Study of Relationships between Companies’ Digitalisation, Resources and Capabilities on Competitive Advantage of Small and Medium Enterprises in Indonesia

Abstract

The importance of this study is to examine the factors that could influence Indonesian SMEs in term of their competitive advantages in the international market. Some research on international entrepreneurship shows resources, capabilities as the drivers of SME internationalisation that relate to competitive advantage. However, the evidence where resources, capabilities, and digitalisation will lead SMEs competitive advantages in international market requires more discussion, particularly in developing countries such as Indonesia. This paper examined resources, capabilities, and digitalisation direct and indirect relationships with competitive advantages in international markets. The directory of DGNED is being utilised in this study on zooming at Indonesian exporting SME. This study is a quantitative study methods where convenient sampling was used in getting the sample through online survey questionnaire. There were 50 samples responsed to this study. The study utilised SmartPLS software to analyse the data. The findings showed that digitalisation and capabilities significantly and positively influence competitive advantages in international markets. Management international resources contribute to price advantage, international capabilities contribute to product and service advantages, while digitalisation has no direct effect to any of these competitive advantages. Nevertheless, these two constructs are important for SME internationalisation owing to their indirect effects on product and service advantages.  This research contributes to Indonesian SMEs that possess the desire to internationalise and enhance their presences in the international market. With understanding on the basis of evidence on capabilities, resources, and digitalisation, SMEs may make haste on its internationalisation in an less difficult method on risks, capital and time. Therefore, SMEs should get and improve the suitable resources, capabilities to gain competitive advantages by creating their international capabilities in the international markets.  Future research should replicate this study with bigger sample size, longitudinal study and across continents for better understanding on international competitions.