The Effect of Strategic Orientation and Dynamic Capability in Turbulent Environment on Commercial Bank Performance in Indonesia with Corporate Social Responsibility as Moderating Variable

Abstract

This study aims to analyze factors that affect the performance of commercial banks in Indonesia in turbulent environment. The influencing factors analyzed are the external oriented strategic (Strategic Orientation, SO) and internal oriented strategic (Dynamic Capabilities, DC) and CSR (Corporate Social Responsibility) as moderating of the relationship between the two strategies on performance. Market orientation and entrepreneurial orientation strategies are used to describeSO.  The object of this research is national commercial banks in Indonesia. The delivery of questionnaires was conducted to all national commercial banks totaling 108 banks, excluding 10 foreign banks operating in Indonesia. Twenty eight banks or about 26% of the population returned questionnaire. This study proves that both SO and DC affect bank performance. The influence of internal oriented strategic (DC) has greater effect on performance than SO. The CSR interaction as a moderating in each SO and DC relationship to performance is positively significant. Turbulent environment has a positive effect on SO, but it has no direct effect on DC. The influence of turbulent environment on DC is indirect, however through SO as its mediation, so in facing turbulent environment, the initial strategy used is strategic orientation. Application of SO will be followed by DC as the relationship influence of SO to DC which proved to be a positive significance.Banking practitioners should be focus on programs (indicators) of SO and DC that have a high degree of signification in order to improve performance more effectively. CSR does not merely fulfill its responsibilities or comply regulations, but it is also able to improve bank performance