The Role of Sensing Capability, Learning Capability and Coordinating Capability on Market Performance: Perspective of Small and Medium Enterprises (SMEs)

Abstract

Aims: The aim of this study is to investigate the impact of sensing capability, learning capability, and coordinating capability on the market performance of Small and Medium Enterprises (SMEs). By examining these three critical capabilities, this research seeks to provide a comprehensive understanding of how SMEs can leverage their internal resources and competencies to achieve superior market outcomes as a market performance in today's dynamic and competitive business environment. Study Design:  This study employs a quantitative research approach using a cross-sectional survey design to gather data on SMEs' sensing, learning, and coordinating capabilities, as well as their market performance. Place and Duration of Study: The study was conducted in Pontianak, West Kalimantan, Indonesia. Data were collected from 97 SME owners or managers who were selected based on the criteria of having been established for at least 3 years. Methodology: Data collection was done using a structured questionnaire administered through an online survey platform. The collected data were analyzed using Structural Equation Modeling (SEM) with the Partial Least Squares (PLS) approach. The analysis was conducted using SmartPLS 4.0 software and involved two stages: (1) measurement model assessment and (2) structural model assessment. Results: The analysis results confirm the convergent validity, internal consistency, composite reliability, and discriminant validity of the constructs: Sensing Capability (SC), Learning Capability (LC), Coordinating Capability (CC), and Market Performance (MP). Using SEM with SmartPLS V.4, the study found that sensing capability (β = 0.383, p < 0.05) and learning capability (β = 0.430, p < 0.05) significantly impact market performance, supporting hypotheses H1 and H2. However, H3 was not supported, as coordinating capability (β = 0.088, p > 0.05) did not show a significant relationship with market performance. Conclusion: This study emphasizes the importance of sensing and learning capabilities for SMEs in Pontianak to enhance market performance. Coordinating capability may have an indirect effect. SME owners and managers should invest in these capabilities to adapt to market changes and maintain a competitive advantage. The findings contribute to the understanding of dynamic capabilities and provide practical insights for SMEs in West Kalimantan, Indonesia.