Sustainable Business Innovation and Competitive Advantage of Halal MSMEs in the Digital Economy

Dewi Sintiya; Asri Handayani; Nurul Komariah

Authors

Dewi Sintiya Department of Management, Universitas Mataram, Mataram, Indonesia
Asri Handayani Department of Management, Bumigora University, Mataram, Indonesia
Nurul Komariah Department of Management, Bumigora University, Mataram, Indonesia

Keywords:

digital economy, sustainable business innovation, competitive advantage, halal MSMEs, digital transformation

Abstract

The rapid expansion of the digital economy has created significant opportunities for halal micro, small, and medium-sized enterprises (MSMEs) to improve their business performance and strengthen long-term competitiveness. However, many halal MSMEs continue to face challenges in translating digital transformation into sustainable competitive advantage due to limited innovation capabilities and organizational readiness. This study aims to examine the influence of the digital economy on sustainable business innovation and competitive advantage while investigating the mediating role of sustainable business innovation. A quantitative explanatory research design was employed using a cross-sectional survey of 350 halal-certified MSME owners and managers in Indonesia. Data were collected through structured questionnaires and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4. The findings indicate that the digital economy significantly enhances sustainable business innovation and directly improves competitive advantage. Sustainable business innovation also exerts a significant positive effect on competitive advantage and partially mediates the relationship between the digital economy and competitive advantage. These results demonstrate that digital technologies generate greater strategic value when integrated with innovation-oriented and sustainability-driven business practices. The study contributes to the literature by proposing an integrated empirical framework linking the digital economy, sustainable business innovation, and competitive advantage in the context of halal MSMEs. The findings provide practical implications for policymakers and business practitioners in promoting digital capability, innovation, and sustainable business development to strengthen the resilience and global competitiveness of halal MSMEs.

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