Strategic alliances and social performance of microfinance institutions in Indonesia

Abstract

The objective of this study is to understand how strategic alliances and dynamic capabilities influence the performance of microfinance institutions (MFIs) in Indonesia. The research was conducted on a sample of 235 CEOs/top leaders of MFIs spread across all provinces in Indonesia. Data collection used survey questionnaires. Data testing used SPSS version 25, and structural modeling used Amos version 25. The findings show that strategic alliances significantly influence dynamic capabilities and dynamic capabilities significantly influence social performance. Social performance has a significant effect on financial performance. MFIs are important in establishing strategic alliance and strengthening their dynamic capabilities to improve social performance (depth and breadth of reach) and affect financial performance. Social performance includes the depth of the reach to contribute to improving the quality of life of people experiencing poverty around the MFI's operations and the social responsibility of MFIs to the community through scholarships, free medical assistance, basic food assistance, and building/renovating houses of worship and others.