SMEs’ Performance in Indonesia: The Nexus of Notable Ethics-Strategic Behavior Constructions

Abstract

Purpose: The rational strategic behavior of humanity to prioritize their self motives may lead to unethical conduct, with a potential financial consequence. Thus, this study investigates how the love of money and locus of control can affect the unethical behavior and performance of small and medium economic actors in the Indonesian context. Participants and Methods: This article examines the responses from 530 small entrepreneurs as part of the hypotheses in behavioral strategy by employing covariance-based structural-equation modeling (CB-SEM). This quantitative approach is conducted following the acceptance of the data quality requirements. Results: The findings confirm most hypotheses, leaving one insignificant nexus of locus of control and SME performance. This finding also illuminates the intangible behavior in shaping the SMEs' strategic performance. Some indirect relationships are also provided. Conclusion: This study substantiated the notion that the strategic aspect of SMEs' business relies on the behavioral construction of the actors. How entrepreneurs view their source of action internally or externally is critical in shaping how they view money achievement. A strong tendency to love money too much leads them to be more unethical and ends up in a deteriorating sign of financial performance. However, being unethical justifies the potentiality of increased income streams. This specific finding of strategic behavior corresponds to the how "unregulated morality" creates a freedom in doing business.

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