Mediating effect of strategy on competitive pressure, stakeholder pressure and strategic performance management (SPM) : evidence from HEIs in Indonesia

Purpose: This study aims to explore the mediating role of strategy. First, we examine whether strategy mediates the relationship between competitive pressure and SPM. Second, we examine whether the strategy mediates the relationship between stakeholder pressure and SPM. Design/methodology/approach: This study is designed as a quantitative study by utilizing partial least squares structural equation modeling (PLS-SEM) in order to test the hypotheses. A mediation model for the research framework was developed to investigate the mediating role of strategy. Findings: Using a sample of 546 managers from higher education institutions (HEIs) in Indonesia, the results show that both competitive pressure and stakeholder pressure have a positive direct effect on SPM. Strategy fully mediates the relationship between competitive pressure and SPM and strategy also partially mediates the relationship between stakeholder pressure and SPM. The findings suggest that the management of the HEIs in Indonesia needs to accommodate the dynamic trends in the competitive environment and the stakeholder’s interests when they develop the strategy used. They need to build a reliable SPM to effectively execute the strategy. Research limitations/implications: This study has the following limitations: (1) the use of PLS-SEM may raise the issue of causality; (2) this study focuses only on the antecedents of the SPM, and therefore future studies should investigate the consequences of the SPM on other variables; (3) this study is context-specific for Indonesia and caution should be used when generalizing it to other countries; (5) this study employs the primary data that may raise the issue of perception bias, and therefore future studies should try to develop proxies of variables using secondary data. Practical implications: This research provides a comprehensive understanding of the management of HEIs who wants to enhance their SPM. This suggests that management needs to verify the role of strategy. In the era of global competition in higher education, management needs to start from the dynamics of competitive intensity and stakeholder interest. Competition and cooperation need to be considered in their strategies if they want to survive in the higher education industry. Finally, management must be aware that they are now assessed using quantitative indicators, standardized processes, and algorithms, and therefore they need to have a more reliable SPM. Social implications: As the global competition increases in higher education, this research provides a model on how to improve the good university governance involving the strategy and the SPM. Higher education plays an extremely important role in society. This study provides a model that can be used by society to have better control of the HEIs by demanding improved good governance. This research provides empirical evidence of the importance of the strategy and the SPM. The society will get more benefits in terms of improved transparency, accountability, fairness, and responsibility of the HEIs. Originality/value: This is the first study that explores the links between competitive pressure, stakeholder pressure, strategy and SPM in Indonesian HEIs. It provides empirical evidence in the HEIs research setting for the industry/organization (I/O) theory of competitive advantage which focuses on the external factors. It also supports the resource-based view (RBV) model of competitive advantage which focuses on internal factors.