Entrepreneurial orientation and social performance of microfinance institutions in Indonesia

Abstract

PurposeThe purpose of this research was to examine the influence of entrepreneurial orientation on social performance and the influence of social performance on financial performance of microfinance institutions (MFIs) in Indonesia. These tests use environmental dynamism as antecedents.Design/methodology/approachThe research was conducted on a sample of 235 CEOs/top leaders of MFIs spread across all provinces in Indonesia. Data collection used survey questionnaires. Data testing used SPSS version 25, and structural modeling used Amos version 25.FindingsThe findings show that entrepreneurial orientation significantly influences the social performance of MFIs in Indonesia. Entrepreneurial orientation does not influence financial performance but must go through social performance mediation. Social performance has a significant effect on financial performance. The importance of MFIs improves social performance (depth and breadth of reach) to improve financial performance.Practical implicationsMFIs need to increase social contribution and responsibility to improve social performance which will impact financial performance.Originality/valueEntrepreneurial orientation influence on financial performance goes through social performance. Social performance includes the depth of the reach to contribute to improving the quality of life of people experiencing poverty around the MFI's operations and the social responsibility of MFIs to the community through scholarships, free medical assistance, basic food assistance and building/renovating houses of worship and others.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-06-2023-0478