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Those who were used as the samples of the study were creative and innovative enough to make use of the opportunities available in order to survive. In this present study,
innovation includes the innovation in creating new products and modifying the existing products. In the last two years, several manufacturers created new products which had
never been produced before such as lamp shades, ketzel painting, silver bracelets with the
black dragon as the motive, bracelets with what is called cangkang kerang as the motive,
Balinese carved bracelets with the face as the motive, bracelets with red garnet as the stone, dragon bones, rings with the topaz blue stone flower as the motive, and so forth.
Such products are marketed in local markets and are exported. Out of the UMKM used as the samples in the present study, 7 23 percent market their products in domestic
markets, while 23 77 percent, the rest, market their products in local markets and overseas.
4.2 Respondents’ Characteristics
The respondents of the present study were the employees who played key roles in the success achieved by the Manufacturing UMKM in Gianyar Regency, totaling 90.
Based on the result of the study, it was identified that the dominant employees were females 84 percent. This indicates that the UMKMs involved in the creative industry
were activated by mothers. If viewed from their ages, they were between 20 and 50 years of age. Most of them 62 percent were senior high school graduates; some 8 percent
were university graduates. However, viewed from their working experience, they had been involved in the manufacturing business for a relatively long time. Out of them, 21 23
percent had been involved in the manufacturing business for 11 – 15 years, and 16 percent
were involved in the creative industry for more than 20 years.
4.3 Results of Data Analysis
In the present study, PLS with Program SmartPLS was used to analyze the data.
Based on the result of the data analysis, the empirical model of research was produced as shown in Figure 1 as follows.
Based on what is shown in the Figure 1, the result of the outer model is described in order to identify the validity and reliability of the indicators used to measure the latent
variable. In addition, the evaluation of the inner model is also described in order to identify
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whether the accuracy of the model and the result of the examination of the research hypothesis.
1 The Result of the Outer Model
The evaluation of the outer model was used to examine the validity and reliability of the indicators used to measure the construct or the latent variable. In this present study,
the variable of the Structural Empowerment X1, the Psychological Empowerment X2, Creativity Y1, and Innovation Y2 are classified as the outer model with reflective
indicators, whereas the variable of the Asta Brata leadership X3 is classified as the
formative outer model. In the reflective outer model, evaluation was made by examining the convergent and discriminant validity of the indicator and the composite reliability of
the indicator block. In the variable of the formative outer model, evaluation was made based on the relative weight. The results of the evaluation of the outer model are described
as follows.
1 Convergent Validity
The result of the examination of the outer model showed that the outer loading of every indicator of the Structural Empowerment variable X1, the Psychological
Empowerment X2, Creativity Y1, and Innovation Y2 is higher than 0.5; in addition, it
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also showed that the T-statistics is higher than 0.96 the critical point in the 5 alpha, meaning that all the indicators are valid for measuring the variables.
The evaluation of the measurement of the Asta Brata Leadership variable X3, if
viewed from the Outer Weights, showed that the T-statistics of several indicators X3.2, X 3.4, X 3.5, X 3.6, X 3.7 is less than 1.96, meaning that it is insignificant. However, in
relation to this, it is impossible to delete the insignificant formative indicator. The reason is that if the insignificant formative indicator were deleted, then the essence of the construct
would change Hair et al., 2013 in Sholihin and Ratmoni, 2013. Therefore, if viewed from the outer loading, the validity of the construct shows that all the indicators of the
Asta Brata Leadership variable are higher than 0.5 and the T-statistics is higher than 1.96,
meaning that all the indicators are valid for measuring the variable.
2 Discriminant Validity
The discriminant validity was examined by comparing the score for the square root of average variance extracted AVE of every variable with the correlation among the other
latent variables in the model. The related data are presented in Table 1. Table 1 The score for the square root of average variance extracted AVE of every
variable and correlation among the variables
Variables AVE
√AVE Innovation
Asta Brata Leadership
Creativity Psychological
Empowerment Structural
Empowerment Innovation
0.8067 08.898
3 1
Asta Brata Leadership
0.7519 0.8671
0.8272 1
Creativity 0.8835
0.9399 0.8446
0.8009 1
Psychological Empowerment
0.7597 0.8716
0.8397 0.7226
0.7728 1
Structural Empowerment
0.9319 0.9653
0.8051 0.7377
0.8513 0.8065
1
Based on the data in Table 4.8, it can be identified that the AVE values of the five variables which were analyzed are higher than 0.5, and that the AVE root value of every
variable is higher than the correlation among the variables, meaning that the latent variables such as the Innovation variable Y2, the Creativity variable Y1, the
Psychological Variable X1, the Structural Empowerment variable, and the Asta Brata
leadership variable predict that their indicators are better than the other latent variable indicators. Based on the result of such an analysis, it can be explained that the discriminant
validity of the model is enough.
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3 Composite Reliability
The composite reliability was used to examine the values of the reliability among the indicator blocks of the Structural Empowerment variable X1, the Psychological
Empowerment variable X2, the Creativity variable Y1, the Innovation variable Y2, and the
Asta Brata Leadership variable X3 which form it. The values of the Composite Reliability are presented in Table 2 as follows.
Table 2 The Values of the Composite Reliability Variables
Composite Reliability Innovation Y2
0.943286 Creativity Y1
0.968081 Structural Empowerment X1
0.976200 Psychological Empowerment X2
0.926646 Asta Brata Leadership X3
0.960010
Based on the values of the Composite reliability as presented in Table 4.9, it can be identified that the values of all the research variables are higher than 0.70, meaning that the
indicator blocks are reliable for measuring the variables. Based on the results of the evaluation of the convergent and discriminant validity of
the indicators and the composite reliability of the indicator blocks, it can be inferred that the indicators used to measure the Structural Empowerment variable X1, the
Psychological Empowerment variable X2, the Creativity variable Y1, and the Innovation variable Y2 are valid and reliable, meaning that the goodness of fit model can
be identified by evaluating the inner model.
2 Result of the Structural Model Inner Model
The structural model is evaluated by referring to Q
2
predictive relevance model, and is based on the coefficient of the determination of all the dependent variables. The
value of Q
2
ranges 0 Q
2
1, meaning that the closer to the value 1 the better the model will be. The determination coefficients R
2
of the dependent variables are presented in Table 3.
Based on the value of R
2
, Q
2
can be identified based on the following calculation: Q
2 =
1 – 1-R
1 2
1 – R
2 2
= 1 – 1-08325111-0.79488 = 0.9656 = 0.97
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Table 3 The Value of R-Square R
2
Variable R Square
Innovation 0.832511
Creativity
0.79488
The fact that the value of Q
2
is 0.97 proves that the goodness of fit of the structural model
is very good. This result reflects that 97 of the information which the data contain can be explained by the model, and that the rest, 3, can be explained by the error and the other
variables which are not included in the model.
3 Result of the Examination of Hypothesis
The hypothesis was examined using t-test in every lane of the partial impact of the
variables. The result of the path coefficient test in every lane is presented in Table 4 as follows.
Table 4 The Result of Hypothesis Examination
Relationship among Variables Original
Sample O T Statistics
│OSTERR│ Remarks
The Structural Empowerment X1 Creativity Y1 0.494168
4.287788 Significant
Psychological Empowerment X2 Creativity Y1 0.110215
1.281721 Insignificant
Asta Brata Leadership X3 Creativity Y1 0.347938
3.302404 Significant
Creativity Y1 Innovation Y2 0.261187
2.418521 Significant
Structural Empowerment X1 Innovation Y2 0.024062
0.256907 Insignificant
Psychological Empowerment X2 Innovation Y2 0.334554
3.492114 Significant
Asta Brata Leadership X3 Innovation Y2 0.374291
3.458552 Significant
Based on what is presented in Table 4, the result of the hypothesis examination can be described as follows.
The Structural Empowerment X1 turns out to positively and significantly contribute to Creativity Y1, as shown by the value of lane coefficient, that is, 0.494168;
the T-statistical value is 4.287788, which is higher than the T-critical value, that is, 1.96, meaning that the better the structural empowerment, the better the employee creativity will
be, and that hypothesis 1 in which it was stated that the structural empowerment positively and significantly contributed to the creativity of human resources can be proved.
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It is evidenced that the Psychological Empowerment X2 positively but insignificantly contributes to Creativity Y1, as shown by the fact that the lane coefficient
value is 0.110215 and the T-statistical value is equal to 1.281721, which is lower than the T-critical value, which is 1.96, meaning insignificance. Thus, hypothesis 2 in which it was
stated that the psychological empowerment significantly contributed to creativity cannot be evidenced.
The Asta Brata leadership X3 turns out to contribute positively and significantly
to Creativity Y1, as shown by the lane coefficient, that is, 0.347938, and the T-statistical value, that is, 3.302404, which is higher than the t-critical value, which is 1.96. Thus, it
can be inferred that the better the implementation of the asta brata leadership the better the
employee creativity will be, meaning that the asta brata leadership significantly
contributes to creativity can be evidenced. Creativity Y1 turns out to positively and significantly contribute to Innovation
Y2. The result of the data analysis shows that the lane coefficient is 0.261187 and that the T-statistics value is equal to 2.418521, which is lower than the T-critical value, which is
1.96. Such a result of examination indicates that the better the creativity, the better the innovation will be. Thus, hypothesis 4 in which it was stated that creativity significantly
affected creativity can be evidenced. The Structural Empowerment X1 turns out to positively but insignificantly affect
Innovation Y2, as can be identified from the lane coefficient, which is 0.024062, and the T-Statistical value, which is equal to 0.256907, which is lower than the T-critical value,
which is 1.96. Thus, hypothesis 5 in which it was stated that the structural empowerment significantly affected innovation cannot be evidenced.
The Psychological Empowerment X2 positively and significantly contributes to Innovation Y2, as shown by the lane coefficient value, which is 0.334554 and the T-
statistical value, that is, 3.492114, which is higher than the T-critical value, that is, 1.96. Thus, hypothesis 6 in which it was stated that the psychological empowerment
significantly affected innovation can be evidenced. The
Asta Brata leadership X3 positively and significantly contributes to Innovation Y2. Based on the result of data analysis obtained from the lane coefficient
value, which is 0.374291, and the T-statistical value, which is 3.458552 and higher than the T-critical value, which is 1.96, hypothesis 7, in which it was stated that the
Asta Brata leadership significantly affected innovation can be evidenced.
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5. Discussion 5.1 Impact of the Structural Empowerment on the Employee Creativity
