Annisa Mardatillah*
| Rosmayani | Rendi Prayuda
© 2023 IIETA. This article is published by IIETA and is licensed under the CC BY 4.0 license (http://creativecommons.org/licenses/by/4.0/).
OPEN ACCESS
This study analyzes knowledge management and innovation based on indigenous product creativity to achieve a sustainable competitive advantage. The unit of analysis in this study was the artisans of the woven handicraft industry from palm oil stem waste, totaling 50 respondents using a census sampling of the entire population. The analysis tool of this research uses SEM PLS. The results of this study indicate that knowledge management and innovation affect sustainable competitive advantage with indigenous product creativity as mediation in the woven handicraft industry from waste palm oil stems. The findings succeeded in filling the gap in previous research that the heterogeneity of company resources is getting higher to achieve sustainable competitive advantage due to the indigenous factor of creativity as a mediation that can provide added value different from competitors. This research implication contributes to developing strategic management science with a resource approach with empirical evidence that original product creativity is a substantial intermediary variable to achieve sustainable competitive advantage. The practical implication of this research is that business actors in the palm oil stem waste industry must pay more attention to their knowledge resources and product innovation on indigenous product creativity.
knowledge management, innovation, indigenous, sustainability
The higher increasing business competition, companies are required to enhance their competitiveness in a sustainable manner. The rapid development of technology and information is a significant factor in this globalized era and cannot be ignored. Market trends also change due to dynamic customer needs and wants, presenting strategic challenges that must be addressed. A company's resources alone cannot determine its strength unless it can create unique value that sets it apart from competitors.
Previous studies have shown a preference for imported products over local ones, suggesting that local products are less desirable [1]. This challenges the local craft industry to add value through unique product appeal [2]. While past research on innovation has emphasized product creativity, there has been little focus on innovation based on indigenous culture. However, it has been suggested that products with an indigenous cultural background can generate higher emotional value for consumers [3-5].
The expansion of oil palm plantations and increased production volume in Indonesia have led to a surge in palm oil waste, including palm oil stick waste. This waste is not being utilized optimally despite its potential. In areas like Rokan Hulu, Riau Province, the waste is often burned or discarded, despite the potential for it to be transformed into valuable commodity products.
The primary hurdle lies in the limitations of knowledge management practices and the need for improved product types to achieve sustainable competitive advantage. The limited capability for product innovation stems from a lack of knowledge management in design, coloring, and packaging techniques. As such, there is a need for strategies that focus on indigenous product creativity, considering the global market's high interest in unique local cultural products. These strategies could turn palm oil stick waste into innovative products with high economic value, thereby solving waste and competitiveness issues.
Knowledge management is crucial in enabling companies to detect new market opportunities quickly and drive innovation [6]. It also fosters market responsiveness, facilitating sustainable strategies [7]. However, formalization could hinder radical projects which should be managed informally to facilitate knowledge management across all company units [8, 9]. The knowledge management process consists of acquiring, applying, and sharing knowledge and designing knowledge transfer [10, 11]. This process incorporates tacit knowledge, explicit knowledge, and a technology base [12]. The resource-based theory (RBT) supports the notion that knowledge capability resources are essential for achieving sustainable competitive advantage and improving company performance [4]. However, what remains unclear is the specific types of knowledge that provide unique added value and are challenging to transfer.
Creating unique value from scarce resources that are not easily imitated and have no substitutes requires innovative skills. Unfortunately, many companies still view innovation as a domain for newcomers. The strategic management approach suggests that companies that do not actively implement strategic management and remain passive will be overtaken by competition.
The concept of sustainable competitive advantage was introduced in an article [13], which posits that companies should possess resources that are rare, valuable, and not easily imitated or substituted. A company's human resources can provide a potential source of sustainable competitive advantage [14]. Despite being valuable, rare, and not easily replaced, resources that are easy to imitate bring challenges to achieving sustainability. Patenting could be a solution to this issue [15].
Moreover, heterogeneous resources, combined with imperfect mobility, will achieve a competitive advantage due to the differences in profitability among competitors. If resources are distributed homogeneously, all organizations in the industry will have the same strength and implement the same strategy [15-17].
Research on sustainable competitive advantage is evolving, with recent advancements in communication and information technology leading to new approaches. One such approach centers on knowledge-based system resources with a focus on local cultural elements. However, current literature predominantly uses only the keywords 'sustainable competitive advantage' and 'knowledge management', indicating a significant gap in studies that incorporate knowledge-based system resources into sustainable competitive advantage.
This disparity underlines the need for more exploration into the integration of knowledge management and innovation within the context of sustainable competitive advantage. Specifically, there is a need to study how indigenous product creativity can be leveraged as a strategic approach in the global market. This approach can offer a new perspective on achieving superiority in global competition through cultivating and utilizing knowledge-based system resources Figure 1 shows research framework which describes research model.
Figure 1. Research framework
Competitive advantage originates from a company's skills and resources, including technical, managerial, and operational capabilities. The uniqueness and differences among competitors revealed through competitive advantage analysis enable companies to maintain their advantage, significantly impacting performance [18]. Activities such as business design, production, marketing, and distribution can create a sustainable competitive advantage by facilitating a company's relative cost position and establishing a basis for differentiation. Lower costs allow a company to offer more value to customers than its competitors can.
Micro and Small Enterprises can develop alternative strategies by leveraging both internal and external factors [19, 20]. Internal factors include marketing, production, human resources, and finance, while external ones encompass socioeconomic conditions, technology, buyers, and competitors. In the global business competition, companies need to focus on internal perspectives in addition to industrial structure, carefully examining and combining their resources to gain core competencies and competitive advantages.
Strategy plays a significant role in an organization's ability to stretch and fulfill its aspirations. It demands careful planning and commitment to continuously enhance its resources [21].
Knowledge management encompasses three primary functions: knowledge generation, storage, and sharing. Knowledge generation includes innovation and accumulation of new knowledge, which is then combined with existing knowledge. Knowledge sharing allows the dissemination of skills, experiences, and knowledge within an organization.
A knowledge management process that involves gathering experiences, clarifying knowledge, and creating, acquiring, storing, and sharing that knowledge can lead to the development of unique core skills and competencies. These unique skills, which businesses, employers, and employees acquire, create, store, share, and disseminate, are difficult to imitate. Consequently, a sustainable competitive advantage can be achieved when these skills are challenging to replicate [22].
Knowledge can be the basis of a sustainable competitive advantage if it can be quickly disseminated within the firm that owns it but not easily transferred to other firms. This declaration intends that knowledge that cannot be quickly disseminated within a company belongs to many people who do not belong to the company. As a result, the ability to create value for the company is limited. The Knowledge Base View (KBV) approach assumes that companies are business entities capable of creating, integrating, and distributing knowledge. The functionality created by the KBV approach is based on something other than tangible resources, such as physical or financial resources. KBV analysis includes human resources, social and organizational resources, and other organizational resources such as technical and economic resources [23].
The knowledge-Based View approach is closely related to the RBV in that knowledge is a strategic resource to achieve a sustainable competitive advantage [24]. Knowledge management is a management tool for rapid growth. Company employees can move to new companies and start using that knowledge. Only the constantly learning company will gain a competitive advantage compared to competitors in the market [25]. Different stakeholders need to know how best to serve consumers. The corporate culture needs to change and foster attribution and collaboration among employees. Technology and infrastructure are the driving force to beat the competition.
Companies use the knowledge and disseminate it everywhere, including the internet, databases, documents, e-mail, podcasts, and websites. Companies can also conduct video conferencing and social networking forums. This media is used to share knowledge. On the one hand, many things can be learned from the literature on success stories elsewhere. Further research is needed to determine its effectiveness. Organizations are a way to protect intellectual capital and strengthen and maintain a company's competitive advantage [25].
Many researchers have researched the importance of innovation in small industries. Innovation is a performance factor; innovation positively impacts the performance of high-tech and low-tech industries [26]. Survey results from small industries in Romania indicate that most of these businesses are considering adopting a learning-oriented organizational culture [26]. The innovation process in small industries relies on internal and external learning resources. Best practices for internal learning resources for small industry cases in Romania are represented by networking with companies and external partners as internal learning resources for small businesses.
Market changes, technology changes, and expert and consultant support are the reported external sources of learning. The survey results also show that most small industries tend to innovate. Especially in terms of business models and the main obstacles they face. Due to the lack of funds and the high costs they face. They are identifying the most common barriers to innovation presented by small industries in Romania as a starting point for setting future directions breaking through barriers one by one to support innovation activities and results. This survey's concrete results are linked to similar surveys of small industries in other countries. It can form the basis of recommendations and initiatives to consider aspects of a particular innovation.
However, it is essential to make this comparison based on the current small industry situation as a national development framework. More recommended based on survey results considering carefully the need for innovation for small industries, especially related to barriers to certain types of innovation. Another possible direction for future research would be to consider the primary factors that small industries consider when a company selects and implements a particular type of innovation that can be applied as a basis for developing an innovation model at the corporate level.
Previous research suggests that innovation influences sustainable competitive advantage [27]. However, this study's findings do not indicate a significant impact of innovation on sustainable competitive advantage. These results align with the viewpoint [28], suggesting that only sometimes do companies' innovations lead to a sustainable competitive advantage. It is because a company has a sustainable competitive advantage if its potential competitors cannot imitate the product innovations it produces or competitors have to carry out reconstruction that requires a lot of capital and investment so that competitors cannot do it.
This study uses a quantitative descriptive method. The sample of this research is 50 business actors who are also craftsmen of the woven industry from palm oil stick waste in Rokan Hulu downstream district, Riau, Indonesia. They are members of a group of craftsmen woven from palm oil stick waste in Rokan Hulu Downstream district, Riau, Indonesia. This sample was taken as a whole from the entire existing population using census sampling. Census sampling was used in this study because the population was considered small or less than 100 [29]. The research location was determined in the palm oil stem waste craft business in Rokan Hulu, Riau, Indonesia, because the research location was a group of craftsmen who first started this craft business and was the largest in Riau Province, Indonesia. Although the first and the largest in Riau Province, Indonesia, they still have problems that deserve scrutiny from knowledge management factors, innovation to achieve a sustainable competitive advantage with indigenous product creativity as a mediating variable.
The qualifications for the length of service for the research sample in the woven industry business are those who have been active in this industry for more than three years. Of their educational background, as much as 56% have a bachelor's degree, 40% have a high school certificate and the rest are below the bachelor's and high school level. The data collection technique in this study relied on questionnaires to collect primary data. Besides that, the researchers also made direct observations at the research location. There are 65 questions in the test on the questionnaire—questions in the questionnaire regarding knowledge management, innovation, indigenous knowledge product creativity, and sustainable competitive advantage. Secondary data was obtained through literature review and documentation. Each question was scored using a 5-point Likert scale.
The validity and reliability in this study refer to the opinion [30] namely using a minimum validity index of 0.5 and a minimum reliability index of 0.6. Data analysis in this study used the PLS-SEM. The analysis tools in this study used the Structural Equation Modeling (SEM) method with PLS. Partial Least Square (PLS) analysis is used becausePLS can be used without a solid theoretical basis, ignoring non-parametric assumptions and the accuracy of the prediction model parameters based on the value of the determinant coefficient (R-square), so PLS is very appropriate for research to develop theory [30].
Convergent validity relates to the principle that the manifest variables of a construct should be highly correlated. Convergent validity with PLS software can be seen from the loading factor for each construct indicator. While to assess Convergent validity, the loading factor value must be more than 0.7, as well as the average extracted (AVE), and the communality value must be greater than 0.5, and the results are as follows.
Table 1. Loading factor
|
Variable |
Indicator |
Loading Factor |
|
KNOWLEDGE MANAGEMENT |
KNOWLEDGE |
0.880 |
|
KOGNITIF |
0.853 |
|
|
TECHNIQUE |
0.726 |
|
|
INOVATION |
INOV1 |
0.756 |
|
INOV2 |
0.787 |
|
|
INOV3 |
0.864 |
|
|
INDIGENOUS PRODUCT CREATIVITY |
IPC1 |
0.930 |
|
IPC2 |
0.938 |
|
|
IPC3 |
0.865 |
|
|
SUSTAINABLE COMPETITIVE ADVANTAGE |
SCA1 |
0.957 |
|
SCA2 |
0.936 |
|
|
SCA3 |
0.928 |
|
|
SCA4 |
0.951 |
Source: Data processing, 2023
Table 1 shows loading factor provides information about the loading factor values for each manifest variable. The loading factor values of all indicators for the latent variables show >0.7, so the indicators are declared valid.
Table 1 provides loading factor, it can be seen that the four latent variables have an AVE value that is greater than the specified value of 0.5. So that all variables are declared valid in explaining the latent variables, which indicates that the use of these manifest variables fulfills the AVE requirements. Therefore, all manifest variables are declared to have met the requirements of convergent validity. Convergent validity is proven if the scores obtained by instruments that measure concepts or concepts with different methods have a high correlation.
Table 2. AVE and communality
|
|
Average Variance Extracted (AVE) |
|
INOVATION |
0.646 |
|
IPC |
0.831 |
|
SCA |
0.889 |
|
KM |
0.676 |
Source: Data processing, 2023
Table 2 shows the discriminant validity from the cross-loading factor with the construct and the comparison of AVE with the correlation of latent variables. If the correlation between the construct and the primary measurement (each indicator) is more significant than the other construct measures, then the variable is said to have high discriminant validity. The cross-loading value is presented as follows:
Table 3. Cross loading factor
|
|
KM |
INOVATION |
IPC |
SCA |
|
KNOWLEDGE |
0.880 |
0.326 |
0.475 |
0.382 |
|
KOGNITIF |
0.853 |
0.160 |
0.454 |
0.416 |
|
TECHNIQUE |
0.726 |
0.263 |
0.481 |
0.351 |
|
INOV1 |
0.247 |
0.756 |
0.519 |
0.369 |
|
INOV2 |
0.189 |
0.787 |
0.433 |
0.407 |
|
INOV3 |
0.288 |
0.864 |
0.591 |
0.378 |
|
IPC1 |
0.575 |
0.661 |
0.930 |
0.792 |
|
IPC2 |
0.567 |
0.595 |
0.938 |
0.644 |
|
IPC3 |
0.399 |
0.484 |
0.865 |
0.560 |
|
SCA1 |
0.523 |
0.452 |
0.736 |
0.957 |
|
SCA2 |
0.378 |
0.508 |
0.668 |
0.936 |
|
SCA3 |
0.440 |
0.423 |
0.702 |
0.928 |
|
SCA4 |
0.414 |
0.420 |
0.686 |
0.951 |
Source: Data processing, 2023
Table 4. Composite Reliability (CR) and Cronbach’s Alpha
|
|
Cronbach's Alpha |
Composite Reliability |
|
INNOVATION |
0.724 |
0.845 |
|
IPC |
0.899 |
0.937 |
|
SCA |
0.958 |
0.970 |
|
KM |
0.756 |
0.862 |
Source: Data processing, 2023
Based on the PLS software results Table 3 shows cross-loading factor correlation value for each latent construct for the corresponding indicator is higher than the other constructs. So the indicators used to measure the latent variable meet the requirements. The reliability test in Partial Least Square (PLS) can use two methods, namely Composite Reliability (CR) and Cronbach's Alpha, which are presented in Table 4.
The test results above show that the Composite Reliability (CR) value is more significant than 0.7, and the Cronbach Alpha value is greater than 0.6. It can be concluded that the data is reliable, indicating that all indicators consistently measure each variable. The hypothesis in this study was tested using path coefficient values and t-values to see whether there was a significant effect. In addition, the results of the path significance test also show the parameter coefficient values (original sample). Table 5 shows path analysis result.
In this study, researchers used a confidence level of 95%. The path coefficient score indicated by the T-statistic value must be above 1.96 for the two-tailed hypothesis. Based on the Path Coefficient and T-Statistics in the table above, it can be explained as follows: that to test the hypothesis above, a t-value is used to see the effect of knowledge management on Indigenous Product Creativity with a t-value of 2.815; this value is more significant than 1.96 with a = 0.05, so it can be concluded that H1 is accepted, meaning that there is a significant influence of knowledge management on Indigenous Product Creativity. The knowledge management variable on Indigenous Product Creativity has an original sample of 0.415 with a positive direction meaning that the better the knowledge management, the Indigenous Product Creativity will also increase by 0.415.
Furthermore, the effect of knowledge management on sustainable competitive advantage is used t-value to see the effect of knowledge management on Sustainable Competitive Advantage with a t-value of 0.424; this value is smaller than 1.96 with a = 0.05. It can be concluded that H1 is rejected, meaning that knowledge management has no significant effect on Sustainable Competitive Advantage (SCA). The knowledge management variable on Sustainable Competitive Advantage has an original sample of 0.064 with a positive direction meaning that the better the knowledge management, the Sustainable Competitive Advantage will also increase by 0.064.
The effect of innovation on indigenous product creativity with a t-value of 3.768 is more significant than 1.96 with a = 0.05; H1 is accepted, meaning that innovation has a significant influence on Indigenous Product Creativity. The innovation variable on Indigenous Product Creativity has an original sample of 0.519 with a positive direction meaning that the better the innovation, the Indigenous Product Creativity will also increase by 0.519. Then for the t-value to see the effect of innovation on Sustainable Competitive Advantage with a t-value of 0.040, this value is smaller than 1.96 with a = 0.05. So H1 is rejected, meaning that innovation has no significant influence toward Sustainable Competitive Advantage. The innovation variable on Sustainable Competitive Advantage has an original sample of 0.006 with a positive direction meaning that the better the innovation, the Sustainable Competitive Advantage will also increase by 0.006.
Then the influence of indigenous product creativity on sustainable competitive advantage is seen with a t-value of 3.337; this value is more significant than 1.96 with a = 0.05. It can be concluded that H1 is accepted, meaning that Indigenous Product Creativity has a significant influence on Sustainable Competitive Advantage.
The Indigenous Product Creativity variable on Sustainable Competitive Advantage has an original sample of 0.700 with a positive direction meaning that the better the Indigenous Product Creativity, the Sustainable Competitive Advantage will also increase by 0.700.
Table 5. Path analysis
|
|
Original Sample (O) |
Sample Mean (M) |
Standard Deviation (STDEV) |
T Statistics (|O/STDEV|) |
P Values |
|
MP -> IPC |
0.415 |
0.420 |
0.148 |
2.815 |
0.005 |
|
INNOVATION -> IPC |
0.519 |
0.513 |
0.138 |
3.768 |
0.000 |
|
IPC -> SCA |
0.700 |
0.666 |
0.210 |
3.337 |
0.001 |
|
MP -> SCA |
0.064 |
0.093 |
0.152 |
0.424 |
0.671 |
|
INNOVATION -> SCA |
0.006 |
0.005 |
0.159 |
0.040 |
0.968 |
|
KM -> IPC -> SCA |
0.291 |
0.267 |
0.109 |
2.661 |
0.008 |
|
INNOVATION -> IPC -> SCA |
0.363 |
0.356 |
0.166 |
2.182 |
0.030 |
Source: Data processing, 2023
While the influence of knowledge management on sustainable competitive advantage through indigenous product creativity is seen based on the provisions previously stated, where a t-count of 2.661 is obtained, this value is more significant than 1.96 with a = 0.05. It can be concluded that H1 is accepted, meaning there is a significant influence of knowledge management on Sustainable Competitive Advantage through Indigenous Product Creativity. The knowledge management variable on Sustainable Competitive Advantage through Indigenous Product Creativity has an original sample of 0.291 with a positive direction meaning that the better the knowledge management, the Sustainable Competitive Advantage through Indigenous Product Creativity will also increase by 0.291. Furthermore, looking at the effect of innovation on sustainable competitive advantage through indigenous product creativity, a t-count of 2.182 is obtained; this value is more significant than 1.96 with a = 0.05. It can be concluded that H1 is accepted, meaning that there is a significant influence of innovation on Sustainable Competitive Advantage through Indigenous Product Creativity. The innovation variable on Sustainable Competitive Advantage through Indigenous Product Creativity has an original sample of 0.363 with a positive direction meaning that the better the innovation, the Sustainable Competitive Advantage (KBB) through Indigenous Product Creativity will also increase by 0.363.
The R-square value can show the influence of the dependent variable. The following Table 6 shows the acquisition of the R-square value.
Table 6. R square
|
|
R Square |
|
IPC |
0.572 |
|
SCA |
0.552 |
Source: Data processing, 2023
The value of the coefficient of determination (R-square) in the table above shows that in the first sub-structure, the R-square value for the Indigenous Product Creativity variable is 0.572. It shows that the Indigenous Product Creativity variable can be explained by 57.2% of knowledge management and innovation variables. In the second sub-structure, the R-square value for the Sustainable Competitive Advantage (KBB) variable is 0.552. It indicates that Sustainable Competitive Advantage (KBB) can be explained by 55.2% by the variable knowledge management, innovation, and Indigenous Product Creativity.
Q-square measures how well the model's observed values and the parameter estimates are produced. A Q-square value greater than 0 (zero) indicates that the model has a predictive relevance value. In contrast, a Q-square value less than 0 (zero) indicates that the model has no predictive relevance value. To calculate Q2, the following formula can be used:
Q2 =1-(1-R12 ) (1-R22 )
Q2 = 1 – (1-0.572)(1-0.552)
Q2 = 0.808
The achieved Q2 value of 0.808 means that the Q2 value above zero provides evidence that the model has predictive relevance.
Researchers supporting the RBV argue that resources are critical for sustainable competitive advantage. These resources are referred to as strategic assets [31], core competencies, and Distinctive Competencies. Empirical findings in the field of sustainable competitive advantage for micro, small, and medium enterprises show that the ability to create competitiveness is determined by how far a company can manage its resources (stretched resources).
The capabilities of a company are unequal because it comes from the ownership of its resources in the form of tangible and intangible assets and the company's ability to use these assets. Companies experience commercial benefits from a proactive environment; their management invests additional resources in a more radical environment that will improve and exploit the environment as an opportunity.
Unfortunately, the experience of initiatives to support environments targeting small businesses may be willing to rely on resources but suggests that mutually beneficial savings can easily be achieved in a low-cost environment. Improvements only sometimes lead to reinvestment in environmental improvements or changes to organizational priorities. Companies sometimes make bigger, longer-term changes. Investing to achieve the higher benefits offered as wins requires a more radical transformation of business processes. Increasing environmental efficiency for sustainability is reflected in the principles of natural capitalism. Continuity and competitiveness about broader (or multiple rounds) learning are needed to bring about cultural change. Many believe that making a real difference toward more sustainable patterns is critical.
Building distinctive abilities and core competencies can be done through experience accumulation, clear articulation of knowledge, and a knowledge management process that starts from creating, acquiring, storing, and sharing that knowledge. Distinctive abilities that are difficult to imitate can be seen in how companies, business actors, and their employees can acquire, create, store, share, and disseminate. It is special knowledge to achieve sustainable competitive advantage when these capabilities are difficult to imitate [32, 33]. Knowledge can be the basis for sustainable competitive advantage if it is quickly disseminated within the company it owns but not easily spread to other companies. The purpose of this statement is that knowledge that spreads slowly within the company remains the property of several people who are not from the company and has limited the company's ability to create value. Therefore, knowledge as a strategic resource is essential to be managed optimally. Knowledge management helps increase company profits with communication that will increase mastery of knowledge through knowledge transfer. Transferring knowledge or knowledge sharing can support companies in carrying out their business processes, being ready to face problems, sharing experiences regarding all work-related matters, and developing company employees' knowledge and skills. The knowledge-sharing process helps identify, select, organize, disseminate, and transfer information and experiences that are part of the company [20].
Knowledge is considered a vital capital and asset for companies to manage because knowledge can improve business performance and create competitive advantage [34]. Knowledge is a sustainable source for companies to achieve competitive advantage. The main difference between information and knowledge is that knowledge lies in information, whereas knowledge is information that people use [35].
Sharing knowledge is essential to knowledge-based companies' competitiveness and competitive advantage [36]. It is a severe concern about company efforts to increase knowledge dissemination within Meso-level companies. Human resources have limitations in sharing knowledge even though they use the system. Knowledge sharing at the micro level is not only with other members of the company's employees but also with external parties such as customers. Many previous studies have assumed that employees are free to share knowledge to support the interests of an organization [37]. It relates from a shared perspective on knowledge implicitly embodied in Knowledge Base View (KBV), the assets available to firms, and their sustainable competitive advantages [32, 33]. Human resources play a significant role in enabling companies to produce and consume company assets. A company's contribution to knowledge-based resources is invaluable, rare, and only partially replicable.
Knowledge sharing is the accumulation of knowledge between different knowledge units within a company [38]. The critical factors for increasing knowledge-sharing activities are intrinsic and extrinsic incentives, social and organizational norms, organizational values, and leadership support [7, 39]. The use of knowledge is the application of shared knowledge through assimilation, part of organizational behavior and problem-solving processes is newly created knowledge [7]. Berry [40] concluded in his research that knowledge formation, knowledge transfer, use of knowledge, and knowledge productivity of employees are related to innovative behavior. Shujahat et al. [41] also concluded from their research results that the knowledge productivity of employees mediates the relationship between knowledge creation and innovation. The results also show that knowledge sharing has a significant impact on innovation. Kuncoro and Suriani [28] thought that innovation by companies only sometimes leads companies to achieve sustainable competitive advantage. It is because companies that have a sustainable competitive advantage if their potential competitors cannot imitate the product innovations produced, or competitors must carry out reconstructions that require a lot of capital and investment so that they cannot be implemented.
This study concludes that knowledge management and innovation increase sustainable competitive advantage with indigenous product creativity as a mediating variable in the woven handicraft industry from waste palm oil stalks in Riau, Indonesia. Furthermore, knowledge management and innovation are fundamental to achieving sustainable competitive advantage based on indigenous product creativity. This study is an important research finding because previous research has failed to explain how company resources can provide added value differently than competitors. So this research contributes to the management literature on sustainable competitive advantage strategies, especially the resource-based view. The practical implication of this research is that business actors in the palm oil stem waste craft industry must pay more attention to their knowledge resources and the development of product innovation in indigenous product creativity. It is easy to achieve a sustainable competitive advantage to stand out.
It is necessary to improve their knowledge management and innovation capabilities by optimizing the availability of local resources based on indigenous product creativity. They can participate in more training and seminars and join a community of artisans with the same background to increase their knowledge and skills in product innovation. Apart from that, it is also essential for them to record better documentation of every business activity in the palm oil stick waste craft industry so that it can become information and knowledge documentation for others. Product heterogeneity is getting stronger with the characteristic value of authenticity based on the creativity of indigenous products seen from the motifs, symbols, and meanings produced. This new knowledge will result in more innovative product innovations that are unique, rare, not easily imitated, and not easily replaced to have an impact on sustainable competitiveness.
This study, still has limitations because it only uses two independent variables, namely knowledge management, and innovation, because many other independent variables can explain their influence on sustainable competitive advantage. In addition, this research was only conducted at one research location with a limited population so that in the future, it could be added to different research locations with the exact case to increase the population. Different characteristics may be found so that future research will be more likely to produce findings that can better explain the effect on sustainable competitive advantage.
The authors would like to thank The Ministry of Education and Culture Directorate General of Higher Education Indonesia, so this research can be funded through the 2023 national competitive basic research grant program.
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