Business Capacity as a Strategic Mediator Between Digital Marketing and Sustainable Performance: Evidence from Indonesian

Septianing; Sri Wahyuni; Rif'ah; Slamet; Jati Nugroho

doi:10.63922/ijeter.v4i03.5118

Septianing Semarang State Polytechnic, Indonesia
Sri Wahyuni Semarang State Polytechnic, Indonesia
Rif'ah Semarang State Polytechnic, Indonesia
Slamet Semarang State Polytechnic, Indonesia
Jati Nugroho Semarang State Polytechnic, Indonesia

DOI: https://doi.org/10.63922/ijeter.v4i03.5118

Keywords: Business Capacity, Knowledge-Based View, Social Media Marketing, Strategic Orientation, Sustainable Performance

Abstract

Sustainable business performance remains a critical challenge for small and medium-sized enterprises (SMEs) operating in increasingly competitive and digital business environments. While previous studies have examined the direct effects of digital marketing and strategic management on organizational performance, limited attention has been given to the role of organizational capability as a strategic mechanism linking these factors to sustainability. Drawing upon the Knowledge-Based View (KBV), this study investigates the mediating role of Business Capacity in the relationships between Social Media Marketing, Strategic Orientation, Government Regulation, and Sustainable Performance among handicraft SMEs in Indonesia. Data were collected from 120 handicraft SMEs in Magelang Regency using purposive sampling and analyzed through Structural Equation Modeling (SEM) with AMOS 24. The results indicate that Social Media Marketing, Strategic Orientation, and Government Regulation significantly enhance Business Capacity. Furthermore, Business Capacity exerts the strongest positive influence on Sustainable Performance, confirming its role as a strategic organizational capability that transforms external knowledge and managerial resources into sustainable business outcomes. This study extends the Knowledge-Based View by demonstrating that organizational knowledge embedded in financial capability, customer management, internal business processes, and organizational learning is fundamental to achieving long-term sustainability. The findings provide practical implications for SME managers and policymakers in designing knowledge-driven capability development programs that strengthen sustainable competitiveness.

References

Akter, S., Fosso Wamba, S., Gunasekaran, A., Dubey, R., & Childe, S. J. (2016). How to improve firm performance using big data analytics capability and business strategy alignment? International Journal of Production Economics, 182, 113–131. https://doi.org/10.1016/j.ijpe.2016.08.018
Bag, S., & Rahman, M. S. (2023). The role of organizational capabilities in achieving sustainable firm performance. Journal of Business Research, 156, 113458. https://doi.org/10.1016/j.jbusres.2022.113458
Banerjee, S. B. (2002). Corporate environmentalism: The construct and its measurement. Journal of Business Research, 55(3), 177–191. https://doi.org/10.1016/S0148-2963(00)00135-1
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Barney, J. B. (2001). Resource-based theories of competitive advantage: A ten-year retrospective. Journal of Management, 27(6), 643–650. https://doi.org/10.1177/014920630102700602
Clemens, B., & Douglas, T. J. (2006). Does coercion drive firms to adopt “voluntary” green initiatives? Journal of Business Research, 59(4), 492–500. https://doi.org/10.1016/j.jbusres.2005.09.016
Desarbo, W. S., Di Benedetto, C. A., & Song, M. (2007). Strategic capability development: A dynamic decision-making process. Industrial Marketing Management, 36(4), 445–460. https://doi.org/10.1016/j.indmarman.2005.11.008
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). Multivariate data analysis (8th ed.). Cengage Learning.
Homburg, C., & Pflesser, C. (2003). A multiple-layer model of market-oriented organizational culture. Journal of Marketing Research, 40(4), 449–462. https://doi.org/10.1509/jmkr.40.4.449.19386
Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and opportunities of social media. Business Horizons, 53(1), 59–68. https://doi.org/10.1016/j.bushor.2009.09.003
Kirchoff, J. F., Tate, W. L., & Mollenkopf, D. A. (2016). The impact of strategic organizational orientations on green supply chain management. Journal of Operations Management, 44, 62–78. https://doi.org/10.1016/j.jom.2016.04.001
Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct. Academy of Management Review, 21(1), 135–172. https://doi.org/10.5465/amr.1996.9602161568
Mangold, W. G., & Faulds, D. J. (2009). Social media: The new hybrid element of the promotion mix. Business Horizons, 52(4), 357–365. https://doi.org/10.1016/j.bushor.2009.03.002
Min, S., & Mentzer, J. T. (2011). The role of marketing in supply chain management. International Journal of Physical Distribution & Logistics Management, 30(9), 765–787. https://doi.org/10.1108/09600030010351494
Nezakati, H., Fereidouni, H. G., & Rahman, M. (2016). Corporate social responsibility and performance. Social Responsibility Journal, 12(4), 747–766. https://doi.org/10.1108/SRJ-05-2015-0062
Purvis, B., Mao, Y., & Robinson, D. (2019). Three pillars of sustainability. Sustainability Science, 14(3), 681–695. https://doi.org/10.1007/s11625-018-0627-5
Raut, R. D., Mangla, S. K., Narwane, V. S., Gardas, B. B., Priyadarshinee, P., & Narkhede, B. E. (2019). Linking big data analytics and operational sustainability. Annals of Operations Research, 270(1–2), 1–33. https://doi.org/10.1007/s10479-016-2255-2
Trainor, K. J., Andzulis, J. M., Rapp, A., & Agnihotri, R. (2014). Social media technology usage and customer relationship performance. Journal of Business Research, 67(6), 1201–1208. https://doi.org/10.1016/j.jbusres.2013.05.002
Tuten, T. L., & Solomon, M. R. (2017). Social media marketing (3rd ed.). Sage Publications.
Vorhies, D. W., & Morgan, N. A. (2005). Benchmarking marketing capabilities. Journal of Marketing, 69(1), 80–94. https://doi.org/10.1509/jmkg.69.1.80.55505
Wiklund, J., & Shepherd, D. (2005). Entrepreneurial orientation and small business performance. Journal of Business Venturing, 20(1), 71–91. https://doi.org/10.1016/j.jbusvent.2004.01.001
Wong, H. Y., & Merrilees, B. (2007). Multiple roles for branding in SMEs. Journal of Product & Brand Management, 16(2), 97–107. https://doi.org/10.1108/10610420710739981
Zhu, Q., Sarkis, J., & Lai, K. (2007). Green supply chain management. International Journal of Production Economics, 107(1), 1–14. https://doi.org/10.1016/j.ijpe.2006.08.010
Zhu, Q., Sarkis, J., & Lai, K. (2012). Examining the effects of green supply chain management practices. International Journal of Production Economics, 140(2), 828–841. https://doi.org/10.1016/j.ijpe.2012.01.012
Grant, R. M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(S2), 109–122. https://doi.org/10.1002/smj.4250171110
OECD. (2019). SME and entrepreneurship outlook. OECD Publishing. https://doi.org/10.1787/34907e9c-en
Gunelius, S. (2011). 30-minute social media marketing. McGraw-Hill.
Hooley, G. J., Greenley, G. E., Cadogan, J. W., & Fahy, J. (2005). The performance impact of marketing resources. Journal of Business Research, 58(1), 18–27. https://doi.org/10.1016/S0148-2963(03)00109-7