SUSTAINABLE COMPETITIVE ADVANTAGE IN THE KNOWLEDGE ECONOMY: EVIDENCE FROM LOCAL WISDOM-BASED SMES THROUGH SUPPLY CHAIN MANAGEMENT AND INTELLECTUAL CAPITAL PERSPECTIVES

Abstract In the era of the knowledge economy, sustainable competitive advantage is increasingly determined by intangible assets such as intellectual capital, relational capabilities, and the effective management of supply chains. This study investigates how supply chain management, intellectual capital, and customer relationship management shape business performance through the mediating role of competitive advantage among local wisdom-based small and medium enterprises (SMEs) in Minahasa, Indonesia. Using a quantitative-associative approach, data were collected from 114 SMEs specializing in traditional craft industries, including bamboo utensils, clay cookware, and woven products. The data were analyzed with variance-based structural equation modeling (SEM-PLS). The findings reveal that supply chain management exerts an insignificant influence on business performance, while intellectual capital negatively affects performance when not effectively managed. Conversely, customer relationship management demonstrates a positive and significant impact on competitive advantage, which in turn enhances business performance. These results highlight the critical role of leveraging relational and knowledge-based resources to sustain competitiveness in resource-constrained contexts. The study contributes to the literature on SMEs, supply chain management, and intellectual capital by offering empirical evidence from emerging economies and providing practical insights for policymakers and entrepreneurs seeking to revitalize local wisdom industries in the post-pandemic era.