American Journal of Humanities and Social Sciences Research (AJHSSR)
2022
American Journal of Humanities and Social Sciences Research (AJHSSR)
e-ISSN :2378-703X Volume-6, Issue-3, pp-169-174 www.ajhssr.com
Research Paper
Open Access
The Effects of Entrepreneur Orientation and Strategic Agility on SMEs Business Performance during the Recession Oci Sarkosi1, M. Saleh Mire2, Irsan Tricahyadinata3 1,2,3
Economic& Business Departement, Mulawarman University, Indonesia Corresponding author:
Oci Sarkosi
ABSTRACT : This research is expected to provide empirical evidence regarding the effect of entrepreneur orientation and strategic agility on SME business performance during the recession due to the Covid-19 pandemic. A total of 135 respondents who are SME owners were asked to answer some questions in the form of a questionnaire. The survey target is SMEs engaged in the manufacturing industry sector in Balikpapan City, Indonesia. The data that has been collected will be tested using Smart-PLS Software. The results show that entrepreneur orientation has no significant positive effect on business performance. Entrepreneur orientation has a positive and significant effect on strategic agility. Strategic agility has a positive and significant effect on business performance. Furthermore, the results also confirm that strategic agility plays a role in mediating the relationship between entrepreneur orientation and business performance. This study is expected to help SME owners, particularly the manufacturing sector, to understand the importance of strengthening entrepreneur orientation and implementing strategic agility to maintain and improve business performance KEYWORDS : Resources Base View (RBV), Entrepreneur Orientation, Strategic Agility, Business Performance, Small and Medium Enterprises (SMEs).
I.
INTRODUCTION
In the current modern economic era, the economic growth of both developed and developing countries is mainly driven by entrepreneurship. Entrepreneurship is one of the most dynamic phenomena in the economy, but it can change under the influence of globalization and crises [1]. The existence of Small and Medium Enterprises (SMEs) has been recognized as a strategic sector to generate high economic growth, reduces unemployment, equalize income and reduces poverty. SMEs also play an important role in the economy in Indonesia. The Indonesian economy is dominated by SMEs where according to data from the Ministry of Cooperatives and SMEs, the number of SMEs as of July 2021 reaches 64.2 million players. The labor absorption rate reaches 97% of the total existing workforce[2]. Given the important role of SMEs as the backbone of the national economy, it is necessary to conduct in-depth studies to improve the entrepreneurial orientation of the perpetrators. This study seeks to gain knowledge about SME business strategies in maintaining their business performance during the recession due to Covid-19. Do entrepreneurial orientation and strategic agility affect business performance during a recession? This study is unique in its strategic context and furthermore, it links entrepreneurial orientation with strategic agility together in the face of a dynamic business environment. Previous studies on entrepreneurial orientation and SME performance have shown gaps in outcomes. Several studies explain that entrepreneurial orientation has a positive and significant impact on the performance of SMEs [3];[4]; [5]. However, there are several other studies that show different results where an entrepreneurial orientation has positive relation but not a significant effect on the performance of SMEs [6]; [7]; [8]. This study aims to analyze the direct and indirect effects of entrepreneurial orientation on business performance through strategic agility as a mediator variable. While in the world of literature, this paper will add to the treasury of literature on empirical evidence of SME entrepreneurial management in developing countries. The structure of the preparation of the paper begins with a review of the relevant literature, research conceptual models, and research hypotheses that discuss the relationship between the variables applied in this study, namely entrepreneurial orientation, strategic agility, and business performance. Next, the author explains the Smart-PLS research methodology along with a report on the results of data analysis. In the end, we present the conclusions and suggestions from the results of this study.
AJHSSR Journal
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