Moderating Effects of Business Strategy and Environmental Uncertainty on the Relationship Between Personal Characteristics and Performance of Indonesian SMEs

Abstract

This study explores the moderating effects of environmental uncertainty (EU) and business strategy (BS) in order to experimentally investigate the impact of entrepreneurial personal characteristics (EPCs) on the performance of small and medium-sized enterprises (SMEs). The study used a mixed-methods approach, gathering information from 213 SMEs through questionnaires and in-depth interviews. Using the Partial Least Squares (PLS) method, data were evaluated. According to empirical findings, EPCs improve the performance of SME. Additionally, BS modifies the association between EPCs and SME performance. EU, however, deteriorates this connection. These results clarify the debate around the effect of EPCs on the performance of SMEs. By highlighting the favorable impact of EPCs on SME performance and the crucial significance of individual traits and business strategies in SME sustainability in Indonesia, this research can practically inform management policy on future business plans. The report suggests raising environmental management awareness, implementing an environmental orientation plan, and boosting environmental performance and business strategy to improve SME performance. In the context of this study, corporate performance is defined as the degree to which a company meets its operational goals in accordance with its vision and mission.

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