SUFFICIENCY OF HUMAN CAPITAL IN SME: EVOLUTION OF SUSTAINABLE COMPETITIVE ADVANTAGE

Abstract

Objective: This research aimed to explore the concept of sustainable competitive advantage concept in small medium-sized enterprise (SME) with collaborative capability and entrepreneur resilience as a mediating variable. It examined the relationship between human capital owned by entrepreneurs and sustainable competitive advantage with a focus on the woven sector, one of the largest tourism-supporting sectors in Bali.   Method: entrprenereurs of SMEs in Bali, Indonesia completed 333 surveys, with each construct measured using an adopted and modified scale from existing studies. Additional analyses were performed on the collected data using partial least square structural equation modelling (PLS_SEM) software. These analyses included regression, factor analysis, structural equation modelling with the boostrapping technique, reliability, validity, mediation and model fit indicates.   Result: The results showed that the human capital of the entrepreneurs, which consisted of education and experience, cannot be a source of sustainable competitive advantage in SME due to low education levels and minimal experience in managing businesses. On the other hand, collaborative capability is one of capabilities needed to achieve sustainable competitive advantage because it helps overcome resource limitations and internal capability by collaborating with external parties. Furthermore, another dynamic capability needed is entrepreneur resilience which can help in dealing with environmental turbulence. This research further supports this assertion by showing a full mediation relationship, implying that the human capital of entrepreneurs is insufficient for SME to attain sustainable competitive advantage, necessitating collaborative capability and entrepreneur resilience as a mediating factor to achieve this objective.