Abstract : In the Strategic Management Accounting paradigm, entrepreneurial orientation and innovation do not automatically translate into high financial performance; both must first be translated into a real competitive advantage. Management accounting validates this advantage by comparing competitor accounting—evaluating whether innovation has successfully positioned the MSME’s cost structure lower than competitors’ (cost leadership) or created unique value that justifies a premium price in the market. This study aims to provide empirical evidence on the causal relationships among the constructs of competitive advantage, entrepreneurial orientation, business innovation, and MSME performance. This research was conducted through a survey, with questionnaires distributed to respondents who met the purposive sampling criteria. The data used in this study are classified as primary data. The objects of this research are four latent variables/constructs, each with 20 reflective indicators. This study explores the perceptions of respondents, comprising MSME entrepreneurs at the managerial level (owners or managers) engaged in the culinary business, fashion, basic necessities, and household utensils. The survey was conducted on MSMEs operating in the provinces of Banten, Jakarta, West Java, Central Java, Yogyakarta, and East Java. A total of 88 valid data points were collected and are ready for processing. This research applies a structural equation model with partial least squares. MS Excel and SmartPLS-v. 3.29 applications were used in data processing and hypothesis testing. All hypotheses regarding the direct effect of exogenous constructs on endogenous constructs have been significantly supported. Regarding the mediating construct, the empirical findings in this study demonstrate that competitive Advantage mediates the causal relationship between entrepreneurial orientation, business innovation, and MSME performance.
Kurniawan et al. (Wed,) studied this question.