A Competitive Strategy Quality System of SME’s Handicraft Products

in a Development Country (Study in Central Java Province, Indonesia)

PRAMONO HARI ADI1, ARISSETYANTO NUGROHO2, RIO DHANI LAKSANA1

Universitas Jenderal Soedirman

INDONESIA

required to address the issues raised above. Thus, a research model was developed using four research

variables: strategic asset quality, adaptability, the entrepreneurial orientation of SME owners, and competitive

strategy quality. Data regarding the variables studied used a structured questionnaire so that the structured

statements in the questionnaire were able to answer the research variables, which 110 handicraft owners then

answered in Central Java Province, Indonesia. Following the collection of the data, the structural equation

modeling (SEM) method was used to analyze it. The model created for this study is a fit, according to the

findings of the model testing. The competitive strategy quality system is positively and significantly impacted

by the analytical findings about the role of strategic asset quality, environmental adaptability, and

entrepreneurial orientation. According to the results of the hypothesis, enhancing the capability of asset quality

indicators and the company's environmental adaptability may be used to improve the competitive strategy

1 Background

In general, SME’s in developing nations frequently

struggle with financing, marketing, knowledge gaps,

and low-quality human resources. Mastery of

knowledge is a key aspect to increase

competitiveness in the face of rising competition.

The main flaw of SME’s is this. Both internal and

external variables have an impact on the low levels

of knowledge mastery in SME’s, [1]. Internal causes

external element,

by SME’s is necessary to have various new market

breakthroughs, the determination of accurate market

strategies, improvement of the system of product

quality, and the competitiveness of the products

related to financing, marketing, a lack of knowledge,

and weak human resources. Knowledge mastery is a

crucial component to boosting competitiveness in

the face of growing competition, [6]. The main flaw

with SMEs is this. Both internal and external

variables have an impact on the poor level of

knowledge mastery in SMEs. According to the

findings of earlier studies, the issues that SMEs

frequently confront mostly relate to the policy in

defining the quality of competitive strategies to grow

The uncertainty and turbulence of the organizational

environment can be identified through its

dimensions: dynamics, complexity, and scarcity of

resources, [8]. The volatility of environmental

changes tends to be higher and its contributors are

not easily predicted with accuracy, [9]. Uncertainty

also occurs due to the scarcity of key resources for

the creation of added value and competence in

today's society, namely knowledge or wisdom, and

attention. A strategic asset is anything that a firm

lies in the ownership of intangible resources. In the

HR Scorecard, the ownership of intangible assets

will provide tangible benefits/ profitability, [11].

Intangible strategic assets owned by an organization

include human resource competence, knowledge

management, organizational capability, and

experience (CEO), [12].

The study, [13], suggests three levels of capabilities,

company activities or the company's ability to learn,

adapt, change, and make continuous updates.

Organizational capabilities are defined as

competencies or abilities to work effectively on

specific tasks and goals, including the ability to

transfer knowledge and skills to new tasks and

Resource-based competencies can be

4 Research Result

Based on research collected through questionnaires,

the profile of respondents according to age is

obtained in Table 1.

are seen from the length of business, the type of

product produced, the form of the company, the

target market, and the number of employees. When

viewed from the length of business, most of the

respondents (80%) have been running their business

for more than 15 years from generation to

generation from their parents. The duration of

business is less than 5 years and more than 15 years

respectively. The majority of respondents produce

all products made from batik materials only (42%),

5 Discussion

research (2017) which states that companies must

able to align the company's capabilities with its

environment. This is also consistent with the study

by Grace George et al. (2022), which found that

organizations that are highly flexible and adaptive to

their external environment do better than those that

are less flexible and less adaptive.

environment are carried out by understanding

customers, suppliers, dealers, and competitors. For

to the company, such as price and service. While the

analysis of competitors is done by observing the

trends that develop in the batik industry.

The quality of a competitive strategy is significantly

influenced by the orientation variable

entrepreneurship, with a degree of influence of

courage to take risks which are characteristics of

entrepreneurial orientation affect sustainable

competitive advantage. Likewise, the results of

research by Marcella, et.al (2022) state that

companies with a good entrepreneurial orientation

will be able to improve performance. Increased

entrepreneurial orientation is carried out by

increasing the company's ability to innovate

(innovativeness), increasing courage in taking risks

(risk-taking), and taking advantage of every

opportunity (proactiveness). Courage in taking risks,

Source and Small Business

Competitiveness, Competitive Forum,

Indiana, Vol.4 Issue 2.

of Covid-19 on Digital Transformation and

Medium Enterprise: Strategic Planning and

Penang, Malaysia.

Effectively: Environmental Scanning,

Competitive Strategy, and Organizational

Performance in Small Manufacturing Firms,

Journal of Small Business Management,

Milwaukee, Vol. 38, Issue 1.

among Social Capital, Entrepreneurial

Small and Medium-Sized Enterprises,"

WSEAS Transactions on Business and

Economics, vol. 12, pp. 65-73,

Strategy Analysis: A Case Of Local Food

Economics Research.

[8] Grace George Bikefe, Cross Ogohi

Daniel,2022. "Employee Retention Practices

and the Performance of Small and Medium

Enterprises in Nigeria," WSEAS

Transactions on Business and Economics,

vol. 19, pp. 1493-1506

[9] Thu Suong, 2020 "The Impacts of

Transformational Leadership on Motivation

of Employees: The Case of Employees at

Faculty of Management Marketing in

Business Affairs.

[11] Joao, Ferreira & Azevedo, Susana, 2017,

Entrepreneurial Orientation as a main

Resource and Capability on Small Firm's

Growth, University of Beira Interior.

[12] Laksana, R.D., Mayasari, V., Setyanto, R.P.

2020. Model of disorientation and

disqualification of peripheral services in

public services on local government device

Clairine, Mohammad Ichsan, Agung

Ruschitskaya,2021 "Subjective

Functioning of Small and Medium-sized

Enterprises in the Russian Federation,"

WSEAS Transactions on Business and

Economics, vol. 18, pp. 51-58

[15] Papulova, Emilia & Zuzana Papulova, 2006,

Competitive Strategy And Competitive

Strategy Advantages Of Small And

WSEAS Transactions on Environment and

Development, vol. 17, pp. 898-910, 2021

Resources, Entrepreneurial Orientation, and

The Performance Of Small and Medium-

Size Businesses, Strategic Management

Journal, 24:1307-1314.