Core Competency and Industry Environment: Its Influences on the Competitive and Cooperative Strategy and Its Implication on the Performance of Sharia-based Financial Institutions in Aceh Province

Objective – The aims of the research are to describe and investigate the causal relationship among underlying exogenous Variables (Core Competency and Industry Environment) and Endogenous Variables (Competitive Strategy and Cooperative Strategy and Performance) of Sharia Based Banking and Microfinance Institutions in the Province of Aceh, Indonesia. Methodology/Technique – The research consists of quantitative survey involving 252 respondents deriving from 79 Sharia based financial Institutions in the region. The collected data are processed by using SEM-Amos. Findings – All of eight hypotheses of variables tested in the model have a significant influence among constructs, except for two hypotheses, namely, between Core Competency and Cooperative Strategy and between Cooperative Strategy and Performance. Another finding is that core competency and Industry environment have stronger influence directly on performance than that influence through the intervening variables of Competitive Strategy and Cooperative Strategy. Novelty – The integration of RBV Approach (e.g. Core Competency) and Industrial Organization View (I/OV) Approach (e.g. Industry Environment) to boast superior business performance is particularly new to the context of sharia-based financial institutions. The research contributed to the literature on sharia-based banking and microfinance and strategic management. Type of Paper: Empirical