The effect of social capital and knowledge sharing to the small medium enterprise’s performance and sustainability strategies

Abstract

Purpose The development of small- and medium-sized enterprises (SMEs) in Indonesia is one of the national economic development priorities. SMEs have given benefits for society, especially in creating a fair income distribution and supporting economic growth. This paper aims to examine and analyze the impact of social capital and knowledge sharing on the sustainability strategy and performance of SME and to formulate policies about SMEs in the future. Design/methodology/approach This research was carried out in Riau Province, which is the closest province to Malaysia and Singapore. The authors collected data from 56 SMEs in trading and craft industries by using the purposive sampling method. The data were analyzed using partial least square technique. Findings The result of data analysis shows that social capital and knowledge sharing significantly affect the sustainability strategy of SMEs. Furthermore, sustainability strategy and knowledge sharing affects SME performance significantly, whereas social capital does not affect its performance. Originality/value A participatory approach (partial least square) was used, the location of the research was Riau Province, Indonesia and the participants in this study are the perpetrators of the micro-, small- and medium-sized enterprises. This method and location have not been considered in earlier studies.

Driving sustainability in SMEs’ performance: the effect of strategic flexibility

“…Sustainability according to Elkington (1998) is a steadiness between profit, people and planet, known as the concept of triple bottom line (TBL). The concept of sustainability in Driving sustainability in SMEs' performance business is truly an idea that displays the success of a business to be able to exist even in the presence of robust competitors and being resistant to shaking that affects its performance, growth indicators, developments and strategies (Meflinda et al, 2018). Therefore, based on this study, dynamic capability as reconfiguration from micro and macro competencies to handle the rapidly changing environment was used for the concept of business sustainability strategy.…”

“…An establishment's productivity is always at the forefront as it is vital in guaranteeing the continuity of the effort. The accomplishment of the establishment, rather than an expression of the favourable outcome or malfunctioning of a firm, can lead to the delineation of the pay-off achieved from the execution of a series of company work functions and activities in a certain period of time (Meflinda et al, 2018).…”

“…The SMEs' performance is very significant in ensuring the sustainability of the effort. The performance of the business other than as a reflection of the success or failure of a business may also designate the results accomplished from the execution of a series of business work functions or activities over some certain period (Meflinda et al, 2018) Therefore, it becomes interesting to explore how sustainability will moderate the relationship between strategic flexibility and firm performance. In sum, in order to explain border circumstances of the effect of strategic flexibility on SMEs' performance, by drawing on the dynamic capability's perspective, the paper builds a contingency model to investigate the moderating effects of sustainability strategy with a focus on SMEs' performance in emerging economies.…”

“…In addition, strategic flexibility on performance and of survival strategies on the performance of SMEs and the formulation of policies relating to SMEs in the future, hence, sustainability strategy will provide an opportunity to review progress to date and take a fresh look at the risks and opportunities facing the business. And it provides the framework to review, adjust and focus Driving sustainability in SMEs' performance activities into an authentic form that is unique to the company and can differentiate it from peers Meflinda et al (2018) and finally can strengthen the relationship between strategic flexibility and performance.…”

“…In addition, strategic flexibility is the capability of the firm to proact or respond quickly to changing competitive conditions and, thereby, develop and/or maintain competitive advantage (Arshad et al, 2018;Xiu et al, 2017). Firms with a strong focus on strategic flexibility are more likely to use sustainability to develop and nurture dynamic core competencies that are of great importance to achieve performance in a rapidly changing environment (Meflinda et al, 2018). Johnson et al (2003) researched the theory related to market-centred strategic flexibility and its relationship towards an establishment's marketplace adaptation.…”