Effects of Focus Strategy and Technological Innovation on The Performance of Sharia Commercial Banks in Indonesia

Noorikha Pandayahesti Saputeri; Juhary Ali; Tulus Suryanto; Zulkarnain Kedah

doi:10.59890/ijefbs.v4i2.395

Authors

Noorikha Pandayahesti Saputeri Asia e University
Juhary Ali Asia e University
Tulus Suryanto UIN Raden Intan Lampung
Zulkarnain Kedah Asia e University

DOI:

https://doi.org/10.59890/ijefbs.v4i2.395

Keywords:

Sharia Commercial Bank, focus strategy, technological innovation, performance, SEM-PLS.

Abstract

This study examines the effect of focus strategy on the performance of Sharia Commercial Banks, with technological innovation as a mediating variable. Drawing on Porter’s strategic framework, the study explores how targeted market segmentation combined with digital innovation enhances competitiveness in Islamic banking. A quantitative approach using Structural Equation Modeling (SEM-PLS) is employed to test the proposed relationships. The results indicate that focus strategy significantly improves organizational performance both directly and indirectly through technological innovation. Innovation plays a crucial role in strengthening the effectiveness of focus strategy by enabling banks to better serve specific market segments. These findings highlight the importance of integrating strategic orientation with digital capabilities to achieve sustainable performance. This study contributes to the literature by providing empirical evidence on the mediating role of technological innovation in Islamic banking and suggests future research to explore additional mediating factors across broader contexts.

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