The determinants of a firm’s strategic orientation and its implication on performance: A study on Indonesia state owned enterprises

Abstract

AbstractThe purpose of the study was to examine empirically the influence of firm characteristics, namely size, age, and industry type, on a firm’s strategic orientation. Furthermore, the study tested the impact of strategic orientation on firm performance. The sample of the study was state-owned enterprises (SOEs) listed on the Indonesia stock exchange from 2015–2019. Findings indicated that the firm characteristics did not have any causal relationship with strategic orientation. However, strategic orientation positively and significantly influenced firm performance using financial indicators’ operating profit margin (OPM) and return on equity (ROE) but not for return on assets (ROA). The study contributes to understanding the organization’s behavior regarding strategic orientation choice associated with firm characteristics and its impact on organization performance. Practically, findings in this study have managerial implications associated with the decision to choose the proper strategic orientation. Academically, the study contributes to organizational behavior and strategic management literature from an Asian perspective, especially that of Southeast Asia.

Keywords

• Strategic orientation
• firm characteristics
• firm performance
• state-owned enterprises