Enhancing Competitive Advantage Through Digital Capability And Innovation In Small Food And Beverage Businesses

Abstract

The innovation strategy and the company's ability to adopt digital technology are a priority due to the increasingly competitive business environment in the era of global competition. Empirically it is known that companies that have adopted digital technology and created innovations will be more responsive in facing rapid changes in uncertainty. The research results show that innovation strategies are more often adopted by companies in developed countries, so that they are quicker in adapting to a dynamic and rapidly changing business environment. Meanwhile, companies in developing countries face different conditions, where they try to harmonize existing resources by utilizing currently developing technologies. Therefore, this study examines the importance of an innovation strategy and the ability to adopt digital technology as a sustainable competitive advantage for small businesses. Data collection used a questionnaire which was distributed to 90 small food and beverage businesses. The hypothesis was tested using Structural Equation Modeling (SEM) with a Partial Least Squares (PLS) approach. The research findings indicate that digital capabilities significantly influence sustainable competitive advantage. However, the innovation strategy does not exhibit a significant effect on sustainable competitive advantage. These results highlight the pivotal role of digital capabilities in maintaining a competitive edge, while suggesting that innovation strategies alone may not be sufficient to achieve long-term competitive advantage without the support of strong digital infrastructure.