An investigative study on sustainable competitive advantage of manufacture companies in Indonesia
Abstract
The purpose of the research is to investigate the effect of external and internal factors on corporate performance and sustainable competitive advantage. The samples of the study are ten manufacturing companies in the pharmaceutical, cosmetic, and household utility sectors listed on the Indonesia Stock Exchange (IDX). The data analysis use PLS-SEM. The result shows that corporate performance is influenced by leverage and liquidity (internal factors) significantly but is not influenced by external factors significantly as well as organizational performance doesn’t impact the sustainable competitive advantage significantly. The results of this study can be a concern for companies that corporate performance is not the ultimate goal of a business. Still, it must be followed by a sustainable competitive advantage if the company wants the return is not temporary, but sustainable. The originality of the paper is the results of this study show that the competitive advantage of an industry or company can not only rely on one factor, from external or internal environmental factors.
Keyword : macroeconomic, leverage, liquidity, firm performance, sustainable competitive advantage
How to Cite
Purwanto, E., & Purwanto, A. D. B. (2020). An investigative study on sustainable competitive advantage of manufacture companies in Indonesia. Business: Theory and Practice, 21(2), 633-642. https://doi.org/10.3846/btp.2020.12256
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Alarussi, A., & Alhaderi, S. (2018). Factors affecting profitability in Malaysia. Journal of Economic Studies, 45(3), 442–458. https://doi.org/10.1108/JES-05-2017-0124
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Dapas, C. C., Sitorus, T., Purwanto, E., & Ihalauw, J. J. O. I. (2019). The effect of service quality and website quality of Zalora.com on purchase decision as mediated by purchase intention. Quality – Access to Success, 20(169), 87–92.
David, F. R., & David, F. R. (2015). Strategic management: concepts and cases (15th ed.). Pearson Education Limited, Edinburgh Gate.
Day, G. S., Reibstein, D. J., & Gunther, R. E. (1997). Wharton on Dynamic Competitive strategy. John Wiley & Sons, Inc.
Dioha, C., Mohammed, N. A., & Okpanachi, J. (2018). Effect of firm characteristics on the profitability of listed consumer goods companies in Nigeria. Journal of Accounting, Finance, and Auditing Studies, 4(2), 14–31.
Egbunike, C. F., & Okerekeoti, C. U. (2018). Macroeconomic factors, firm characteristics, and financial performance: A study of selected quoted manufacturing firms in Nigeria. Asian Journal of Accounting Research, 3(2), 142–168. https://doi.org/10.1108/AJAR-09-2018-0029
Growe, G., DeBruine, M., Lee, J., & Tudón Maldonado, J. (2014). The profitability and performance measurement of U.S. regional banks using the predictive focus of the Fundamental Analysis Research. Advances in Management Accounting, 24, 189–237. https://doi.org/10.1108/S1474-787120140000024006
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: indeed a silver bullet. Journal of Marketing Theory and Practice, 19(2), 139–151. https://doi.org/10.2753/MTP1069-6679190202
Hair, J. F., Sarstedt, M., Ringle, C. M., & Mena, J. A. (2012). An assessment of the use of partial least squares structural equation modeling in marketing research. Journal of the Academy of Marketing Science, 40(3), 414–433. https://doi.org/10.1007/s11747-011-0261-6
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2011). Strategic management concepts competitiveness & globalization (9th ed.). South-Western Cengage Learning, Mason, Ohio.
Ho, C., & Mohd-Raff, N. (2019). External and internal determinants of performances of Shariah and non-Shariah compliant firms. International Journal of Islamic and Middle Eastern Finance and Management, 12(2), 236–253. https://doi.org/10.1108/IMEFM-08-2017-0202
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Karno, C. G., & Purwanto, E. (2017). The effect of cooperation and innovation on business performance. Quality – Access to Success, 18(158), 123–126.
Kock, N., & Hadaya, P. (2018). Minimum sample size estimation in PLS‐SEM: The inverse square root and gamma‐exponential methods. Information Systems Journal, 28(1), 227–261. https://doi.org/10.1111/isj.12131
Lasisi, I. O., Dikki, C. A., & Okpanachi, J. (2017). The empirical determinant of a firm’s profitability: evidence from listed agricultural companies in Nigeria. Sahel Analyst: Journal of Management Sciences, 15(8), 66–88.
Liou, F.-M., Tang, Y.-C., & Huang, C.-P. (2015). Asset-light business model: a theoretical framework for sustained competitive advantage. file:///C:/Documents%20and%20Settings/ Administrator/My%20Documents/Downloads/Asset-Light_Business_Model_A_Theoretical_ Framework%20(1).pdf
Liuspita, J., & Purwanto, E. (2019). The profitability determinants of food and beverages companies listed at the Indonesia stock exchange. International Journal of Scientific & Technology Research, 8(9), 197–202.
Lotfi, R., Mostafaeipour, A., Mardani, N., & Mardani, S. (2018). Investigation of wind farm location planning by considering budget constraints. International Journal of Sustainable Energy. https://doi.org/10.1080/14786451.2018.1437160
Maury, B. (2018). Sustainable competitive advantage and profitability persistence: Sources versus outcomes for assessing advantage. Journal of Business Research, 84, 100–113. https://doi.org/10.1016/j.jbusres.2017.10.051
Mehrjerdi, Y. Z., & Lotfi, R. (2019). Development of a mathematical model for sustainable closed-loop supply chain with efficiency and resilience systematic framework. International Journal of Supply and Operations Management, 6(4), 360–388.
Mwangi, E. N., & Wekesa, S. (2017). Influence of economic factors on organizational performance of airlines: a case study of Kenya Airways Ltd. IOSR Journal of Humanities and Social Science, 22(5), 8–14. https://doi.org/10.9790/0837-2205050814
Nanda, S., & Panda, A. K. (2018). The determinants of corporate profitability: an investigation of Indian manufacturing firms. International Journal of Emerging Markets, 13(1), 66–86. https://doi.org/10.1108/IJoEM-01-2017-0013
Ndlovu, C., & Alagidede, P. (2018). Industry structure, macro-economic fundamentals, and return on equity. International Journal of Emerging Markets, 13(6), 2047–2066. https://doi.org/10.1108/IJoEM-06-2017-0210
Nustini, Y. (2006). Determinants of sustainable competitive advantage due to an it-enabled strategy. Jurnal Siasat Bisnis, 11(1), 21–36. https://doi.org/10.20885/jsb.vol11.iss1.art2
Pgcareers. (2019). P&G Indonesia. https://www.pgcareers.com/location-Indonesia
Purwanto, E. (2016). The effect of cosmopolitanism on perceived foreign product and purchase intentions: Indonesia case. Quality – Access to Success, 17(155), 94–98.
Purwanto, E., & Loisa, J. (2020). The intention and use behaviour of the mobile banking system in Indonesia: UTAUT Model. Technology Reports of Kansai University, 62(06), 2757–2767.
Purwanto, E., & Budiman, V. (2020). Applying the technology acceptance model to investigate the intention to use e-health: a conceptual framework. Technology Reports of Kansai University, 62(05), 2569–2580.
Saputra, S. M. (2013). UNILEVER VS P&G: Persaingan Dagang Berlabel Lingkungan. https://ekonomi.bisnis.com/read/20130527/12/141332/unilever-vs-pg-persaingan-da-gang-berlabel-lingkungan
Tang, Y., & Liou, F. (2010). Does firm performance reveal it’s own causes? The role of Bayesian inference. Strategic Management Journal, 31, 39–57. https://doi.org/10.1002/smj.799
Tjiu, M., & Purwanto, E. (2017). Guanxi and the leader-member exchange in the Chinese supervisor and subordinate relationship. Journal of Applied Economic Sciences, 12(8/54), 2218–2232.
Unilever. (2019). Tentang Unilever Indonesia. https://www.unilever.co.id/?navids=tcm:1310-50553-4
Vieira, E. S., Neves, M. E., & Dias, A. G. (2019). Determinants of Portuguese firms’ financial performance: panel data evidence. International Journal of Productivity and Performance Management, 68(7), 1323–1342. https://doi.org/10.1108/IJPPM-06-2018-0210
Wiyono, G. (2011). Merancang penelitian Bisnis dengan alat analisis SPSS 17.0 dan SmartPLS 2.0. UPP STIM YKPN.
Wong, K. K-K. (2013). Partial Least Squares Structural Equation Modeling (PLS-SEM) Techniques Using SmartPLS’. Marketing Bulletin, 24.
Yadav, P. L., Han, S. H., & Kim, H. (2016). Sustaining competitive advantage through corporate environmental performance. Business Strategy and the Environment, 26(3), 345–357. https://doi.org/10.1002/bse.1921