The Effects of Organizational Inertia and Dynamic Capability on Firm Performance: Business Model Innovation as a Mediating Variable at Small Industry of Rendang in West Sumatera

Authors

  • Mira Permata Sari Department of Magister Management, Andalas University, Padang
  • Donard Games Department of Magister Management, Andalas University, Padang
  • Dessy Kurnia Sari Department of Magister Management, Andalas University, Padang

DOI:

https://doi.org/10.31933/dijemss.v5i4.2591

Keywords:

Organization Inertia, Dynamic Capability, Firm Performance, Business Model Innovation, Organization Learning, Knowledge Management, Small Industry Manufacture, SMES Indonesia

Abstract

This study aims to explore the knowledge management challenges faced by Rendang IKMs in the context of organizational inertia as a barrier and unordinary competencies as antecedents to achieving superior performance in the domestic and global markets. At the same time, know the role of business model innovation in relation to the performance of the IKM business. The research analyzed data from 105 IKM Rendang in West Sumatra and found that despite being in a state of stagnation or inertia, these businesses can still generate profits. However, inertia must still be minimized by innovating. Meanwhile, the unordinary capability (dynamic capability) that dominates rendang entrepreneurs is absorptive capability, indicating that while SMEs have enough knowledge to understand tastes and market conditions, they struggle to transform this knowledge into viable companies. Business model innovation plays a vital role in reducing company stagnation and enhancing dynamic capabilities in implementation. Moreover, it can mitigate the risk of innovation failure, a fear often faced by rendang entrepreneurs, and provide space for converting knowledge into effective strategies and products

References

Amiripour, P., Dossey, J. A., & Shahvarani, A. (2017). Impact of organizational inertia and dynamic capabilities on educational performance of the charitable societies and its impact on mathematical performance of elementary at-risk students. Journal of New Approaches in Educational Research, 6(1), 37–49. https://doi.org/10.7821/naer.2017.1.199

Barney, J. B., & Hesterly, W. S. (2018). Strategic Management and Competitive Advantage. In Competitive Strategy. https://doi.org/10.7551/mitpress/8956.003.0007

Bogers, M., Chesbrough, H., Heaton, S., & Teece, D. J. (2019). Strategic Management of Open Innovation: A Dynamic Capabilities Perspective. California Management Review, 62(1), 77–94. https://doi.org/10.1177/0008125619885150

Ferreira, J., Coelho, A., & Moutinho, L. (2020). Dynamic capabilities, creativity and innovation capability and their impact on competitive advantage and firm performance: The moderating role of entrepreneurial orientation. Technovation, 92–93(November 2018), 102061. https://doi.org/10.1016/j.technovation.2018.11.004

Games, D., Hidayat, T., Fhardilha, J., Fernando, Y., & Kurnia Sari, D. (2022). The Impact of Trust, Knowledge Sharing, and Affective Commitment on SME Innovation Performance. Journal of Governance and Integrity, 5(2), 267–274. https://doi.org/10.15282/jgi.5.2.2022.7184

Games, D., Soutar, G., & Sneddon, J. (2021). Personal values and SME innovation in a Muslim ethnic group in Indonesia. Journal of Entrepreneurship in Emerging Economies, 13(5), 1012–1032. https://doi.org/10.1108/JEEE-01-2020-0008

Haag, S. (2014). Haag Organizational Inertia as Barrier to Firms’ IT Adoption Twentieth Americas Conference on Information Systems. Rumelt 1995.

Hair, J. F., Hult, G. T., Ringle, C., & Sarstedt, M. (2017). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). In Sage (Second Ed.). SAGE Publications, Inc.

Huang, H. C., Lai, M. C., Lin, L. H., & Chen, C. T. (2013). Overcoming organizational inertia to strengthen business model innovation: An open innovation perspective. Journal of Organizational Change Management, 26(6), 977–1002. https://doi.org/10.1108/JOCM-04-2012-0047

Jácome, N. R., Medina-Tovar, F., Rodríguez-Herás, J., Vásquez-Peñaloza, L., & Gómez-Charris, Y. (2021). Model for the development of innovation as a dynamic capability for an organization in the furniture industry. Procedia Computer Science, 198(2020), 542–547. https://doi.org/10.1016/j.procs.2021.12.283

Kaur, V. (2019). Knowledge-Based Dynamic Capabilities: The Road Ahead in Gaining Organizational Competitiveness. In Springer Nature Switzerland AG.

Kaur, V. (2022). Knowledge-based dynamic capabilities: a scientometric analysis of marriage between knowledge management and dynamic capabilities. Journal of Knowledge Management, May. https://doi.org/10.1108/JKM-02-2022-0112

Mamun, A. Al. (2018). Diffusion of innovation among Malaysian manufacturing SMEs. European Journal of Innovation Management, 21(1), 113–141. https://doi.org/10.1108/EJIM-02-2017-0017

Miroshnychenko, I., Strobl, A., Matzler, K., & De Massis, A. (2021). Absorptive capacity, strategic flexibility, and business model innovation: Empirical evidence from Italian SMEs. Journal of Business Research, 130(February 2019), 670–682. https://doi.org/10.1016/j.jbusres.2020.02.015

Moradi, E., Jafari, S. M., Doorbash, Z. M., & Mirzaei, A. (2021). Impact of organizational inertia on business model innovation, open innovation and corporate performance. Asia Pacific Management Review, 26(4), 171–179. https://doi.org/10.1016/j.apmrv.2021.01.003

Nedzinskas, Š., Pundziene, A., Buožiute-Rafanavi?iene, S., & Pilkiene, M. (2013). The impact of dynamic capabilities on SME performance in a volatile environment as moderated by organizational inertia. Baltic Journal of Management, 8(4), 376–396. https://doi.org/10.1108/BJM-01-2013-0003

Oyemomi, O., Liu, S., Neaga, I., Chen, H., & Nakpodia, F. (2019). How cultural impact on knowledge sharing contributes to organizational performance: Using the fsQCA approach. Journal of Business Research, 94(August 2017), 313–319. https://doi.org/10.1016/j.jbusres.2018.02.027

Pang, C., Wang, Q., Li, Y., & Duan, G. (2019). Integrative capability, business model innovation and performance: Contingent effect of business strategy. European Journal of Innovation Management, 22(3), 541–561. https://doi.org/10.1108/EJIM-09-2018-0208

Pang, C., Wang, Q., & Wu, S. (2022). Influence of dynamic capabilities on novelty-centered business model design: a moderated mediating effect analysis. European Journal of Innovation Management, 21. https://doi.org/10.1108/EJIM-09-2021-0465

Permatasari, A., Dhewanto, W., & Dellyana, D. (2022). The role of traditional knowledge-based dynamic capabilities to improve the sustainable performance of weaving craft in Indonesia. Journal of Enterprising Communities. https://doi.org/10.1108/JEC-11-2021-0156

Pundziene, A., Nikou, S., & Bouwman, H. (2021). The nexus between dynamic capabilities and competitive firm performance: the mediating role of open innovation. European Journal of Innovation Management, 25(6), 152–177. https://doi.org/10.1108/EJIM-09-2020-0356

Rahman, H., & Siswowiyanto, H. P. (2018). Knowledge Inertia in the Innovation of Coffee Production. The South East Asian Journal of Management, 12(2). https://doi.org/10.21002/seam.v12i2.9721

Rinta-Kahila, T., Penttinen, E., & Nevalainen, A. (2016). Unfolding the types of organizational inertia in information systems adoption. Proceedings of the Annual Hawaii International Conference on System Sciences, 2016-March, 3908–3917. https://doi.org/10.1109/HICSS.2016.486

Rusdi, R., Basri, W., Hardi, E., & Alberida, H. (2021). Usaha Rendang Rumahan Untuk Meningkatkan Perekonomian Keluarga di Kelurahan Padang Tangah Payobadar Kecamatan Payakumbuh Timur. Abdi: Jurnal Pengabdian Dan Pemberdayaan Masyarakat, 3(1), 39–48. https://doi.org/10.24036/abdi.v3i1.85

Smallbone, D., Saridakis, G., & Abubakar, Y. A. (2022). Internationalisation as a stimulus for SME innovation in developing economies: Comparing SMEs in factor-driven and efficiency-driven economies. Journal of Business Research, 144(March), 1305–1319. https://doi.org/10.1016/j.jbusres.2022.01.045

Teece, D. J. (2018). Business models and dynamic capabilities. Long Range Planning, 51(1), 40–49. https://doi.org/10.1016/j.lrp.2017.06.007

Teece, D. J., Pisano, G., & Shuen, A. (1999). Dynamic Capabilities and Strategic Management. Knowledge and Strategy. In 77–115. doi:10.1016/b978-0-7506-7088-3.50009-7 (Vol. 18, Issue 7). Butterworth-Heinemann. https://doi.org/10.1016/B978-0-7506-7088-3.50009-7

Wahyono, & Hutahayan, B. (2021). The relationships between market orientation, learning orientation, financial literacy, on the knowledge competence, innovation, and performance of small and medium textile industries in Java and Bali. Asia Pacific Management Review, 26(1), 39–46. https://doi.org/10.1016/j.apmrv.2020.07.001

Wang, M. C., Chen, P. C., & Fang, S. C. (2021). How environmental turbulence influences firms’ entrepreneurial orientation: the moderating role of network relationships and organizational inertia. Journal of Business and Industrial Marketing, 36(1), 48–59. https://doi.org/10.1108/JBIM-05-2019-0170

Widjaja, A. W., & Sammy, A. (2022). The Resiliency of Business Model Innovation of Indonesian Newspapers During Covid-19 Pandemic. Jurnal Manajemen, 26(1), 1–16. https://doi.org/10.24912/jm.v26i1.831

Zulu-Chisanga, S., Chabala, M., & Mandawa-Bray, B. (2021). The differential effects of government support, inter-firm collaboration and firm resources on SME performance in a developing economy. Journal of Entrepreneurship in Emerging Economies, 13(2), 175–195. https://doi.org/10.1108/JEEE-07-2019-0105

Downloads

Published

2024-05-05

How to Cite

Sari, M. P., Games, D. ., & Sari, D. K. (2024). The Effects of Organizational Inertia and Dynamic Capability on Firm Performance: Business Model Innovation as a Mediating Variable at Small Industry of Rendang in West Sumatera. Dinasti International Journal of Education Management And Social Science, 5(4), 578–588. https://doi.org/10.31933/dijemss.v5i4.2591

Issue

Vol. 5 No. 4 (2024): Dinasti International Journal of Education Management and Social Science (April - May 2024)

Section

Articles

License

Copyright (c) 2024 Mira Permata Sari, Donard Games, Dessy Kurnia Sari

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Authors who publish their manuscripts in this journal agree to the following conditions:

  1. The copyright on each article belongs to the author(s).
  2. The author acknowledges that the Dinasti International Journal of Education Management and Social Science (DIJEMSS) has the right to be the first to publish with a Creative Commons Attribution 4.0 International license (Attribution 4.0 International (CC BY 4.0).
  3. Authors can submit articles separately, arrange for the non-exclusive distribution of manuscripts that have been published in this journal into other versions (e.g., sent to the author's institutional repository, publication into books, etc.), by acknowledging that the manuscript has been published for the first time in the Dinasti International Journal of Education Management and Social Science (DIJEMSS).