The Impact of External Integration and Internal Integration to Product Innovation and Competitive Advantage on Small and Medium Enterprises (SMEs)

Chamdan Chamdan,Ludi Wishnu Wardana,Mirhamida Rahmah,Yusriyah Rahmah,Dinda Fatmah

doi:10.18775/ijied.1849-7551-7020.2015.64.2006

Abstract

This study aims to analyze the influence of external integration and internal integration to product innovation and competitive advantage. The research was conducted on a sample of 180 manager small and medium enterprises (SMEs) in East Java clothing taken with stratified cluster sampling technique. Selection of sample areas based on areas that have the potential development of the industry. Data collection was done by using questionnaire that has been tested for its validity and reliability. Data analysis used Structural Equation Modeling (SEM) analysis with help of AMOS version 21 program. Based on the analysis of SEM, it was found that the first, external integration influence on product innovation SMEs and affect the competitive advantage of SMEs. Second, the internal integration effect on product innovation SMEs and affect the competitive advantage of SMEs. Third, product innovation SMEs effect on the competitive advantage of SMEs. In this respect, the company needs to build a collaboration of external integration and internal integration in order to improve product innovation and competitive advantage of SMEs.

Highlights

The business world is currently growing and more and more competitors are unavoidable
This study aims to analyze the influence of external integration and internal integration to product innovation and competitive advantage
This study aims to describe and analyze the influence of External integration (EI) with indicators and II with indicator to Product innovation (PI) with indicators and their impact on Competitive advantage (CA) with indicators

Summary

Introduction

The business world is currently growing and more and more competitors are unavoidable. The existence of competition makes the company exposed to various opportunities and threats both from within the country and abroad. Because of this intense competition the company must have a CA in order to survive and continue to develop their business. The CA is the heart of marketing performance to the competition (Purnama and Subroto, 2016; Porter, 1996). The setting is a good strategy the key to success for the company to be in the forefront with anticipation in the market competition (Tarabieh et al, 2015). Innovation can be used as a strategy to achieve competitive advantage

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Conclusion