Diversification Strategy and its Impact on Sustainability: Research on Indonesian SMEs

Abstract

Sustainable development and its contingency aspects have emerged as a fascinating topic in recent years, particularly for small and medium enterprises (SMEs). Several studies have looked at innovation, technology, and individual contexts, as well as diversification tactics, and found mixed results. Consequently, the purpose of this study is to investigate the impact of SMEs' diversification on their long-term viability. The 180 respondents that took part in the survey were all owners of SMEs from around Yogyakarta Province. The hypothesis was tested using Analysis of Variance (ANOVA), and the results revealed that there were substantial disparities in sustainability among SMEs, depending on their linearity. Furthermore, SMEs that engaged in linear diversification outperformed their non-linear counterparts in terms of profitability. The findings have implications for SME owners who want to ensure their long-term viability by employing the most appropriate approach.