Entrepreneurial Orientation, Agility, and Sustainable Performance in Indonesian SMEs

INKUBIS: Jurnal Ekonomi dan Bisnis Volume 8, Issue 1, 408-418 e_ISSN: 2775-3913 https://inkubis.polteksci.ac.id/index.php/ink/index DOI: doi.org/10.59261/inkubis.v8i1.198 Entrepreneurial Orientation, Agility, and Sustainable Performance in Indonesian SMEs *Justin Wijaya1 Denny Bernardus Kurnia Wahyudono2 Christian Herdinata3 Universitas Ciputra, Indonesia Universitas Ciputra, Indonesia Universitas Ciputra, Indonesia *Corresponding author: Justin Wijaya, Universitas Ciputra, Indonesia. 🖂 Article Info : Article history: Received: March 26, 2026 Revised: May 06, 2026 Accepted: May 06, 2026 Abstract Background: Small and Medium Enterprises (SMEs) are vital contributors to economic development, employment generation, and innovation. However, SMEs in Indonesia face escalating sustainability challenges driven by digital transformation, shifting consumer behavior, and intensifying global competition, necessitating an examination of the strategic capabilities that underpin long-term sustainable performance. Objective: This research examines how Entrepreneurial Orientation (EO), as the independent variable, affects sustainable business performance and Keywords: investigates the role of pro-growth entrepreneurial agility as the entrepreneurial orientation; mediating variable in the EO–SBP relationship among Indonesian SMEs. entrepreneurial agility; sustainable Methods: This research uses a quantitative approach and applies PLSperformance; SMEs; sustainability SEM to analyze data collected from 300 SME owners across different business sectors. Before testing the proposed model, the reliability and validity of the measurement instruments were carefully evaluated. Results: The results reveal that entrepreneurial orientation has a positive impact on sustainable business performance and entrepreneurial agility. This confirms the fully developed mediating role of entrepreneurial agility and suggests that SMEs need to develop both an entrepreneurial mindset and dynamic capabilities to achieve long-term sustainability. Conclusion: This study conceptualizes and measures entrepreneurial agility, confirming it as a key mediating factor in the relationship between entrepreneurial orientation and sustainable performance, thus contributing to Dynamic Capabilities Theory. The results provide useful implications for stakeholders, such as owners of micro, small, and medium enterprises, as well as policymakers, to strengthen entrepreneurship education and operational capabilities. To cite this article: ustin, W., Wahyudono, D. B. K., & Herdinata, C. (2026). Entrepreneurial Orientation, Agility, and Sustainable Performance in Indonesian SMEs. INKUBIS: Jurnal Ekonomi dan Bisnis, 8(1), 408-418. https://doi.org/10.59261/inkubis.v8i1.198 INTRODUCTION The most interesting thing about Small and Medium Enterprises (SMEs) is that they can evolve creatively, quickly developing the capacity to support both their own economic development and that of the broader economy. In this way, these companies become major providers of employment, important innovators, and significant contributors to Indonesia’s national income (Bansal & Song, 2017; Camilleri, 2017; Cristobal-Cipriano et al., 2022). Among the largest SME ecosystems in Southeast Asia, Indonesia’s SME sector is an inseparable component of the country’s integrated and inclusive economic growth engine, contributing more than 60% of total GDP and accounting for an employment absorption rate of more than 97% of the national workforce (Yadegaridehkordi et al., 2023). However, despite their macroeconomic importance, SMEs in many cases have operated for years under significant limitations in capital, technology, and managerial capacity, reducing their competitiveness in increasingly complex INKUBIS: Jurnal Ekonomi dan Bisnis | 408 Justin Wijaya, Denny Bernardus Kurnia Wahyudono, Christian Herdinata Entrepreneurial Orientation... markets. In recent years, these challenges have been compounded by the rapid pace of digitization, changing consumer preferences, and rising stakeholder pressure for socially and environmentally responsible business practices. Sustainable Business Performance (SBP), encompassing economic viability, social responsibility, and environmental stewardship, has therefore become one of the most important strategic goals pursued by SMEs seeking sustainable competitive advantage (Yadegaridehkordi et al., 2023). Exploratory findings from the preliminary data collection in this study show that SME owners reported difficulties in maintaining operational stability over extended periods, particularly during turbulent and volatile market conditions. Rapid changes in consumer preferences, increasing input and operational costs, and growing competitive pressure from both local and foreign competitors were consistently mentioned by many interviewees as factors necessitating continuous and largely reactive strategic adjustments. At a minimum, these preliminary findings indicate that internal strategic orientation and organizational capability not only influence the adaptive responsiveness of SMEs but also determine their ability to respond effectively to external environmental changes. Failure to sense market shifts and adjust internal processes accordingly may limit even the most entrepreneurially oriented SMEs from achieving sustained economic, social, and environmental performance. Entrepreneurial Orientation (EO), in the context of this research, is defined as a firm-level strategic posture comprising three dimensions: innovativeness, proactiveness, and risk-taking (Lumpkin & Dess, 1996; Prastiwi & Rohimat, 2020; Rauch et al., 2009). EO has long been recognized as a core predictor of firm performance. Firms that demonstrate strong entrepreneurial orientation are more likely to proactively recognize and seize emerging market opportunities ahead of competitors, continuously innovate in products, services, and business models, and adapt more swiftly to changes in the competitive landscape. This strategic posture provides a clear advantage in highly uncertain environments, where the ability to anticipate and capitalize on change is often more important than operational efficiency alone. Recent empirical evidence further supports this proposition by identifying EO as a direct driver of environmental innovation, stakeholder-oriented decision-making, and long-term strategic thinking that extends beyond short-term financial returns (Coelho et al., 2024; Khan et al., 2023). These developments necessitate closer scientific scrutiny of the EO–sustainable performance nexus, particularly within SME contexts such as Indonesia, where sustainability pressures continue to intensify alongside economic development imperatives. However, prior studies repeatedly suggest that entrepreneurial orientation alone does not guarantee long-term sustainability outcomes. This is particularly true for many SMEs that possess strong entrepreneurial intentions and strateg (...truncated)