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Enhancing MSME Competitive Performance in Indonesia: The Role of Digital Capability
This study aims to examine the effect of managerial competence, product
differentiation, and institutional collaboration on the competitive performance of micro,
small, and medium enterprises, with digital capability as a mediating variable. The study is
motivated by the increasing importance of digital transformation in enhancing business
competitiveness in a dynamic market environment. A quantitative approach was employed
using survey data collected from micro, small, and medium enterprises, analyzed through
variance-based structural equation modeling. The results indicate that managerial competence
and institutional collaboration have a positive and significant effect on digital capability,
while product differentiation does not show a significant effect. Digital capability
significantly influences competitive performance and mediates the relationship between
managerial competence and institutional collaboration on performance, but does not mediate
the effect of product differentiation. The study concludes that digital capability plays a crucial
role in strengthening competitiveness by transforming internal competencies and external
collaboration into performance outcomes.
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