Driving Business Performance in Jakarta’s Fried Chicken MSMEs: The Role of Product and Service Innovation in Creating Competitive Advantage
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This study investigates the strategic pathways through which product quality and service quality drive business performance in Jakarta's fried chicken micro, small, and medium enterprises (MSMEs), with competitive advantage as a mediating variable. Using a quantitative approach with structural equation modeling based on partial least squares (SEM-PLS) analysis of 101 MSME owners, the research empirically validates the Resource-Based View (RBV) theory in the emerging market context. Findings reveal that both product quality (path coefficient = 0.456 to competitive advantage) and service quality (path coefficient = 0.536 to competitive advantage) significantly enhance competitive advantage, which subsequently amplifies business performance. Service quality demonstrates the strongest direct effect on business performance (path coefficient = 0.425), while competitive advantage partially mediates the relationships between quality dimensions and performance. The exceptional explanatory power of the structural model (R² = 0.992 for business performance) confirms that quality-based competition strategies yield superior performance outcomes compared to price-based approaches in the post-pandemic culinary market. These findings demonstrate that resource-constrained MSMEs can achieve sustainable competitive advantages through strategically leveraging difficult-to-imitate quality capabilities and emotional service connections, extending RBV theory's applicability to emerging market MSME contexts and providing actionable implications for MSME strategic management and policymakers.
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