West Java is the one of provinces that drives the national economic for it has various natural resources, enormous population, strategic geograph spot, and diverse culture as the assets of competitive advantages. West Java Province has a strategic position as the heart of the national industry by controlling more than 50% of the contribution of the industrial sector to the national economy. As raw materials and capital are limited, small industries, including the small handicraft industry, need to develop is to develop creative industries by promoting new and renewable resources.
The low entrepreneurial competence possessed by craftsmen will certainly have an impact on their performance in producing a work of art; this is also confirmed by entrepreneurial research which shows that entrepreneurial competence has a positive impact on SME performance. Companies with managers who have a relatively high level of entrepreneurial competence are likely to scan and manage the environment in which they operate to find new opportunities and consolidate their competitive position (Covin & Miles, 1999). Generally performance is interpreted only in terms of the output of achieving measurable goals. But more than that, performance is a process of what people achieve. This means, performance is not only about the end result but also about the work process, viewed from how people achieve it (Armstrong, 2006). Craftsmen' performance in SME is a measure of the quantity and quality of the work produced, which is expected to meet market demands.
The output of performance in the form of a product certainly varies from each craftsman, even though the type of product created is the same. This is due to the influence of each craftsmans' competency. In addition, their products can also be different because of the innovations made by the craftsmen. Innovation is the company's efforts by using technology and information to develop produce and market new products in the industry (Freeman, 2004). In other words, innovation is the modification or discovery of ideas for continuous improvement and development to meet customers' demand. Product improvements or enhancement are solely carried out to meet the market demand, so it is not surprising that if the craftsmen have the opportunity then they will make best use of it by performing innovation to align their products with market demand. Therefore, creative industry craftsmen must be able to see a lot opportunities, and before taking these opportunities, they have to firstly identify those opportunities (Krueger, 1998).
Indonesian creative industry has been one of the most successful and promising industries since 2002. The average GDP contribution from the Indonesian creative industry during 20022015 was 3.6% of the total National GDP with a value of Rp. 104.6 trillion. The export value of creative industry reached Rp. 81.4 trillion and contributed 9.13% to the total value of the national exports with employment reaching 5.4 million workers (Indonesian Ministry of Trade, 2015). Although in general creative industry experienced a positive growth, the development of creative industry in the craft sub-sector, which in the economic classification belongs to the MSME category, is still unstable and vulnerable to bankruptcy. When viewed from the scope of creative economy in the craft sub-sector, the increase in achievement tends to rely on the quality of Human Resources (HR), because the main capital needed is a creative and tough workforce, combining creativity, expertise and individual talent. This is in accordance with the definition stated by the Department of Culture, Media and Sports (DCMS) which explains that creative industry are activities emerging from creativity, skills and talents of individuals who have the potential to realize prosperity and employment through the creation and exploitation of intellectual wealth (UNCTAD, 2008; Gibbons, 2011).
The development of the craft sub-sector creative industry in West Java from 2010-2015 showed an increase (Figure 1), but based on observations upon 15 small-scale handicraft industries, it was found that the product sales turnover of each craftsman was not significant each year; this detects the existance of problems in performance and innovation so that annual targets were not achieved. This condition can be viewed in the following graph:
The problem of innovation and performance in the craft sub-sector of the creative industry in the province of West Java can be seen from their low capability and low access to technological-based information and their limited business opportunities; small-scale handicraft industry craftsmen also have low capability in accounting and business feasibility studies, in understanding export-import trade mechanisms and systems, and they have no clear competence standardization.
From the explanation above, the formulation of research problems can be done by conducting some tests to find out the influence of entrepreneurial competence and innovation on opportunities and performance. The objectives of this study are: (1) to reveal the influence of entrepreneurial competence and innovation on the performance of small handicraft industry craftsmen in West Java both partially and simultaneously; and (2) to reveal the influence of entrepreneurial competence and innovation on the performance which is mediated by opportunity in small handicraft industry craftsmen in West Java.