Dynamic capability as antecedent to firm efficiency

Indonesia is one of the significant players in the international petroleum industry. However, Indonesia’s petroleum industry is arguably now in a transitional phase. Recent depletion of oil resources in Indonesia was caused by low productivity and high consumption. The operational productivity of petroleum has a high risk of failure. Thus, the efficiency of firm performance must be improved. This study investigates the impact of work professionalism, ambidextrous leadership, and dynamic capabilities in efficiency on Indonesia’s petroleum industry. This study uses work professionalism and ambidextrous leadership as antecedents of personal dynamic capabilities. The research model and hypothesis were developed from the literature cited, and the hypothesis was tested based on data collected through 156 questionnaires from eight petroleum companies in Indonesia. The data obtained from questionnaires were analysed through covariance-based structural equation modelling. The results from the study indicate that dynamic capabilities have a significant effect on efficiency, and work professionalism and ambidextrous leadership also have significant positive effects on efficiency. The managerial implication from this study is that Indonesia’s petroleum stakeholders must empower the personal traits of dynamic capabilities and ambidextrous leadership in order to increase firm efficiency that in turn mitigates a low productivity situation in the oil sector.