MSMEs’ Financial Performance Based on Determinants of Competitive Advantage

This study strives to empirically test the determinants of competitive advantage and their consequences towards financial performance.A total of 260 MSME owners in the culinary sector in the cities of Semarang, Salatiga, and Surakarta, in Central Java Province, Indonesia, were selected as respondents.The survey data was processed using a Partial Least Squares Structural Equation Modeling (PLS-SEM) analysis.The study results revealed that environmentally friendly behavior and entrepreneurial marketing increase competitive advantage.Furthermore, competitive advantage, environmentally friendly behavior, and entrepreneurial marketing have a direct effect on financial performance.In another finding, competitive advantage is demonstrated to partially mediate the influence of environmentally friendly behavior and entrepreneurial marketing on financial performance.However, this study could not prove that hygienic behavior affects competitive advantage and financial performance.It is expected that the findings of this study will add to the literature regarding the role of environmentally friendly behavior and entrepreneurial marketing on competitive advantage, as well as the impact of competitive advantage on the financial performance of MSMEs in the culinary sector, especially when the economic conditions have entered the new normal era after the COVID-19 pandemic.In addition, these findings can be utilized as reference material that can be implemented by MSME actors and policymakers.