Do Intangible Assets and Innovation Orientation Influence Competitive Advantages? A Case Study of SMEs in Indonesia

Competition in small and medium-sized businesses (SMEs) is growing in the era of transition. As a result, these advances are putting pressure on the retail sector to find new and efficient solutions to boost retail and customer experience. Meanwhile, in Central Java, Indonesia, there is one specific SME type that is part of the nation's cultural heritage, namely Batik SME. This study aims to determine the effect of Intangible Assets and Innovation Orientation on the Competitive Advantages of Batik SMEs in Central Java, Indonesia. This study's method was an explanatory survey method with a type of decompression-verification study from primary data obtained from Batik SMEs and using PLS SEM in analyzing the data of the book. The results of this study indicate that Intangible Assets with Path coefficient (β) = 0.320, P value <0.001 (<α = 0.05), and Innovation Orientation with Path coefficient (β) = 0.28 P value <0.038 (<α = 0.05), have a positive effect on Competitive Advantage with coefficient (β) = 0.46, P value <0.001 (<α = 0.05). This result means that the better Intangible Assets would improve the Batik SME Competitive Advantage. Besides, the Orientation owned by Batik SME would increase the Competitive Advantage. Batik SME in Central Java should improve the quality of their Intangible Asset and Innovation Orientation to increase their Competitive Advantage.