Reawakening Digital Innovation and Collaboration Strategy: Strategies

to Improve Business Performance

SAIFUL HIDAYAT, MARGONO SETIAWAN, FATCHUR ROHMAN,

ANANDA SABIL HUSSEIN

Management Department, Faculty of Economic and Business, Brawijaya University,

Jalan Veteran No 1, Ketawanggede, Lowokwaru, Kota Malang, Jawa Timur 65145,

INDONESIA

Abstract: - Purpose: The objective of this study is to examine the effect of company resources on digital

innovation, collaboration strategy, and business performance, as well as the effect of company resources on

business performance through digital innovation and collaboration strategy. Research Design: This study uses

a quantitative research approach. Observations were made in a cross-section time horizon, in 2022. The

Population of this study is the ISP industry, which amounted to 474 companies, and the unit of observation was

the management. Sampling used stratified random sampling. ISPs are grouped based on the size of each

company based on the number of customers and branch cities are divided into 3 groups: small, medium, and

large. Samples were taken many as 100 respondents. Sampling from each classification is done randomly based

on a list of population members. Testing the causality hypothesis in this study used PLS (Partial Least Square).

Results: the hypothesis testing reveals that company resources play a significant role in developing digital

innovation and collaboration strategies. Company resources do not significantly directly affect business

performance, but significantly affect business performance through digital innovation and collaboration

strategy. Findings: The study provided managerial implications for ISP company management in Indonesia,

that collaboration strategy and digital innovation can increase the influence of the development and utilization

of company resources on business performance so that companies no longer have to develop and own all of

their resources independently. By elaborating their collaboration strategy and digital innovation, companies can

focus on developing key resources and additional digital innovations needed to increase the company's

competitive advantage. Limitation: the measurement of variables was carried out based on the management's

perception of the conditions and situations faced during the COVID-19 pandemic in 2021-2022. To get a

deeper understanding and truly describe the details of the empirical conditions, it is necessary to complement

qualitative research through confirmatory and in-depth interviews.

Key-Words: - company resources, digital innovation, collaboration strategy, business performance,

internet service provider.

Received: July 4, 2022. Revised: November 15, 2022. Accepted: December 8, 2022. Published: January 11, 2023.

1 Introduction

A survey conducted by the Indonesian Internet

Service Providers Association (APJII) (2018)

reveals the increase in internet penetration in

Indonesia is almost nine times greater than

population growth. This cannot be separated from

the role of the Internet Service Provider/ISP which

is currently facing hyper-competition conditions.

This condition occurs because currently 474 local

ISP players are registered as members of APJII and

have a permit from the Ministry of Communication

and Information Technology. In addition to

competing with fellow local ISPs, competition will

also occur with Global ISPs, both operating in

Indonesia and abroad.

During the Covid-19 pandemic, there was a

decline in revenue at local ISPs, especially those

that relied on a B2B business model that served

non-retail customers. In addition, there has also

been a stagnation/decline in the company's

profitability. This is related to internet access rates

which have continued to decline from year to year,

starting in 2009 until now.

The increasing need for IoT implementation

increases the need for internet access to connect

various applications to various IoT sensors.

However, only ISPs who are also

Telecommunication Operators get more benefits,

due to the location of IoT sensors which generally

tend to be scattered and mobile (Mobile). In

addition, currently, ISPs in Indonesia generally have

limited resources and the ability to innovate and

collaborate to become IoT service providers

consisting of connectivity service providers,

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2023.20.32

Saiful Hidayat, Margono Setiawan,

Fatchur Rohman, Ananda Sabil Hussein

E-ISSN: 2224-2899

342

Volume 20, 2023

platforms, and IoT solutions/applications.

Companies are required to be able to utilize

resources to anticipate threats and opportunities in

the business environment to improve their

performance. Companies need to discern the

correlation between resources, capabilities,

competitive advantage, and profitability to maintain

a long-term competitive advantage, [1]. However,

the phenomenon in the ISP industry shows that there

are obstacles related to capital ownership and an

insufficient number of experts. The company's

resources are only able to provide internet access

services, as well as the limited mastery of Digital

Technology and the performance of ICT

infrastructure which tends to lag behind ISPs in

other countries. In addition, ISPs doing B2B

business need to keep the company's cash flow

resources positive during the Covid-19 pandemic.

These various phenomena greatly affect the

profitability of ISP companies in Indonesia.

In addition, APJII also stated that the current

performance of ISPs is related to the development of

cooperation between industry players and relevant

stakeholders, which had not yet been fully

established optimally. In addition, the creativity of

industry players in developing the ISP industry

tends not to fully refer to the existing market

demands. During this pandemic, many ISP

companies are experiencing a decline in revenue, so

they need to immediately innovate to find new

business models and new services, such as Smart

Home services using IoT (Internet of Things),

Video, Games, and others. The phenomenon of

digital innovation in ISP companies shows that there

are still difficulties for companies in segmenting

customers to seize market share. In addition, there is

a tendency for companies to be slow to innovate in

the face of digital disruption, especially innovation

of new products/services and business models.

There are five key areas in managing innovation in

digital products and services, including user

experience, value proposition, digital evolution

scanning, skills, and improvisation, [2], [3].

Therefore, companies are required to be able to

build capabilities thru Innovation as a competitive

advantage in utilizing the resources they have, like

the RBV concept, companies can understand the

relationship between resources, capabilities,

competitive advantage, and profitability to maintain

a long-term competitive advantage, [1]. The

company implements its collaboration strategy to

deal with changes in the business environment by

the condition of its resources to improve

performance. Through collaboration, companies are

expected to be able to have "Strategic Resources"

that will have a long-term competitive advantage

over other companies that do not have them, [1].

This research was conducted at the observation

unit of the management of ISP companies in

Indonesia, and the measurement of variables was

carried out based on the management's perception of

the conditions and situations faced during the

COVID-19 pandemic in 2021-2022. In addition, this

research was carried out using quantitative methods

that only relied on statistical results, so to get a

deeper understanding and truly describe the details

of the empirical conditions, it is necessary to

complement with qualitative research through

confirmatory and in-depth interviews, which have

not been applied in this study.

Regarding the situation of the analysis unit, this

study contributes a construct of collaboration

strategy that was developed based on the

combination (cohesion) of the concept of

collaboration with the concept of collaborative

advantage through a shared meta-strategy.

From the results of the study, it is hoped that a

finding model will be obtained that describes the

role of company resources, digital innovation, and

collaboration strategy on business performance so

that they can provide useful managerial implications

for the management of ISP companies in Indonesia.

2 Literature Review

The description of the variables used in this study is

based on the findings of previous studies that are

explained as follows:

Business performance is the output or result of

business activities, [4]. Performance is the result

of activities measured by some measures that

have been determined in the formulation of

strategy as part of the strategic management

process related to profitability, market share, or

cost reduction, [5]. Company performance is

measured by financial ratios to compare the

company's performance in several periods,

compare the company's performance with the

performance of competitors, and compare the

company's performance against the industry

average, [7]. So, business performance

describes the results of all company activities

within a certain period as measured by several

predetermined sizes.

There are several indicators used to measure the

performance of a company: sales growth, assets, and

profitability, [4], [5], [6], [7]; ROE (Return on

equity), ROA (return on assets), EPS (earnings per

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2023.20.32

Saiful Hidayat, Margono Setiawan,

Fatchur Rohman, Ananda Sabil Hussein

E-ISSN: 2224-2899

343

Volume 20, 2023

share) and Tobin's Q ratio, [8], ROA, [9], ROA and

ROE, [10]. Organizational performance was

measured by two dimensions, namely subjective

performance, and objective performance. Subjective

performance includes measures of sales, net income,

and cash flow. Objective performance is measured

by customer satisfaction, market share, and

employee turnover, [11].

The company's resources and capabilities are the

basic building blocks of the company's competitive

strategy. Resources are divided into two main

categories, namely: tangible resources and

intangible resources, [12]. Each company is

distinguished by a set of unique resources consisting

of tangible assets, intangible assets, and

organizational capabilities. There are three basic

resources needed by companies, namely tangible

assets, intangible assets, and organizational

capabilities, [13]. Resources are organizational

assets and become the basic building for the

organization. Resources consist of tangible assets,

human assets, and intangible assets. Tangible assets

such as plant, equipment, finance, and location.

Human assets such as the number of employees,

employee skills, and employee motivation.

Intangible assets such as technology (patents and

copyrights), culture, and reputation, [5].

Companies need dynamic tools to support the

digital innovation process. To that end, the digital

innovation management framework identifies five

key areas to measure and evaluate the management

of digital product and service innovation, which

includes: user experience, value proposition, digital

evolution scanning, skills, and improvisation, [3].

Digital innovation is the use of information and

communication technology to drive innovations that

impact organizational structures, processes, and

landscapes, [14]. Digital innovation is a new

combination of physical and digital components to

produce new products, [15]. This definition implies

a focus on product innovation, which distinguishes

it from the study of IT innovation that leads to

process innovation. A must, although an inadequate

condition for digital innovation is that new

combinations rely on digitization. Digitization

makes physical products programmable,

addressable, sensible, communicable, memorable,

traceable, and associable. Digital innovation

demands that companies re-examine the

organizational logic and usability of enterprise IT

infrastructure.

The concept of collaboration is expressed as a

process in which parties who see different aspects of

a problem can constructively explore their

differences and seek solutions that go beyond their

limited vision of what is possible, [16]. In further

research it is explained that collaboration is a

management process in which two or more

companies work together to solve problems and find

solutions beyond their limited capabilities, to

achieve common goals, [16], [17], [18]. At first, and

perhaps most importantly, collaboration was a

matter of internal cooperation. However many

organizations have considered and even pursued

external collaboration, but it is often to the

detriment of their efforts at internal collaboration,

[19].

The concept of collaboration strategy was

developed based on the combination (cohesion) of

the concept of collaboration, [16], [17], [18], [19]

with the concept of collaborative advantage through

a shared meta-strategy, [20] that is a planned

cooperative activity for mutual benefit, which

involves all relevant stakeholders including

horizontal stakeholders (lateral, internal), vertical

stakeholders (customers, suppliers), and

complementary stakeholders, in developing business

activities to create sustainable company

performance. Partnership strategy stems from the

business strategy, which determines the overall

objectives of the business unit alliance and the

configuration of the portfolio business alliance, [21].

The portfolio includes partnerships with suppliers,

complementary, customers, and competitors.

Collaboration is "a joint decision-making process

among key stakeholders of a problem domain about

the future of that domain", [16].

The construct of the collaboration concept in this

study is a novelty as a contribution to the

collaboration strategy literature.

2.1 Variable Dimensions

The company resource variables are measured

through tangible resources and intangible resources,

[12], [22], [23].

The digital innovation variable is measured by

five dimensions: user experience, value proposition,

observation of digital evolution, skills, and

improvisation, [3].

The collaboration strategy variable is measured

through: partnerships with suppliers, partnerships

with customers, partnerships with laterals, internal

partnerships, and partnerships with complementary,

[21], [24], [25].

Business performance in this study is measured

through three dimensions namely: profitability, asset

growth, and market share, [4], [5], [6], [7].

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2023.20.32

Saiful Hidayat, Margono Setiawan,

Fatchur Rohman, Ananda Sabil Hussein

E-ISSN: 2224-2899

344

Volume 20, 2023

2.2 Hypothesis Development

The influence of company resources on digital

innovation

HR is an important element in achieving innovation

for companies in the company's ever-changing

operating environment, [26]. There is a positive and

significant effect of entrepreneurship, marketing

capabilities, relational capital, and empowerment on

innovation capability and performance, [27]. the

combination of three capabilities namely market,

technology, and capability management created a

unique configuration known as the source of the

company's core competencies that shape the

company's strategic decisions as a synergistic

innovation management model, [28].

Based on the findings of these studies, the first

hypothesis is formulated as follows:

H1: company resources have a significant effect on

digital innovation.

The influence of company resources on

collaboration strategy

The partnership is carried out to identify and

respond to market changes in search of flexibility

and innovative ways to develop company activities,

[29]. Collaborative competitive advantage is the

result of a strategy to access complementary

resources through collaboration with other

organizations, [30].

Based on the findings of these studies, the

second hypothesis is formulated as follows:

H2: company resources have a significant effect on

the collaboration strategy.

The influence of company resources on business

performance

There was a strong positive correlation between the

e-HRM and company organizational performance,

[31]. HR practices affect bank performance

positively, [32]. Manager competence affected

business performance, [33]. Meanwhile, capital

resources had an insignificant and mixed effect on

the operating performance and financial

performance of the company. Intellectual capital

also affects stock market performance, but not

significantly, [34].

Knowledge and competence, digital technology,

and reputation affect business, [35]. Digital

capabilities affect business performance. Digital

innovation positively and significantly impact

business performance, and digital innovation

mediates the influence of innovation capability on

business performance, [36].

Based on the findings of these studies, the third

hypothesis is formulated as follows:

H3: company resources have a significant effect on

business performance.

The influence of company resources on business

performance through digital innovation

Entrepreneurial orientation, company resources, and

SME branding are related to company performance

through innovation, [22]. The knowledge

management process affects innovation capability,

innovation capability affects organizational

performance, and the knowledge management

process affects organizational performance through

innovation capability, [37]. Digital capabilities have

a significant influence on business performance.

Digital innovation has a positive and significant

impact on business performance, and digital

innovation can mediate the effect of innovation

capability on business performance, [36]. Digital

orientation and digital capabilities have a positive

effect on digital innovation and also that digital

innovation mediates the effect of technology

orientation and digital capabilities on financial and

non-financial performance, [11]. Based on the

findings of these studies, the fourth hypothesis is

formulated as follows:

H4: digital innovation mediates the influence of

company resources on business performance.

The influence of company resources on business

performance through collaboration strategy

An organization's ability to integrate and collaborate

within a network or to develop partnerships

increases the opportunity to leverage its capabilities

and benefit from the synergies generated through

collaboration, [30]. Companies should emphasize

enhancing collaboration to build core competencies

through strategic alliances and technical cooperation

all of which can help companies to achieve a

competitive advantage higher and helps the

company’s growth, [38]. Based on the findings of

these studies, the fifth hypothesis is formulated as

follows:

H5: collaboration strategy mediates the influence of

company resources on business performance.

3 Methods

This study uses a quantitative research approach.

Observations were carried out in a cross-section/one

shot, in 2022. The population of this study was the

ISP company industry, and the unit of observation

was the management. Stratified random sampling

was used as the sampling method. Elements of the

population were grouped at certain levels aiming at

taking samples evenly throughout the group so that

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2023.20.32

Saiful Hidayat, Margono Setiawan,

Fatchur Rohman, Ananda Sabil Hussein

E-ISSN: 2224-2899

345

Volume 20, 2023

the sample represented the character of all

heterogeneous population elements.

The survey was conducted by selecting a sample

of the population, namely licensed ISP companies

operating in Indonesia and being members of APJII

(Indonesian Internet Service Providers Association)

totaling around 474 and grouped (subpopulation)

based on the size of each company based on the

number of customers and branch cities which are

divided into 3 groups, namely: small, medium and

large. Samples were taken from as many as 100

respondents. Sampling from each subpopulation was

carried out randomly based on a list of population

members. The measurement scale in this study uses

an ordinal scale using the Likert method which

produces ordinal data. The ordinal measurement

scale is a scale where the data shows a certain order

or order, [39]. Testing the causality hypothesis in

this study used PLS (Partial Least Square), which is

a multivariate statistical technique that can be used

to handle many response variables as well as

explanatory variables at once.

4 Analysis and Discussion

4.1 Goodness of Fit

Structural equation modeling is an ideal data

analytical tool to test the complex relationships

among many analytical variables. SEM can analyze

the pattern of the relationship between latent

extracts and indicators, latent extracts with each

other, and measure measurement error. This

analysis can simultaneously test multiple mediating

relationships, estimate latent variables based on

related measures, and address practical problems

such as abnormality. Besides that, it that can test the

extent to which the hypothesized model provides an

appropriate characterization of the collective

relationship among the variables, whereby the

researcher can assess the "fit" between the model

and the sample data.

A guideline for assessing if a theory-based model

fits empirical data or if the resulting model describes

actual conditions. As a statistical test, Structural

Equation Model (SEM) can explain the strength of a

model to assess its suitability of the model by using

several index criteria.

The Goodness of fit of this study is shown in the

following Fig.1, Chi-Square = 732.68, and the Chi-

Square p-value = 0.83034 > 0.05. Therefore,

referring to the Chi-Square index, the suitability of

this research model is fit, [40]. The RMSEA is less

than 0.05. Besides that, Goodness of Fit Index (GFI)

= 0.96> 0.80, likewise AGFI. So, it is concluded

that the research model is in an empirical condition.

The structural model framework in this study is

formulated as follows:

DIGITALI = 0.69* CompResources , R² = 0.47

COLLAB = 0.61* CompResources, R² = 0.38

PERFORMANCE = 0.47* COLLAB + 0.42* DIGITALI

+ 0.046* CompResources, R² = 0.61

4.2 Measurement Model

After the model is declared fit, the next process is to

see indicators in a construct which is called the

construct validity test (latent variable). It is carried

out through the convergent validity test, which is an

indicator that composes data that the construct has a

high loading factor with that construct's internal

reliability and composite reliability commonly used

to evaluate construct reliability. And convergent

validity was achieved through Average Variance

Extracted and factor loadings with an expected

value >0.50.

Digital Inovation

Customer

Experience

0.89 Value Proposition

0.87

Digital Evolution

Observation

0.92

Skills

0.85

Collaboration Strategy

Partnership with

suppliers

0.89

Partnership with

customers

0.95

Partnership with

Lateral

0.89

Partnership with

Internal

0.92

Improvisation

0.87

Partnership with

complementary

0.91

DI1

DI2

DI3

DI4

DI5

DI6

DI7

0.77

0.79

0.80

0.75

DI8

DI9

DI10

DI11

DI12

DI13

DI14

0.75

0.686

0.77

0.80

0.78

0.82

DI15

0.81

Coll1 Coll2 Coll3 Coll4 Coll5

0.79 0.79 0.75 0.78 0.76

Coll6 Coll7 Coll8 Coll9 Coll10

0.77 0.78 0.78 0.81 0.77

Coll11 Coll12

0.77 0.77

Company Resources

Tanggible

Resources

Intanggible

Resources

0.87

0.95

CR1

CR2

CR3

CR4

CR5

CR6

CR7

0.77

0.82

0.77

0.81

0.80

0.81

0.78

CR8

CR9

0.81

0.77

g11 = 0.69

(0.053)

t hitung = 13.02

g21 = 0.61

(0.049)

t hitung = 12.54 Business Performance of

Internet Service Provider in

Indonesia

Profit

0.97

Asset Growth

Market Share

1.00

Perf1

Perf2

Perf3

Perf4

Perf5

0.79

0.76

0.84

0.78

0.79

χ2 = 732.68

Df = 761

P value = 0.83034

RMSEA = 0.000

GFI = .96; GFI = .96

NFI = .97; NNFI =1.00 ;

CFI = 1.00 ; IFI = 1.00

b31 = 0.42

(0.068)

t value= 6.10

b32= 0.47

(0.064)

t value= 7.28

g31 = 0.046

(0.075)

t hitung = 0.61

(ns)

Fig. 1: Estimate Model Results

In Figure 1 it is known that the loading factor is

> 0.50, and the t value of the loading factor is higher

than the t-table at a significance of 5%. It shows that

dimensions and indicators are valid in measuring

latent variables, [41]. Composite Reliability and

Cronbach Alpha are used to see the level of

reliability of indicators and dimensions in measuring

research variables. If Cronbach’s Alpha value is

greater than 0.70, [42], then the dimensions and

indicators are reliable to measure the research

variables.

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2023.20.32

Saiful Hidayat, Margono Setiawan,

Fatchur Rohman, Ananda Sabil Hussein

E-ISSN: 2224-2899

346

Volume 20, 2023

4.3 Hypothesis Testing

The results of hypothesis testing are shown in table

Table 1. Hypothesis Testing

Structural

Model

Path

Coeff.

Std.

Error

value

Conclusion

Company

Resources ->

Digital

Innovation

0.69

0.053

13.02

0.000

0.47

Significant

Company

Resources ->

Collaboration

Strategy

0.61

0.049

12.54

0.000

0.38

Significant

Company

Resources ->

Business

Performances

0.046

0.075

0.61

0.542

0.00

not Significant

Company

Resources ->

Digital

Innovation ->

Business

Performances

0.290

0.052

5.58

0.000

0.290

Significant

Company

Resources ->

Collaboration

Strategy ->

Business

Performances

0.287

0.045

6.33

0.000

0.287

Significant

The results of hypothesis testing revealed a

significance level of 95% (α = 0.05), in table 1.

conclude that:

 Company resources have a positive and

significant direct effect on digital innovation and

collaboration strategy, with of t-value > 1.98

(Prob < 0.05). Company resources have the

dominant influence on digital innovation with R2

= 0.48.

 Company resources give a positive and

significant indirect effect on business

performances both through digital innovation

and collaboration strategy and dominant

influence through digital innovation with R2 =

0.29.

 Company Resources does not have a significant

effect on Business Performances with a

coefficient of 0.046 having Prob > 0.05

The findings of this research are obtained in

Figure 2 based on the results of hypothesis testing.

= Indirect effect

= direct effect

Company

Resources

Digital Inovation

Collaboration

Strategy

Business Performance

of Internet Service

Provider

g11 = 0.69

R2 = 0.48

g11 = 0.69

R2 = 0.48

g21 = 0.61

R2 = 0.37

g21 = 0.61

R2 = 0.37

b31 = 0.42

R2 = 0.176

b31 = 0.42

R2 = 0.176

b32 = 0.47

R2 = 0.221

b32 = 0.47

R2 = 0.221

g11 *b31 = 0.290

R2 = 0.290

g21 *b32 = 0.287

R2 = 0.287

Fig. 2: Research Finding

The findings model illustrates that in the ISP

industry, company resources play a significant role

in developing digital innovation and collaboration

strategies. Company resources do not affect

business performance directly, but significantly

affect business performance through digital

innovation and collaboration strategy. These

findings illustrate that company resources can

encourage digital innovation and collaboration

strategies to improve business performance.

In real terms, companies need resources to run a

business to achieve the desired company

performance. However, according to the result of

hypothesis testing, the increase in company

performance is not caused directly by the company's

ability to control company resources, but other

factors have a more significant contribution in

improving the performance of ISP companies.

Company resources will contribute if the

company can manage these resources as inputs or

means to develop digital innovation and

collaboration strategies that can encourage increased

company performance. Company resources cannot

directly improve business performance but must go

through digital innovation and collaboration strategy

so that their influence is significant. This is contrary

to the results of previous research that aspects of

company resources significantly affect business

performance, [31], [32], [33]. Meanwhile, this

finding supports the previous research that company

resources insignificantly affect business

performance, [34].

Company resources are the company-driven

aspect. These results are following accordance with

the RBV concept which reveals the importance of

company resources to build a competitive

advantage. For ISP companies, company resources

are used to carry out digital innovations in

anticipation of a hyper-competition market.

This finding supports the result of previous

research which describes the significant role of

company resources in digital innovation, [26], [27],

[28].

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2023.20.32

Saiful Hidayat, Margono Setiawan,

Fatchur Rohman, Ananda Sabil Hussein

E-ISSN: 2224-2899

347

Volume 20, 2023

Company resources are used as capital in the

implementation of a collaboration strategy aimed at

improving company performance. Without

resources, it is difficult for companies to collaborate

because the resources they have become a

bargaining position in carrying out collaboration to

obtain resources or capabilities that they do not

have. With limited resources, collaboration is

carried out to develop technology and overcome the

limited strategic resources owned.

This finding is also in line with the previous

research finding that company resources affect

collaboration strategy, [29], [30].

Company resources have contributed to the

company's performance through its role in the

development of digital innovation. Mastery of

company resources is a driving force in

implementing digital innovations that have an

impact on improving ISP company performance.

Today, ISP companies have to put more

emphasis on company resources to be able to

innovate because the business environment can only

be adapted. Company resources are a company-

driven aspect. These results are following the RBV

concept which reveals the importance of company

resources to build a competitive advantage. For ISP

companies, company resources are used to carry out

digital innovations in anticipation of a hyper-

competition market.

These findings also support the results that

company resources affect performance through

digital innovation, [11], [22], [36], [37].

Company resources have a significant

contribution to company performance through their

role in developing collaboration strategies. Through

collaboration, companies are expected to be able to

have “Strategic Resources” that will have a long-

term competitive advantage over other companies

that do not have them, [1].

Collaboration is a means to develop technology

and overcome the limitations of the main resources

owned by the company to have a competitive

advantage. ISP companies can build themselves,

buy, and borrow (cooperate) to improve their

mastery of technology and digital innovation to gain

a competitive advantage.

This finding is also in line with the finding of the

research that collaboration strategy mediated the

influence of company resources on business

performance, [30], [38].

The company's resources and capabilities are the

basic building blocks of the company's competitive

strategy, [12]. Tangible resources and intangible

resources can be utilized by ISP companies as

capital in developing digital innovation and

collaboration strategies with related parties to

improve their business performance.

The findings of this study provide managerial

implications for the management of ISP companies

in Indonesia to improve business performance

through the development of digital innovation and

collaboration strategy that relies on the utilization

and control of adequate company resources.

5 Conclusions

In the ISP industry, company resources play a

significant role in developing digital innovation and

collaboration strategies. Company resources do not

give a direct significant effect on business

performance but significantly affect digital

innovation and collaboration strategy. Company

resources can encourage digital innovation and

collaboration strategies to improve the business

performance of ISP companies in Indonesia.

The findings give managerial implications for the

management of ISP companies in Indonesia that

improve business performance and can be built

through collaboration and digital innovation

strategies that rely on the utilization and control of

adequate company resources. The mediating effect

of digital innovation and collaboration strategies on

the relationship between company resources and

company performance has a relatively similar

coefficient of determination (0.290 and 0.287) so it

is recommended that ISP companies in Indonesia

apply digital innovation and collaboration strategy

in parallel (simultaneously) to improve business

performance by utilizing the company's resources.

The results of this study are novel and very

interesting to apply, that is, even though a company

has abundant resources, it will not directly affect

business performance but will only have a

significant influence on business performance if

these company resources are used to develop digital

innovation to answer the current rapid technological

changes and the demands of customer satisfaction

for the services provided which are increasingly

diverse and complex. Likewise, company resources

can be used as bargaining power in a collaboration

strategy to be able to complement each other's

resource needs and/or capabilities in collaborating

with horizontal stakeholders, vertical stakeholders,

and complementary stakeholders to improve

business performance. It means collaboration

strategy and digital innovation can increase the

influence of the development and utilization of

company resources on business performance so that

companies no longer have to develop and own all of

their resources independently. By elaborating their

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2023.20.32

Saiful Hidayat, Margono Setiawan,

Fatchur Rohman, Ananda Sabil Hussein

E-ISSN: 2224-2899

348

Volume 20, 2023

collaboration strategy and digital innovation,

companies can focus on developing key resources

and additional digital innovations needed to increase

the company's competitive advantage.

In addition, although this research was conducted

on the ISP Industry in Indonesia, broadly speaking,

the results of this discovery can be applied to other

industries, especially those industries that are highly

dependent on the use of technology in providing

their services. The findings can be applied in

general across industries if the industry has some of

the same characteristics as the ISP company

industry in Indonesia.

The result of this study also provides theoretical

implications that strengthen and provides empirical

evidence on the Resource Based View (RBV)

theory [1] says that to have a competitive advantage,

a company must have the capability to innovate

using its available resources and the company can

have strategic resources through collaboration.

The limitation of this research is that it has not

studied how the mediation effect of Digital

Innovation on the relationship between

Collaboration Strategy and Business Performance,

as well as how the mediation effect of Collaboration

Strategy influences the relationship between digital

innovation and business performance. It is

interesting to investigate further to find out more

about how the influence of digital innovation on

collaboration strategies and vice versa on the

relationship between company resources with

business performance, and also to find out to

improve business performance using company

resources which are more give more significant

effect, whether through digital innovation mediation

through the mediation of the collaboration strategy

or the mediation of the collaboration strategy first

then through the mediation of digital innovation,

and also to find out which of the two mediation

relationships above are more influential when

compared to digital innovation mediation and

collaboration strategies on the relationship between

company resources and business performance.

References:

[1] Barney, J. (1991). Firm Resources and

Sustained Competitive Advantage. Journal of

Management, 17(1), 99-120.

DOI:10.1177/014920639101700108

[2] Soelton, Mochamad; Noermijati, Noermijati;

Rohman, Fatchur; Mugiono, Mugiono. 2021.

Improving the Performance of Non-Profit

Organizations. Academy of Strategic

Management Journal; Vol 20, (2021): 1-13

[3] Nylen, D. & Holmstrom, J. (2015). Digital

innovation strategy: A framework for

diagnosing and improving digital product and

service innovation. Business Horizons, 58,

57-67

[4] Best, R.J. (2014). Market-Based

Management: Strategies for Growing

Customer Value and Profitability. 6th Edition.

Prentice Hall: Upper Saddle River, New

Jersey Björnfot, A., Torjussen, L.,

Erikshammar. (2011). Horizontal supply

chain collaboration in Swedish and

Norwegian SME networks

[5] Wheelen, T.L., Hunger, J. D., Hoffman, A.N.,

Bamford, C. E. (2018). Strategic management

and business policy: Globalization,

Innovation, and Sustainability. 15th edition,

England: Pearson Education Limited

[6] David, F. R. (2013). Strategic Management,

Concepts & Cases. Pearson Education

Limited. England

[7] Uno, S. S.; Supratikno, H.; Gracia Shinta S.

Ugut, Innocentius Bernarto, Ferdi Antonio

and Yudistira Hasbullah. 2020. The effects of

entrepreneurial values and entrepreneurial

orientation, with environmental dynamism

and resource availability as moderating

variables, on the financial performance and its

impacts on firms' future intention: Empirical

evidence from Indonesian state-owned

enterprises. Management Science Letters Vol.

10 Issue. 15 (2020) 3693–3700. homepage:

www.GrowingScience.com/msl

[8] Tifow, A.A. & Sayilir, O. 2015. Capital

Structure and Firm Performance: An Analysis

of Manufacturing Firms In Turkey. Eurasian

Journal of Business and Management, 3(4),

2015, 13-22 DOI:

10.15604/ejbm.2015.03.04.002

[9] Hahn, W. & Powers, T.L. 2010. Strategic

plan quality, implementation capability, and

firm performance. Academy of Strategic

Management Journal, 9(1), 63-81.

[10] Al-Tamimi, H. & Hassan, A. 2010. Factors

Influencing Performance of the UAE Islamic

and Conventional National Banks.

Department of Accounting, Finance, and

Economics, College of Business

Administration, University of Sharjah

[11] Khin, S. & Ho, T. (2018). Digital technology,

digital capability and organizational

performance: A mediating role of digital

innovation. International Journal of

Innovation Science, 11 (2), 177-195

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2023.20.32

Saiful Hidayat, Margono Setiawan,

Fatchur Rohman, Ananda Sabil Hussein

E-ISSN: 2224-2899

349

Volume 20, 2023

[12] Thompson, A.A., Peteraf, M.A., Gamble,

J.E., Strickland III, A.J. 2020. Crafting and

Executing Strategy, The Quest for

Competitive Advantage, Concepts, and cases.

Nineteenth Edition. McGraw Hill Education.

22ND EDITION

[13] Pearce, J.A. II & B. Robinson, Jr., R.B. 2015.

Strategic Management: Planning for

Domestic & Global Competition. 14th

Edition, Singapore: McGraw Hill

International Edition

[14] Yoo, Y. Henfridson, P, Lyvtinen, K. 2010a.

The New Organizing Logic of Digital

Innovation: An Agenda for Information

System Research. Information System

Research, 21, 4, 724-735.

[15] Yoo, Y., Lyytinen, K., Boland, R., Berente,

N., Gaskin, J., Schutz, D. and Srinivasan, N.

2010b. The next wave of digital innovation:

opportunities and challenges, A report of a

research workshop on Digital challenges in

innovation research. http://ssrn.

com/abstract¼1622170

[16] Gray, B. 1989. Collaborating: Finding

Common Ground for Multiparty Problems

(San Francisco: Jossey-Bass, 1989.

[17] Wood, D.J. & Gray, B 1991. Toward a

Comprehensive Theory of Collaboration. The

Journal of Applied Behavioral Science, 27

(2): 139–62.

[18] Gray, B. 2000. Assessing inter-organizational

collaboration: multiple conceptions and

multiple methods. Cooperative strategy:

economic, business, and organizational

issues. 243-260

[19] Barratt, M.A. & Green, M. 2001. The cultural

shift: the need for a collaborative culture.

Conference Proceedings of Supply Chain

Knowledge 2001, Cranfield School of

Management, November

[20] Huxham, C. & Macdonald, D. 1992.

Introducing Collaborative Advantage:

Achieving Inter-organizational Effectiveness

through Meta-strategy. Management

Decision, 30(3)

[21] Gutiérrez, R., Márquez, P., & Reficco, E.

(2016). Configuration and Development of

Alliance Portfolios: A Comparison of Same-

Sector and Cross-Sector Partnerships. J Bus

Ethics 135:55–69, DOI 10.1007/s10551-015-

2729-7

[22] Hafeez, M. H., Shariff, M.N.M, Mad Lazim,

H. (2012). Relationship between

Entrepreneurial Orientation, Firm Resources,

SME Branding and Firm’s Performance: Is

Innovation the Missing Link? American

Journal of Industrial and Business

Management, 2, 153-159

DOI: 10.4236/ajibm.2012.24020

[23] Amit, R. & Schoemarker, P. (2016). Firm

Resources. In book: The Palgrave

Encyclopedia of Strategic Management, p.1-

6). DOI:10.1057/978-1-349-94848-2_481-1

[24] Cravens, D. W., and Piercy, N F. (2013).

Strategic Marketing. 10th Edition. New York:

McGraw-Hill

[25] Björnfot, A., Torjussen, L., Erikshammar.

(2011). Horizontal supply chain collaboration

in Swedish and Norwegian SME networks

[26] Kohansal, M.R., Rahimi, M., Vazifehshenas,

S. (2013). Environmental Efficiency,

Innovation and Corporate Performance in

Management Human Resources. International

Journal of Agriculture and Crop

Sciences., www.ijagcs.com IJACS/2013/5-

IJACS Journal

[27] Sulistyo, H. & Siyamtinah (2016). The

Innovation capability of SMEs through

entrepreneurship, marketing capability,

relational capital, and empowerment. Asia

Pacific Management Review. 21: 196-233

[28] Tchuta, L. & Xie, F. (2017). Towards A

Synergic Innovation Management Model:

The Interplay of Market, Technology, and

Management Innovations, International

Journal of Business and Economic

Development, 5(1)

[29] Gavrila-Paven, I. & Muntean, A-C. (2011).

Valorising Entrepreneurial Potential of The

Central Region – Partnership Between

University and Business Environment as

Supporting Element of The Entrepreneurial

Culture. Annales Universitatis Apulensis:

Series Oeconomica, 13(2), 532-538

[30] Roja, A.I & Nastase, M. (2013). Leveragin

Revista De Management Comparat

International/Review of International

Comparative Management Organizational

Capabilities through Collaboration and

Collaborative Competitive Advantage.

Faculty of Management, Academy of

Economic Studies, Bucharest, Romania,14(3),

359-366

[31] Oladele, I. O., & Omotayo, O. A. (2014). e-

human resource management and

organizational performance (e-HRM) in the

Nigerian banking industry: An empirical

study of guaranty trust bank plc

(GTBank), Anvesha, 7(1), 10-20

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2023.20.32

Saiful Hidayat, Margono Setiawan,

Fatchur Rohman, Ananda Sabil Hussein

E-ISSN: 2224-2899

350

Volume 20, 2023

[32] Karami, A., Sahebalzamani, S., Sarabi, B.

(2015). The Influence of HR Practices on

Business Strategy and Firm Performance: The

Case of Banking Industry in Iran. The IUP

Journal of Management Research, XIV(1),

30-53

[33] Bagheri, S., Ebrahimpour, H., & Ajirloo, M.

B. 2013. Surveying The Impact of Managers

Competencies on Business Performance of

Agricultural Bank Managers In Ardabil

Province. International Journal of

Management Research and Reviews, 3(9),

3424-3433.

[34] [34] Hussain, R.T dan Waheed, S. 2019.

Strategic Resources and Firm Performance:

An Application of the Resource-Based View.

The Lahore Journal of Business, 7(2), 59–94

[35] Izadi, J., Ziyadin, S., Palazzo, M. & Sidhu,

M. 2020. The evaluation of the impact of

innovation management capability on

organizational performance. Qualitative

Market Research an International Journal,

23(4), 697-723

[36] Yasa, N.N.K., Ekawati, N.W., Rahmayanti,

P.L.D. 2019. The role of digital innovation in

mediating digital capability on business

performance. European Journal of

Management and Marketing Studies, 4(2),

111-128.

[37] Migdadi, M.M. (2020). Knowledge

management processes, innovation capability,

and organizational performance. International

journal of productivity and performance

management

[38] Wu, Huang-Yi., Lin, Yueh-Ju., Chien, Fei-

Liang., Hung, Yu-Min (2011). A Study on the

relationship among supplier capability,

partnership, and competitive advantage in

Taiwan's semiconductor industry.

International Journal of Electronic Business

Management, 9(2), 122-138

[39] Ferdinand, A. (2014). Metode Penelitian

Manajemen Pedoman Penelitian untuk

Penulisan Skripsi Tesis dan Disertasi Ilmu

Manajemen. Edisi 5, 2014, BP Undip, ISBN

979-704-254-5

[40] Hair, J.F., Black, W.C., Babin, B.J. and

Anderson, R.E. (2010) Multivariate Data

Analysis. 7th Edition, Pearson, New York.

[41] Chin W. (2000). Partial Least Squares for

Researchers: An Overview and Presentation

of Recent Advances Using the PLS

Approach. http://disc-

nt.cba.uh.edu/chin/indx.html

[42] Nunnally, J.C. & Bernstein, I.H. (1994). The

Assessment of Reliability. Psychometric

Theory, 3, 248-292

Contribution of Individual Authors to the

Creation of a Scientific Article (Ghostwriting

Policy)

-Saiful Hidayat is the main author of this article and

also plays a role in analyzing the statistical data

generated in this study.

-Margono Setiawan is an expert in the field of

economics and research management, she is also an

expert in the field of economics so she is very

instrumental in providing input on the use of

theories in this research to produce quality research.

-Fatchur Rohman is an expert in the field of

research management, he is very helpful in

providing input and input in this research so that it

can produce quality research.

-Ananda Sabil Hussein is an expert in Strategic

Marketing, he plays a role in providing input and

input in this research so that it can produce quality

research.

Sources of Funding for Research Presented in a

Scientific Article or Scientific Article Itself

All funding in this study came from private funding.

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2023.20.32

Saiful Hidayat, Margono Setiawan,

Fatchur Rohman, Ananda Sabil Hussein

E-ISSN: 2224-2899

351

Volume 20, 2023

Conflict of Interest

The authors have no conflicts of interest to declare

that are relevant to the content of this article.

Creative Commons Attribution License 4.0

(Attribution 4.0 International, CC BY 4.0)

This article is published under the terms of the

Creative Commons Attribution License 4.0

https://creativecommons.org/licenses/by/4.0/deed.en

_US