Unlocking problems in micro, small, and medium enterprises’ strategy and performance: Regional scope learning

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Abstract

For the past few decades, micro, small, and medium-sized enterprises (MSMEs) have made an important contribution to supporting the Indonesian economy, especially in East Kalimantan Province (Amalia et al., 2022). However, it is still found that many business growths at the MSME scale are not optimal. This paper investigates the associative relationship between human resources (HR) competency, strategic flexibility, and sustainable performance with a focus on MSME actors in two locations in East Kalimantan, i.e., Penajam North Paser Regency and East Kutai Regency. Observations were carried out on 170 business actors in the MSME context. Data collection was conducted through questionnaires and tabulated using partial least squares (PLS). The findings reveal that HR competency influences strategic flexibility, but HR competency does not influence the sustainable performance of MSMEs. Other statistical results confirm that strategic flexibility can improve sustainable performance. Another fact was also found that strategic flexibility is able to mediate the interaction between HR competency and sustainable performance. The limitations of this paper, which have implications for the future, are a reflection for MSME players to consider new alternatives in building sustainable performance. Valuable lessons from this paper lead to the development of current knowledge about more efforts beyond strategic flexibility or HR competency to encourage sustainable MSME performance in the two case studies above.

Keywords: MSMEs, Human Resources Competency, Strategic Flexibility, Sustainable Performance, Partial Least Squares

Authors’ individual contribution: Conceptualization — T.H., S.H., and Z.A.; Methodology — N.H.; Validation — T.H. and Z.A.; Formal Analysis — N.H.; Investigation — S.H., Z.A., and N.H.; Supervision — T.H.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: C51, C52, J24, L26, M10

Received: 27.04.2025
Revised: 30.07.2025; 30.12.2025
Accepted: 08.01.2026
Published online: 12.01.2026

How to cite this paper: Hidayati, T., Hudayah, S., Abidin, Z., & Hassan, N. (2026). Unlocking problems in micro, small, and medium enterprises’ strategy and performance: Regional scope learning. Corporate and Business Strategy Review, 7(1), 89–101. https://doi.org/10.22495/cbsrv7i1art8