Strategic Orientations and Absorptive Capacity on Competitive Advantage Among the Batik SMEs in Malaysia

Abstract

The performance of SMEs is a major focus of emerging and developing economic growth. Furthermore, as the market environment became more dynamic and competitive, SMEs were forced to cultivate their competitive advantage in order to improve their performance. The aim of this study was to investigate the impact of firm orientation for customer, supplier, innovation, and competitor, as well as the firm’s absorptive capacity on competitive advantage. Cross-sectional research design was used to gather data from batik SMEs industry in Malaysia’s Terengganu and Kelantan. For information collection, the structured interview yielded 213 relevant responses. PLS-SEM, a variance-based structural equation model, was used in the analysis. The findings showed that a firm’s absorptive capacity, competitor orientation, innovation orientation, and supplier orientation have a substantial and positive impact on competitive advantage of the firm in batik industry, while, customer orientation had a positive and insignificant influence on firm’s competitive advantage. Furthermore, absorptive capacity and competitor orientation were the most influential factors to competitive advantage of SMEs batik industry. Finally, the discussion, implications and conclusion of the study are discussed in the research paper.