Competitive Advantage as Mediating Role to Enhance MSMES Performance

Small and Medium Enterprises (SMEs) play an important role in improving a country’s economy. However, only SMEs with a competitive advantage can win the market competition and improve SMEs’ performance. This study aims to analyze the role of knowledge management and supply chain management in improving company performance through the influence of competitive advantage. The research method used in this research is quantitative with a causal approach. The population in this study was conducted on SMEs in Palu City. Purposive sampling was used to collect 100 samples from small and medium enterprises. Data analysis was performed using Structural Equation Modeling (SEM). The research results partially and simultaneously show that Knowledge management has a significant effect on competitive advantage; knowledge management has a significant effect on company performance. Supply chain management has a significant effect on company performance. Competitive advantage has a significant effect on company performance, and also, Competitive advantage mediates the effect of knowledge management on company performance. However, supply chain management has no significant effect on competitive advantage, and Competitive advantage does not mediate the effect of supply chain management on company performance. the importance of knowledge management in achieving competitive advantage from SMEs is important. Increased competitive advantage occurs from two factors, namely product differentiation strategies and pricing, which can increase the competitive advantage of competitors and increase SMEs’ profitability.