The Role of Organizational Capabilities Towards Firm Performance in Disruptive Environment

The objective of this study is to identify multiple paths from organizational capabilities towards firm performance, as well as to clarify conflicting results concerning whether inertia is a preferable crisis management approach. With a response rate of 63.2%, a validated questionnaire was utilized to collect data from 316 respondents who worked in a variety of businesses that catered to different industry categories in Indonesia. This quantitative study uses a cross-sectional methodology, online questionnaires for data collecting, and a structural equation model for data analysis. It also highlights the roles and connections among organizational capabilities that may affect firm’s performance in a turbulent condition. The finding confirms that the firm’s inertia will establish a strong basic orientation, limiting the firm’s ability to develop essential creative and adaptive answers. Being overly creative amid turbulent times may have the opposite effect as it could impair the firm performance. Organizational resilience leads to the best path to firm performance, compared to creativity and agility.