Dynamical Capabilities Of Small And Medium Enterprises (SMES) Through Supply Chain Strategy And Its Relationship On SMES Financial Performance

  • Yeni Absah, R.Hamdani Harahap


Ever increasing financial performance is undoubtedly one of the business objectives. Increasing business competition drives companies to strive to have a sustainable competitive edge by having various core capabilities such as adaptive capabilities, absorption capabilities, marketing capabilities, and innovation capabilities. Small and medium enterprises are facing rapid environmental change demanding SMEs to be able to adapt quickly with a growing business environment. The population of research is all SMEs in fashion, culinary, and leather in Medan city. The total structural model is estimated using structural equation modeling (WARP-PLS software) with a sample of 237 SMEs in Medan. The author tested a theoretical model that specifies innovative capabilities as the mediation variable that links dynamic capabilities, such as adaptive capabilities, absorptive capabilities, and marketing capabilities to the financial performance. The results indicate that the model fits well with the data; All hypothesized path coefficients are positive and significant.