The Role of Ambidexterity, Strategic Orientation and Supply Chain Integration on Firm Performance: Case Study of SMEs in Traditional Market

Abstract

The existence of traditional markets as social institutions has a strategic role in the development process of a nation. But with the entry of modern civilization and dynamic market conditions the existence of traditional markets is threatened with extinction. Efforts to develop traditional markets become a particular concern of the government and an interesting issue to be studied. Some studies have discussed the weaknesses of traditional markets but few have discussed their development strategies. This study aims to analyze the strategies for developing traditional market performance in this disruptive and dynamic era by increasing ambidexterity and strategic orientation. In addition, this study also aims to analyze supply chain integration in traditional markets as a moderation of the relationship between ambidexterity and strategic orientation towards the performance of traditional markets. Empirical results are obtained through the distribution of questionnaires to 126 traditional market managers in Sleman, Yogyakarta. The study conducted structural equation modeling to test the proposed relationships.  The result show that ambidexterity and supply chain integration have a significant influence on firm performance but ambidexterity does not have a significant effect on supply chain integration, while strategic orientation has a significant effect on supply chain integration but does not significantly influence firm performance. This study is the first empirical test to examine the impact of ambidexterity and strategic orientation toward traditional market performance. The study results may help managers of traditional market to implement ambidexterity, strategic orientation and supply chain integration to develop traditional market's performance.