How Leaders Deal with Changes from the External Environment in Developing Country: Evidence from Indonesia

The purpose of this study is to investigate how dynamic managerial ability affects SMEs’ sales performance under environmental shocks with strategic adjustment as a mediating variable and dominant logic as a moderating variable. An empirical investigation of SMEs in Indonesia using questionnaires, which received around 246 responses. Structural equation modeling (SEM) was employed to test the proposed hypotheses. The results of this study’s empirical analysis support two of its three hypotheses, confirming that strategic adjustment positively and significantly influences SME sales performance under environmental shocks and indicating that dynamic managerial capabilities are valuable intangible resources for this. According to these results, strategic leaders of SMEs should develop and support their dynamic managerial skills to manage strategic adjustment in response to environmental shocks.