Leadership Innovation and Service Quality as Determinants of SME Competitiveness and Performance

In the face of increasing globalization and digital disruption, small and medium enterprises (SMEs) must strengthen their competitiveness to sustain and enhance performance. This study examines the impact of leadership, innovation, and service quality on SME competitiveness and overall firm performance in Indonesia. Using a quantitative methodology, data from 133 SME managers and entrepreneurs in West Java were analyzed employing Structural Equation Modeling with Partial Least Squares (SEM-PLS). Results indicate that leadership, innovation, and service quality significantly improve firm competitiveness, which in turn positively influences firm performance. While firm size shows a positive effect on competitiveness, it does not directly impact performance. Human capital and external factors demonstrated limited influence in this context. The findings emphasize the critical role of strategic leadership and innovation-driven service quality in building sustainable competitive advantages for SMEs. This research contributes empirical evidence from an emerging market perspective and offers actionable insights for SME practitioners and policymakers seeking to foster business sustainability. Future studies should consider broader geographic samples and mixed methods to enhance generalizability and depth of understanding.