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The Impact of External Integration and Internal Integration to Product Innovation and Competitive Advantage on Small and Medium Enterprises (SMEs)

Author

Listed:
  • Chamdan Purnama

    (School of Economics Al-Anwar Mojokerto, Indonesia)

  • Ludi Wishnu Wardana

    (Faculty of Economics, State University of Malang, Indonesia)

  • Yusriyah Rahmah

    (Faculty of Computer Science, University of Brawijaya Malang)

  • Dinda Fatmah

    (School of Economics Al-Anwar Mojokerto, Indonesia)

  • Mirhamida Rahmah

    (School of Economics Al-Anwar Mojokerto, Indonesia)

Abstract

This study aims to analyze the influence of external integration and internal integration to product innovation and competitive advantage. The research was conducted on a sample of 180 manager small and medium enterprises (SMEs) in East Java clothing taken with stratified cluster sampling technique. Selection of sample areas based on areas that have the potential development of the industry. Data collection was done by using questionnaire that has been tested for its validity and reliability. Data analysis used Structural Equation Modeling (SEM) analysis with help of AMOS version 21 program. Based on the analysis of SEM, it was found that the first, external integration influence on product innovation SMEs and affect the competitive advantage of SMEs. Second, the internal integration effect on product innovation SMEs and affect the competitive advantage of SMEs. Third, product innovation SMEs effect on the competitive advantage of SMEs. In this respect, the company needs to build a collaboration of external integration and internal integration in order to improve product innovation and competitive advantage of SMEs.

Suggested Citation

  • Chamdan Purnama & Ludi Wishnu Wardana & Yusriyah Rahmah & Dinda Fatmah & Mirhamida Rahmah, 2020. "The Impact of External Integration and Internal Integration to Product Innovation and Competitive Advantage on Small and Medium Enterprises (SMEs)," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 6(4), pages 82-95, October.
    • Handle: RePEc:mgs:ijoied:v:6:y:2020:i:4:p:82-95
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    References listed on IDEAS

    as
    1. Chamdan Purnama & Waspodo Tjipto Subroto, 2016. "Competition Intensity, Uncertainty Environmental on the use of Information Technology and its Impact on Business Performance Small and Medium Enterprises," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 984-992.
    2. Prajogo, Daniel & Olhager, Jan, 2012. "Supply chain integration and performance: The effects of long-term relationships, information technology and sharing, and logistics integration," International Journal of Production Economics, Elsevier, vol. 135(1), pages 514-522.
    3. Ekaterina Pustynnikova & Elena Uskova, 2017. "The Formation of Competitive Advantages for Corporate Structures Based on the Cluster Integration," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(2), pages 500-510.
    4. Chamdan Purnama & Waspodo Tjipto Subroto, 2016. "Competition Intensity, Uncertainty Environmental on the use of Information Technology and its Impact on Business Performance Small and Medium Enterprises," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 984-992.
    5. Li, Suhong & Ragu-Nathan, Bhanu & Ragu-Nathan, T.S. & Subba Rao, S., 2006. "The impact of supply chain management practices on competitive advantage and organizational performance," Omega, Elsevier, vol. 34(2), pages 107-124, April.
    6. Antonella Martini & Paolo Neirotti & Francesco Paolo Appio, 2017. "Knowledge Searching, Integrating and Performing: Always a Tuned Trio for Innovation?," Post-Print halshs-02292295, HAL.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Moses Waiganjo & Danijela Godinic & Bojan Obrenovic, 2021. "Strategic Planning and Sustainable Innovation During the COVID-19 Pandemic: A Literature Review," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 7(5), pages 52-59, December.
    2. Asif Arshad Ali & Asif Mahmood, 2023. "How Do Supply Chain Integration and Product Innovation Capability Drive Sustainable Operational Performance?," Sustainability, MDPI, vol. 16(1), pages 1-20, December.

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    More about this item

    Keywords

    External integration (EI); Internal integration (II); Product innovation (PI); Competitive advantage (CA); Small and medium enterprises (SMEs);
    All these keywords.

    JEL classification:

    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General

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