The Influence of Business Environment and Capabilities on Transient Competitive Advantage and Their implications for Business Performance of Micro, Small and Medium Enterprises in Indonesia

  • Authors

    • Nurul Hermina
    • Adjeng Mariana
    • Keni Kaniawati
    2018-12-13
    https://doi.org/10.14419/ijet.v7i4.34.25308
  • Transient competitive advantage, Business Performance, SEM, UMKM/MSME, Web-based Sampling.

  • Micro, small and medium enterprises (MSME – Indonesian: UMKM – Usaha Micro, Kecil dan Menengah) are the key to increase growth, create employment, act as the source of people’s income, to fulfil the need of goods and services, to increase the added values which eventually influence the economic growth. This research is aimed to explain how business environment and capability influence the competitive advantage which plays an important role that determines the business performance of MSME. The total sample able to be collected with web-based design is 56 MSME/UMKM from all over Indonesia. The analysis technique used is structural equation modeling (SEM). The study proves that business environment does not significantly influence the business performance of MSME/UMKM. However, this variable contributes significant indirect influence with a greater level than its direct influence. The finding indicates that improvement in business environment will be able to boost the business performance if it is combined with the improvement in competitive advantage of the MSME/UMKM.

     

     


     

  • References

    1. [1] Klaus S (2016) The Global Competitiveness Report (2016-2017). World Economic Forum. http://www3.weforum.org/docs/GCR2016-2017/05FullReport/TheGlobalCompetitivenessReport2016-2017_FINAL.pdf.

      [2] The annual report of the minister of cooperatives and micro, small and medium enterprises (UMKM) (2016).

      [3] The annual report of the minister of cooperatives and micro, small and medium enterprises (UMKM) (2017).

      [4] Altschuller S, Gelb DS, Henry TF (2010) A Resource for Competitive Agility: An Analysis of Firm Performance During Industry Turbulence. Journal of International Technology and Information Management, 19, 39-59.

      [5] Ansoff HI, McDonnell EJ (1990) Implanting Strategic Management. Prentice Hall.

      [6] Eisenhardt KM (1989) Building theories from case study research. Academy of Management Review, 14(4), 532-550.

      [7] Hosseini SM, Sheikhi N (2012) An Empirical examination of competitive capability’s contribution toward form performance. International Business Research, 5(5), 116-131.

      [8] Indiatsy CM, Mwangi MS, Mandere EN, Bichanga JM, George GE (2014) The Application of Porter’s Five Forces Model on Organization Performance: A Case of Cooperative Bank of Kenya Ltd. European Journal of Business and Management, 6(16), 75-85.

      [9] Teece DJ (2007) Explicating Dynamic Capabilities: The Nature and Micro Foundations of (Sustainable) Enterprise Performance. Strategic Management Journal, 28(13), 1319-1350.

      [10] Hill CWL, Jones GR (2013) Strategic Management: An Integrated Approach. South-Western.

      [11] Porter ME (1989) How competitive forces shape strategy. In D Asch, C Bowman (Eds.), Readings in strategic management. London: Palgrave, pp. 133-143.

      [12] Hunger JD & Wheelen TL (2011) Essentials of Strategic Management. Prentice Hall.

      [13] Porter ME (1980) Competitive Strategy. Free Press.

      [14] McGrath RG (2013) The End of Competitive Advantage: How to keep your strategy moving as fast as your business. Harvard Business Review Press.

      [15] Kaplan RS, Norton DP (2014) Strategy Maps. Harvard Business School Publishing

      [16] Hair JF, Hult GTM, Ringle C, Sarstedt M (2016) A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). Sage Publications.

  • Downloads

  • How to Cite

    Hermina, N., Mariana, A., & Kaniawati, K. (2018). The Influence of Business Environment and Capabilities on Transient Competitive Advantage and Their implications for Business Performance of Micro, Small and Medium Enterprises in Indonesia. International Journal of Engineering & Technology, 7(4.34), 340-347. https://doi.org/10.14419/ijet.v7i4.34.25308