Driving SMEs’ Sustainable Competitive Advantage: The Role of Service Innovation, Intellectual Property Protection, Continuous Innovation Performance, and Open Innovation

The process of transforming service innovation into sustainable competitive advantage in small and medium-sized enterprises (SMEs) remained underexplored. Grounded in the resource-based view, this study investigated the roles of intellectual property protection, open innovation, and continuous innovation performance in facilitating this transformation. A survey of 158 representatives from Chinese SMEs was conducted. The results showed that service innovation had a significant positive effect on both intellectual property protection and continuous innovation performance. Furthermore, intellectual property protection significantly influenced continuous innovation performance, which, in turn, had a significant impact on sustainable competitive advantage. Notably, continuous innovation performance was found to partially mediate the relationship between service innovation and sustainable competitive advantage. However, the moderating role of open innovation and the mediating role of intellectual property protection in the relationship between service innovation and sustainable competitive advantage were not supported. This study contributed to the literature by offering a deeper understanding of how service innovation could drive sustainable competitive advantage in small and medium-sized enterprises. The empirical findings provided practical insights to help small and medium-sized enterprises align their innovation efforts with appropriate protective and collaborative strategies to enhance long-term competitiveness and market positioning.