Strategic agility and sustainable competitive advantage of private universities in Indonesia: dynamic capability theory

Private universities play a crucial role in fulfilling Indonesia’s higher education needs. However, in recent years, the sector has faced severe challenges. According to the Ministry of Education, between 2019 and 2022, more than 300 private universities in Indonesia were permanently closed or had their licenses revoked, primarily because they were unable to adapt to changing market demands and continual shifts in education policy. In addition, over 1,600 private universities reported fewer than 500 active students, with nearly 500 institutions having less than 100, illustrating deep sustainability and enrollment issues. This crisis underscores the urgent need for strategic agility and adaptability among private universities. Despite the importance of these capabilities, existing studies on Strategic Agility in higher education—particularly within Indonesian private universities—remain scarce. Most prior research focuses on corporate contexts, leaving a gap in understanding how entrepreneurial leadership, digital transformation, and strategic collaboration capabilities jointly drive sustainable competitive advantage (SCA) in this sector. Dynamic capability is a concept in management theory referring to an organization’s ability to continuously adapt and innovate in response to changing conditions. Dynamic capabilities—such as sensing, perceiving, and reconfiguring—are fundamental to addressing rapid change. Entrepreneurial Leadership Capability enables leaders to stimulate innovation, take measured risks, and drive change initiatives. Digital Transformation Capability involves integrating digital technology into various operational aspects, enabling agility in responding to technological and market shifts. Strategic Collaboration Capability reflects the ability to collaborate effectively with internal and external stakeholders, fostering agility through shared resources and expertise. Collectively, these capabilities can enhance strategic agility and positively influence SCA. This study surveyed 212 private universities in Indonesia and employed Structural Equation Modeling (SEM) using SmartPLS 3. Five of ten hypotheses were validated, showing varying significance levels among the three capabilities in influencing SCA. The study contributes theoretically by extending Dynamic Capability Theory to the higher education context with an integrated model of three critical capabilities. Methodologically, it applies a robust SEM-PLS approach with a comprehensive national sample. Practically, it offers actionable guidance for higher education leaders to strengthen strategic agility and sustain competitive advantage in a rapidly changing environment.