The effect of environmental dynamism, dynamic managerial capabilities, and deliberate organizational learning on the sme performance with dynamic capabilities as mediator variable. (case study on small and medium enterprise in Surabaya)

Rapid change on business environment requires the business practitioner to prepare in order to stay exist and keep efficient. The company with good quality will be able to take an advantage when compete with other companies. SMEs in Indonesia influences national economic growth. SMEs have been proved as a resilience entity when face the global crisis. Also, SMEs contribute positively to the society. This study was conducted on SMEs in Surabaya to assess the effect on dynamic capabilities when faced the external environmental changes which are frequently uncontrollable and unpredictable. The research sample is 114 SMEs in Surabaya area. The data will be analyzed by structural equation modeling. The study found that environmental dynamism, dynamic managerial capabilities, and deliberate organizational learning gave a considerable effect on dynamic capability, however these variables did not prove a significant effect on firm performance. The dynamic capability variable mediated the relationship between environmental dynamism, dynamic managerial capabilities and deliberate organizational learning towards firm performance