The Effect of Dynamic Capability on Business Performance with Organizational Agility as a Moderating Variable
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Abstract
This study aims to examine the effect of Dynamic Capability on Business Performance, the effect of Organizational Agility on Business Performance, and the moderating role of Organizational Agility in the relationship between Dynamic Capability and Business Performance among Micro, Small, and Medium Enterprises (MSMEs) in Kendal Regency, Indonesia. This study employed a quantitative approach with an explanatory research design. Primary data were collected through questionnaires from 210 MSME owners selected using purposive sampling. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4. The results show that Dynamic Capability has a positive and significant effect on Business Performance, with a path coefficient of 0.600, t-statistic of 5.398, and p-value of 0.000. Organizational Agility also has a positive and significant effect on Business Performance, with a path coefficient of 0.456, t-statistic of 3.370, and p-value of 0.001. Furthermore, Organizational Agility significantly moderates and strengthens the relationship between Dynamic Capability and Business Performance, as indicated by an interaction coefficient of 0.103, t-statistic of 2.782, and p-value of 0.005. These findings indicate that Dynamic Capability contributes more effectively to MSME performance when supported by the ability to respond to environmental changes quickly, flexibly, and innovatively.
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