The external environment dynamics analysis towards competitive advantage and company performance: the case of manufacture industry in Indonesia

Abstract

This study investigates the direct effect of external environment dynamics on competitive advantage and company performance. To analyse the direct effect of competitive advantage on company performance, this study also explains the indirect effect of external environment dynamics on company performance through competitive advantage as mediation variable. Primary data is collected by using a questionnaire, while secondary data is obtained from relevant documents. The number of samples was 267 manufacturing companies taken from the population based on proportional random sampling method. This study uses descriptive statistics, and structural equation modelling (SEM) as method of analyses. The findings of the study prove that external environment dynamics can increase competitive advantage. The external environment dynamics also can improve company performance. Then, competitive advantage can improve company performance. Moreover, external environment dynamics indirectly can influence company performance mediated by variable of competitive advantage. Company performance can be improved by improving the competitive advantage variable elements for getting best results.