Empowered to lead: how women’s strategic leadership drives sustainable competitive advantage in SMEs

Purpose This study aims to enhance our understanding of how women’s strategic leadership contributes to sustainable competitive advantage, with a focus on the mediating roles of adaptive innovation capabilities, access to resources, and diversification strategies factors expected to drive competitive advantage in women-led or women-owned SMEs. Design/methodology/approach This study employed a quantitative approach with a sample of 315 respondents and was conducted in the food and beverage (F&B) sector in Indonesia. Partial least squares (PLS), a structural equation modelling (SEM) technique, was used to assess the reliability and validity of the theoretical constructs and to estimate the relationships among co-occurring variables. Findings The results of the study indicate that women’s strategic leadership has a direct influence on achieving sustainable competitive advantage. This relationship is further strengthened by the mediating roles of adaptive innovation capabilities and diversification strategies. However, access to resources shows a weak mediating effect between women’s strategic leadership and sustainable competitive advantage. Research limitations/implications This study offers dual theoretical contributions by extending and challenging upper echelon theory through an examination of women’s strategic leadership in female-led F&B SMEs. It introduces and tests three mediators: adaptive innovation, resource accessibility, and diversification strategy, within a resource-based view framework. Interestingly, while resource access is often emphasized, its weak mediating effect highlights structural barriers for women entrepreneurs. In contrast, strong mediating roles of innovation and diversification provide new gendered insights into dynamic capabilities theory. This research also addresses an empirical gap by exploring women’s leadership in Indonesian SMEs, a setting reflective of broader conditions in developing economies. Practical implications This study offers key implications for organizational practices in strengthening women’s strategic leadership, promoting gender equality, and enhancing innovation and diversification to achieve sustainable competitive advantage (SCA) in SMEs. First, SMEs should expand leadership opportunities for women, as findings demonstrate a direct impact of women’s strategic leadership on SCA. Adaptive innovation and diversification also mediate this relationship, particularly in women-led F&B SMEs. Second, the study highlights limited resource access among women leaders. Therefore, government support is vital to improve access and empower women entrepreneurs in building competitive, resilient, and sustainable businesses in dynamic market environments. Social implications This study highlights the social importance of empowering women in strategic leadership roles within SMEs, particularly in the F&B sector. Promoting women’s leadership helps close gender gaps and foster inclusive economic development. The findings show that women’s strategic leadership enhances innovation and sustainable competitive advantage (SCA), emphasizing the need for equal access to leadership opportunities and resources. Government and community support are vital to help women entrepreneurs thrive, innovate, and lead sustainable businesses. Strengthening gender-inclusive policies and support systems not only benefits women leaders but also contributes to broader organizational resilience and long-term societal growth. Originality/value This study addresses theoretical and empirical gaps by introducing adaptive innovation capability, access to resources, and diversification strategy as mediating variables that are expected to drive sustainable competitive advantage when women exercise strategic leadership. The findings reveal that access to resources serves as a weak driver, indicating that it remains a constraint for women leaders. Additionally, this study offers valuable insights into the critical role of women’s leadership in advancing SME performance.