The Causal Model of Business Model Innovation to Competitive Advantage of Small and Medium Entrepreneurs (SMEs)

Abstract

         This research aims to analyze causal model of business model innovation to competitive advantage of entrepreneurs in small and medium enterprises (SMEs). This research was the survey research, testing 271 respondents from tourism business in central region. The research samples were obtained from purposive sampling. The index of item-objective congruence (IOC) was 0.715 and reliability value of 0.91. The hypothesis testing used confirmatory factor analysis (CFA) and structural equation modeling (SEM) were used for hypotheses testing. According to the analysis, the causal relationship model was congruent with the empirical data (c2 = 21.14, df = 16, c2/df = 1.32, P-value = 0.714, RMR = 0.160, GFI = 1.000, RMSEA = 0.045 and CFI = 0.987), and the influence of business model innovation on competitive advantage of entrepreneurs in small and medium enterprises (SMEs). The business model innovation helps adaptivity of entrepreneurs to survive with the crisis and leads to the enhancement of products and services, create market opportunities, Increase the efficiency of business operations for entrepreneurs, support new competition and creating a competitive advantage over competitors.