Strategic Dynamic Capability for
Indonesia Real Estate Companies
Kelik Hastjarjo
Doctoral Program in Management Science
Padjadjaran University
Bandung, Indonesia
hastjarjo21@gmail.com
Abstract—Purpose– This study aims to address the factors or
variables that would effect to real estate companies facing a
rapid change in the industrial environment. in Indonesia.
Design/methodology/approach– In total, 215 respondents
from all across Indonesia participated in the questionnaire for
this study. For data analysis, the authors used SEM analysis to
reach the conclusion of this study. Findings– The findings
suggested the model of strategic dynamic capability for real
estate Indonesia companies that consist five strategic
management variables.
Keywords—external environment; dynamic capability; core
competence; business strategy; business environment; real estate
Indonesia
I. INTRODUCTION
Real estate development is driven by external
environmental factors. In recent years, the external
environment has changed rapidly (Ho, 2014: 240).
Disruptive in the real estate world, making buildings that
do not take into account rapid changes is less feasible. Real
estate must be adaptable, disrupting, in a good, sustainable and
unique location. (Veuger, 2018: 107). To prepare for this
implication, the real estate company operations ensure that the
company has the right dynamic capability to create new
operational capability.
Competition among real estate developers is increasingly
fierce due to governme
nt regulations, increased industrial concentration, and
increased external operating costs. Therefore, real estate
developers must foster their core competence to obtain a
sustainable competitive advantage (Wang et al. 2015 (in Yang
et al. 2015: 109).
Real estate growth in developing countries also increases
competition among real estate companies and the investment
community. Real estate companies must update their
competitive positions and strategies in the market.
Business performance in a strategic management
perspective, is part of the concept of overall organizational
effectiveness. The formulation of the company's strategy and
Prof. Dr. Dwi Kartini Yahya, SE., Spec. Lic
Doctoral Program in Management Science
Padjadjaran University
Bandung, Indonesia
its implementation are the main factors of the company's
performance excellence.
II. LITERATURE RIVEW
A. Strategic Dynamic Capability
This study combines market-based view (MBV) and
resource-based view (RBV) such as Grant (2013: 10) and
dynamic capability approach (DCA). In this study, business
strategy is a link between external environment, dynamic
capability, and core competence to achieve business
performance.
External Environment - the construct of external
environment in this study is a change in factors outside an
industry (Hitt et al, 2015: 38), and companies (Hitt et al,
2015: 38; Pearce II and Robinson, 2013: 87; Grant, 2013:
60); which has an impact on the choice of strategy (Pearce II
and Robinson, 2013: 87), and organizational performance
(Grant, 2013: 60).
Dynamic Capability – the construt of dynamic capability
in this study is the capability (Wang and Ahmed, 2007: 10) in
the form of corporate processes (Eisenhardt and Martin,
2000: 1107), routine operational organizations (Zollo and
Winter, 2002: 340), or distinct skills, processes, procedures,
organizational structures, decision rules, and disciplines
(Teece, 2007: 1341) that can sense and shape opportunities
and sensing, seizing, and maintaining competitiveness through
transfers and reconfiguring resources. (Teece et al., 1997:
516; Teece, 2007: 1319) and the operational capability of
Pavlou and El Sawy (2011: 242) to deal with a rapidly
changing environment
Core Competence – the construct of core competence in
this research are the set of skills, technology (Prahalad and
Hamel, 1990: 15), experience, knowledge and systems
(Markides and Williamson (1994: 153), at the centers of
activity (Mooney, 2007: 111) in value chain (david, 2013:
151).
Business Strategy - the construct of business strategy in
this study is the strategy as a long-term plan that contains
decisions and actions (Pearce II and Robinson, 2013: 4;
David, 2013: 41; Dess et al. 2012: 48) which comprehensively
states the company's mission and objectives (Wheelen et al., dynamic capability and core competence and intervening
2015: 51) to interact with a competitive environment (Pearce variables, namely business strategy.
II and Robinson, 2013: 4); by configuring resources (Johnson
and Scholes, 2002 in Shah et al., 2015: 91-92), exploiting core
competence (Hitt et al., 2015: 4), competing is different from
competitors (Thomson et al., 2014: 4), in a single industry for
achieve competitive advantage (Barney and Hesterly, 2015:
124).
Business Performance – the construct of business
performance in this study is the measurement of business
performance of organizations with financial, operational
dimensions (Venkatraman and Ramanujam, 1986: 803-804),
including efficiency and effectiveness of companies to achieve
competitive advantage in the real estate development process.
Fig. 2. Value of Effect of External Environment, Dynamic Capability and
B. The Model and Hipotesis Core Competence on Business Strategy

In Figure 2 shows the value of the influence of external

environments, dynamic capability and core competence on
business strategy. The value of the influence of the external
environment on business strategy is ϒ11 = 0.18, the value of
the effect of dynamic capability on business strategy is ϒ12 =
0.28, and the value of the effect of core competence on
business strategy is ϒ13 = 0, 25.
.
Fig. 1. The Theoritcal Model of Strategic Dynamic Capability

The hipotheses are :

1. External environment (LE), dynamic capability (KD) and
core competence (KI) affect the business strategy (SB) of
real estate companies in Indonesia.
2. External environment (LE), dynamic capability (KD) and
core competence (KI) influence business performance
(KB) directly in real estate companies in Indonesia.
3. External environment (LE), dynamic capability (KD), and
core competence (KI) indirectly affect business Fig. 3. Value of Significant of External Environment, Dynamic Capability
performance (KB through business strategy (SB) in real and Core Competence on Business Strategy
estate companies in Indonesia.
Significance value (tvalue) on external environment
variables, dynamic capability and core competence of business
III. RESEARCH METHOD strategy is presented in Figure 3. the effect of core competence
Observations using the time horizon are cross section / one on business strategy is 2.73.
shot from 2017 - 2018. The unit of analysis are 215 directors
or managers real estate developer companies in Indonesia. The TABLE I. TABLE STYLES TEST RESULTS FOR THE FIRST HYPOTHESES
design of the analysis used is a structural equation model
Hypotheses Path coeff. T Value Result
(SEM).
External Environment > Business Strategy 0.18 2.15 significant
IV. RESULTS Dynamic Capability > Business Strategy 0.28 3.11 significant
Core Competence > Business Strategy 0.25 2.25 significant
A. Effect of External Environment, Dynamic Capability, and
Core competence on Business Strategy structural equation
SB = 0.18LE + 0.28KD + 0.25KI + ἐ
The testing of the first hypotheses is done by the
significance test of the standardized solution and based on the Based on table I, the results of testing the hypothesis above
significance value (t-value) with a 95% confidence level or the can be seen that all the results of testing the fourth hypothesis,
significance level α = 5%. The second hypothesis test uses fifth and sixth produce a value of tcount> 1.96 so that this
exogenous variables consisting of the external environment, hypothesis test all has a significant effect. The results of
testing the fourth, fifth and sixth hypotheses state that there is
a significant influence on the external environment on
business strategy, there is a significant effect of dynamic
capability on business strategy and there is a significant effect
of core competence on business strategy in real estate
companies in Indonesia. The path coefficient value (ϒ) as a
direct influence of the external environment on business
strategy (ϒ11) is 18%, the dynamic capability of the business
strategy (ϒ12) is 28%, and the core competence of the
business strategy (ϒ13) is 25%.
B. Effect of External Environment, Company Dynamic
Capability, and Core Competence on Business
Performance
The testing of the second hypotheses is carried out with a
significance test based on the standardized solution and based
on the significance value (t-value) with a 95% confidence
level or a significance level of α = 5%. This hypothesis test
uses exogenous variables, namely the external environment,
dynamic capability and core competence and uses endogenous
variables, namely business performance.
Fig. 4. Value of Effect of External Environment, Dynamic Capability and
Core Competence on Business Performance
In figure 4 shows the value of the influence of the external
environment, dynamic capability and core competence on
business performance. The value of the influence of the
external environment on business performance is ϒ11 = 0.28,
the value of the influence of dynamic capability on business
performance is ϒ12 = 0.39, and the value of the effect of core
competence on business performance is ϒ13 = 0, 33.
Fig. 5. Value of Significant of External Environment, Dynamic Capability
and Core Competence on Business Performance
Significant value (tvalue) between external environment
variables, dynamic capability and core competence on
business performance is presented in figure 5. The magnitude
of the external environmental significance value to business
performance is 4.04, the significance value of dynamic
capability for business performance is 5.18 and the value
significance of core competence for business performance of
4.40.
TABLE II. TABLE STYLES TEST RESULTS FOR THE SECOND HYPOTHESES
Hypotheses Path coeff. T Value Result
External Environment > Business
Performance 0.28 4.04 significant
Dynamic Capability > Business
Performance 0.39 5.18 significant
Core Competence > Business Performance 0.33 4.40 significant
structural equation
KB = 0.28LE + 0.39KD + 0.33KI + ἐ
Based on table II, it can be seen that all the results of
testing the eighth hypothesis, tenth and tenth produce tcount>
1.96 so that the overall hypothesis test has a significant
influence. The results of testing this hypothesis state that there
is a significant influence on the external environment on
business performance, there is a significant effect of dynamic
capability on business performance and there is a significant
effect of core competence on business performance. The path
coefficient value (ϒ) as a direct influence of the external
environment on business performance (ϒ11) is 28%, dynamic
capability for business performance (ϒ12) is 39%, and core
competence for business performance (ϒ13) is 33%.
C. The Effect of Business Strategy in Moderating the External
Environment, Company Dynamic Capability, and Core
competence Against Business Performance
The testing the third hypotheses is done by the significance
test of the standardized solution and based on the significance
value (t-value) with a 95% confidence level or a significance
level of α = 5%. The structural model estimation results on the
influence of business strategy in moderating the external
environment, dynamic capability and core competence of
business performance are shown in figure 4. below.
In figure 6 shows the value of the influence of the external
environment, dynamic capability and core competence on
business performance indirectly which is moderated by
business strategy. The value of the influence of the external
environment on business strategy is ϒ11 = 0.19, the value of
the influence of the external environment on business
performance is ϒ21 = 0.23, the value of the effect of dynamic
capability on business strategy is ϒ12 = 0.27, the magnitude
of the effect of dynamic capability on business performance
by ϒ22 = 0.32, the value of the effect of core competence on
business strategy is ϒ13 = 0.25, the value of the effect of core
competence on business strategy is ϒ23 = 0.26, the magnitude
of the effect of business strategy on business performance is
β21 = 0, 27.
The magnitude of the significance of the external
environment towards business strategy is 2.20, the magnitude
of the significance of the external environment on business
performance is 3.34, the significance value of the dynamic
capability of the business strategy is 3.07, the significance
value of dynamic capability for business performance is 4 15,
the magnitude of the core competence significance of business
strategy is 2.81, the significance value of core competence on
business performance is 3.44, and the significance of business
strategy on business performance is 2.87.
Fig. 6. Value Effect of business strategy in moderating the external
environment, dynamic capability and core competence of business
performance
The estimation results of structural models on the
influence of the external environment, dynamic capability and
core competence on business performance indirectly which are
moderated by business strategy are shown in Figure 4.12
which shows the standardized solution coefficient value which
shows how much the direct influence and significance value.
TABLE III. TABLE STYLES TEST RESULTS FOR THE THIRD HYPOTHESES
Hypotheses Path coeff. T Value
External Environment > Business Strategy 0.19 2.20
Dynamic Capability > Business Strategy 0.27 3.07
Core Competence > Business Strategy 0.25 2.81
External Environment > Business
Performance 0.23 3.34
Dynamic Capability > Business
Performance 0.32 4.15
Core Competence > Business Performance 0.26 3.44
Business Strategy > Business Performance 0.27 2.87
structural equation
KB = 0.19LE + 0.27KD + 0.25KI + 0.23LE + 0.32KD + 0.26KI +0.27SB + ἐ
Based on table III, it can be seen that all the results of the
eleventh hypothesis test, twelfth and thirteenth result in
tcount> 1.96 so that all hypothesis tests have a significant
influence. The results of this hypothesis testing state that there
is a significant influence on the external environment on
business strategy, dynamic capability on business strategy,
core competence on business strategy, external environment
on business performance, dynamic capability on business
performance, core competence on business performance, and
business strategy on performance business.
While the value of the path coefficient (ϒ) as the value of
the direct influence of the external environment on business
strategy is 19%, the direct effect of dynamic capability on
business strategy (ϒ12) is 27%, the value of the direct effect
of core competence on business strategy (ϒ13) by 25%, the
direct influence of the external environment on business
performance (ϒ21) is 23%, the direct effect of dynamic
capability on business performance (ϒ22) is 32%, the direct
effect of core competence on business performance (ϒ23) is
26%, and the value of the direct effect of business strategy on
business performance (β21) is 27%.
D. Test of Research Instruments
Based on the results of calculating construct reliability
(CR) and variance extracted (VE) in each research dimension,
it can be seen that all research dimensions are declared valid
because they have a factor loading value of ≥ 0.5. While the
CR value in each construct has a value of ≥ 0.7 so it can be
concluded that all constructs and dimensions used in this study
have good validity and reliability.
E. Model Compatibility Test
The results of the model testing obtained a path diagram
model based on parameter estimation models that can explain
the relationship of the model structurally as shown below.
Result
significant
significant
significant
significant Fig. 7. The value of the influence of the external environment, dynamic
capability, core competence on business performance is moderated by
significant business strategy.
significant
significant
Fig. 8. The value of the influence of the external environment, dynamic
capability, core competence on business performance is moderated by
business strategy.
 Figure 7 and 8 above show seven paths either directly or
indirectly which show the path hypothesis tested. The path is
indicated by a direction arrow from one variable to another
variable. This one-way arrow symbol shows the effect of
exogenous constructs on endogenous constructs. The values
inherent in each pathway are path coefficients that are
identical to the beta coefficients in the regression analysis.
The pathway model above explains that the external
environment, dynamic capability, core competence affect
business performance which is moderated by business
strategy. So that this research can be used as a model to
improve the business performance of real estate companies in
Indonesia.
V. CONCLUSION & NOVELTY
Based on the results of quantitative analysis, this study
produces a Business Performance Model of Real Estate
Companies formed by the external environment, dynamic
capability and core competence of business performance
indirectly moderated business strategy. Figure 4.13 shows the
model findings of this study.
Novelty research entitled "Model" is expected to be useful
for real estate development companies in Indonesia in an
effort to improve business performance through business
strategy. Other efforts to improve business performance are
anticipating changes in the external environment, developing
the company's dynamic capability more reliably, as well as
building the competency of the right company.
Fig. 9. The Empirical Model of Strategic Dynamic Capability for Real Estate
Indonesia Compenies.
The results of this study also have novelty including:
1. Five variables are examined, namely the external
environment, dynamic capability, core competence, business
strategy, and business performance. The research using the
five variables mentioned above was carried out on companies
that joined the Indonesian Real Estate Association which had
never been done by previous researchers.
2. This research develops a new dimension in core
competency variables where this dimension has never been
used by previous researchers. This dimension describes the
company's efforts in managing the development area that has
been completed or has been used by residents / customers.
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