toward risk (behavior to dare to take risks). The concepts of innovative behavior, proactiveness, and the courage to take risks seem to have become the most widely used dimensions in most scientific publications. The local cultural values in the Padang restaurant business that are distributed in its business strategy form an attitude of being able to compete, whereby business actors in Padang restaurants are sharpened to become more creative and innovative (Mardatillah, 2020).

These results are also aligned with research conducted by Wales, Gupta, and Mousa (2011), which summarizes that 98 out of 123 published articles use all three dimensions together to explain entrepreneurial orientation. Interestingly, other published articles also contain one or two of these dimensions. The prevalence of this use suggests that researchers agree to explain entrepreneurial orientation by the use of these three dimensions.

Using indicators on entrepreneurial orientation—the courage to take risks to increase business growth, regular adjustments of products and services for market success, and creating regularly executed strategies to stay ahead of competitors—Kajalo and Lindblom (2015) explain that entrepreneurial orientation affects business performance among small retailers in Finland. These results are reinforced by the results from Christian, Dewi, Rembulan, Indriyarti, Wibowo, and Yuniarto (2021), who have explained that entrepreneurial orientation has a significant impact on the business performance of local salted-fish distributors in Kapuk, Jakarta.

Examining the explanations of the theoretical concepts and the development of the hypotheses above, this study proposes the next hypothesis:

H4: Entrepreneurial orientation affects the business performance of Padang food restaurants in North Jakarta

2.4. Service Distribution Strategy

In addition to goods, distribution strategy also applies to services; in this case, it is important to optimize service aspects for successful strategy (Fayaz & Azizinia, 2016). According to Alhelalat, Habiballah, and Twaissi (2017), the success of a restaurant business in general can in part be seen from the success of the services carried out in both the functional and personal aspects.

The service distribution strategy in this study is described as a series of strategies to distribute services into several important areas, starting from the concept and planning of services to be provided and following through to service delivery. Various studies attempt to raise and explain the concept of service strategy in the service industry.

Interestingly, several related studies have emphasized variations on and adjustments to the service strategy model, which in this case will be related to the aspects used in the service strategy. For example, Shehadeh et al. (2016), in a literature review, have raised the concept of The Service Strategy Triad to explain the importance of a service strategy that synchronizes various service processes to achieve organizational goals. This concept also emphasizes other important aspects of service strategy, such as how service is delivered; how customers experience the service they receive; and the value of the service to customers. Meanwhile, Chang (2016) in research on hot spring resorts services in Taiwan, has used the concept of The Service Marketing Triangle Model to explain service aspects in the service climate and perceived service-scape, in which these service aspects are related both to employee engagement and to customers, particularly customer emotions and behavioral intentions.

The cultural heritage values among the Padang restaurant businesses are further reflected in the service provision strategy, particularly regarding such intangible services (Aaltonen, Heinze, Ielpa, & Tommaso, 2015) as serving food on bowls or plates arranged in layers, and the approach to bringing customers’ orders to the table by arranging as many plates as possible in the server’s arms of (Mardatillah, 2020).

Several further studies have examined the relationships involved in service distribution strategy in several aspects, including organizational culture, entrepreneurial orientation, and business performance. Nair & Choudhary (2016) have specifically explained that service dimensions such as tangibility, reliability, and empathy influence both financial and operational performance in the five-star hotel service industry in Qatar. Meanwhile, other service dimensions, such as responsiveness and assurance, have not been found to have any impact on business performance. Another study by Liu and Wang (2017) in Tainan, Taiwan has explained that the implementation of excellent service influences organizational performance. Furthermore, Liu & Wang’s study explains that the quality of services provided to customers can support the success of organizational performance in terms of profitability, productivity, and business growth.

Based on the explanation above, this study proposes the following further hypotheses:

H5: Service distribution strategy affects the business performance of Padang restaurants in North Jakarta.

H6: Service distribution strategy moderates the impact of local-based organizational culture on the business performance of Padang restaurants in North Jakarta.

H7: Service distribution strategy moderates the impact of local-based organizational culture on the entrepreneurial orientation of Padang restaurants in North Jakarta.

Thus, based on the development of the hypotheses described above, the current study’s conceptual framework is presented in Figure 1 below.

Figure 1: Conceptual framework

3. Research Methods and Materials

3.1. Measurement of Local-based Organizational Culture

The definition of a local-based organizational culture (LOC) variable in this study is organizational identity, which is reflected in how management runs a business and makes decisions based on local cultural backgrounds. The measurement of this variable adapts the studies of Fine and Hallett (2014); Khedhaouria et al. (2020); Schneider et al., (2017). This variable is measured using three indicators forming organizational culture: clan (LOCCL); market (LOCM); and adhocracy (LOCAD), where each indicator includes two items. The items in LOCCL are related to the development of menu flavors based on Padang culture (LOCCL1) and reliable knowledge of Padang food (LOCCL2). LOCM indicators consist of the principle of providing opportunities for all employees to monitor selling prices (LOCM1) and the principle of providing opportunities for customers to provide input to improve menu and service quality (LOCM2). The LOCAD indicators comprise the importance of evaluating performance and the importance of developing and distributing new ideas for the business.

3.2. Measurement of Service Distribution Strategy

The service distribution strategy (SDS) variable in this study is defined as a series of strategies to distribute services across several important aspects, starting from the concept and planning of services to be provided, following through to service delivery. Adapting the measurement approach of Shehadeh et al. (2016), this variable consists of three indicators: service concept (SDSSC); service encounters (SDSSE); and service delivery (SDSSD). The SDSSC indicator explains the principle of prioritizing the speed of service (SDSC₁) and the convenience of places to eat on the spot (SDSC₂). Furthermore, SDSSE indicators are explained through the principles of upholding service etiquette (SDSSE1) and creating a positive service impression (SDSSE2). Meanwhile, SDSSD indicators are explained through the principle of providing maximum service to customers (SDSSD1) and prioritizing speed in delivery services (SDSSD2).

3.3. Measurement of Entrepreneurial Orientation

The entrepreneurial orientation (EO) variable in this study is defined as a series of strategic actions that are carried out, based on the principles of creating change and renewal; continuing desire to excel in competition; and daring to take risks. The measurement of this variable adapts the studies of Anderson et al. (2014); Christian et al. (2021); Kajalo and Lindblom (2015); Khedhaouria et al. (2020). This variable is measured by three indicators: risk-taking, proactiveness, and innovativeness, and each indicator consists of two items. The risk-taking indicator (EORT) is reflected through the principle of prudence in making decisions (EORT1) and the courage to take risks in all situations (EORT2). The proactiveness indicator (EOPRO) is reflected through the principle of aiming to become a superior Padang restaurant in the surrounding area (EOPRO1) and the principle of actively making adjustments and changes compared to competitors (EOPRO2). Meanwhile, the indicator of innovativeness (EOIN) is reflected through the importance of updating menus and services (EOIN₁) and the principle of creating improved changes (EOIN2).

3.4. Measurement of Business Performance: Management Process

In this study, ‘business performance management process’ (BPMP) describes the overall distributed management process, including planning, sharpening strategies, and supervising the strategies carried out. This is deemed necessary to support the achievement of the expected business performance. The measurement of this variable adapts the research of Mesaros et al. (2016) and consists of three indicators: strategizing (BPMPSZ); planning (BPMPPL); and monitoring (BPMPMO).

BPMPSZ is explained through periodic evaluation of service strategy (BPMPSZ1) and periodic business strategy development (BPMPSZ2). BPMPPL indicators consist of the principle of the importance of proper planning for business success (BPMPPL1) and periodic service improvement (BPMPPL2). Meanwhile, BPMPMO indicators are explained through supervisory actions on competitor service strategies (BPMPMO1) and supervision on tableware/customer service (BPMPMO2).

3.5. Sample and Data Collection

This quantitative study utilizes a survey comprising a questionnaire instrument designed based on the 12 research indicators, following what has been described above regarding the measurement of the variables. The survey in this study measures responses using a Likert scale, ranging from ‘1–strongly disagree’ to ‘5–strongly agree.’

The criteria for the participants in this study were that they be the business actor (the owner or person in charge) of a Padang restaurant, aged at least 20 years, for a restaurant in North Jakarta. The age criteria are based on consideration of the feasibility of business actors in making strategic business decisions. Participants were also asked for their consent and willingness to be involved in filling out this questionnaire.

Based on the above criteria, the size of the population in this study is unknown with certainty; to accommodate this issue, this study has used a sample. Determination of the sample size is based on the views of Bollen (1989). This view determines the sample size for a population of unknown size by multiplying the number of research parameters or indicators by 5 to 10. With 12 indicators involved, the appropriate sample size used in this study is thus 60 to120 Padang restaurants.

The COVID-19 conditions have inhibited all Padang restaurants in North Jakarta from participating in this study. In the data collection process (April–May 2021), 100 questionnaires were successfully distributed randomly focusing on three sub-districts in North Jakarta, as the area with the largest distribution of this type of restaurant: Kelapa Gading, Pademangan, and Penjaringan. However, after screening based on the study’s age criteria, the number of eligible participants came to 86 participants out of 100 returned questionnaires, for an effective response rate of 86%. This amount, being higher than 60, meets this study’s sample size requirement. Meanwhile, several prior studies on hospitality, such as restaurants or hotels, have an effective response rate of 8%~15% (Grissemann, Plank, & Brunner-Sperdin, 2013; Jogaratnam, 2017; Seilov, 2015).

3.6. Technique Analysis

With a relatively small sample size and a research framework that uses path analysis, this study uses Partial Least Square–Structural Equation Modeling (PLS–SEM) with SMART PLS as an analytical tool (Benitez, Henseler, Castillo, & Schuberth, 2020; Willaby, Costa, Burns, MacCann, & Roberts, 2015). This study tested the PLS- SEM measurement to check the results of the reliability and validity tests. The reliability test in this study used the results of Composite Reliability (CR), with the provisions of CR > 0.7. Furthermore, the validity test in this study used the results of Average Variance Extracted (AVE) (AVE > 0.5) and Outer Loading (OL) (OL>0.7) (Barati, Taheri- Kharameh, Farghadani, & Rásky, 2019; Memon & Rahman, 2014). Furthermore, this study analyzes hypothesis testing using the p-value results, where the standard provision is p<0.05 (Ali, Hilman, & Gorondutse, 2020).

4. Results and Discussion

4.1. Results

The profile of participants in this study, as Table 2 shows, was dominated by male entrepreneurs who run or are responsible for running the business. In Indonesia, micro-, small-, and medium-scale businesses remain dominantly carried out by men rather than women. In addition, this local industry is characterized strongly by family businesses that have been run by men for generations. The data show that more than half of this study’s participants are generally grouped into business actors ranging in age from 20 years to more than 33 years. These results can indirectly explain other indications that apart from heredity, the interest of the younger generation continues in making this business their main livelihood. Groups at this age see that Padang food remains a taste for people in this region.

Table 2: Participant Profile Data

Further results can also be observed for the educational background of the business actors at Padang restaurants, which are dominated by business actors having a high school and junior high school educational background. The ease of adopting or adapting this business encourages young entrepreneurs to dare to run these restaurants.

4.2. PLS-SEM Measurement

The first test in this study was the measurement of the PLS-SEM Algorithm, as Table 3 shows, to check the reliability and construct validity results. As explained earlier, the reliability test in this study uses the provision of CR > 0.7. Furthermore, the validity test in this study uses the provisions AVE > 0.5 and OL > 0.7. In the initial test, several items did not meet the requirements, and needed to be eliminated and tested again. After retesting, the items that meet this study’s standards of reliability and validity, as Table 3 shows, are two Market Culture items on the Local based Organizational Culture variable (LOCM1 and LOCM2). Furthermore, on the entrepreneurial orientation variable, the items that meet the regulatory standards are item 1on proactive indicators (EOPRO₁) and item 2 on risk taking (EORT2). In the service distribution strategy variable, the items that meet the standard provisions are item 2 on the service concept indicator (SDSSC₂), item 1 on service delivery (SDSSD1), and two items on service encounters (SDSSE1 and SDSSE2). Furthermore, on the business performance variable, the items that meet the standard provisions are two items on the strategy indicator (BPMPSZ1 and BPMPSZ2).

Table 3: PLS-SEM Algorithm

Note: LOC=Local-based Organizational Culture;

EO=Entrepreneurial Orientation;

SDS=Service Distribution Strategy;

BPMP=Business Performance: Management Process

Table 4 shows the results of the means and standard deviations (STDEV). The smallest mean is 3, 930 (BPMPSZ2) and the largest is 4, 302 (LOCM1 and SDSSC₁). The STDEV number shows a result that is smaller than the mean number, which explains the variation in the data and indicates a good representation for the overall data in this study.

Table 4: Significance Test

The significance test in this study, as Table 4 shows, uses the p-value results, where the standard provisions are p < 0.05. The results on the direct influence path indicate two hypotheses with significant results (p < 0.05) and two hypotheses with insignificant results (p > 0.05). The path of mediating effect in this study did not explain the mediation effect, with p > 0.05. Likewise, the path of the moderating effect in this study also did not show a moderating effect, with p > 0.05. Examining this result, it can be further explained that local-based organizational culture does not affect BPMP (0.56 > 0.05); in other words, Hypothesis 1 is rejected.

However, the next result explains that a local-based organizational culture affects entrepreneurial orientation (0.00 < 0.05); in this case, Hypothesis 2 is accepted. Regarding the mediating effect, this result means that a local-based organizational culture when mediated by entrepreneurial orientation does not affect BPMP (0.06 > 0.05), and Hypothesis 3 is rejected.

Furthermore, the results of this study also explain that entrepreneurial orientation affects BPMP; Hypothesis 4 is accepted. The service distribution strategy (SDS) result indicates there is no effect on BPMP (0.83 > 0.05), which means Hypothesis 5 is rejected. Regarding the moderating effect, SDS does not moderate a local-based organizational culture toward entrepreneurial orientation (0.49 > 0.05); Hypothesis 6 is rejected. Moreover, SDS does not moderate a local-based organizational culture toward BPMP (0.91 > 0.05); Hypothesis 7 is rejected.

4.3. Discussion

4.3.1. Service Distribution Strategy on Business Performance Management Process

The service distribution strategy to customers focuses on four aspects. Based on the outer loading, the highest service distribution strategy comprises the service encounters aspect, in which the service strategy focuses on the goal of upholding service provision etiquette (SDSSE1) followed by efforts to create a positive service provision impression (SDSSE2). The service distribution strategy is also formed via a service strategy that aims to provide maximum service to customers (SDSSD1). Meanwhile, the service concept aspect in which the service strategy aims to establish customer convenience for dining on the spot (SDSSC₂) is the smallest in shaping the service distribution strategy among the Padang restaurant businesses in this study.

The COVID-19 pandemic conditions have indirectly affected the pattern of forming the service distribution strategy concept among these restaurants. Social restrictions, from micro-scale to large-scale, that are periodically enacted, means these businesses must continually adjust their customer service strategies. It can be explained that the service distribution strategy aspect focuses on basic service strategies. This is also related to health protocols that limit restaurant services.

As previously explained, the Padang restaurant business carries local cultural concepts e via a series of distinctive features of customer service, for example, the way of delivering food menus in several small plates arranged on both arms of the server, and the arrangement of various menu items on the table for customers, as Figure 2 shows (Mardatillah, 2020). In the service distribution concept, for example, customers who want to eat on the spot can be supported via a series of applicable health protocols, such as the availability of handwashing areas; body temperature checks; seating distances; and the use of masks for restaurant workers during work, and for customers before and after eating. These service strategies are not only able to provide a sense of comfort but are also able to demonstrate maximum service (SDSSD1), manners (SDSSE1), and a positive impression (SDSSE2) for customers who want to eat on the spot.

Figure 2: Distinctive Features of Service in Food Serving Source: Mardatillah (2020)

The results of this study indicate that the service distribution strategy has no significant effect on business performance. This suggests that these restaurants under pandemic circumstances continue to uphold aspects of local culture in customer service. In this study, the highest business performance is focused on the strategic aspect through periodic evaluation of service strategy (BPMPSZ1), followed by periodic business strategy development (BPMPSZ2).

The fear of these Padang restaurants business regarding the uncertainty of when the COVID-19 pandemic will end is an indication of the main cause in the formation of a pattern of definitions for restaurant business performance from general to specific. In the periodic evaluation of service strategy, for example, business actors conduct periodic evaluations of their service strategy with the intention of adjusting to existing conditions.

For example, government policies regarding health protocols for restaurants must be adhered to regularly, and are necessarily adjusted periodically. No few businesses have reduced their number of workers, or even reduced the number of food items on the menu. Thus, the regular development of business strategies is also carried out just as a precaution in anticipation and prevention of greater losses. Therefore, under such abnormal conditions as the current pandemic, the service distribution strategy has no impact on business performance management processes under the general definition.

The pandemic conditions are also related to the role of service distribution strategy in moderating other variables, namely local-based organizational culture regarding the business performance management process, and local-based organizational culture regarding entrepreneurial orientation. With strategy formulation via in-service distribution, the role of the ability of employees involved in this process is an important consideration (Ganotakis, 2012; Jogaratnam, 2017). However, it is inseparable from the opposing evidence indicating that employee abilities have no impact on business performance (Lee, Hallak, & Sardeshmukh, 2016).

4.3.2. Local-based Organizational Culture and Entrepreneurial Orientation

This study agrees that local-based organizational culture is the key identity value in running a business and making decisions based on the local cultural background. This is in line with the highest formation in local-based organizational culture: the market culture aspect through the principle of providing opportunities for all employees to monitor selling prices (LOCM1), followed by the principle of providing opportunities for customers to provide input for improving menus and service quality (LOCM2). Social restrictions on a certain scale have an impact on the distribution channels for restaurants’ food ingredients. Coupled with a normal price strategy, or promotional prices to attract customers, these inhibitions pose a dilemma. Therefore, considering the prices of competitors can also help the sustainability of Padang restaurants.

In addition, determining how to keep customers buying is a strategy that can currently be undertaken by, for example, looking at comments on social media for feedback and reviews of purchasing food from restaurants. Thus, the current aim of the Padang restaurant businesses in this study is to synergize existing resources and efforts to survive, rather to gain profits as under the normal conditions before the pandemic. The results of this study further explain that local-based organizational culture does not affect business performance. This result is aligned with the results of the service distribution strategy, which currently does not have an impact on business performance, where the local-based organizational culture as the identity of the restaurant must continue even when operating income has decreased. Organizational culture, one aspect of which is shaped by market culture, coexists with proactive and innovative behavior on entrepreneurial orientation (Naranjo-Valencia, Jimenez-Jimenez, & Sanz-Valle, 2017). Likewise, Brettel, Chomik, and Flatten (2014) have suggested that aspects of market culture and adhocracy are important in shaping entrepreneurial orientation; these factors indirectly trigger the formation of entrepreneurial behavior.

In contrast, the current study’s results indicate local based organizational culture has a significant effect on entrepreneurial orientation; this result is in line with Engelen et al. (2014), who have emphasized that the level of entrepreneurial orientation fluctuates from high to low, especially in organizations on a small scale; these are affected by the adaptation of the appropriate organizational culture prevailing in the region. In this study, the highest entrepreneurial orientation was formed by the proactiveness aspect through the principle of aiming to become a superior Padang restaurant in the surrounding area (EOPRO₁), followed by the risk-taking aspect involving taking risks in all situations (EORT2). This is also under the current pandemic conditions, in which decision-making accuracy can affect the success of the businesses in this study. Business actors in this study retain the ambition to excel in competition, but must face making decisions in abnormal situations. Thus, the ambition for success is currently being reduced to an ambition to survive, to continue operating and avoid closing the business.

Meanwhile, regarding business performance, entrepreneurial orientation also does not act as a mediator between local-based organizational culture and business performance. Likewise, the effect of local-based organizational culture on entrepreneurial orientation is also not found to be moderated by service distribution strategy. The role of entrepreneurial orientation lies in generating ‘pros and cons’ as a mediating variable between organizational culture and business performance Wales et al. (2011); however, in generals entrepreneurial orientation has an impact on business performance, through various aspects such as innovation, to form business excellence (Jogaratnam, 2017). Khedhaouria et al. (2020) have explained the opposite role of entrepreneurial orientation as a mediating variable.

Although the global view states that entrepreneurial orientation plays an important role in shaping indirect effects on business performance, this study has found entrepreneurial orientation to have no significant impact. However, during the difficult pandemic conditions, regardless of how strong the entrepreneurial orientation principle is, it remains unable to mediate the local-based organizational culture to influence the performance of existing businesses.

5. Conclusions

The difficult conditions during the COVID-19 pandemic have impacts on adjusting the perception pattern on the strategic focus of business actors in the Padang restaurant business in North Jakarta. This study has successfully explained the strategic focus related to service distribution strategy: service encounters (showing good manners and impressions in providing services); service delivery (providing maximum service to customers); and service concept (building customer convenience to eat at a restaurant). Based on the results of this study, the service distribution strategy has no significant effect on the business performance-management process. Likewise, no evidence has been found that the service distribution strategy moderates local-based organizational culture toward entrepreneurial orientation, nor does it moderate entrepreneurial orientation toward the business performance management process. Furthermore, the local-based organizational culture in the study has been shaped by the market culture aspect, consisting of the principle of providing opportunities for all employees to monitor selling prices, and the principle of providing opportunities for customers to provide input for improving the quality of the menu and service.

Although local-based organizational culture does not have a significant impact on the business performance management process, local-based organizational culture has succeeded in influencing entrepreneurial orientation. In this regard, although it does not act as a mediating factor in the local-based organizational culture, entrepreneurial orientation in this study affects the business performance management process. The results of this study imply the aspects of local-based organizational culture related to the importance of maintaining the principle of worker involvement, to pay attention to selling price. Thus, it is highly important to increase employee involvement in menu and service quality; for example, workers can pay attention to what makes customers happy, satisfied, or disappointed.

In the aspect of entrepreneurial orientation, the principle of ambition to become a superior Padang restaurant around the business area must be maintained. Meanwhile, the courage to take risks in business decisions must be further increased, even though restaurants experience trial and error. For example, risk taking can be implemented in the strategy of creating an online ordering system, via website or application, for delivery services or time-based orders. This may be more appropriate than a telephone ordering system.

In the aspect of service distribution strategy, service strategies with elements of local cultural ethics that have been attached must be maintained, such as politeness in the appearance of workers and the method of serving or bringing food orders to the customer’s table. Along with these, the element of convenience for customers to eat on the spot should be improved. This can be implemented by providing air conditioners in the restaurant so that the temperature remains comfortable, and by providing handwashing areas.

In the aspect of business performance, efforts to strategize on the approaches that have been designed must be maintained to achieve the determined goals. To support this, business strategies need to be periodically developed and carried out, such as adjusting customer tastes to the flavors of food that are currently popular (for example, spicy flavors with several levels), enabling adapting the menu of these restaurants to the current trends.

Academically, this study’s results have implications for choosing the appropriate service strategy for a restaurant business based on local cultural concepts. Restaurants do not simply involve name tags; instead, service strategies that highlight the adopted cultural identity have become increasingly important. The elements of service quality in general concepts (tangible, empathetic, responsive, reliable, and assuring) are likely to be strengthened by a service distribution strategy incorporating local cultural identities. This can also support strengthening the business’s selling value.

The limitations of this study are that the research area only uses one-point area—North Jakarta—which could be expanded for further research. The conditions of the COVID-19 pandemic, under which this research was conducted, limited the measurements; thus, this study has measured performance only during the pandemic. Future research can compare the respective business performance during and after the pandemic. Moreover, because of the existing conditions, the sample size in this study is relatively small; future studies should increase the sample size to include a wider range of areas. Lastly, this study has only measured restaurants that had been operating for at least one year. This presents an opportunity for future research to compare the length of business operations.