The Role of Collaboration and Competitiveness in Improving Business Sustainability Sandi Setiadi1.
Alhidayatullah2.
Rizky Maulana3.
Nadia Halimatu SyaAodiah4 Management.
Faculty of Economics and Social Sciences.
Linggabuana PGRI University Sukabumi.
Indonesia Retail Management.
Faculty of Economics.
Muhammadiyah University Sukabumi.
Indonesia Abstract This study seeks to address the existing gap in the literature concerning the interplay among stakeholders, including government entities, academic institutions, and the private sector, in relation to the competitiveness and sustainability of micro, small, and medium enterprises (MSME.
in the digital era.
MSMEs frequently encounter challenges such as limited resources, insufficient innovation, and restricted access to broader markets.
Consequently, effective collaboration can generate synergies that enhance competitiveness.
This research employs a quantitative methodology with a descriptive approach.
The study population comprises 3,501 food industries in Sukabumi Regency, from which 175 samples were selected through purposive sampling.
Data analysis was performed using the Structural Equation Modeling (SEM) method with a Partial Least Square (PLS) approach.
The findings of this study reveal that both MSME Collaboration and MSME Competitiveness exert a positive and significant impact on Business Sustainability.
Both research hypotheses (H1 and H.
were substantiated, as evidenced by t-statistic values of 5.
069 and 7.
340, respectively, and a p-value of 0.
The research model demonstrates robust explanatory power, as indicated by an R-Square value of 959, signifying that Collaboration and Competitiveness account for 95.
9% of the variation in Business Sustainability.
Furthermore, a QA value of 0.
611 corroborates the model's strong predictive capability.
These findings underscore that the synergy between collaboration and competitiveness is a crucial determinant in fostering an adaptive and resilient business ecosystem conducive to the sustainable growth of MSMEs.
Keywords: collaboration, competitiveness, business sustainability.
MSMEs.
Sukabumi Regency Introduction In the contemporary digital age, businesses must adapt and collaborate effectively to maintain relevance and sustainability.
It is important to recognize that Micro.
Small, and Medium Enterprises (MSME.
often encounter challenges in achieving sustainability due to limited resources, a lack of innovation, and restricted access to broader markets (Wahyuni et , 2025 .
Darmawan, 2.
Existing research indicates a gap that warrants attention, specifically the insufficient studies examining the collaboration among various stakeholders, including the government, academia, and the private sector, in the context of MSME competitiveness and sustainability (Alhidayatullah et al.
, 2.
While several studies have underscored the significance of collaboration in enhancing competitiveness (Damayanti et al.
, there is a need for a deeper understanding of how such collaboration can be practically and effectively implemented to foster business sustainability across diverse industrial sectors.
For instance, efficient collaboration can generate synergies that not only bolster competitiveness but also stimulate the innovation necessary to address the challenges posed by an ever-evolving market (Darwin et al.
, 2.
The novelty of this research resides in its comprehensive and applicable approach to analyzing collaboration and competitiveness within business contexts in the digital era.
This study demonstrates that innovation in business models and the integration of digital technology can enhance the competitiveness of MSMEs (Mulawarman, 2.
Furthermore, a collaborative approach involving multiple stakeholders can expedite the innovation adoption process and augment the resources available to SMEs(Amory et al.
, 2.
For instance, research indicates that synergy between governmental bodies and business entities can foster an environment conducive to sustainability (Renaldo & Agustiyani, 2025.
Setiadi et al.
, 2.
The incorporation of sustainability principles into business strategies is gaining increasing Enterprises that successfully implement sustainable practices will not only adhere to relevant regulations but will also enhance their attractiveness in a market that is progressively concerned with environmental issues (Siahaya, 2.
Digital empowerment has emerged as a crucial factor for many MSMEs in maintaining sustainability amidst intense market competition.
By advancing existing theories and best practices derived from local experiences, this research aims to make a substantial contribution, focusing not only on technical aspects but also on broader collaborative dimensions in establishing a sustainable business ecosystem in Indonesia Consequently, this research aims to contribute novel insights into the interplay between collaboration and competitiveness in enhancing business sustainability.
Additionally, it seeks to address a gap in the current literature concerning the implementation of collaborative practices within the context of micro, small, and medium enterprises (MSME.
in Indonesia.
The researchers intend to propose a framework that business practitioners can utilize to formulate effective collaborative strategies in addressing prevailing challenges.
Literature Review 1 Business Sustainability Business sustainability is defined as an organization's ability to operate over the long term by maintaining a balance among economic, social, and environmental dimensions (Bradley et , 2020.
Ford et al.
, 2.
This concept extends beyond mere profitability to encompass a responsibility towards society and the environment, increasingly recognized as a fundamental component of contemporary business strategy (Rosyrio et al.
, 2.
Business sustainability embodies a strategic approach that acknowledges the impact of business activities on both the environment and society.
In this regard, companies are urged to prioritize not only short-term financial gains but also the long-term effects on stakeholders and the ecosystem (Ford et al.
The business sustainability indicators employed in this study (Al-Ghifari & Lestari, 2025.
Kadang et al.
, 2.
include: .
Effective financial management, .
Transparency of sustainability reports, .
Enhancement of human resource capacity, and .
Adoption of digital 2 MSME Collaboration Collaboration among micro, small, and medium enterprises (MSME.
is a crucial concept for enhancing the growth and competitiveness of this sector in Indonesia.
Such collaboration can occur among MSMEs themselves, as well as with various other stakeholders, including the government, educational institutions, and the private sector.
Collaboration significantly impacts business outcomes, innovation, and sustainability(Fauzi et al.
, 2.
Collaborative networks and digital leadership can enhance the performance of accounting information systems (AIS) and support MSME sustainability, particularly concerning technology adaptation (Budiarto et al.
, 2.
Collaboration among MSMEs, whether through shared resource utilization, market access, training, or government support, aims to facilitate more inclusive and sustainable growth.
Through a collaborative approach.
MSMEs can overcome existing challenges and actively participate in local economic development, thereby increasing their competitiveness on a broader scale.
Indicators for business collaboration can be categorized into several important areas based on the latest research utilized in this study, including: .
Effective communication between the parties involved (Salmiah et al.
, 2.
Distribution networks, customer loyalty, and relationship strength (Sindania & Hartono, 2.
Digital marketing and social media usage (Mahendra & Utami, 2.
3 Competitiveness of MSMEs The competitiveness of Micro.
Small, and Medium Enterprises (MSME.
is characterized by their capacity to effectively engage in the market through innovative strategies, which encompass enhancements in product and service quality, cost efficiency, and adaptability to market fluctuations.
Factors such as transportation, resources, information, facilities, and pricing significantly influence MSME competitiveness and necessitate strategic management to bolster their market position(Sumarsono et al.
, 2.
Additionally, the advent of information technology and digitalization plays a pivotal role in augmenting the performance and competitiveness of MSMEs in the contemporary digital era, underscoring the importance of market orientation and social media presence in enhancing MSME performance (Heryadi et , 2.
Consequently, the competitiveness of MSMEs is contingent upon their ability to adapt and innovate in response to challenges and opportunities within a dynamic market Indicators of competitiveness for MSMEs are instrumental in enhancing their performance and market standing.
The indicators examined in this study include: .
Product innovation, .
Service quality, .
Entrepreneurship management, and .
Government support.
4 Hypothesis Drawing upon the literature review and conceptual framework delineated in the preceding section, the hypotheses for this study are articulated as follows:
H1: Collaboration among MSMEs exerts a positive influence on business sustainability.
H2: The competitiveness of MSMEs positively impacts business sustainability.
The subsequent research framework diagram elucidates the interconnections among the variables under investigation.
This model, grounded in pertinent theories and prior research findings, functions as a conceptual guide for examining the relationships among independent, moderating, and dependent variables, in alignment with the research objectives.
Collaboration MSMEs Competitiveness SMEs Sustainability Business Figure 1.
Conceptual Model of Research Material and Method This study employs quantitative methodologies to investigate and evaluate the relationship between variables through a descriptive approach.
This method is effective in offering a comprehensive overview of the phenomenon under investigation and enables researchers to assess the impact of the observed variables (Vakira et al.
, 2.
By utilizing questionnaires as a data collection instrument, quantitative research facilitates statistical analysis that uncovers significant relationships between variables and yields conclusions that are more applicable in the context of policy or strategy (Mohajan, 2.
Based on the applied methodology, the research findings can be utilized to develop improved models and strategies in related fields (Zhang & Ju, 2.
The research population comprised 3,501 food industries located in Sukabumi Regency .
The sample was selected using purposive sampling based on the criteria of business capital Ou IDR 10,000,000, business age Ou 2 years, and the owner serving as the respondent, resulting in a total of 175 samples.
This study examined three variables: two independent variables (MSME Collaboration and MSME Competitivenes.
and one dependent variable (Business Sustainabilit.
Quantitative data were collected through a Google Form questionnaire utilizing a five-point Likert scale.
The collected data were subsequently analyzed to assess the validity and reliability of the research instrument.
Following this, data processing was conducted using the Structural Equation Modeling (SEM) technique, employing the SmartPLS software, to achieve precise analytical results regarding the relationships among the predetermined research variables.
Results and Discussion 1 Measurement Model and Structural Model This study encompassed 40 manifest variables and 3 latent variables, which were analyzed through two principal methodologies: the measurement model and the structural model.
These models were employed to examine the relationships among variables within the Structural Equation Model (SEM) utilizing the Partial Least Square (PLS) approach.
This was undertaken to achieve a comprehensive and empirical understanding of the interrelationships among the constructs under investigation.
1 Outer Model Test 1 Validity Test In research, the concepts of convergent and discriminant validity are crucial for ensuring the validity of instruments designed to measure specific constructs.
Convergent validity assesses the degree to which two instruments, anticipated to measure the same construct, exhibit a high correlation.
Conversely, discriminant validity evaluates the extent to which different instruments are not correlated with one another(Akbar et al.
, 2.
2 Convergent Validity In the application of SmartPLS with reflective indicators, the assessment of convergent validity is conducted by evaluating factor loading values, which reflect the degree of correlation between each indicator and the construct it represents.
These factor loading values are utilized to ensure that each indicator effectively represents the construct being measured.
Furthermore, this analysis is depicted through a path diagram that illustrates the causal relationships between constructs and the factor loading values of each indicator.
Figure 2.
Outer Model Source: processed by SMART PLS3 .
Figure 2 presents the outcomes of the convergent validity assessment conducted using PLS software, evaluated based on the factor loadings of each indicator.
A construct is deemed valid if the factor loading surpasses 0.
70 and the AVE exceeds 0.
The analysis results indicate that all indicators satisfy these criteria for convergent validity Table 1.
AVE Values Variable AVE Value MSME Collaboration (X.
MSME Competitiveness (X.
Business Sustainability (Y) Source: Data processed by the researcher .
According to Table 1, the three latent variables exhibit Average Variance Extracted (AVE) values exceeding 0.
5, thereby confirming the validity of all variables and indicating that the employed indicators satisfy the criteria for convergent validity.
3 Discriminant Validity Discriminant validity is a crucial component in evaluating construct validity within Structural Equation Modeling (SEM) frameworks.
It ensures that each construct exhibits a stronger correlation with its own indicators than with those of other constructs.
This evaluation is conducted through cross-loading analysis, wherein indicators must demonstrate the highest factor loading on their respective constructs.
The resulting cross-loading values are then presented to affirm the distinctiveness of each research construct measurement.
Table 2.
Cross Loading Factor Collaboration Competitiveness Sustainability Indicator (X.
(X.
(Y) X1.
X1.
X1.
X1.
X1.
X1.
X1.
X1.
X1.
X1.
X1.
X1.
X2.
X2.
X2.
X2.
X2.
X2.
X2.
X2.
X2.
X2.
Y10
Y11
Y12
Y13
Y14
Y15
Y16
Y17
Y18
Source: Data processed by the researcher .
The cross-loading analysis indicates that each indicator exhibits the highest loading value within its respective construct compared to other constructs.
This finding confirms that all indicators have accurately measured the intended construct, thereby fulfilling the criteria for discriminant validity in the research model and rendering it statistically acceptable.
2 Reliability Test Composite Reliability (CR) and CronbachAos Alpha (CA) assess the internal consistency of the PLS-SEM instrument.
CR and CA values above 0.
70 indicate good reliability and a valid and consistent measurement instrument.
Table 3.
Composite Reliability (CR) and Cronbach's Alpha (CA) Variable Cronbach's Alpha Composite Reliability MSME Collaboration (X.
MSME Competitiveness (X.
Business Sustainability (Y) Source: Data processed by the researcher .
The results of the reliability test indicate that all variables exhibit Cronbach's Alpha and Composite Reliability values exceeding 0.
90, which significantly surpasses the minimum threshold of 0.
This suggests that the measurement instrument demonstrates exceptionally high internal consistency and is reliable in accurately assessing each research construct.
1 Inner Model Test Structural model testing was performed utilizing the Partial Least Squares (PLS) method to evaluate the robustness and significance of the relationships among latent variables through bootstrapping path analysis.
These findings offer empirical insights into the influence among the primary constructs examined in the study using the PLS-SEM approach.
Figure 3.
Bootstrapping Source: processed by Smart PLS 3 .
5 Figure 3.
Bootstrapping Source: processed by Smart PLS 3 .
The results of the bootstrapping analysis indicate that the variables of Collaboration (X.
and Competitiveness (X.
exert a positive and significant influence on Sustainability (Y), as evidenced by t-statistics values of 5.
454 and 7.
938, respectively.
These findings substantiate the assertion that collaboration and competitiveness among MSMEs are crucial factors in significantly enhancing business sustainability.
2 R-Square Test The structural model, also referred to as the inner model, was evaluated using SmartPLS 3 to determine the strength of the relationships between latent constructs.
The R-Square value indicates the extent to which independent variables account for the variance in dependent Utilizing the bootstrapping procedure, a t-statistic test was performed to empirically assess the significance of these relationships and to test the research hypothesis.
Table 4.
R Square Results Variable R Square Business Sustainability (Y) Source: processed by Smart PLS 3 .
An R-Square value of 0.
959 suggests that the variables of Collaboration and Competitiveness account for 95.
9% of the variance in Sustainability or business sustainability.
This finding demonstrates that the model possesses substantial explanatory power, thereby confirming that the relationship between the latent variables in this study is both significant and substantial.
3 Predictive Relevance The QA value serves as an indicator of the predictive capability of the PLS model concerning the dependent variable.
A positive QA value suggests that the model possesses substantial predictive power.
Specifically, a QA value exceeding 0.
25 denotes moderate predictive capability, whereas a value surpassing 0.
50 signifies that the model exhibits strong and significant predictive power.
Table 5.
Q-square Variable SSO
SSE
Q2 (=1-SSE/SSO)
Business Sustainability 3150,000 1,225,124 Source: processed by Smart PLS 3 .
A QA value of 0.
611 signifies that the model possesses substantial predictive capability for the Sustainability variable.
This indicates that 61.
1% of the variance in the dependent variable can be accurately forecasted by the model, demonstrating its excellent reliability and 2 Hypothesis Testing Bootstrapping is a resampling technique employed to estimate the variance and significance of coefficients in Structural Equation Modeling (SEM) by drawing repeated random samples from the original dataset.
This method generates t-statistic and p-value metrics to evaluate the relationships between variables.
At a 95% confidence level, a hypothesis is deemed significant if the t-statistic value exceeds 1.
Table 5.
Path Significance Test Original Description T Statistics Variable Sample P Values (|O/STDEV|) (O) MSME Collaboration (X.
-> Influential Business Sustainability (Y) Competitiveness of SMEs (X.
Influential
7,340
Ie Business Sustainability (Y) Source: processed by Smart PLS 3 .
The results of the path analysis indicate that both Collaboration (X.
and Competitiveness (X.
exert a positive and significant influence on Sustainability (Y).
The t-statistic values are 069 and 7.
340, respectively, with a p-value of 0.
000 (< 0.
, thereby confirming that both variables significantly contribute to enhancing the sustainability of MSME businesses.
This finding suggests that collaboration among business actors and robust competitiveness are crucial factors in maintaining and strengthening business sustainability in a sustainable Discussion The findings of this study indicate that collaboration and competitiveness are two primary factors that mutually reinforce each other in enhancing the sustainability of food MSMEs in Sukabumi Regency.
The positive and significant correlation between the research variables suggests that fostering collaboration among business actors and bolstering competitiveness can serve as effective strategies for MSMEs to sustain and expand their operations in a competitive market environment.
1 MSME Collaboration for Business Sustainability The findings of this study substantiate the assertion that collaboration among MSME actors significantly contributes to enhancing business sustainability.
Through collaborative efforts, business actors can exchange resources, information, and networks, thereby fortifying their competitive stance in the marketplace.
Effective cooperation enables MSMEs to surmount individual limitations, enhance operational efficiency, and foster value-added innovations.
Consequently, collaboration emerges as a pivotal strategy for expanding business opportunities and bolstering business resilience amidst increasingly competitive market Furthermore, collaboration fosters the development of a mutually supportive business ecosystem oriented towards sustainable growth.
These findings align with the research conducted by Hari et al.
, .
Min et al.
, which demonstrate that collaboration positively impacts the sustainability practices and business performance of MSMEs.
2 The Competitiveness of SMEs in Relation to Business Sustainability The findings of this study demonstrate that competitiveness significantly impacts the business sustainability of MSMEs.
Enhanced competitiveness, achieved through improved product quality, sustainable innovation, competitive pricing strategies, or superior service, provides MSMEs with a strategic advantage to endure and thrive amidst market uncertainties.
MSMEs exhibiting strong competitiveness are better equipped to swiftly adapt to external environmental changes, respond more effectively to consumer demands, and enhance customer Furthermore, robust competitiveness broadens opportunities for MSMEs to expand their market reach and fortify their position within the industry value chain.
Consequently, enhancing competitiveness capacity emerges as a fundamental strategy for ensuring long-term business sustainability.
These findings align with the research by Darmawan .
:Triwijayati et al.
, which affirm that high competitiveness enables MSMEs to be more adaptive and facilitates market expansion, crucial for their business continuity.
The results of this study also indicate that the sustainability of food SMEs in Sukabumi Regency is significantly influenced by the synergy between collaboration and competitiveness.
Collaboration functions as a strategic mechanism that strengthens connections among business actors, providing access to resources, information, and broader partnership networks.
Meanwhile, competitiveness serves as a critical foundation for MSMEs to sustain their existence and expand their market share through product quality enhancement, operational efficiency, and sustainable innovation.
The synergy between these two factors fosters a business ecosystem that is adaptive and resilient to changes in the business environment.
Thus.
MSMEs are not only able to withstand competitive pressures but also evolve into resilient, creative, and sustainability-oriented economic entities, both at the local and regional levels, ultimately contributing to the sustainable strengthening of the regional economy.
Conclusion In a dynamic and uncertain business environment, collaboration among business entities serves as a strategic tool for enhancing competitive positioning and establishing sustainable advantages.
Through collaborative efforts.
Micro.
Small, and Medium Enterprises (MSME.
can share resources, information, and networks that may be challenging to access This collaborative process not only enhances operational efficiency but also accelerates innovation, improves product quality, and broadens market access opportunities.
This aligns with the Resource-Based View (RBV) theoretical perspective, which posits that competitive advantage can be achieved through the management and utilization of unique and difficult-to-imitate resources.
Moreover, competitiveness is a fundamental component in ensuring business sustainability.
The competitiveness of MSMEs is demonstrated by their ability to create added value through product quality enhancement, continuous innovation, and superior customer service.
The Dynamic Capability theory supports this notion, suggesting that the adaptive capacity of MSMEs in responding to market changes is crucial for maintaining long-term performance.
High competitiveness enables MSMEs to adapt to evolving consumer trends, anticipate technological shifts, and respond to competitive pressures swiftly and The synergy between collaboration and competitiveness fosters an adaptive and resilient business ecosystem.
Collaboration strengthens network relationships and facilitates access to external resources, while competitiveness ensures internal sustainability through quality and efficiency improvements.
The integration of these elements enables MSMEs in Sukabumi Regency to not only withstand market pressures but also evolve into innovative, productive, and highly competitive entities.
Consequently, this study offers theoretical and practical contributions to understanding how the synergy between collaboration and competitiveness can serve as a key strategy in achieving the sustainability of MSMEs oriented towards sustainable local economic growth.
References