The Determinants and Effects of Competitive Advantage of Lasem Batik Tulis MSEs

Abstract

This study examines the direct effects of human capital (HC), structural capital (SC), and relational capital (RC), on MSE performance (MP), and analyzes the mediating impact of competitive advantage (CA) on the relationship between HC, SC, and RC with MP using a partial least square-structural equation modeling (PLS-SEM) technique. This study also adds CA as a mediating variable to reflect the research setting of batik tulis MSEs in Indonesia. The study documents that HC and RC have a significant effect on CA. HC, RC, and CA have a significant positive effect on MP. The partial mediating role of CA is demonstrated in the indirect pathway of HC, SC, and RC to MP. Intangible capital (non-financial capital) can be a vital asset to increase CA and MP, especially when facing the crisis caused by the pandemic. The findings provide a model for consideration by related parties in improving community welfare through increasing MP, taking into account the determinants of HC, SC, RC, and CA.