Dynamic Capabilities as the Foundation of Sustainable Competitive Advantage in MSMEs: The Mediating Role of Strategic Innovation

Determinants of Competitive Advantage Through Firm Performance: A Quantitative Strategic Management Approach

This study aims to analyze the influence of Innovation Capability, Market Orientation, and Resource Capability on Competitive Advantage with Firm Performance as a mediating variable among batik Micro, Small, and Medium Enterprises (MSMEs) in Tangerang Regency. A quantitative approach was employed using Partial Least Squares Structural Equation Modeling (PLS-SEM) through SmartPLS 4.0. A purposive sample of 147 respondents was obtained from a registered population of 247 active batik MSME units as of January 2026. Results reveal that all three antecedent constructs exert significant positive influences on both Firm Performance and Competitive Advantage, with Resource Capability emerging as the strongest predictor. Firm Performance is confirmed as a significant partial mediator in all three indirect pathways from Innovation Capability, Market Orientation, and Resource Capability to Competitive Advantage. These findings provide actionable strategic insights for batik MSME owners, policymakers, and development agencies seeking to strengthen sectoral competitiveness sustainably

Absorptive Capacity and Sustainable Competitive Advantage through Market Orientation and Dynamic Capability in MSMEs

Purpose: This study examines the direct and mediating effects of market orientation, dynamic capability, and absorptive capacity on sustainable competitive advantage among Micro, Small, Medium-Sized Enterprises (MSMEs).Research Methodology: Employing a quantitative explanatory approach, this study analyzes data from 280 purposively selected MSMEs using structured questionnaires and Partial Least Squares Structural Equation Modeling (PLS-SEM).Results: The findings indicate that market orientation significantly enhances absorptive capacity by improving firms’ ability to acquire, assimilate, and utilize external knowledge. Market orientation and dynamic capability also positively affect sustainable competitive advantage, while absorptive capacity partially mediates these relationships.Conclusions: MSMEs need to strengthen market knowledge, organizational flexibility, and knowledge management capabilities to maintain long-term competitiveness.Limitations: The cross-sectional design and industry-specific context may limit the generalizability of the findings across different sectors and regions.Contributions: This study contributes to the Knowledge-Based View (KBV) and Dynamic Capability Theory (DCT) by explaining how knowledge utilization and adaptive capabilities generate sustainable competitive advantage. It also provides practical implications for MSME managers in improving strategic responsiveness and organizational adaptability.

Business Strategy, Technological Capability, and MSME Performance: The Mediating Role of Competitive Advantage

Micro, small, and medium enterprises operating within free trade zones face intensifying competitive pressures that demand both strategic clarity and technological readiness to sustain business performance. Despite growing scholarly attention to strategy and technology as performance drivers, their simultaneous examination within a mediated structural model remains limited in open industrial zone contexts. This study investigates the influence of business strategy and technological capability on MSME business performance in Batam City, Indonesia, with competitive advantage as a mediating variable. A quantitative explanatory design was employed, with data collected from 350 MSME respondents through a structured Likert-scale questionnaire and analyzed via Partial Least Squares Structural Equation Modeling using SmartPLS 4.1. All seven hypotheses were supported. Both constructs significantly and positively affect competitive advantage and business performance, with technological capability producing the strongest path coefficient in the model, particularly toward competitive advantage. Competitive advantage partially mediates both the strategy-performance and technology-performance relationships. The findings extend the Resource-Based View and Dynamic Capabilities Theory to the MSME free trade zone setting and offer guidance for practitioners and policymakers seeking to support technology-driven competitive development.

Dynamic Capabilities and Sustained Competitive Advantage in Indonesian Public Sector Innovation: The Moderating Role of Effectuation

Purpose – This study examines how dynamic capabilities influence sustainable competitive advantage (SCA) in Indonesian public sector organizations and investigates the moderating role of effectuation. Drawing on the Dynamic Capabilities View (DCV), Resource-Based View (RBV), and effectuation logic, the study explains how sensing, seizing, and transforming capabilities sustain public sector innovation. Design/Methodology/Approach – A quantitative explanatory survey was conducted using data from 290 public service innovations selected from 1,059 KIPP Top Public Service Innovation (SINOVIK) recipients. Data were collected through structured questionnaires and analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS). Findings – The results show that sensing, seizing, and transforming capabilities have positive and significant effects on SCA. Effectuation significantly strengthens these relationships, indicating that adaptive decision-making, experimentation, stakeholder commitment, and flexible resource utilization enhance the sustainability of public sector innovation. Originality/Value – This study extends the literature by integrating dynamic capabilities and effectuation to explain sustainable competitive advantage in the public sector. The findings suggest that innovation sustainability depends not only on organizational capabilities but also on adaptive decision-making, providing practical guidance for strengthening long-term public value and institutionalized service innovation.

An Integrative SMESCO-Based Model of Entrepreneurial Orientation, Innovation, Sustainable Competitive Advantage, and MSME Performance

The Impact of Strategy Flexibility on Business Model Innovation, Competitive Advantage, and Company Performance: A Study on the Sustainable Growth of the Small and Medium-Sized Enterprises in Iran

This study examines the role of strategic flexibility (SF) in supporting sustainable growth among small and medium-sized enterprises (SMEs) operating in an emerging economy context. Specifically, it investigates the relationships between SF, business model innovation (BMI), competitive advantage (CA), and firm performance (FP) in Iranian SMEs. Drawing on the Resource-Based View (RBV) and Dynamic Capabilities Theory (DCT), the study empirically examines a capability–innovation–performance model and contributes by extending existing theoretical relationships to the context of SMEs in an emerging economy. Using structural equation modeling (SEM), data were collected through 391 validated questionnaires from SMEs across different sectors in Iran. The findings reveal that SF has a direct and significant effect on both BMI and CA, while BMI positively influences CA and FP. However, CA does not show a significant direct effect on FP, suggesting that competitive positioning alone may be insufficient to generate performance outcomes in uncertain and resource-constrained environments. The results indicate that adaptive and innovation-oriented capabilities play a central role in enhancing long-term organizational resilience and sustainable performance among SMEs operating under institutional and market volatility.