The Effect of Business Strategy on Business Performance Moderated by Environmental Dynamics (Study on SMEs in Timor Leste)

The purpose of this study is to analyze and explain the effect of business strategy on business performance and the influence of business strategy and environmental dynamics as a moderating variable on business performance. This study was conducted in the capital cities of Dili, Baucau and Maliana from 13 districts in Timor Leste. The population in the study was 275 SMEs from three districts (Dili, Baucau and Maliana) in Timor Leste with saturated sampling, of which only 157 questionnaires were collected with a respondent rate of this study of 57.1%. Data analysis techniques using Generalized Structured Component Analysis (GSCA). Based on the results of the study, it shows that there is a positive influence of business strategy on business performance, meaning that the more appropriate a business strategy is, the higher the performance of small and medium enterprises, the influence of business strategy and government policies as moderating variables on business work shows a positive influence on environmental dynamics as a pseudo moderating variable. This means that the more precise the implementation of a business strategy that is in accordance with the environment, the stronger it will encourage business performance improvement