Financial performance of small and medium enterprises from the perspective of organizational capability, learning organization, dan business ages.
Muhammad Andi Abdillah Triono(a), Selamat Triono Ahmad (b), Henry Iskandar (c), Armin Rahmansyah Nasution(d), Sienny(e), Humisar Sihombing(f)

a)Faculty of Economy, Universitas Negeri Medan, Indonesia *andiabdillah[at]unimed.ac.id
b)Faculty of Technical Engineering, Universitas negeri Medan, Indonesia
c) Faculty of Technical Engineering, Universitas negeri Medan, Indonesia
d) Faculty of Economy, Universitas Negeri Medan, Indonesia
e) Faculty of Economy, Universitas Negeri Medan, Indonesia
f) Faculty of Economy, Universitas Negeri Medan, Indonesia

Abstract

Financial performance is an indicator of the health of a business. This study looks at the perspective of organizational capability, organizational learning, and business ages in supporting the financial performance of small and medium enterprises in the production sector in Medan City. This study uses a quantitative descriptive method and is carried out from August 1, 2021, to June 30, 2022. The population used in this study is all SMEs registered in Medan, with a total of 259,812 business actors. In addition, the sampling technique used is a stratified random sample so that all business sizes are represented. The questionnaire instrument was used by distributing it by sending letters to business actors. In this case, as many as 700 business actors from various business sizes have sent back the questionnaire, of which 575 business actors returned the questionnaire with complete answers. There is one endogenous variable (financial performance), two exogenous variables (organizational capacity and organizational learning), and one moderator variable (business ages). This study carries three research hypotheses- the data analysis technique used is the structural equation modeling partial least square with the SmartPLS 3.0 tool. Based on the calculation results, it is found that two research hypotheses are accepted, where learning organization and organizational capacity affect business financial performance, with P Values of 0.026 and 0.000, respectively. These results indicate that organizational capability and learning are crucial in supporting SMEs in the third largest city and the economic gateway to the western region of Indonesia (Medan City). Meanwhile, one research hypothesis with P Values 0.566 was rejected: the moderating effect of business ages between organizational learning and financial performance.

Keywords: small and medium enterprises, financial performance, organizational capability, learning organization, business age

Topic: Social Science and Humanities