Strengthening The Competitive Advantage Of Msmes Based On Local Branding: An RBV Perspective With The Moderating Role Of Digital Marketing

Abstract

Increasingly fierce business competition demands that MSMEs have a sustainable competitive advantage, one of which is through strengthening local branding that represents identity, cultural values, differentiation, and perceptions of product quality. However, the effectiveness of local branding in creating a competitive advantage is inseparable from the ability of MSMEs to adopt digital marketing as a supporting capability for marketing strategies. This study analyzes the influence of local branding on the competitive advantage of MSMEs and examines the role of digital marketing adoption as a moderating variable in this relationship. The study used a quantitative approach with a survey method on MSME actors, and the data were analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS). The results showed that local branding had a positive and significant effect on the competitive advantage of MSMEs, while digital marketing adoption did not have a direct effect on competitive advantage. However, the results of the moderation test proved that digital marketing adoption was able to strengthen the influence of local branding on competitive advantage, indicating that the use of digital marketing plays an important role in increasing the effectiveness of local identity-based branding strategies. These findings confirm that the integration between strengthening local branding and optimal digital marketing adoption can be a relevant strategy for MSMEs in building stronger and more sustainable business competitiveness.