THE IMPROVING FIRM PERFORMANCE WITH ROLES OF DYNAMIC CAPABILITY, PRO INNOVATION OPPORTUNITY EXPLOITABILITY, COMPETITIVENESS, AND QUALITY BASED DIFFERENTIATION: GOVERNMENT POLICY AS MODERATING

Abstract The research focus is on analyzing and describing strategic efforts and steps to implement dynamic capability management as an intangible resource to improve firm performance through variables; competitiveness, pro innovation opportunity exploitability, quality-based differentiation as mediation and moderated by government policies that can accelerate the influence of dynamic capabilities on firm performance. To answer the objectives and focus of this research, testing with direct and indirect relationships between variables uses a quantitative approach with the structural equation method. The research sample used proportion stratified random sampling obtained the validity of the respondents as many as 168 people as representatives of 168 palm oil companies in Indonesia. At the same time, the population of this study was 289 companies. Thirteen path coefficients are positive, and path analysis of moderation has a significant but negative effect. It can be concluded that Dynamic Capability, Pro Innovation Opportunity Exploitability, Competitiveness, and Quality Based Differentiation play an essential role in improving firm performance. However, current government policies have not been able to strengthen the firm performance even though the company has good dynamic capabilities. Therefore, it is essential for business players in the palm oil industry in Indonesia to be able to know the direction of national policies better so that in the future, they will not be wrong in determining the company's business strategy and remain in line with government policies