Susana, Erni and Andarwati, Mardiana (2021) Empowerment of Small and Medium Businesses (SMES) based on regional potential in an effort to increase competitive advantage and business performance. IOSR Journal of Business and Management (IOSR-JBM), 23 (9). pp. 56-65. ISSN 2278-487X

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Abstract

Empowerment of SMEs based on regional potential through local economic development, local governments
and community groups are required to take initiative and instead of passive roles.Various strategic roles are
owned by the SME sector, but this sector is also faced with various problems, including in terms of capital,
business management capabilities, and the quality of human resources.The objectives of this study are: (1) To
analyze the influence of innovation ability, innovation culture, human resource capability, and customer
orientation on competitive advantage in SMEs in Malang Regency. (2) Analyzing the influence of innovation
ability, innovation culture, human resource capability, customer orientation, and competitive advantage on
business performance of SMEs in Malang Regency. (3) Analyzing the influence of innovation ability, innovation
culture, human resource capability, customer orientation on business performance through competitive
advantage in SMEs in Malang Regency. This research method uses a quantitative descriptive approach. The
population in this study was 232 SME business unit and a sample of 115 SMEs assisted businesses Cooperatives
and SME Malang and products featured in Malang Regency. The sampling technique is purposive sampling.
The data analysis technique used Structural Equation Modeling (SEM).The results of the study are (1) the
ability of innovation, innovation culture, human resource capabilities, and customer orientation have a
significant effect on competitive advantage in SMEs in Malang Regency.(2) The ability of innovation, innovation
culture, human resource capabilities, customer orientation, and competitive advantage have a significant effect
on business performance in SMEs in Malang Regency.(3) The ability to innovate, the culture of innovation, the
ability of human resources, customer orientation in SMEs in Malang Regency and competitive advantage as
intervening variables

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