Utilizing innovation and collective organizational engagement into SMEs’ sustainable competitive advantage

Abstract

The present study centered on the mediation of innovation and the moderation of collective organizational engagement in affecting human capital (a combination of skill and knowledge) on sustainable competitive advantage and further examined human capital, innovation, and collective organizational engagement impacts on sustainable competitive advantage. Subsequently, this study utilized a quantitative approach, engaging 270 sample frame SME units in Indonesia using a Likert scale questionnaire and examining it using SEMPLS. The findings demonstrate that human capital positively and significantly impacted innovation and sustainable competitive advantage, indicating that a high level of business skill, business orientation, perception of risk, and know-how management enhances the organization’s innovation capability, creating distinctive, exceptional, and invaluable resources as core competencies of sustainable competitive advantage. This study confirms and advances the RBV theory and previous studies by examining intangible resources' mediating and moderating role, in which innovation contributes to mediating the effect of human capital on sustainable competitive advantage and collective organizational engagement reinforces (moderates) the impact of human capital on establishing sustainable competitive advantage. So, the results of this research illuminate the significance of human capital, innovation, and collective organizational engagement as the organization’s superior resources in manifesting sustainable competitive advantage.