ORIGINAL ARTICLE
ENTREPRENEURIAL CULTURE.
INNOVATION.
AND
DIGITAL MARKETING CAPABILITY IN MSMEsAo
SUSTAINABLE COMPETITIVE PERFORMANCE
EriyaniA*.
Inaya Sari MelatiA.
Lola Kurnia PitalokaA.
RusdartiA a Universitas Negeri Semarang.
Indonesia *Corresponding Author: eriyani.
pe@mail.
ABSTRACT
Micro, small, and medium enterprises (MSME.
require complementary organizational and digital capabilities to maintain competitiveness in increasingly dynamic markets.
This study examines the effects of entrepreneurial culture and innovation on sustainable competitive performance and evaluates the direct and moderating role of digital marketing capability.
A quantitative survey was administered to 136 owners or managers of processingsector MSMEs in Semarang Regency.
Indonesia.
Data were analyzed using partial least squares structural equation modeling with 5,000 bootstrap resamples.
Digital marketing capability had a strong positive effect on sustainable competitive performance ( = 0.
602, p < .
, and innovation also had a positive effect ( = 0.
218, p = .
Entrepreneurial culture did not have a significant direct effect ( = Oe0.
033, p = .
Digital marketing capability negatively moderated the relationship between entrepreneurial culture and performance ( = Oe0.
215, p = .
indicating that entrepreneurial values may become less effective when they are not aligned with data-informed digital practices.
Its positive moderation of the innovationAeperformance relationship did not reach the 5% significance level ( = 0.
147, p = .
The findings show that sustainable competitiveness depends more directly on actionable innovation and well-developed digital marketing capability than on entrepreneurial values alone.
MSME support programs should therefore integrate product and process innovation with practical digital marketing, analytics, and managerial execution.
Keywords: Digital Marketing Capability.
Entrepreneurial Culture.
Innovation.
Sustainable.
Competitive Performance INTRODUCTION Micro, small, and medium enterprises (MSME.
are productive business entities that operate with relatively limited capital, workforces, and organizational resources (Maulida & Yunani, 2.
Despite their modest scale, they occupy a central position in IndonesiaAos economic structure.
In 2023, approximately 66 million MSMEs contributed about 61% of national gross domestic product, equivalent to IDR 9,580 trillion, and absorbed roughly 117 million workers, or 97% of the national workforce (Directorate General of Treasury, 2.
Their capacity to create employment, circulate local income, and stimulate community-based economic activity makes MSME competitiveness an important component of inclusive and sustainable development.
The present study focuses on processing-sector MSMEs in Semarang Regency.
Official regional data indicate that the number of MSMEs increased from 12,151 in 2021 to 14,291 in 2022 and 19,180 in 2023 (Semarang Regency Open Data, 2021, 2.
This growth expands entrepreneurial opportunities but also intensifies competition for customers, suppliers, skilled labor, and market visibility.
Local capacity-building programs have increasingly emphasized product development, entrepreneurship, and digital literacy.
however, the ability of MSMEs to translate such support into sustainable competitive performance remains uneven.
MSMEs in developing economies commonly face limited managerial expertise, constrained finance and human resources, low technological readiness, and weak innovation systems (Ernawati et al.
, 2022.
Fatimah et al.
, 2021.
Habib & Sutopo, 2.
These constraints can reduce the speed and quality of strategic responses to changes in consumer preferences, technology, distribution channels, and competitive pressure.
Sustainable competitive performance therefore requires more than short-term sales growth.
It reflects an enterpriseAos continuing ability to generate economic value, respond to markets, improve operational efficiency, reduce waste, and maintain advantages that competitors cannot easily displace.
Entrepreneurial culture is one possible source of such performance.
It refers to shared values and behavioral norms that support initiative, proactiveness, experimentation, controlled risk-taking, and continuous improvement.
In the entrepreneurship literature, these orientations are expected to improve adaptability and opportunity recognition (Lumpkin & Dess, 1.
A culture that encourages employees EDUCATIONE: Journal of Education Research and Review | 633
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and owners to question established routines may support faster responses to market change.
Nevertheless, entrepreneurial values do not automatically produce measurable outcomes.
Their effects depend on whether they are embedded in managerial systems, resource allocation, market intelligence, and operational execution.
Innovation constitutes a more observable mechanism through which MSMEs can convert entrepreneurial intent into value.
Product, process, marketing, and business-model innovation enable firms to differentiate their offerings, improve efficiency, reach new customers, and adapt to environmental change.
Meta-analytic evidence has generally linked entrepreneurial and innovative orientation to stronger business performance (Rauch et al.
, 2.
From a dynamic capability perspective, innovation supports the sensing of opportunities, the seizing of new possibilities, and the reconfiguration of resources in response to changing market conditions (Teece, 2.
For processingsector MSMEs, even incremental changes in product quality, packaging, production methods, and service delivery may have meaningful competitive consequences.
Digital marketing capability is another strategic capability that has become increasingly important.
It encompasses the knowledge, routines, technology, and analytical competence required to use websites, social media, marketplaces, digital advertising, customer databases, and online interactions Digital channels may expand market reach and improve customer engagement, but their value depends on strategic coordination rather than mere platform adoption.
Small firms often experience gaps in digital skills, infrastructure, content quality, and data use, which can prevent technology from producing the expected performance gains (Dwivedi et al.
, 2.
Digital marketing capability is therefore treated in this study both as a direct performance driver and as a condition that may alter the effects of entrepreneurial culture and innovation.
Previous studies have examined the direct relationships among entrepreneurial culture, innovation capability, digital marketing capability, and firm performance.
Al Koliby et al.
, for example, linked these organizational capabilities to sustainable competitive performance in manufacturing SMEs in emerging economies.
Other studies have emphasized the positive contribution of digital marketing to efficiency, customer relationships, and competitive advantage (Riyadi & Darma, 2023.
Sharabati et al.
, while innovation has consistently been associated with differentiation and sustainable advantage (Astuti et al.
, 2023.
Hameed et al.
, 2.
However, three gaps remain.
First, direct-effect models may overlook the conditions under which entrepreneurial culture and innovation become more or less Second, evidence concerning digital marketing capability as a moderator remains limited and mixed.
Third, local evidence from processing-sector MSMEs is still insufficient, even though these enterprises face distinct constraints in technology, logistics, product development, and market access.
This study addresses these gaps by positioning digital marketing capability as both a direct antecedent of sustainable competitive performance and a moderator of the relationships between entrepreneurial culture, innovation, and performance.
The model integrates the resource-based view, which regards organizational capabilities as strategic resources, with the dynamic capability perspective, which emphasizes adaptation and resource reconfiguration.
Accordingly, the study examines whether digital marketing capability, entrepreneurial culture, and innovation directly influence sustainable competitive performance and whether digital marketing capability changes the strength of the entrepreneurial cultureAeperformance and innovationAeperformance relationships among processingsector MSMEs in Semarang Regency.
METHOD
Research Design and Context The study used a quantitative, cross-sectional survey design within a positivist research paradigm.
The design was selected to test theoretically specified relationships among entrepreneurial culture, innovation, digital marketing capability, and sustainable competitive performance.
The unit of analysis was the MSME, while the respondent was the owner or manager who possessed sufficient knowledge of the enterpriseAos operations, marketing activities, innovation practices, and performance.
Population and Sample The research population comprised 206 processing-sector MSMEs officially registered in the MSME development program of Semarang Regency.
Processing-sector enterprises were selected because they EDUCATIONE: Journal of Education Research and Review | 634
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operate under substantial pressure to maintain product quality, control production costs, adjust packaging and distribution, and respond to changing customer preferences.
From this population, 136 MSMEs participated in the study.
Clusters were defined by subdistrict, and the sample was allocated proportionally to the distribution of registered MSMEs across the available clusters.
Respondents within each cluster were selected from the official registry through random selection procedures to reduce selection bias and improve geographical representation.
A post-hoc power assessment based on a medium effect size .
A = 0.
, an alpha level of .
05, and statistical power of .
80 indicated that the achieved sample was adequate for detecting moderate Nevertheless, interaction effects are generally more difficult to identify than direct effects.
therefore, small moderation coefficients were interpreted cautiously.
Instrument and Data Collection Primary data were collected using a structured, closed-ended questionnaire administered to MSME owners or managers.
All items were measured on a five-point Likert scale ranging from 1 .
trongly disagre.
to 5 .
trongly agre.
Entrepreneurial culture assessed initiative, risk orientation, support for experimentation, and continuous improvement.
Innovation assessed the enterpriseAos use of new ideas, alternative work methods, product development, and creative problem solving.
Digital marketing capability measured the ability to use digital media to understand markets, develop customer relationships, coordinate partnerships, and support marketing decisions.
Sustainable competitive performance assessed profitability, responsiveness, efficiency, waste reduction, delivery performance, and the ability to maintain competitiveness over time.
The instrument was adapted from previously validated scales and reviewed for clarity and contextual relevance before full distribution.
A pilot test was conducted to identify ambiguous wording and evaluate internal consistency.
The preliminary reliability results exceeded the commonly accepted threshold of .
70 for all constructs.
Participation was voluntary, and the questionnaire was used exclusively for research purposes.
Data Analysis Data were analyzed using partial least squares structural equation modeling (PLS-SEM) with SmartPLS 3.
The method was appropriate because the research model contains multiple latent constructs and interaction terms and is oriented toward explaining variance in sustainable competitive performance.
The analysis proceeded in two stages.
First, the measurement model was evaluated through indicator loadings, average variance extracted (AVE).
CronbachAos alpha, composite reliability, the FornellAe Larcker criterion, and the heterotraitAemonotrait ratio (HTMT).
Indicator loadings above .
AVE values 50, and reliability coefficients above .
70 were treated as evidence of satisfactory convergent validity and internal consistency.
Figure 1 presents the conceptual relationships tested in the model.
Figure 1.
Research Framework
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Second, the structural model was assessed by estimating standardized path coefficients and their Interaction terms were created for entrepreneurial culture y digital marketing capability and innovation y digital marketing capability.
Bootstrapping with 5,000 resamples generated standard errors, t statistics, and p values.
Relationships were considered statistically significant at p < .
RESULTS AND DISCUSSION
Respondent Characteristics The study involved 136 MSME owners or managers.
Women represented 63.
2% of respondents, while men represented 36.
Most respondents were older than 40 years .
8%), indicating that the sample included a substantial proportion of experienced business actors.
Senior secondary education was the most common educational level .
3%), followed by bachelorAos degrees .
6%) and junior secondary education .
2%).
The profile indicates that the sample was dominated by mature ownermanagers with secondary-level formal education, a pattern that is relevant when interpreting digital capability and managerial practices.
Table 1.
Respondent Profile Category Gender Age Education Description Frequency .
Percentage (%) Male Female 20Ae40 years > 40 years Primary school Junior secondary school Senior secondary school BachelorAos degree MasterAos degree Source: Survey data processed by the authors .
Descriptive Assessment of the Constructs Mean scores for the construct indicators ranged from approximately 4.
00 to 4.
Respondents therefore tended to agree that their enterprises supported initiative and improvement, experimented with new ideas, used digital media for marketing, and pursued sustainable performance outcomes.
These descriptive results indicate favorable perceptions of all four constructs, but they do not establish causal or statistically significant relationships.
In particular, positive self-assessments of entrepreneurial culture must be distinguished from the structural model result, which tests whether variation in that culture is associated with variation in sustainable competitive performance after the other predictors are Respondents generally reported experimentation with product and work-method improvements, suggesting that innovation was present mainly through incremental changes suited to the scale of MSME Digital marketing practices were also widely reported, although the responses indicated uneven capability in market analysis, customer-data use, and strategic coordination.
With respect to sustainable competitive performance, respondents perceived relatively strong profitability and market responsiveness but reported more varied performance in delivery efficiency and operational consistency.
Measurement Model Convergent validity was assessed through the outer loadings.
AVE, and composite reliability values presented in Table 2.
All indicator loadings exceeded .
70, ranging from .
798 to .
The AVE values ranged from .
720 to .
767, which means that each construct explained more than half of the variance in EDUCATIONE: Journal of Education Research and Review | 636
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its indicators.
Composite reliability ranged from .
894 to .
923, demonstrating satisfactory internal These results support the retention of all indicators in the model.
Table 2.
Convergent Validity and Composite Reliability Construct
DMC
SCP
Indicator Outer Loading EC1
EC3
EC4
IN1
IN2
IN3
DMC1
DMC2
DMC3
DMC4
SCP1
SCP2
SCP3
SCP4
AVE
Composite Reliability Source: SmartPLS output processed by the authors .
Discriminant validity was assessed through the FornellAeLarcker criterion and HTMT.
The square root of each constructAos AVE exceeded its correlations with the other constructs, and all HTMT values were below .
The constructs therefore demonstrated adequate empirical distinctiveness.
CronbachAos alpha values ranged from .
87 to .
90, and composite reliability values remained above .
89, as shown in Table 3.
The measurement model was consequently considered suitable for structural analysis.
Table 3.
Construct Reliability CronbachAos Alpha Construct Composite Reliability Assessment Entrepreneurial Culture (EC) Reliable Innovation (IN) Reliable Digital Marketing Capability (DMC) Reliable Sustainable Competitive Performance (SCP) Reliable Source: SmartPLS output processed by the authors .
Structural Model and Hypothesis Testing The structural model results are summarized in Table 4 and illustrated in Figure 2.
Digital marketing capability had the largest direct effect on sustainable competitive performance ( = 0.
602, t = 6.
316, p < .
Innovation also had a positive effect ( = 0.
218, t = 1.
978, p = .
By contrast, entrepreneurial culture did not have a significant direct effect ( = Oe0.
033, t = 0.
520, p = .
The interaction between entrepreneurial culture and digital marketing capability was negative and significant ( = Oe0.
215, t = 092, p = .
The interaction between innovation and digital marketing capability was positive but did not reach the .
05 significance threshold ( = 0.
147, t = 1.
914, p = .
These results indicate that EDUCATIONE: Journal of Education Research and Review | 637
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digital marketing capability directly supports sustainable competitiveness, while its moderating influence differs across the two organizational antecedents.
Table 4.
Structural Model and Hypothesis Testing Relationship Path Coefficient () Sample Mean Standard Deviation t Statistic Value Decision DMC Ie SCP < .
Significant EC Ie SCP Oe0.
Oe0.
Not significant IN Ie SCP Significant EC y DMC Ie SCP Oe0.
Oe0.
Significant IN y DMC Ie SCP Not significant at Source: SmartPLS output processed by the authors .
Figure 2.
Structural Path Model Digital Marketing Capability and Sustainable Competitive Performance The strong positive relationship between digital marketing capability and sustainable competitive performance supports the resource-based view.
Digital marketing capability is not merely the possession of social-media accounts or marketplace access.
it is an organizational ability to coordinate technology, market knowledge, customer communication, content, and decision-making.
When these elements are integrated.
MSMEs can reduce the cost of reaching customers, improve promotional targeting, respond more quickly to market feedback, and develop relationships beyond their immediate geographic area.
The result is consistent with studies reporting that digital marketing capability improves MSME market reach, customer relationships, and competitive advantage (Riyadi & Darma, 2023.
Sharabati et , 2.
It also aligns with evidence that digital tools strengthen performance when they support customer-value creation and more accurate marketing decisions (Dahnil et al.
, 2.
For processingsector MSMEs, digital marketing may be particularly valuable because product appearance, packaging.
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customer reviews, ordering convenience, and delivery information can be communicated directly through digital channels.
The effect therefore reflects both commercial visibility and a broader capability to use market information strategically.
The practical implication is that digitalization programs should move beyond introductory training on platform operation.
MSMEs require competence in customer segmentation, content planning, conversion measurement, marketplace optimization, simple analytics, and the integration of online promotion with inventory and delivery.
Without these complementary routines, digital adoption may remain symbolic and fail to generate sustained performance improvements.
Entrepreneurial Culture and Sustainable Competitive Performance Entrepreneurial culture did not directly influence sustainable competitive performance.
This result does not imply that initiative, risk-taking, or proactiveness are unimportant.
Rather, it suggests that shared entrepreneurial values were not sufficient to explain performance differences once digital marketing capability and innovation were included in the model.
A culture may encourage ideas and confidence, but performance depends on whether those values are converted into market-relevant actions, disciplined resource allocation, measurable experiments, and operational improvements.
The finding differs from studies that report a direct positive association between entrepreneurial culture and organizational performance, but it is compatible with research suggesting that the effect may operate indirectly through innovation or strategic orientation (Kantur & eri-Say, 2022.
Mulyani & Yuliani, 2.
In small owner-managed enterprises, entrepreneurial culture may also be highly concentrated in the owner and insufficiently institutionalized in routines, employee participation, or formal planning.
As a result, respondents may express strong entrepreneurial attitudes without consistently translating them into performance-enhancing practices.
Programs designed to strengthen entrepreneurship should therefore combine motivational and cultural components with concrete managerial competencies.
Risk-taking needs to be accompanied by financial analysis.
proactiveness needs market intelligence.
and experimentation needs performance This combination is more likely to transform entrepreneurial values into sustainable results.
Innovation and Sustainable Competitive Performance Innovation had a positive and statistically significant effect on sustainable competitive performance.
The result supports the dynamic capability perspective because innovation enables enterprises to adjust products, processes, and business models as market conditions change.
For processing-sector MSMEs, innovation does not necessarily require radical technology.
Improvements in ingredients, design, packaging, production flow, quality control, distribution, and service can create differentiation and reduce operating inefficiencies.
The finding is consistent with previous evidence that product and process innovation improve performance and sustainable competitive advantage among SMEs (Astuti et al.
, 2023.
Hameed et al.
Innovation contributes to customer value by offering solutions that are more relevant, convenient, distinctive, or reliable.
It can also reduce waste and production time, which directly supports the economic and operational dimensions of sustainable competitive performance.
The relatively smaller coefficient compared with digital marketing capability suggests, however, that innovation must be communicated and commercialized effectively before its full value is realized.
MSME support agencies should consequently connect innovation assistance with market testing.
Product-development activities should include customer validation, packaging evaluation, pricing analysis, and digital promotion.
This approach reduces the risk that an innovative product remains disconnected from actual demand.
Moderating Role of Digital Marketing Capability Digital marketing capability significantly weakened the relationship between entrepreneurial culture and sustainable competitive performance.
The negative interaction indicates that higher digital marketing capability did not amplify the benefits of entrepreneurial culture.
One plausible interpretation is a lack of alignment between intuitive entrepreneurial behavior and data-informed digital practice.
When digital capability becomes more sophisticated, decisions increasingly depend on evidence, segmentation, platform metrics, and coordinated execution.
Entrepreneurial risk-taking that is not EDUCATIONE: Journal of Education Research and Review | 639
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supported by these practices may become less productive or may introduce inconsistency into marketing This interpretation is consistent with the argument that entrepreneurial culture must be integrated with analytical and technological competence in digitally mediated markets (Rahmawati & Santosa.
Digital systems may also redistribute decision authority from personal intuition toward measurable customer behavior.
The negative moderation should therefore not be read as evidence that digital marketing damages entrepreneurial culture.
rather, it signals that the two capabilities require strategic alignment.
Training should help MSME owners combine experimentation with digital data, so that entrepreneurial initiative is tested, refined, and scaled using market evidence.
The innovation y digital marketing capability interaction was positive but not significant at the 5% The coefficient suggests a tendency for digital marketing capability to strengthen the effect of innovation, but the evidence is not sufficiently strong for a definitive moderation claim.
This cautious interpretation is important because interaction effects typically require substantial statistical power.
Conceptually, innovative products should benefit from digital communication and distribution, and previous studies have reported such complementarity (Setiawan et al.
, 2.
In the present sample, however, differences in digital skill, infrastructure, innovation quality, and implementation consistency may have limited the strength of the interaction.
Taken together, the moderation results demonstrate that digital capability does not automatically reinforce every organizational strength.
Its effect depends on fit.
Innovation and digital marketing are potentially complementary because digital channels can communicate and commercialize new value.
Entrepreneurial culture is more abstract and may require managerial systems before it can interact productively with digital capability.
This distinction helps explain why the direct effect of digital marketing capability was strong, the innovation effect was positive, and the entrepreneurial-culture effect was not significant.
CONCLUSION
This study shows that sustainable competitive performance among processing-sector MSMEs is driven most directly by digital marketing capability and innovation.
Digital marketing capability produced the strongest positive effect, demonstrating that coordinated use of digital channels, customer information, and market-oriented decision-making is a strategic resource rather than a supplementary promotional activity.
Innovation also improved performance by enabling product, process, and business adjustments, whereas entrepreneurial culture did not have a significant direct effect, indicating that entrepreneurial values require managerial and technological execution before they generate measurable Digital marketing capability significantly weakened the entrepreneurial cultureAeperformance relationship, which suggests a misalignment between intuitive entrepreneurial behavior and datainformed digital practice, while its positive moderation of the innovationAeperformance relationship did not reach the 5% significance threshold.
Local governments.
MSME development agencies, and business-support institutions should therefore integrate digital marketing, analytics, managerial discipline, and market-tested innovation in a single capacity-building framework.
Future research should test indirect pathways, particularly innovation as a mediator between entrepreneurial culture and performance, compare sectors and enterprise sizes through multigroup analysis, employ longitudinal designs, and incorporate organizational resilience, market orientation, and digital transformation to explain how MSMEs sustain competitiveness over time.
REFERENCES