<![CDATA[Creative economy MSMEs play an important role in generating economic activity, creating employment opportunities, and sustaining cultural values. However, these enterprises face challenges in maintaining and improving performance. This study examines the relationships between local wisdom, entrepreneurial leadership, competitive advantage, and MSME performance, with competitive advantage as a mediating variable. The study involved 137 creative economy MSME operators in the culinary, handicraft, and herbal product sectors. Data were analyzed using PLS-SEM with SmartPLS. The results show that local wisdom is positively associated with competitive advantage and MSME performance, while entrepreneurial leadership is positively associated with competitive advantage but has no significant direct relationship with MSME performance. Competitive advantage is positively associated with MSME performance. The mediation analysis indicates that competitive advantage exhibits complementary partial mediation in the relationship between local wisdom and MSME performance, while it exhibits indirect-only mediation in the relationship between entrepreneurial leadership and MSME performance. These findings suggest that competitive advantage represents an important pathway linking culturally embedded resources and entrepreneurial leadership with MSME performance. The study contributes to the Resource-Based View and Dynamic Capabilities literature by demonstrating that local wisdom and entrepreneurial leadership may be associated with MSME performance through different pathways involving competitive advantage.]]>
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