Strategic Agility, Managerial Ties, and the Sustainable Performance of Small and Medium Enterprises in an Emerging Economy: Direct and Relational Pathways
Drawing on dynamic capabilities and social capital theories, this study of Indonesian SMEs demonstrates that strategic agility directly drives sustainable performance while also exerting a smaller, complementary indirect effect through managerial ties, challenging the notion that relational resources fully mediate this relationship.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
Imagine the business world as a vast, chaotic ocean. For a small boat—a Small and Medium Enterprise (SME)—surviving isn't just about having a strong hull; it's about knowing how to steer through sudden storms and shifting currents. In the world of business science, researchers have long debated what keeps these small boats afloat and moving forward. Two big ideas often float to the surface: Strategic Agility and Managerial Ties. Think of Strategic Agility as the boat's engine and rudder—the ability to instantly sense a wave coming and swivel the ship to avoid it. It's about being quick on your feet. On the other hand, Managerial Ties are like the crew's network of friends and allies on other ships. These are the relationships a business owner has with customers, suppliers, and even the people who run the local government. For a long time, many experts believed that having a fast engine didn't matter much unless you also had a great network of friends to help you navigate. They thought the engine's power was entirely dependent on the crew's connections. But is that true? Does the engine work on its own, or does it need the crew to do the heavy lifting? This question matters because these small businesses are the heartbeat of many developing economies, providing jobs and driving growth. If we misunderstand how they succeed, we might build the wrong support systems for them.
This paper dives into that exact question, focusing on small businesses in the Greater Bandung region of Indonesia. The researchers, Harimukti Wandebori and their team, wanted to see if being agile (fast and adaptable) helps a business succeed directly, or if it only helps by first building better relationships. They set up a clever experiment using a survey of 179 business owners and managers. To make sure their results were honest and not just a result of how people answered questions, they used a special "detective kit" in their survey design. They mixed up the way questions were asked, added secret "attention checks" to catch people who weren't paying attention, and included a few unrelated questions to test for bias.
The results were a bit of a surprise to the old-school theories. The study found that Strategic Agility is a powerhouse on its own. When a business can quickly sense changes and move its resources around, it boosts its success—measured by money, social good, and environmental care—directly and strongly. In fact, the "engine" (agility) did about 86% of the heavy lifting. However, the "crew's network" (managerial ties) wasn't useless. It did help, acting like a turbocharger that gave the engine a little extra push. The study showed that these relationships carried about 14% of the total success. So, the old idea that agility only works through relationships was ruled out. Instead, the paper suggests a "dual-pathway" story: being agile makes you successful directly, and it also helps you build better relationships, which then adds a smaller, but still important, bonus to your success.
The researchers also looked at something called "decision speed"—how fast a boss makes a choice. They found that while fast decision-makers tend to be agile and have good friends, speed itself didn't add any extra magic to the business's success once you accounted for agility and relationships. It's like a race car: the driver might be fast, but if the car isn't agile and the team isn't connected, the speed doesn't win the race. Speed just comes along for the ride.
Interestingly, the study also broke down "success" into three parts: making money (economic), treating people well (social), and protecting the planet (environmental). They found that agility and relationships were great at boosting money and social standing. But when it came to the environment, the boost was very weak. It seems that just being fast or having good friends isn't enough to make a small business green; that requires specific, dedicated help.
In short, this paper tells us that for small businesses in emerging economies, the most important thing is to build a strong, adaptable internal engine. While having a wide circle of friends and partners is a helpful bonus, it's not the only thing that keeps the ship sailing. You can't just rely on networking to fix a slow engine, and you can't just rely on speed to fix a broken connection. You need both, but the engine does the most work. And if you want to help these businesses save the planet, you'll need to do more than just tell them to be faster or friendlier; you'll need to give them specific tools for the job.
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