Strategy and performance interrelation: The mediating role of the solidarity

Abstract

The present study provides insights for the SMEs to enhance their performance. For instance, SMEs managers or owners are expected to develop an understanding of the relationship among SMEs performance and business strategy. The main purpose of the study is to examine the impact of the entrepreneurial orientation and the business strategy on the firm's performance of the SMEs operating in the Indonesia. In addition to that the study has also examined the mediating role of solidarity in the relationship between entrepreneurial orientation and business strategy and firm performance. We have adopted second generation method for data examination which is Partial least square Structural Equation Modelling PLS-SEM to avoid the limitations of first-generation methods. With the help of PLS technique the researcher can control number of interdependent links simultaneously. The response rate for present study was 59%. The findings of the study have provided support to the hypothesized results. The study will be helpful for the policymakers, and researchers in understanding the issues related to SMEs performance in Indonesia.