The Role of Strategic Sourcing and Supply Chain Agility on Firm Performance: Case Study of SMEs in Traditional Market

Abstract

Cooperatives, Small and Medium Enterprises, and Micro, Small and Medium Enterprises (MSMEs) have an important and strategic role in national economic development. In addition to helping in economic growth and development of labor, MSMEs also support the development of development outcomes. MSMEs are now circulating in the market especially traditional markets. Traditional markets are beginning to decline with the demand for supermarkets and other retail businesses. Especially now that the online age, management of MSMEs and SMEs must be able to compete with online shops as well. The main challenge for management in promoting innovation and how it is applied to new innovations is the number of binding things such as regulation and wisdom. This study aims to analyze the strategies for developing traditional market performance in this disruptive and dynamic era by increasing strategic sourcing and strategic agility. In addition, this study also aims to supply chain agility in traditional markets as a moderation of the relationship between strategic sourcing towards the performance of traditional markets. Empirical results are obtained through the distribution of questionnaires to 200 traditional market managers in Sleman, Yogyakarta. The study conducted structural equation modeling to test the proposed relationships. The result show that supply chain agility has a significant influence on firm performance but strategic sourcing does not have a significant effect on firm performance, while strategic sourcing has a significant effect on supply chain agility. The study results may help managers of traditional market to implement strategic sourcing and supply chain agility to develop traditional market’s performance.