In running their business, entrepreneurs often experience problems in accessing capital or credit. For this reason, the government has issued a People’s Business Credit program policy to empower Micro, Small and Medium Enterprises (MSMEs). In providing access to credit that cannot be provided by banks, Microfinance Institutions (LKM) under the supervision of the Financial Services Authority (OJK) play a role in facilitating the provision of credit, savings, money transfers, and credit insurance to ultra-micro entrepreneurs, the poor, and the informal.
According to Dr. Morrison Hendrik Riwu Kore, Postgraduate Program student in the Management Science Doctoral Study Program (Prodi), Faculty of Economics and Business (FEB) Universitas Indonesia (UI), MFIs are facing the challenge of intense competition due to the proliferation of illegal financial technology (fintech) loan companies in Indonesia. Apart from that, consumer and market demands also continue to change. Therefore, there is a shift in mission which poses a problem in MFIs. Initially, MFIs had a social goal of reducing poverty, but they are now more oriented towards financial goals.
The development of MFI performance cannot be separated from the dynamics of the business environment, technological developments, changes in business models and globalization. This has increased instability, uncertainty, and competitive complexity. To be able to create sustainable competitive advantages, companies need to adapt to an environment that is always changing rapidly.
“Environmental dynamics bring opportunities and threats to companies, and studies show that companies that are more entrepreneurially oriented tend to thrive in dynamic environments. With changing and uncertain environments, an entrepreneurial orientation is needed,” said Dr. Morrison. Entrepreneurial orientation is an orientation to competitive advantage that exists within an organization to build new innovations, add value, and make decisions. This is closely related to the growth and entrepreneurial strategy of a company.
In his research, Dr. Morrison tested the influence of entrepreneurial orientation on social performance and the influence of social performance on financial performance in MFIs in Indonesia. The research was conducted using a survey questionnaire on a sample of 235 top MFI leaders spread across all provinces in Indonesia using environmental dynamics as an antecedent, strategic alliances and dynamic capabilities as mediation.
The findings show that entrepreneurial orientation has a significant effect on the social performance of MFIs in Indonesia. Meanwhile, entrepreneurial orientation has no effect on financial performance, which has to be increased through social performance. Furthermore, social performance has a significant effect on financial performance. Therefore, Dr. Morrison stated the importance of MFIs in improving social performance to further improve financial performance.
According to him, MFIs need to increase their contribution and social responsibility to improve social performance which will have an impact on financial performance. In this case, social performance includes the depth of outreach to contribute to improving the quality of life of poor communities around the MFI’s operational locations. MFIs’ social responsibility to the community can be realized through providing scholarships, free medical assistance, basic food assistance, building or renovating places of worship, and so on.
Thanks to the research entitled “The Role of Entrepreneurial Orientation in Microfinance Institutions in Indonesia”, Dr. Morrison Hendrik Riwu Kore succeeded in obtaining a Doctorate degree from FEB UI. The doctoral promotion session was held at the FEB UI Postgraduate Building, on Monday (8/11). In the promotion session, Morrison was declared to have graduated with Cum Laude honors and became the 318th doctor of the FEB UI Postgraduate Management Science Program.
This doctoral promotion open session was chaired by the Dean of FEB UI, Teguh Dartanto, Ph.D. The promoter for this doctoral promotion session was Prof. Rofikoh Rokhim, Ph.D with co-promoters Riani Rachmawati, Ph.D and Dr. Lily Sudhartio. The examining team was chaired by Prof. Dr. Lindawati Gani with members namely Prof. Sari Wahyuni, Ph.D; Arief Wibisono Lubis, Ph.D; Dr. Bambang Siswaji; and Dr. Ir. T Ezni Balqiah, M.E., M.H.
