Factors Affecting Competitive Advantages Among the Batik SMEs in Malaysia

Abstract

The economic development of emerging economies is mainly focusing on SMEs’ performance. Moreover, the increasingly competitive business landscape forced SMEs to cultivate their competitive advantage for improvement. This work aimed to examine the effects of firm’s innovation, customer, competitor, and supplier orientations with the firms’ absorptive capacity regarding competitive advantage. This study utilised a cross-sectional research design and collected data from batik SMEs in Kelantan and Terengganu situated in Malaysia. The structured interview obtained 213 valid responses for data analysis. The analysis used variance-based structural equation model such as PLS-SEM. The results revealed that the significant and positive effect of a firm’s innovation orientation, competitor orientation, supplier orientation, and firm’s absorptive capacity on the firm’s competitive advantage. However, the firm’s customer orientation had an insignificant effect on the firm’s competitive advantage. Moreover, the firm’s competitor orientation and absorptive capacity were the most significant contributors to the firms’ competitive advantage. Finally, this paper presented the discussion and implications in concluding the research findings.