1. Introduction
According to Asbari (2020), the current global challenge is if a company or organization can survive in increasingly fierce competition. The leader is the main element in an organization as a policymaker and decision-maker. Leaders in an organization are required to have the ability, expertise, strategy, and skills to control and lead the organization to move on the right path. According to Astuti et al. (2020), organizational performance will not run optimally if a conducive organizational culture and continuous motivation for the performance of each individual are not built in it. Leadership factors will not have a significant effect on employee performance if the leadership patterns displayed are not in accordance with the dynamics of the organization they lead. Strategic leadership is about a leader’s ability to change people through vision and values, culture and work climate, and structures and systems. Strategic leadership further means the ability of a leader to manage, coordinate, influence and motivate and improve the performance of the people he leads to achieving organizational goals.
According to Budi Hartono and Maksum (2020), in improving employee performance, synergy is needed to build common perceptions of what is the ultimate goal of the organization in accordance with the designed vision and mission. Employee performance will be optimal and maximum if there is a systematic, measurable, and planned performance appraisal. Performance is the result of work achieved by a person or group of people in the organization in accordance with the job description of the duties, responsibilities, and authority of each. The function of strategic leadership and a conducive culture in the organization can motivate employees to improve their performance. According to Dam and Dam (2021), organizational culture also plays an important role in motivating employees to improve employee performance. Several studies have found that salary and promotion are important in motivating employees, but are not the only motivation needed to improve their performance.
According to Fatmawati and Fauzan (2021), the ability of leaders to take strategic actions depends on the historical factors of the organization (organizational culture) which are influenced by changes in the external environment (the presence of new competitors, technological developments, decreased demand for services/products, different political/ regulatory climates), strengthening the strategy and increasing consistency between strategy, organizational structure, culture, and human resources. They argued that the characteristics of strategic leadership are: being involved in change; being more proactive in communicating change; unwilling to change leadership to become an external consultant; not only having a vision of change but also accompanied by a sustainable capacity for change implementation; always encourage the creation of change; change in behavior in a positive, independent manner and allow others to do the same and dare to take risks.
According to Goeltom et al. (2020), a leader has a role to generate interest, create enthusiasm so that employees do the best of their abilities. Organizational failure generally lies in the lack of leaders understanding the importance of motivation in achieving the vision and mission of the organization. In fact, their opinion is that even though a leader understands the importance of motivation, if he or she does not have the skills and knowledge to provide an organizational environment/culture that can motivate employees, it will not be effective in encouraging an increase in employee performance productivity.
Previous research such as Maharsi et al. (2021) looked at the concept of leadership in terms of strategic leadership and its impact on employee performance. Besides they stated that there are two things that employees need from their leaders, namely providing the right motivation and communicating regularly which is proven to be effective as an encouragement that ensures the success and quality performance of each individual employee.
According to Mulyono et al. (2020), strategic leadership refers to a manager’s potential to express a strategic vision for the organization, or a part of the organization, and to motivate and persuade others to acquire that vision. Strategic leadership can also be defined as utilizing strategy in the management of employees. Strategic leadership has its own characteristics and characteristics that distinguish it from transformational leadership.
Novitasari et al. (2021) stated several characteristics of strategic leadership behaviors namely, 1) having the courage to take decisive action, especially when facing a crisis, 2) having the competence to make lasting changes, 3) knowing what to do, and being able to control events/situations, 4) rewarding good performance but not blaming external conditions for poor performance. Other characteristics of strategic leadership mentioned are: 1) loyalty (ability and effectiveness to show loyalty to vision, words and actions), 2) keeping them updated (keeping information about the organization updated), 3) judicious use of power (wisely using power in developing agreement for ideas rather than forcing those ideas) 4) have a wide perspective/outlook (have broad insight, skills, and knowledge), 5) motivation (have a passion to work beyond money and power ), 6) compassion (understanding the perceptions and feelings of subordinates, decisions made after considering subordinates), 7) self-control (has the potential to control moods and disturbing desires; think before acting) 8) social skills (friendly and have a social nature), 9) self-awareness (the potential to understand moods and emotions and their impact on others), 10) readiness to delegate and authorize (realizing that the delegation will avoid over-loading responsibility, acknowledging the fact that subordinates also have the authority to make decisions that will motivate them), 11) arti-culate (sufficient articulation to communicate the vision to organizational members in enhancing the role of members), 12) constancy/reliability (making the organization’s vision a component of organizational culture).
From some of the references above, it can be concluded that the characteristics of strategic leadership are visionary, missionary, and strategic, namely having, understanding and communicating the vision and mission; being able to formulate and realize strategies and have the knowledge, skill, and insight; oriented to change and is always involved in change; have clear goals and directions and is future-oriented and likes to set priorities; is able to build strong relationships by always acting wisely, involving subordinates in developing ideas, and giving opportunities to subordinates to make decisions; always completing responsibilities immediately and have extensive social networks with various parties; have a personal style and personal skills such as being proactive, controlling emotions, enthusiastic, caring for subordinates, and working beyond money and power and taking risks. Purnamasari et al. (2020) stated that the way strategic leaders maintain the sustainability of their organization is by motivating their employees appropriately and creating equal opportunities for employees.
Praditya (2020) found that a leader has a strategic role in bringing the organization he leads to achieving organizational goals by motivating employees to improve their performance. His research showed that if a leader is able to motivate employees to work better, this will make employees more careful in trying to achieve the targets expected by the company, and this has an impact on their performance. Praditya (2020) concluded that there was a significant influence between leadership on motivation and leadership and employee performance. Likewise, he found that leadership has an effect on employee motivation.
According to Sihite et al. (2020), organizational culture includes an organization’s expectations, experiences, philosophy, as well as values that guide member behavior, and is expressed in member self-image, inner workings, interactions with the outside world, and future expectations. According to Sasono et al. (2021), organizational culture is an arrangement of shared thoughts that differentiates members of an organization from others. Sudarsono et al. (2021) defined culture as a strong determinant of people’s beliefs, attitudes, and behavior, and their influence can be measured through how people are motivated to respond to their cultural environment. According to Soliha et al. (2021), there are seven characteristics of organizational culture namely: innovation and courage to take risks, attention to detail, results-oriented, human-oriented, team-oriented, aggressiveness, and stability. Related to the characteristics of organizational culture, there are several important components including observed rules of behavior, norms, dominant values, philosophy, rules, and organizational climate. Organizational culture is a philosophy, ideology, values, assumptions, beliefs, hopes, attitudes, and norms that are shared and binding in a particular community. According to Supratman et al. (2021), organizational culture (1) is a tool to create distinctive differences between organizations, (2) an identity for members of the organization, (3) facilitates the commitment to interests that are broader than individual interests. (4) strengthen the system, (5) serves as a meaning creation mechanism and a control system that guides and shapes employee attitudes and behavior. In their research, Soliha et al. (2021) and Pramono (2020) found a significant and positive relationship between organizational culture and employee motivation.
According to Suprapti et al. (2020), motivation means needs, desires, wants, or drives within the individuals. It is the process of stimulating people to action to accomplish the goals. Furthermore, motivation can be understood through these three aspects, namely, those that generate (energizes) behavior, which direct (direct) or connect (channels) behavior and maintain (maintains) behavior. Within the individual, there are several motives or needs. Fatmawati and Fauzan (2021) divided the motives (needs) into three groups: first, needs of existence related to survival (physiological well-being), secondly, needs of relatedness which emphasize the importance of social relationships or interpersonal relationships, and third, the needs of growth, namely the intrinsic desire of individuals to develop. They stated that other factors other than salary and promotion are needed to motivate employees, such as career development and comfortable working conditions.
According to Wanasida et al. (2021), performance is the result or overall success rate of a person during a certain period in carrying out a task compared to various possibilities, such as work standards, targets, or criteria that have been determined in advance and have been mutually agreed upon. From some of the definitions and descriptions put forward, it can be said that employee performance is an individual end result of an intentional, planned, and structured activity based on the goals, mission, and vision of the organization. Employee performance will be achieved if it is supported by a number of factors including leadership, organizational culture, and high employee motivation. Several previous studies found a significant relationship between work motivation and employee performance. The results of research conducted by Wardana et al. (2020) showed that employee motivation has a significant positive relationship with employee performance. However, they stated that motivation does not have a significant effect if their needs are satisfied, on the other hand, motivation has a significant effect if the employee’s needs have not been met.
The purpose of this study was to determine the effect of strategic leadership on competitive strategy, motivation on competitive strategy, organization culture on competitive strategy, strategic leadership on business performance, motivation on business performance, organization culture on business performance, and competitive strategy on business performance.
2. Research Method
2.1. Operational Definition of Variables and Indicators
The model used to analyze the data in this study is the SEM-PLS Structural Equation Modeling. This model is used since in the conceptual model there are latent variables and their indicators, as such, we need to find out how much influence each latent variable has. Based on the research conceptual framework, four research hypotheses can be identified which will be confirmed with the data as follows. Probability sampling is defined as a sampling technique in which the researcher chooses samples from a larger population using a method based on the theory of probability. For a participant to be considered as a probability sample, he/she must be selected using a random selection. The probability sampling technique is a sampling technique carried out by providing opportunities or opportunities for all members of the population to become samples. The analytical method used in this research is structural equation modeling (SEM) to determine the causal relationship between latent variables contained in structural equations. The analysis tool used is with the help of Smart PLS. The method used in this research is quantitative, and data collection method by distributing questionnaires to manufacturing industry employees. with 5 items for each variable. Each closed question/statement item is given five answer options, namely: strongly agree (SS) score 5, agree (S) score 4, disagree (KS) score 3, disagree (TS) score 2, and strongly disagree (STS)) score 1. The method for processing data is by using PLS and using the SmartPLS version 3.0 software as a tool.
2.2. Population and Sample
The population in this study was employees of the manufacturing industry in Tangerang, whose numbers have not been identified with certainty. The questionnaire was distributed electronically using a simple random sampling technique. The results of the questionnaire returned were 150 respondents.
Based on the theoretical study and previous research above, the research model is as in Figure 1, while the research hypothesis is as follows:
Figure 1: Research Model
SL: Strategic Leadership; MO: Motivation; OC: Organization Culture; CS: Competitive Strategy; BP: Business Performance.
H1: Strategic Leadership has a significant effect on Competitive Strategy.
H2: Motivation has a significant effect on the Competitive Strategy.
H3: Organization Culture has a significant effect on Competitive Strategy.
H4 Strategic Leadership has a significant effect on Business Performance.
H5: Motivation has a significant effect on Business Performance.
H6: Organization Culture has a significant effect on Business Performance.
H7: Competitive Strategy has a significant effect on Business Performance.
3. Results and Discussion
3.1. Sample Description
The results of processing respondent data through questionnaires obtained respondent data as follows (Table 1):
Table 1: Respondents Profile
Test Results of the Validity and Reliability of research indicators. The testing phase of the measurement model includes testing for convergent validity, discriminant validity, and composite reliability. The results of the PLS analysis can be used to test the research hypothesis if all indicators in the PLS model have met the requirements of convergent validity, discriminant validity, and reliability testing.
3.2. Convergent Validity Testing
A convergent validity test is done by looking at the loading factor value of each indicator against the construct. In most references, a factor weight of 0.5 or more is considered to have sufficiently strong validation to explain the latent. In this study, the minimum limit for the accepted loading factor is 0.5, provided that the AVE value of each construct is > 0.5.
Based on the estimation results of the PLS model in the image above, all indicators have a loading factor value above 0.5 so that the model has met the convergent validity requirements. Apart from looking at the loading factor value of each indicator, convergent validity was also assessed from the AVE value of each construct. The AVE value for each construct of this study is more than 0.5. So the convergent validity of this research model has met the requirements. The value of loadings, Cronbach’s alpha, composite reliability, and AVE for each complete construct can be seen in Table 2.
Table 2: Cronbach’s Alpha, Composite Reliability, and Average Variance Extracted (AVE)
Figure 2: Model Valid
3.3. Construction Reliability Testing
Construct reliability can be assessed from the Cronbach’s alpha value and the composite reliability of each construct. The recommended composite reliability and Cronbach’s alpha value is more than 0.7. The results of the reliability test in Table 2 above show that all constructs have composite reliability and Cronbach’s alpha values greater than 0.7 (> 0.7). In conclusion, all constructs have met the required reliability.
Figure 3: Model Valid
3.4. Discriminant Validity Testing
Discriminant validity is demonstrated by evidence that measures of constructs that theoretically should not be highly related to each other are, in fact, not found to be highly correlated to each other. Discriminant validity is done to ensure that each concept of each latent variable is different from other latent variables. The model has good discriminant validity if the AVE square value of each exogenous construct (the value on the diagonal) exceeds the correlation between this construct and other constructs (values below the diagonal). The results of discriminant validity testing using the AVE square value, namely by looking at the Fornell-Larcker Criterion Value are obtained as follows:
The results of the discriminant validity test in Table 3 above show that all constructs have a square root value of AVE above the correlation value with other latent constructs (through the Fornell-Larcker criteria) so that it can be concluded that the model has met discriminant validity.
Table 3: Discriminant Validity
3.5. Hypothesis Test
Hypothesis testing in PLS is also known as the inner model test. This test includes a significance test for direct and indirect effects as well as a measurement of the magnitude of the influence of exogenous variables on endogenous variables. To determine the effect of Strategic Leadership, Motivation, Organization Culture, Competitive Strategy, and Business Performance, a direct and indirect effect test is needed. The effect test was performed using the t-statistic test in the partial least squared (PLS) analysis model using the SmartPLS 3.0 software. With the bootstrapping technique, the R Square value and the significance test value are obtained as shown in Table 4:
Table 4: R Square
Based on Table 4, the R Square value for business performance is 0.357 which means that the 35.7% of the variance in business performance variable can be explained by the Strategic Leadership, Motivation, Organization Culture, and Competitive Strategy variables, while the remaining 64.3% is explained by other variables not discussed. in this research. The R Square value for Competitive Strategy is 0.582, which means that 58.2% of the variance in the Competitive Strategy variable can be explained by Strategic Leadership, Motivation and Organization Culture variables, while the remaining 41.8% is explained by other variables not discussed in this study.
Meanwhile, Table 5 shows the T Statistics and P-values which show the influence between the research variables that have been mentioned.
Table 5: Hypotheses Testing
The relationship between strategic leadership and competitive strategy
Based on the results of the analysis in Table 5, T statistics is 1,697 < 1.96 and P-value is 0.090 > 0.050, so it can be concluded that H1 is rejected, which means strategic leadership has no significant effect on competitive strategy. An increase in strategic leadership variables will not be followed by an increase in competitive strategy and a decrease in strategic variables. Leadership will not be followed by a decrease in competitive strategy. The results of this study are in line with the results of research by Wardana et al. (2020) stated that organizational commitment has no significant effect on competitive strategy.
The relationship between strategic leadership and business performance
Based on the results of the analysis in Table 5, T Statistics is 3,394 > 1.96 and P-value is 0.001 < 0.050, so that it can be concluded that H2 is accepted, which means strategic leadership has a significant effect on business performance. An increase in strategic leadership variables will be followed by an increase in business performance and a decrease in the strategic leadership variable will be followed by a decrease in business performance. The results of this study are in line with the research results of Sasono et al. (2021) who stated that strategic leadership has a significant effect on business performance.
The relationship of organizational learning to business performance
Based on the results of the analysis in Table 5, T statistics is 1,968 > 1.96 and P-values is 0.050 < 0.050, so that it can be concluded that H3 is accepted, which means the organizational culture has a significant effect on business performance. An increase in organizational learning variables will be followed by an increase in business performance and a decrease in organizational learning variables will be followed by a decrease in business performance. The results of this study are in line with the research results of Purnamasari et al. (2020) who stated that organizational culture has a significant effect on business performance.
The relationship of organizational learning to competitive strategy
Based on the results of the analysis in Table 5, T statistics is 2.876 > 1.96 and P-value is 0.004 < 0.050, so that it can be concluded that H4 is accepted, which means the organizational culture has a significant effect on competitive strategy. An increase in organizational learning variables will be followed by an increase in competitive strategy and a decrease in organizational learning variable will be followed by a decrease in competitive strategy. The results of this study are in line with the research results of Goeltom et al. (2020) who stated that organizational learning has a significant effect on competitive strategy.
The relationship between motivation and competitive strategy
Based on the results of the analysis in Table 5, T statistics is 2.518 > 1.96 and P-values is 0.012 < 0.050, so that it can be concluded that H5 is accepted, which means motivation has a significant effect on competitive strategy. An increase in the motivation variable will be followed by an increase in competitive strategy and a decrease in variable motivation will be followed by a decrease in competitive strategy. The results of this study are in line with the research results of Maharsi et al. (2021) who stated that motivation has a significant effect on competitive strategy.
The relationship between motivation on business performance
Based on the results of the analysis in Table 5, T statistics is 1.004 < 1.96 and P-value is 0.316 > 0.050, so it can be concluded that H6 is rejected, which means motivation has no significant effect on business performance. An increase in the motivation variable will not be followed by an increase in business performance and a decrease in the motivation variable will not be followed by a decrease in business performance. The results of this study are in line with the results of research by Astuti et al. (2020) who stated that motivation does not have a significant effect on business performance.
The relationship of competitive strategy to business performance
Based on the results of the analysis in Table 5, T statistics is 1.595 < 1.96 and P-value is 0.111 > 0.050, so it can be concluded that H7 is rejected which means competitive strategy has no significant effect on business performance. An increase in the competitive strategy variable will not be followed by an increase in business performance and a decrease in the competitive strategy variable will not be followed by a decrease in business performance. The results of this study are in line with the research results of Wanasida et al. (2021) who stated that competitive strategy has no significant effect on business performance.
4. Conclusion
Based on data analysis, it is concluded that strategic leadership has no significant effect on competitive strategy. However, strategic leadership has a significant effect on business performance, organizational culture has a significant effect on business performance, and organizational culture has a significant effect on competitive strategy. Motivation has a significant effect on competitive strategy but has no significant effect on business performance. The competitive strategy has no significant effect on business performance.
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