The Effect of Strategic Flexibility as a Moderating Variable in Improving Firm Performance in Microfinance Institutions

Abstract

Purpose: This study aims to determine and analyze the effect of intangible assets in increasing sustainable competitive advantage and performance in microfinance institutions as well as the influence of strategic flexibility as a moderating variable. Theoretical framework: The five variables studied, namely intellectual capital and social capital, each measured with three dimensions as independent variables, sustainable competitive advantage as variable intervening and performance as dependent variables, and the influence of strategic flexibility moderation. Design/methodology/approach: The study was conducted with a quantitative approach; questioners were given to MFI leaders in Madura while analysis of the influence of each variable using partial least squares structural equation modeling (PLS-SEM) techniques with the help of SmartPLS 3.0 software. Findings: The results of the analysis show that intellectual capital has a significant effect on sustainable competitive advantage and performance, social capital has a significant impact on sustainable competitive advantage but does not affect performance, while strategic flexibility weakens the influence of intellectual capital on firm performance and strengthens the effect of social capital on performance. Research, Practical & Social Implications: The following study can be more detailed by measuring and exploring the influence of each dimension, both social capital and intellectual capital dimensions. Company leaders must continue to increase the value of intellectual capital and develop social relations and utilize these relationships in alternative strategies. Originality/value: This study investigates the influence of intellectual capital and social capital on sustainable competitive advantage and performance in a hyper-competitive business environment as well as the effect of moderation of strategic flexibility with research objects in Islamic microfinance institutions.