Market Orientation and Dynamic Capability as A Basis Competitive Advantage Achievement of MSMEs

Abstract

The MSME sector is a vital part of the country's economy due to its significant role in driving the economy, including its contribution to creating new job opportunities, driving economic growth, and serving as a source of innovation. However, the contribution of MSMEs to exports was still relatively low. The competitive ability or competitive advantage of Indonesian MSMEs is still lower compared to similar business sectors in neighbor countries in Southeast Asia. Therefore, this study aims to conduct a literature review on the main determining factors, particularly market orientation and dynamic capabilities, which can be used as a basis for empowering MSMEs to achieve and maintain competitive advantage. The results of the study reveal that through customer orientation, competitor orientation, and inter-functional coordination as dimensions of market orientation, MSMEs can create superior value, increase customer satisfaction and loyalty, and strengthen their competitive position in a sustainable manner.  Meanwhile, through dynamic capabilities, MSMEs are able to overcome internal limitations, improve efficiency, and create competitive advantages that are difficult for competitors to replicate. Through strengthening both of these aspects, MSMEs are not only able to survive, but also grow, expand their markets, increase profitability, and achieve sustainable competitive advantage in an increasingly complex global competition. The analysis in this study is still based on literature reviews and previous research results. Empirical research needs to be conducted to ensure that market orientation and dynamic capabilities can be used as a basis for empowering MSMEs in achieving competitive advantage in the market.