This study examines how market orientation is translated into competitive advantage through value creation and operational capability in an automotive service SME located in Bandar Lampung, Indonesia. While prior research has largely adopted a linear perspective, the underlying mechanisms remain insufficiently explored, particularly in service-based SMEs. Using a qualitative case study design, this study captures the process linking strategic orientation to competitive outcomes.The findings show that market orientation functions as a strategic driver for selective B2B customer targeting and relationship-based engagement. However, competitive advantage is not generated directly, but mediated by value creation through competitive pricing, service quality, and customer trust. Operational capability plays a dual role as both an enabler and a constraint in executing this value proposition.This study contributes by proposing a process-based model and highlights that SME competitiveness depends not only on strategy, but on the ability to execute it consistently.
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