Innovation aesthetics as a key driver of sustainable competitive advantage: a multi-level analysis

The purpose of this study is to analyze how innovation can drive economic growth for small and medium enterprises (SMEs). This study was conducted using a survey aimed at SMEs in Indonesia. Questionnaires were distributed online via Google Forms, offline, and through in-person visits. A total of 524 respondents participated, including owners, store heads, division heads, and managers. This study explains that entrepreneurial orientation (EO) can play a role in increasing aesthetic innovation (IA). Meanwhile, SE weakens the relationship between EO and IA; SE can also weaken knowledge transfer (KT) to IA, while IA can enhance sustainable competitive advantage (SCA). The findings indicate that businesses cannot sustain themselves without innovation, which is attributable to the changing business environment and the evolving requirements, desires, and needs of consumers. Not every customer purchases the same item; consequently, they may seek products from other companies that they believe will satisfy their requirements. This study identifies that businesses cannot survive without innovation due to changing business conditions and increasing consumer needs. Therefore, continuous improvement in innovation is necessary for the operational sustainability of the industry. Finally, to understand innovation, this study employs the Stimulus-Organism-Response theory to enhance the research more applicable. Although previous studies have partially discussed sustainable competitive advantage, this study provides insights into sustainable competitive advantage in the industrial sector and its theoretical and practical implications from a resource-based view (RBV) perspective by utilizing innovation aesthetics as a strategic resource. Aesthetic elements have significant potential as a unique resource that is rare and difficult for competitors to imitate, thereby becoming a competitive advantage for SMEs.