Abstract
This study focuses specifically on the effect of Entrepreneurial Values and Entrepreneurial Orientation on Financial Performance of Indonesian state-owned enterprise and also incorporates Environmental Dynamism (ED) and Resource Availability (RA) as moderating variables which will influence the effect of (i) Entrepreneurial Orientation (EO) on Financial Performance (FP), (ii) Entrepreneurial Values (EV) on Financial Performance (FP), and (iii) Entrepreneurial Values (EV) on Entrepreneurial Orientation (EO). In addition, this study also provides a better understanding about the effect of Financial Performance on Intention to Sustainable Development (ITS) as well as Financial Performance on Intention to Collaboration (ITC) in Indonesian state-owned enterprises. The method of analysis used in this study is PLS-SEM methodology with purposive sampling method. The unit of analysis is all the state-owned enterprises listed which consists of 81 out of 106 state-owned enterprises, while the unit of observation is individuals from those state-owned enterprises (represented by the paired CEO and CFO who are originated from the same company). The findings of this study are that there is a significantly positive effect of: (i) EV on EO; (ii) EO on FP; (iii) FP on ITS; and (iv) FP on ITC. Meanwhile, (i) there is not any significantly positive effect of EV on FP, and (ii) there is no significant moderating effect of ED and RA on the relationship between (1) EV and FP, (2) EO and FP, as well as (3) EV and EO.
Highlights
The study that focuses on the concept of Entrepreneurship and Financial Performance (FP) has been widely investigated in many developed and developing countries
The theoretical implications of this study are: (i) the literature of EO-FP relationship and EV-EO relationship in small to medium-sized enterprises (SMEs) can be generalized to large firms state-owned enterprises in developing country such as Indonesia; (ii) the unidimensional EO construct can be applied in the state-owned enterprise context; (iii) the Entrepreneurial Values of top management team play a significant role in influencing positively the Entrepreneurial Orientation behavior of the institution and the Entrepreneurial Orientation affects positively the Financial Performance, (iv) the Financial Performance has a positive effect on Intention to Sustainable Development and Intention to Collaboration
The practical implication of this study can be summarized as follows: firstly, the implication of the evidence in this study is that the government needs to consider carefully any additional state-capital participation in SOEs so as not to create comfort zone and making firms tend to lose financial discipline and expand to non-core activities that have an impact of reducing their entrepreneurial orientation which may decrease the financial performance
Summary
The study that focuses on the concept of Entrepreneurship and Financial Performance (FP) has been widely investigated in many developed and developing countries. There are some EO-performance and EV-performance studies in emerging markets, most of those studies use small to medium-sized enterprises (SMEs) as samples (Campos & Valenzuela, 2013). Schumpeter (1934) emphasized the importance of the role of entrepreneurs in the economic activities of a country, to promote economic growth. The role of entrepreneurs is necessary to encourage the economy of a country, where the business world will absorb more labor, reduce unemployment and poverty which will further improves the welfare of the people (Schumpeter, 1934). In 2018, the number of entrepreneurs in Indonesia is 64,199,606 units. The number of Micro, Small and Medium Enterprises (MSMEs) reached 64,194,057 units or 99.99%. The remaining, approximately 0.01% or 5,550 units, is a large-scale business (Ministry of Cooperatives and SMEs Republic of Indonesia, 2018, http://www.depkop.go.id/data-umkm)
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