Title: Mediating role of inter-firm linkages and innovation capability towards the sustainability of SMEs in Indonesia

Authors: Faisol; Vikas Kumar; Sri Aliami

Addresses: Faculty of Economics and Business, Accounting Department, University of Nusantara PGRI Kediri, Kediri – 64112, Indonesia ' Central University of Haryana, Jant-Pali, Mahendergarh – 123031, Haryana, India ' Faculty of Economics and Business, Management Department, University of Nusantara PGRI Kediri, Kediri – 64112, Indonesia

Abstract: Present study examines the role of inter-firm linkages and innovation capability in driving the business strategy for sustainability of small and medium enterprises (SMEs). By using a convenience sampling, data was collected through a structured questionnaire from the SME clusters in East Java province of Indonesia. A total of 152 entrepreneurs from SMEs participated in the study. Data was analyzed using SEM-PLS. Findings reveal that business strategies do not directly affect firm sustainability. Their effects to the sustainability are mediated by inter-firm linkages and innovation capability among SMEs. In addition to this, firm characteristics like size and age of an enterprise also influence firm performance either directly or indirectly. These findings practically implicate that the role of business strategies in obtaining firm sustainability have to intensify inter-firm linkages as external resources and enhance their innovation capability as internal resources.

Keywords: MSME; business strategy; financial strategy; marketing strategy; human management; innovation capability; inter-firm linkages.

DOI: 10.1504/IJTPM.2023.133918

International Journal of Technology, Policy and Management, 2023 Vol.23 No.4, pp.387 - 409

Received: 26 Jul 2022
Accepted: 17 Oct 2022
Published online: 05 Oct 2023 *

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