The export performance of Indonesian SMEs: the effects of entrepreneurial orientation and strategic capability in a dynamic environment

This research is based on the dynamic capability view,
resource-based view, internationalization theory, and international entrepreneurship theory, with the primary objective of determining the factors affecting Indonesian SMEs' export performance. It examines the combined capabilities of entrepreneurial orientation and strategic capability. Entrepreneurial orientation encompasses innovativeness, risktaking, pro-activeness, and competitive aggressiveness. Meanwhile, strategic capability contains technological capacity, cultural competence, network competence,
and market knowledge capability. Environmental dynamism is included in this study to examine its influence as a moderating factor in the relationship between SMEs' capabilities and their export performance. This study develops and examines sixteen
hypotheses. Primary data were collected using postal questionnaires obtained from 174 top management executives of SMEs in three regions of Indonesia (Java, Sumatera, and Bali and the Nusa Tenggara Timur). The data were analysed using PLS-SEM 3.0. Generally, the research findings reveal that only innovativeness, risk-taking, technological capacity, network competency, and market knowledge capability are found to be directly significant in influencing the Indonesian SMEs' export
performance. However, pro-activeness, competitive aggressiveness and cultural competence are shown to have no significant effect on the export performance of Indonesian SMEs. When environmental dynamism was added as a moderator, the effects of entrepreneurial orientation and strategic capabilities on Indonesian SMEs' export performance remained unchanged. Relevantly, the most critical factors affecting export performance are technological capacity and market knowledge capability. This study enhances novel knowledge in the existing body of knowledge and practice of the impacts of entrepreneurial orientation and strategic capability on export performance. Given the critical nature of technological capacity and market knowledge capability for strategic management as a decision-making mechanism for improving Indonesian SMEs' export performance, it is critical that managers, as well as other hierarchical elements in the company, assist and facilitate the necessary conditions and needs to improve SMEs export performance. The findings of this research may also assist the Indonesian government and relevant policymakers in providing essential advice and resources, which could positively contribute to the country's SMEs' export performance.