The Influence of Leadership on the Competitive Advantage of SMEs: Empirical Evidence from Indonesia

Abstract

This academic study aims to examine, analyze and synthetize the role of entrepreneurial orientation in determining the influence of leadership on competitive advantage. The research was carried out at small- and medium-sized enterprises (SMEs) in the food sector made involved in cassava production. The number of samples in the study were 184 respondents who were entrepreneurs or business owners. The sample method used was judgment sampling with criteria. The data analysis used to determine the effect was Warp Partial Least Square (WarpPLS). Inner and outer models were evaluated for convergence validity and composite reliability. The results of data analysis show that all hypotheses are accepted; there is a positive and significant impact of the leadership on SMEs’ competitive advantage by placing entrepreneurial orientation as a moderating variable. An interesting finding is that the placement of entrepreneurial orientation as a moderating factor has a greater influence than the direct effect of leadership on competitive advantage. This research provides new insights to enable SME owners to include entrepreneurial orientation in their business practices, to assess market opportunities, update products, take business risks, make forward-looking decisions, and participate in training both from the Internet and that provided by local governments.