Service-driven capabilities as competitive advantage drivers: Evidence from Indonesian healthcare organizations

Type of the article: Research Article AbstractThe traditional way of differentiating services has reduced in a saturated market under Indonesia’s National Health Insurance, increasing competition across the health care sector. The objective of this study is to examine how organizational resources convert into sustainable competitive advantage when mediated by service capabilities, in Indonesian health care organizations. Data were collected through a self-administered survey from March to June 2023, from 158 accredited hospitals in Central Java, Indonesia. The data were analyzed using structural equation modeling with partial least squares (SEM-PLS).The findings indicate that serving culture has an indirect influence on competitive advantage through service capabilities, and serving culture has no direct influence on competitive advantage. Service capabilities are a full mediator between serving culture and competitive advantage, while strategic HRM and workplace spirituality are partial mediators through service capabilities. All models exhibited strong explanatory power, and predictive relevance for service capabilities and competitive advantages. Hospital administrators may be able to take the results of this study, and create formal service capabilities to advance competitive positioning in Indonesia’s changing healthcare environment. The findings of this study confirm that intangible organizational resources should be operationalized through formal service capabilities to create sustainable business value, especially in standardized environments, where conventional forms of differentiation may not work. This paper adds to the understanding of how healthcare organizations can leverage their internal resources to achieve sustained competitive advantage in increasingly regulated and standardized environments.