Reframing MSME Competitiveness: Integrating Digital Transformation, Customer-Centric Value, and Green Innovation for Sustainable Advantage

Abstract

Globalization and rapid technological disruption have created a highly dynamic and competitive business landscape, posing significant challenges for Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. Despite their strategic role as the backbone of the national economy, MSMEs face structural constraints, including limited access to technology, financial resources, and innovation capacity. This study examines the impact of digital transformation (DT), customer value creation (CVC), and green innovation (GI) on sustainable competitive advantage (SCA), utilizing the Resource-Based View (RBV) as the theoretical framework. Using a quantitative approach, data were collected from 300 MSMEs across manufacturing and service sectors in Indonesia through a structured questionnaire. The results suggest that while digital transformation and green innovation provide strategic foundations, their effectiveness is amplified when aligned with customer value creation. The study contributes to the innovation and strategic management literature by extending RBV to the context of MSMEs in emerging economies. Practically, the findings offer policymakers and MSME managers valuable insights for designing strategies that integrate digital adoption, customer-centric innovation, and sustainability orientation to achieve a sustainable competitive advantage in the face of global competition.