Competitive advantage: Selective mediator of digital-financial capabilities MSME performance

Setya Pramono (Selamat Sri University, Indonesia)
Nanang Apriliyanto (Selamat Sri University, Indonesia)
Atika Desiana (Selamat Sri University, Indonesia)

Indonesia Accounting Research Journal
Vol. 14 No. 1 (2026): September: Auditing, Finance, Accounting, Management

This study examines how financial literacy, financial inclusion, and e-commerce adoption enhance MSME performance through competitive advantage as a mediating mechanism. While prior research demonstrates these capabilities independently improve performance, limited understanding exists regarding the underlying pathways through which they operate. Competitive advantage serves as a critical mediator because it transforms isolated resources into distinctive, inimitable capabilities that create sustainable business value, a principle underexplored in rural MSME contexts. Theoretically, this study advances RBV and Dynamic Capability Theory by demonstrating that resource ownership alone is insufficient for performance improvement without strategic transformation into competitive advantages. Additionally, we extend the TOE framework by revealing that technological adoption (e-commerce) generates greater value when converted into competitive advantage compared to financial capabilities alone. Using a quantitative approach with 70 MSME owners from Sukodono Village, Kendal District, data were analyzed via Smart-PLS structural equation modeling. Results reveal that financial literacy, financial inclusion, and e-commerce adoption positively affect MSME performance. Critically, competitive advantage significantly mediates only the e-commerce-performance relationship, not financial capability relationships. This selective mediation indicates that digital capabilities are more effectively translated into competitive advantage than financial capabilities. These findings suggest that sustainable MSME development requires integrating financial capability enhancement with digital transformation initiatives. However, financial resources alone require complementary strategic management to yield competitive advantages, highlighting the need for holistic business development approaches combining financial education, digital training, and innovation support to strengthen long-term MSME competitiveness and sustainability.