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.

Keywords:

• the love of money
• locus of control
• unethical perception
• performance
• SMEs

Ethics Statement

This study obtained the data from Indonesian SME entrepreneurs by revealing their behavioral motives under some business ethics contexts. The participants are initially provided with the Letter of Research Conduct attached in the Google Form. The respondents agreed to participate in filling the questionnaires with recorded consent through online questionnaires. The survey does not record confidential information that may be used for inappropriate measures. The research is also conducted under the supervision of the ethical committee in the Management Department, Faculty of Islamic Economics and Business, Universitas Islam Negeri Alauddin Makassar, Indonesia.

Disclosure

The author reports no conflicts of interest in this work.