Competitive advantages of SMEs: The roles of innovation capability, entrepreneurial orientation, and social capital

Abstract

The purpose of this study is to examine the influence of entrepreneurial orientation and social capital on innovation and performance capabilities in achieving the competitive advantage of small and medium enterprises (SMEs). SMEs contribute significantly to the Indonesian economy, especially in the era of a monetary crisis. Some researches on performance and innovation capabilities in SMEs have focused on finance, operation, and marketing aspects but have not explored the intangible assets such as entrepreneurial and social capital. Intangible assets become a key success factor in improving the performance of SMEs, especially in the era of ASEAN Economic Community 2016. The method used in this research is descriptive and explanatory. The sample of this study is owners of SMEs handicraft in Semarang, Jepara, Kudus, with as many as 254 respondents. Sampling is conducted on SMEs that have been operating for at least five years, having employees over 10 people and still exist up to now. Data were collected by using survey method through closed and open questionnaires and interview. Data analysis was done by using the structural equation model with AMOS program. The results show that there is a significant influence between entrepreneurial orientation and social capital on innovation and performance capabilities. Innovation capability has a significant influence on performance improvement and competitive advantage of SMEs.

Effects of entrepreneurial orientation on social media adoption and SME performance: The moderating role of innovation capabilities

“…These studies indicate the considerable part of EO and that EO should be determined contextually since cultures vary across countries and within organizations. Hence, it is essential to examine the link between EO and SME performance [ 6 , 48 ].…”

“…Past studies have explained EO as a resource [ 38 , 48 ] that can produce valuable results (e.g., improved SME performance) only when appropriate capabilities are deployed [ 80 , 81 ]. RBV theory supports this, suggesting that resources should be aligned with organizational capabilities to achieve desired results.…”

“…Some have measured financial performance, while others have used subjective measures [44,51,52]. Scholars measuring SME performance have faced a similar problem [6,48]. [51] suggested that subjective performance measures will better enable decision-makers to predict the future.…”

“…Prior research has proved the direct EO-SM relationship [20,44,56] and EO and SME performance [6,48], but very few studies have used SM as a mediator [78,79]. Prior studies suggest investigating the mechanisms that affect the direct EO-SME-performance link.…”

Exploring Innovation Adoption Behavior for Sustainable Development: The Case of Hungarian Food Sector

“…In economic theory, innovation is one of the key tools for a company's growth, its access to new markets and its long-term sustainable development [1,2]. Companies, driven by increased competition from global markets and an unprecedented level of interest in sustainable development practices, are trying to implement more advanced sustainability practices and, at the same time, to maintain a high value of the products and services offered through rapid and constant innovation [3][4][5][6].…”