Competitive advantage: Selective mediator of digital-financial capabilities MSME performance
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Published:
Sep 30, 2026
Keywords:
Competitive advantage, E-commerce adoption, Financial literacy, Financial inclusion, MSME performance
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Articles
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Abstract
This study examines how financial literacy, financial inclusion, and e-commerce adoption enhance MSME performance through competitive advantage as a mediating mechanism. While prior research demonstrates these capabilities independently improve performance, limited understanding exists regarding the underlying pathways through which they operate. Competitive advantage serves as a critical mediator because it transforms isolated resources into distinctive, inimitable capabilities that create sustainable business value, a principle underexplored in rural MSME contexts. Theoretically, this study advances RBV and Dynamic Capability Theory by demonstrating that resource ownership alone is insufficient for performance improvement without strategic transformation into competitive advantages. Additionally, we extend the TOE framework by revealing that technological adoption (e-commerce) generates greater value when converted into competitive advantage compared to financial capabilities alone. Using a quantitative approach with 70 MSME owners from Sukodono Village, Kendal District, data were analyzed via Smart-PLS structural equation modeling. Results reveal that financial literacy, financial inclusion, and e-commerce adoption positively affect MSME performance. Critically, competitive advantage significantly mediates only the e-commerce-performance relationship, not financial capability relationships. This selective mediation indicates that digital capabilities are more effectively translated into competitive advantage than financial capabilities. These findings suggest that sustainable MSME development requires integrating financial capability enhancement with digital transformation initiatives. However, financial resources alone require complementary strategic management to yield competitive advantages, highlighting the need for holistic business development approaches combining financial education, digital training, and innovation support to strengthen long-term MSME competitiveness and sustainability.
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How to Cite
Pramono, S., Apriliyanto, N., & Desiana, A. (2026). Competitive advantage: Selective mediator of digital-financial capabilities MSME performance. Indonesia Accounting Research Journal, 14(1), 42–52. Retrieved from https://journals.iarn.or.id/index.php/Accounting/article/view/656
References
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Bougie, R., & Sekaran, U. (2019). Research Methods For Business: A Skill Building Approach. Wiley. https://books.google.co.id/books?id=ikI6EAAAQBAJ
Cruz-Sánchez, O., Cruz-Cázares, C., & Hernandez-Vivanco, A. (2026). Business model innovation from dynamic capabilities perspective: A systematic literature review. Journal of Business Research, 204, 115835. https://doi.org/10.1016/j.jbusres.2025.115835
Desmiyawati, D., Susilatri, S., & Ramaiyanti, S. (2024). Financial Literacy, Technology, Competitive Advantages and Implications to MSMEs Performance. Jurnal Organisasi Dan Manajemen, 20(2), 236–251. https://doi.org/10.33830/jom.v20i2.7671.2024
Evinita, L. L., Tangkau, J. E. M., Pesak, P. J., & Cahyono, S. (2025). Policy Framework to Improve MSME Competitiveness and Financial Performance with Indonesia’s Asta Cita Vision Goals. Journal of Risk and Financial Management, 18(12), 692. https://doi.org/10.3390/jrfm18120692
Farida, I., & Setiawan, D. (2022). Business Strategies and Competitive Advantage: The Role of Performance and Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 8(3), 163. https://doi.org/10.3390/joitmc8030163
Hafni Sahir, S. (2021). Metodologi Penelitian. www.penerbitbukumurah.com
Hair, J., & Alamer, A. (2022). Partial Least Squares Structural Equation Modeling (PLS-SEM) in second language and education research: Guidelines using an applied example. Research Methods in Applied Linguistics, 1(3), 100027. https://doi.org/10.1016/j.rmal.2022.100027
Kilay, A. L., Simamora, B. H., & Putra, D. P. (2022). The Influence of E-Payment and E-Commerce Services on Supply Chain Performance: Implications of Open Innovation and Solutions for the Digitalization of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. Journal of Open Innovation: Technology, Market, and Complexity, 8(3), 119. https://doi.org/10.3390/joitmc8030119
Lestari, R., Syahyuti, Mulia Wibawa, B., Endayani, F., Setyawati, D., & Silalahi, S. A. F. (2024). Confirmatory factor analysis of marketing performance dimensions: a lesson from SMEs in Malang, Indonesia. Cogent Business & Management, 11(1). https://doi.org/10.1080/23311975.2024.2310084
Liemansyaputri, S., Sarwoko, E., & Gatot Haryono, C. (2025). Digital Transformation of MSMEs: A Study on the Impact and Motives of Using Third-Party E-Commerce Platforms: Profitable or Not? Eduvest-Journal of Universal Studies, 5(9). http://eduvest.greenvest.co.id
Mang’ana, K. M., Hokororo, S. J., & Ndyetabula, D. W. (2024). An Investigation of the Extent of Implementation of the Financial Management Practices of Agri-SMEs in developing countries: Evidence from Tanzania. Sustainable Technology and Entrepreneurship, 3(1), 100049. https://doi.org/10.1016/j.stae.2023.100049
Masdupi, E., Imran, M., & Sintya, R. (2025). Financial literacy and sustainability of SMEs: the mediating and moderating effect of entrepreneurial financing choice, risk-taking and social capital. Management & Sustainability: An Arab Review, 1–24. https://doi.org/10.1108/MSAR-01-2025-0003
Memon, M. A., T., R., Cheah, J.-H., Ting, H., Chuah, F., & Cham, T. H. (2021). PLS-SEM STATISTICAL PROGRAMS: A REVIEW. Journal of Applied Structural Equation Modeling, 5(1), i–xiv. https://doi.org/10.47263/JASEM.5(1)06
Nogueira, M. C., Almeida, L., & Tavares, F. O. (2025). Financial Literacy, Financial Knowledge, and Financial Behaviors in OECD Countries. Journal of Risk and Financial Management, 18(3), 167. https://doi.org/10.3390/jrfm18030167
Panda, N., & Baral, S. K. (2025). Financial Literacy and Its Impact on MSEs Performance: A Mediating Role of Financial Self-efficacy. SEDME (Small Enterprises Development, Management & Extension Journal): A Worldwide Window on MSME Studies, 52(3), 268–288. https://doi.org/10.1177/09708464251361231
Polisetty, A., G, S., Chakraborty, D., & Bresciani, S. (2026). Sustainable competitiveness through regulatory trust: How indian small and medium enterprises transform regulation into innovation. Technological Forecasting and Social Change, 230, 124766. https://doi.org/10.1016/j.techfore.2026.124766
Ratnawati, K., & Yuana, P. (2022). Financial inclusion and its impact on performance of MSMEs with efficiency and financial flexibility as mediation: Empirical evidence from Malang city. In Contemporary Research on Management and Business (pp. 184–187). CRC Press. https://doi.org/10.1201/9781003295952-47
Salah, O. H., & Ayyash, M. M. (2024). E-commerce adoption by SMEs and its effect on marketing performance: An extended of TOE framework with ai integration, innovation culture, and customer tech-savviness. Journal of Open Innovation: Technology, Market, and Complexity, 10(1), 100183. https://doi.org/10.1016/j.joitmc.2023.100183
Sari, F. N., Komariyah, E. F., Rofiqoh, I., & Andiyansari, P. (2026). Does Financial Literacy and Government Support Affect SME Performance? Evidence from Disability-owned SMEs in Yogyakarta. International Journal of Scientific Research and Management (IJSRM), 14(01), 10259–10269. https://doi.org/10.18535/ijsrm/v14i01.em08
Sun, J., & Zhang, J. (2024). Digital Financial Inclusion and Innovation of MSMEs. Sustainability, 16(4), 1404. https://doi.org/10.3390/su16041404
Sunatriyo, G. L. (2025). Analysis of the Influence of Financial Literacy Levels on Financial Management and Micro Business Sustainability (Case Study on Micro Businesses in Bandar Lampung. Eduvest - Journal of Universal Studies, 5(11), 14029–14041. https://doi.org/10.59188/eduvest.v5i11.51888
Surya, B., Menne, F., Sabhan, H., Suriani, S., Abubakar, H., & Idris, M. (2021). Economic Growth, Increasing Productivity of SMEs, and Open Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 7(1), 20. https://doi.org/10.3390/joitmc7010020
Susanti, E., Mulyanti, R. Y., & Wati, L. N. (2023). MSMEs performance and competitive advantage: Evidence from women’s MSMEs in Indonesia. Cogent Business & Management, 10(2). https://doi.org/10.1080/23311975.2023.2239423
Sutrisno, Widodo, & Ausat, A. M. A. (2025). In-Depth Study of the Strategic Interaction between Electronic Commerce, Innovation, and Attainment of Competitive Advantage in the Context of SMEs. International Journal of Analysis and Applications, 23, 78. https://doi.org/10.28924/2291-8639-23-2025-78
Tajudeen, F. P., Moghavvemi, S., Thirumoorthi, T., Phoong, S. W., & Bahri, E. N. B. A. (2025). Impact of Digital Transformation on Business Functional Areas of SMEs. In Digital Transformation of Malaysian Small and Medium Enterprises (pp. 45–68). Emerald Publishing Limited. https://doi.org/10.1108/978-1-83662-168-320251004
Tandilino, C., Pontoh, G. T., Darmawati, D., & Indrijawati, A. (2025). Digital Financial Inclusion as a Mediator of Digital Financial Literacy and Government Support in MSME Performance. International Journal of Financial Studies, 13(4), 199. https://doi.org/10.3390/ijfs13040199
Tripathi, A., & Singh, A. (2024). SMEs Awareness and Preparation for Digital Transformation: Exploring Business Opportunities for Entrepreneurs in Saudi Arabia’s Ha’il Region. Sustainability, 16(9), 3831. https://doi.org/10.3390/su16093831
Wati, K. L., Sianturi, M., & Liswatin, L. (2025). The Impact of Financial Literacy on SMEs Performance: The Role of Access to Financial Resources as a Mediator. RIGGS: Journal of Artificial Intelligence and Digital Business, 4(2), 5969–5979. https://doi.org/10.31004/riggs.v4i2.1540
Widiantari, K. S., Putra, I. G. K. S., & Basmantra, I. N. (2024). Influences on MSME Sustainability: The roles of financial literacy, business capital, and financial inclusion. Review of Management, Accounting, and Business Studies, 5(2), 109–117. https://doi.org/10.38043/revenue.v5i2.5581
Widyastuti, M., Ferdinand, D. Y. Y., & Hermanto, Y. B. (2023). Strengthening Formal Credit Access and Performance through Financial Literacy and Credit Terms in Micro, Small and Medium Businesses. Journal of Risk and Financial Management, 16(1), 52. https://doi.org/10.3390/jrfm16010052
Xuhua, H., Elikem, O. C., Akaba, S., & Brown, D. W. (2019). Effects of business-to-business e-commerce adoption on competitive advantage of small and medium-sized manufacturing enterprises. Economics and Sociology, 12(1), 80–99. https://doi.org/10.14254/2071-789X.2019/12-1/4
Zahara, Z., Muslimin, M., Rumijati, A., & Rony, Z. T. (2024). Competitive Advantage as Mediating Role to Enhance MSMES Performance. Journal of Small Business Strategy, 34(2). https://doi.org/10.53703/001c.121131
Aritonang, M. P., Sadalia, I., & Muluk, C. (2023). The Effect of Financial Literacy and Financial Inclusion on MSMEs Performance (pp. 356–368). https://doi.org/10.2991/978-94-6463-008-4_46
Bougie, R., & Sekaran, U. (2019). Research Methods For Business: A Skill Building Approach. Wiley. https://books.google.co.id/books?id=ikI6EAAAQBAJ
Cruz-Sánchez, O., Cruz-Cázares, C., & Hernandez-Vivanco, A. (2026). Business model innovation from dynamic capabilities perspective: A systematic literature review. Journal of Business Research, 204, 115835. https://doi.org/10.1016/j.jbusres.2025.115835
Desmiyawati, D., Susilatri, S., & Ramaiyanti, S. (2024). Financial Literacy, Technology, Competitive Advantages and Implications to MSMEs Performance. Jurnal Organisasi Dan Manajemen, 20(2), 236–251. https://doi.org/10.33830/jom.v20i2.7671.2024
Evinita, L. L., Tangkau, J. E. M., Pesak, P. J., & Cahyono, S. (2025). Policy Framework to Improve MSME Competitiveness and Financial Performance with Indonesia’s Asta Cita Vision Goals. Journal of Risk and Financial Management, 18(12), 692. https://doi.org/10.3390/jrfm18120692
Farida, I., & Setiawan, D. (2022). Business Strategies and Competitive Advantage: The Role of Performance and Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 8(3), 163. https://doi.org/10.3390/joitmc8030163
Hafni Sahir, S. (2021). Metodologi Penelitian. www.penerbitbukumurah.com
Hair, J., & Alamer, A. (2022). Partial Least Squares Structural Equation Modeling (PLS-SEM) in second language and education research: Guidelines using an applied example. Research Methods in Applied Linguistics, 1(3), 100027. https://doi.org/10.1016/j.rmal.2022.100027
Kilay, A. L., Simamora, B. H., & Putra, D. P. (2022). The Influence of E-Payment and E-Commerce Services on Supply Chain Performance: Implications of Open Innovation and Solutions for the Digitalization of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. Journal of Open Innovation: Technology, Market, and Complexity, 8(3), 119. https://doi.org/10.3390/joitmc8030119
Lestari, R., Syahyuti, Mulia Wibawa, B., Endayani, F., Setyawati, D., & Silalahi, S. A. F. (2024). Confirmatory factor analysis of marketing performance dimensions: a lesson from SMEs in Malang, Indonesia. Cogent Business & Management, 11(1). https://doi.org/10.1080/23311975.2024.2310084
Liemansyaputri, S., Sarwoko, E., & Gatot Haryono, C. (2025). Digital Transformation of MSMEs: A Study on the Impact and Motives of Using Third-Party E-Commerce Platforms: Profitable or Not? Eduvest-Journal of Universal Studies, 5(9). http://eduvest.greenvest.co.id
Mang’ana, K. M., Hokororo, S. J., & Ndyetabula, D. W. (2024). An Investigation of the Extent of Implementation of the Financial Management Practices of Agri-SMEs in developing countries: Evidence from Tanzania. Sustainable Technology and Entrepreneurship, 3(1), 100049. https://doi.org/10.1016/j.stae.2023.100049
Masdupi, E., Imran, M., & Sintya, R. (2025). Financial literacy and sustainability of SMEs: the mediating and moderating effect of entrepreneurial financing choice, risk-taking and social capital. Management & Sustainability: An Arab Review, 1–24. https://doi.org/10.1108/MSAR-01-2025-0003
Memon, M. A., T., R., Cheah, J.-H., Ting, H., Chuah, F., & Cham, T. H. (2021). PLS-SEM STATISTICAL PROGRAMS: A REVIEW. Journal of Applied Structural Equation Modeling, 5(1), i–xiv. https://doi.org/10.47263/JASEM.5(1)06
Nogueira, M. C., Almeida, L., & Tavares, F. O. (2025). Financial Literacy, Financial Knowledge, and Financial Behaviors in OECD Countries. Journal of Risk and Financial Management, 18(3), 167. https://doi.org/10.3390/jrfm18030167
Panda, N., & Baral, S. K. (2025). Financial Literacy and Its Impact on MSEs Performance: A Mediating Role of Financial Self-efficacy. SEDME (Small Enterprises Development, Management & Extension Journal): A Worldwide Window on MSME Studies, 52(3), 268–288. https://doi.org/10.1177/09708464251361231
Polisetty, A., G, S., Chakraborty, D., & Bresciani, S. (2026). Sustainable competitiveness through regulatory trust: How indian small and medium enterprises transform regulation into innovation. Technological Forecasting and Social Change, 230, 124766. https://doi.org/10.1016/j.techfore.2026.124766
Ratnawati, K., & Yuana, P. (2022). Financial inclusion and its impact on performance of MSMEs with efficiency and financial flexibility as mediation: Empirical evidence from Malang city. In Contemporary Research on Management and Business (pp. 184–187). CRC Press. https://doi.org/10.1201/9781003295952-47
Salah, O. H., & Ayyash, M. M. (2024). E-commerce adoption by SMEs and its effect on marketing performance: An extended of TOE framework with ai integration, innovation culture, and customer tech-savviness. Journal of Open Innovation: Technology, Market, and Complexity, 10(1), 100183. https://doi.org/10.1016/j.joitmc.2023.100183
Sari, F. N., Komariyah, E. F., Rofiqoh, I., & Andiyansari, P. (2026). Does Financial Literacy and Government Support Affect SME Performance? Evidence from Disability-owned SMEs in Yogyakarta. International Journal of Scientific Research and Management (IJSRM), 14(01), 10259–10269. https://doi.org/10.18535/ijsrm/v14i01.em08
Sun, J., & Zhang, J. (2024). Digital Financial Inclusion and Innovation of MSMEs. Sustainability, 16(4), 1404. https://doi.org/10.3390/su16041404
Sunatriyo, G. L. (2025). Analysis of the Influence of Financial Literacy Levels on Financial Management and Micro Business Sustainability (Case Study on Micro Businesses in Bandar Lampung. Eduvest - Journal of Universal Studies, 5(11), 14029–14041. https://doi.org/10.59188/eduvest.v5i11.51888
Surya, B., Menne, F., Sabhan, H., Suriani, S., Abubakar, H., & Idris, M. (2021). Economic Growth, Increasing Productivity of SMEs, and Open Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 7(1), 20. https://doi.org/10.3390/joitmc7010020
Susanti, E., Mulyanti, R. Y., & Wati, L. N. (2023). MSMEs performance and competitive advantage: Evidence from women’s MSMEs in Indonesia. Cogent Business & Management, 10(2). https://doi.org/10.1080/23311975.2023.2239423
Sutrisno, Widodo, & Ausat, A. M. A. (2025). In-Depth Study of the Strategic Interaction between Electronic Commerce, Innovation, and Attainment of Competitive Advantage in the Context of SMEs. International Journal of Analysis and Applications, 23, 78. https://doi.org/10.28924/2291-8639-23-2025-78
Tajudeen, F. P., Moghavvemi, S., Thirumoorthi, T., Phoong, S. W., & Bahri, E. N. B. A. (2025). Impact of Digital Transformation on Business Functional Areas of SMEs. In Digital Transformation of Malaysian Small and Medium Enterprises (pp. 45–68). Emerald Publishing Limited. https://doi.org/10.1108/978-1-83662-168-320251004
Tandilino, C., Pontoh, G. T., Darmawati, D., & Indrijawati, A. (2025). Digital Financial Inclusion as a Mediator of Digital Financial Literacy and Government Support in MSME Performance. International Journal of Financial Studies, 13(4), 199. https://doi.org/10.3390/ijfs13040199
Tripathi, A., & Singh, A. (2024). SMEs Awareness and Preparation for Digital Transformation: Exploring Business Opportunities for Entrepreneurs in Saudi Arabia’s Ha’il Region. Sustainability, 16(9), 3831. https://doi.org/10.3390/su16093831
Wati, K. L., Sianturi, M., & Liswatin, L. (2025). The Impact of Financial Literacy on SMEs Performance: The Role of Access to Financial Resources as a Mediator. RIGGS: Journal of Artificial Intelligence and Digital Business, 4(2), 5969–5979. https://doi.org/10.31004/riggs.v4i2.1540
Widiantari, K. S., Putra, I. G. K. S., & Basmantra, I. N. (2024). Influences on MSME Sustainability: The roles of financial literacy, business capital, and financial inclusion. Review of Management, Accounting, and Business Studies, 5(2), 109–117. https://doi.org/10.38043/revenue.v5i2.5581
Widyastuti, M., Ferdinand, D. Y. Y., & Hermanto, Y. B. (2023). Strengthening Formal Credit Access and Performance through Financial Literacy and Credit Terms in Micro, Small and Medium Businesses. Journal of Risk and Financial Management, 16(1), 52. https://doi.org/10.3390/jrfm16010052
Xuhua, H., Elikem, O. C., Akaba, S., & Brown, D. W. (2019). Effects of business-to-business e-commerce adoption on competitive advantage of small and medium-sized manufacturing enterprises. Economics and Sociology, 12(1), 80–99. https://doi.org/10.14254/2071-789X.2019/12-1/4
Zahara, Z., Muslimin, M., Rumijati, A., & Rony, Z. T. (2024). Competitive Advantage as Mediating Role to Enhance MSMES Performance. Journal of Small Business Strategy, 34(2). https://doi.org/10.53703/001c.121131
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