Supply Chain Management Practices and Performance of F&B Smes in Indonesia: Exploring the Role of Firm Supply Performance and Market Orientation Interventions

Abstract

This study develops an empirical model exploring the influence of supply chain performance and market orientation in mediating the relationship between supply chain management practices and business performance, with a focus on small businesses in developing countries, particularly within the underrepresented food and beverage sector. Drawing from the Resource-Based View (RBV) theory, which emphasizes resources that are valuable, rare, inimitable, and non-substitutable (VRIN), the research seeks to guide businesses in leveraging these resources to enhance supply chain practices and achieve improved performance through effective market orientation and supply chain outcomes. Using smartPLS software, the study analyzed data from a sample of 350 small and medium-sized enterprises (SMEs) operating in the food and beverage industry on Java Island, Indonesia. The results demonstrate that market orientation serves as a full mediator between supply chain management practices and business performance. Additionally, the findings highlight the role of supply chain management practices in influencing supply chain performance and market orientation, offering empirical evidence on the factors that shape business performance, including supply chain practices, market orientation, and the involvement of government. However, the study could not validate the moderating effect of government involvement on the link between supply chain management practices and business performance. These findings underscore the importance of market orientation as a pivotal mediator, providing actionable insights for policymakers and stakeholders to develop strategies that strengthen supply chain practices and foster superior business outcomes.