Strategies often fail to deliver expected performance, yet the mechanisms linking business strategy (BS) to firm performance (FP) remain unclear. This study examined whether this relationship in a state-owned enterprise (SOE) operates directly or through performance management systems (PMS) and execution consistency (EC), with corporate governance (CG) enabling execution.
A serial mediation model was estimated using consistent partial least squares structural equation modeling (PLS-SEM) on survey data from 256 executives, senior managers, and professionals across multiple entities in a non-listed Indonesian energy-sector SOE group. The instrument used existing scales, forward–backward translation, and pilot testing with 28 managers. Robustness was assessed using respondent-level controls, out-of-sample prediction, and three common method variance procedures.
EC is the proximate correlate of FP. BS has a small, non-significant direct effect but a positive, significant serial indirect effect through PMS and EC. CG has the strongest antecedent association with EC. The pattern supports EC as the primary pathway linking BS to FP, with CG as a parallel institutional enabler.
The cross-sectional, single-source design is confined to one non-listed Indonesian SOE group and cannot establish the proposed ordering. Reverse causality, omitted variables, and residual common method variance cannot be excluded, and generalization should be limited to settings meeting the specified scope conditions. Longitudinal, multi-source, and entity-clustered designs are priority extensions.
Where strategic direction is externally constrained, performance differentiation is associated more strongly with execution infrastructure than strategy formulation. Managers can respond by coupling each performance indicator to a named execution routine, accountable owner, and review cadence; monitoring EC directly; and equipping supervisory boards with execution dashboards and challenge protocols.
For citizens and communities dependent on SOE services, stronger execution practices may improve service reliability and responsiveness and the productivity of publicly owned capital.
Prior research has largely examined BS, PMS, CG, and FP separately, with their links identified mainly through case-based and qualitative research. This study integrates them in a single transmission model, provides variance-based evidence of the strategy–execution–performance pathway, distinguishes EC from adjacent constructs, and specifies when indirect pathways should outweigh a direct strategy–performance relationship.
