Organizational performance and competitive advantage determinants of creative SMEs

Abstract

The purpose of this paper is to examine the determinants that associated with IT utilization and further how IT utilization influences competitive advantage and organizational performance in creative SMEs sector. The samples used in this research were 400 creative SMEs in Yogyakarta, Indonesia. Purposive sampling method was taken. Structural Equation Modeling (SEM) by using Partial Least Squares (PLS) was conducted to examine the validity, reliability, and the proposed hypotheses. The determinants of IT utilization covering management commitment, and direct and indirect supports from government were significantly influence IT utilization. IT utilization does not significantly influence performance directly. The influence of IT utilization on performance is indirect via competitive advantage. Considering that management commitment and government supports is vital to IT utilization, management and government collaborations should be developed and improved. Strategic IT development is vital to create competitive advantage and further to achieve higher organizational performance. The management commitment to build people equity for employees and management is urgent since it provides the basis for IT successful engagement.