Examining the Effect of Radical Innovation and Incremental Innovation on Leading E-Commerce Startups by Using Expectation Confirmation Model

Abstract

The purpose of this study is to compare the effect of strategic entrepreneurship through different innovation approach between two leading digital multi-sided platform (MSP) e-commerce startups, Bukalapak, that use incremental innovation approach, and Shopee that use radical innovation approach to face the business challenge during Covid-19 pandemic. Using structural equation modeling (SEM) with the partial least squares method, the researchers use an extended expectation confirmation model (ECM) from a customer point of view to analyze the effect of the innovation efforts. A questionnaire was distributed to people who purchased a Bukalapak or Shopee online shopping application during the covid pandemic with the purposive sampling method. Finally, the analysis was performed with a total of 300 samples from Bukalapak and Shopee users. The results show that confirmation positively impacts perceived enjoyment, satisfaction, and customer engagement in both Bukalapak and Shopee cases. The results also show that perceived enjoyment and satisfaction engagement positively impact continuance intention as the manifestation of innovation. However, in the Bukalapak case that performs incremental innovation, the customer engagement is insignificant on continuance intention, while it is significant in the Shopee case that performs radical innovation. This study suggests enabling the customers to engage more in an e-commerce platform through a radical innovation approach by providing services beyond e-commerce scope (ex: mini-game, gamification activities, etc.) will likely lead to favorable responses and lasting relationships.