The effect of satisfaction and competitive advantage on the SMEs sustainability of local coffee shops: A case in Yogyakarta, Indonesia

Abstract

The SME’s business sustainability of the local coffee shop is extremely crucial in today’s competitive market. Sustainability-oriented business practices, including local coffee shops, are obligated to maintain a high level of market competitiveness. Besides that, customer satisfaction also appears to be one of the pillars of long-term business viability. Yogyakarta province is one of the regions that have a great number of local coffee shops SMEs. This present study aimed to (1) determine the level of competitive advantage of the local coffee shop SMEs, (2) measure the level of customer satisfaction of the local coffee shop SMEs, and (3) analyze the effect of competitive advantage and customer satisfaction on the sustainability of the local coffee shop SMEs in the Special Region of Yogyakarta. Yogyakarta city and Sleman district were selected as the research area. To collect the data, customers who uploaded pictures by using hashtags or tagging one of the 31 local coffee shop locations on their Instagram account were asked to fill out an online questionnaire. Those customers had the same chance to be sampled according to a representative proportion at each local coffee shop. A total of 173 respondents from independent and franchise coffee shops were used as the samples in the study. Structural Equation Modeling (SEM) with the help of the AMOS application was utilized to analyze the data. The results of the research indicated that competitive advantage had a direct positive effect on the SMEs sustainability of the local coffee shops, while customer satisfaction did not affect it at all.