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International Journal of Mechanical Engineering and Technology (IJMET)
Volume 10, Issue 01, January 2019, pp. 1183-1192, Article ID: IJMET_10_01_120
Available online at http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=10&IType=1
ISSN Print: 0976-6340 and ISSN Online: 0976-6359
© IAEME Publication Scopus Indexed
BUILDING SUSTAINED COMPETITIVE
ADVANTAGE THROUGH TECHNOLOGY
RESOURCES AND INTERNATIONAL
COMPETITIVENESS
Nurdin Tampubolon,
BINUS Business School Doctor of Research in Management, Bina Nusantara University
Jakarta, Indonesia
Dyah Budiastuti,
BINUS Business School Doctor of Research in Management, Bina Nusantara University
Jakarta, Indonesia
Agustinus Bandur,
BINUS Business School Doctor of Research in Management, Bina Nusantara University
Jakarta, Indonesia
Edi Abdurachman
BINUS Business School Doctor of Research in Management, Bina Nusantara University
Jakarta, Indonesia
ABSTRACT
Crude palm oil is one of the mainstays of Indonesia's exports. In the midst of
intense competition with vegetable oil producing countries in the world, Indonesia
must have international competitiveness which is strongly supported by the technology
in order to achieve a sustained competitive advantage. The major purpose of this
paper is to examine the direct effect of technological resources to international
competitiveness and sustained competitive advantage as well as measure the
mediating effect of international competitiveness in the relationship between
technological resources and sustained competitive advantage. For these purposes, an
empirical survey was conducted with the active participation of 82 palm oil industries
in Indonesia. In addition to the survey, in-depth interviews were conducted to follow
up the quantitative results. On the basis of path analysis with SmartPLS, technology
resources had positive and significant effect to sustained competitive advantage. This
study suggests the importance of technological resources in achieving sustained
competitive advantage on the part of palm oil industries in developing countries.
Keywords: Sustained competitive advantage; International competitiveness;
Technological resources; Palm oil industry; Indonesia.
Building Sustained Competitive Advantage Through Technology Resources and
International Competitiveness
http://www.iaeme.com/IJMET/index.asp 1184 editor@iaeme.com
Cite this Article: Nurdin Tampubolon, Dyah Budiastuti, Agustinus Bandur and Edi
Abdurachman, Building Sustained Competitive Advantage through Technology
Resources and International Competitiveness, International Journal of Mechanical
Engineering and Technology, 10(01), 2019, pp. 1183-1192.
http://www.iaeme.com/IJMET/issues.asp?JType=IJMET&VType=10&IType=1
1. INTRODUCTION
Palm oil with particular reference to the crude palm oil (CPO) has been widely known as one
of the driving forces of economic development in its producing countries, including
Indonesia. The World Bank considers palm oil as a commodity that plays an important role in
advancing economic development in its producing countries, ensuring a decent standard of
living for rural farmers as well as contributing to global resilience, if the Government is able
to handle environmental, social and economic risks [27]. Likewise, data report from the
International Trade Center (ITC) shows that between 2012-2016 the average export value of
palm oil and its fractions from Indonesia to many countries around the world reached 10% of
the total export value of all products (www.trademap.org). The rapid growth of the world
population has triggered an increase in demand for CPO as raw material, both for the food
industry and for renewable energy. To meet this demand, since the 1990s the area of palm oil
plantations in the world has increased by 43%, especially in Malaysia and Indonesia [27].
CPO has a competitive international market because it has to compete with other
vegetable oils, such as soybean oil, sunflower oil, coconut oil, corn oil, and even peanut oil. In
terms of competitiveness, however, CPO has been proven to be the best, because it has high
productivity and production costs that are far lower than other vegetable oils [17]. With the
very promising competitiveness in the international market, there is a very rapid area
expansion in Indonesia, even Indonesia is able to surpass Malaysia as the world's largest CPO
producer. Together, Indonesia's and Malaysia's CPO production reaches 85% of global
production [27]. However, the Indonesian palm oil industry is often criticized for being seen
as causing deforestation, carbon emissions, and loss of biodiversity. In 2017, EU countries
issued a resolution entitled Report on Palm Oil and Deforestation of Rainforests. The
resolution prohibits the use of CPO-based biodiesel starting in 2020 and will apply a single
certification for palm oil. This will certainly have a negative impact on the Indonesian palm
oil industry.
Given that palm oil is an export commodity, the Indonesian palm oil industry must be able
to compete with its competitors in the global market, both competitors in the vegetable oil
industry and in the palm oil industry itself. In 2017, the Swiss-based International Institute for
Management Development (IMD) World Competitiveness Center released the results of a
survey that placed Indonesia in the 42nd rank out of 63 countries in the world competition
level. This position is better than in 2016 which was ranked 48th, but fell from 37th in 2015
[13]. The IMD survey results also show that Indonesia's position is still far below other palm
oil producing countries, such as Malaysia (24th rank) and Thailand (27th rank). In line with
these publications, the World Economic Forum also announced the 2017-2018 Global
Competitiveness Index (GCI) which presents competitiveness ratings from 137 countries.
Based on GCI, Indonesia is ranked 36th, down from 2014 which is ranked 34th. The results of
the ranking indicate that Indonesia must improve on the pillars of labor efficiency and
technological readiness [29]. The survey results also concluded that the performance of the
Indonesian economy was strongly supported by large market size and a strong
macroeconomic environment.
Nurdin Tampubolon, Dyah Budiastuti, Agustinus Bandur and Edi Abdurachman
http://www.iaeme.com/IJMET/index.asp 1185 editor@iaeme.com
From the results of the competitiveness research, it appears that Indonesia still has not
achieved optimal competitiveness. This is also evident in the Indonesian palm oil industry.
Although the area of Indonesian oil palm plantations (7.80 million ha) is far greater than
Malaysia (3.38 million ha), Malaysia is actually the price maker of CPO in the international
market, while Indonesia is only a 'price taker'. Because CPO has become a world commodity,
Indonesian oil palm companies need to be transformed into world-class companies to be able
to compete in the international market.
Previous scholars [26] affirm that the survival of a company in the international market is
strongly influenced by resources, especially technological resources. Companies that are
better able to obtain and manage adequate resources during the internationalization process
tend to be able to maintain their activities in the international market. Accordingly, resources
are important because of the inherent uncertainty in the foreign environment. Optimal use of
technological resources is very supportive to overcome environmental changes. Companies
with adequate resources are able to adjust their routines and allow them to react more quickly
to changes in the environment [23]. Resources, more particularly the technological resources,
also support the strategy of developing and promoting palm oil and increasing the
competitiveness of Indonesian CPO products in the international market [21]. In the palm oil
industry where most of its products are used for exports, management of technology resources
can help companies to achieve sustainable competitiveness.
The major purpose of this paper is to examine the direct effect of technological resources
to sustained competitive advantage, as well as its indirect effect through international
competitiveness. In particular reference to the effect of technology resources to sustained
competitive advantage, this paper is highly significant in filling the gap in existing literature,
as previous studies on information technology (IT) and competitive advantage has
predominantly focused on ‘desciribing how, rather than systematically why’ IT can lead to
achieve competitive advantage [2]. Accordingly, qualitative research was mixed with
quantitative research to explore the context of relationship among variables. Moreover,
several leading scholar in competitive advantage [2] reports that while IT might be able to
create sustained competitive advantage for firms is provocative, work in this area is relatively
underdeveloped, both empirically and theoretically. This paper is then to fill these gaps.
2. LITERATURE REVIEW AND HYPOTHESES
This study was built on the basis of resource-based theory. For almost three decades, the
resource-based theory of the firm has been widely applied in strategic management [1], [4],
[5], [10], [35]. More particularly, Davis [10] affirms that “the resource-based theory (RBT) of
competitive advantage argues that a firm’s internal resources can be a source of sutained
competitive advantage (SCA) for the firm.” The resource-based theory of the firm postulates
that a firm earns a competitive advantage by controlling and utilizing a unique set of resources
[4].
Within the context of this paper, technology is one component of resources [37]. Other
resources are to include natural resources, human resources, capital resources, and
infrastructure resources. Meanwhile, several researchers [19] categorizes resources into six
elements, including: financial, physical, human, technological, reputation and organization.
Other scholar [2] divides resources into three categories: physical capital resources, human
capital resources and organizational capital resources. Physical resources include physical
technological resources used by the company, internal infrastructure, machine tools, raw
material materials, geographical location, and access to raw materials. The main resources
that involve the uses of technology, can positively affect the company's commitment to
Building Sustained Competitive Advantage Through Technology Resources and
International Competitiveness
http://www.iaeme.com/IJMET/index.asp 1186 editor@iaeme.com
international competition. In the following sections, hypotheses are formulated on the basis of
relevant literature and previous empirical studies.
2.1. Effect of Technology Resources to International Competitiveness
Previous studies in the last decade show that the use of information technology and
communication has a positive effect on international competitiveness of firms in developing
countries [31], [19], [32]. More particularly, several researchers [32] conducted an empirical
research of 100 small to medium-sized enrepresises (SMEs) in Peru. The study was primarily
aimed at evaluating the effect of ITCs usage on international competitiveness. The findings of
the study have shown that the ITCs have a positive effect on the international competitiveness
of the firms. Similarly, the main resources that involve the use of technology, can positively
affect the company's commitment to international competition [19].
Other scholars [31] also found that provisions of new technology development such as
machineries can enhance the competitiveness of firms. They then suggest that it is urgent to
link the science and technology system with firm production units which lead to increase its
international competitiveness. Accordingly the firms should be strengthened for the
provisions of their personnels and members to continuously learn about new technology for
enhancing their competitiveness.
Hypothesis 1: Technology resources have positive and significant effect on international
competitiveness.
2.2. The Effect of Technology Resources to Sustainable Competitive Advantage
Scholars in the last two decades have conducted research to examine the effect of technology
to competitive advantage [34], [7], [33], [9], [24], [30]. More specifically, several researchers
[33] found a positive effect of technology resource capability to competitive advantage.
Similarly, other recent researchers [34] found on the basis of a quantitative study in
Indonesian Carefors managers that information technology strategy had significant effect on
competitive advantage.
These recent studies support the theory that attributes of IT have been considered as the
sources of sustained competitive advantage technology [3]. For instance, firms which achieve
sustained competitive advantage are strongly linked to technical and managerial IT skills
owned by the firms. In this context, “the technical skills refer to the know-how needed to
build IT applications using the available technology and to operate them to make products or
provide services” [3]. The managerial IT skill is, for an example, the ability to work with
functional managers, suppliers, and customers to develop appropriate IT applications.
Hypothesis 2: Technology resources have positive and significant effect on the
achievement of sustained competitiveness advantage.
2.3. The Effect of International Competitiveness to Sustainable Competitive
Advantage
Globalization and changes have globally known as the drivers of world economy which have
led to raise new challenges for firms, industries, and countries [36]. They further clarify that
as the result, competitiveness has become a “hot topic” among managers, policy makers, and
academics. More particularly, the study of firm-level international competitiveness have been
built upon the areas of international business, marketing, and strategic management
literatures. In this context, several authors [6] assert that the concept of sustained
competitiveness requires a geographical configuration that covers many countries, where
specific advantages and locations of companies in several countries can complement or
Nurdin Tampubolon, Dyah Budiastuti, Agustinus Bandur and Edi Abdurachman
http://www.iaeme.com/IJMET/index.asp 1187 editor@iaeme.com
compete with each other. In Indonesian context, international market has become one of main
objectives of the Indonesian palm oil industry as evidenced by the high Indonesian CPO
exports abroad.
Hypothesis 3: International competitiveness has positive and statistical significant effect
to sustainable competitive advantage
3. RESEARCH METHODS
3.1. Research Design
This paper is built on the basis of quantitative research with particular reference to an
empirical survey. The quantitative research was aimed primarily at examining the direct effect
of technology resources on international competitiveness and competitive advantage, as well
as to measure the indirect of technology resources to competitive advantage through the role
of international competitiveness.
The population of this study was the Indonesian palm companies which are members of
the Indonesian Palm Oil Association (or known as Gabungan Pengusaha Kelapa Sawit
Indonesia/GAPKI), comprising of 682 companies. Cluster random sampling was used to
select companies that represent all areas of palm oil companies across the Indonesian islands.
The islands or a group of islands as cluster, from which random samples seleted
proportionaly. Accordingly, a hundred (100) companies were selected and participated in the
study. As the study was focuses on palm oil industries’ competitive advantage, both managers
or general managers were considered appropriate to be the samples. The managers or
managers were viewed to have sufficient knoledge about the business processes in the oil
palm company. Therefore, a hundred questionnaires were delivered and 82 questionnaires
were returned with an good response rate of 82%.
3.2. Research Instrument
For the purpose of this study, questionnaire was used in collecting quantitative data. The
questionnaire was adapted from Likert-type scale: 1 = Strongly Disagree, 2 = Disagree, 3 =
Tend to Disagree, 4 = Tend to Agree, 5 = Agree, 6 = Strongly Agree). To measure the
sustained competitive advantage, there were four indicators, including price advantage,
quality superiority, innovation excellence, and speed response to market. Then, five indicators
to measure international competitiveness were: profits achievement, sales growth, export
performance, strategic objectives achievement, and increased productivity [19]. To measure
technology resources, three indicators were studied, including: usage of environmentally
friendly technologies, utilization of e-planatation technology, and innovation development
technologies [19]. These data were then measured its validity with analysis factor as well as
relationship among variables with path analysis with Smart-PLS (Partial Least Square)
analysis software.
4. RESULTS AND DISCUSSION
In this section, results and discussion are presented. As shown in Figure 1, all indicators have
required minimum value standard of loading factor ≥ 0.5. Four indicators reflected the
sustained competitive advantage had acceptable loading factor, ranged between .73 and .85.
Meanwhile, five indicators that measured the international competitiveness in this study were
valid with the loading factors ranged between .58 until .90. The three indicators represented
technology resources had also the acceptable loading factors, ranged between .76 and .83. For
the purpose of measuring reliability of the items, Cronbach’s Alpha and Composite
Reliability were applied. On the basis of minimum standard [22], 38], the internal consistency
Building Sustained Competitive Advantage Through Technology Resources and
International Competitiveness
http://www.iaeme.com/IJMET/index.asp 1188 editor@iaeme.com
coefficient of technology resources ( 3 items) and sustained competitive advantage (4 items)
were considered acceptable (.70 and .77 respectively), while the international competitiveness
had a good reliability (.88, 5 items).
Figure 1 Results of Data Analysis
Note: SBD (Sumber Daya) =Technology resources; DSI (Daya Saing International) =
International competitiveness; KDB (Keuntungan Daya Saing Berkelanjutan) = Sustained
competitive advantage
Figure 1 also shows the magnitude of the direct effect of technology resources to both
international competitiveness and sustained competitive advantage. In the study, the
technology resources had direct positive medium effect to international competitiveness (β =
0.366). Moreover, there was a positive direct effect of technology resources to sustained
competitive, even though the strength of the relationship was low β = 0.206). Furthermore,
there had been a high direct positive effect of international competitiveness to sustained
competitive advantage (β = 0.647). This implies that there had been a greater indirect effect of
technology resources to sustained competititive advantage through the mediating effect of
international competitiness. It can be concluded that variables related to international
competitiveness are crucial in achieving the sustained competitive advantage, especially the
profit achievement which had the highest loading factor (.92), followed by sales growth,
export performance, strategic objectives achievement, and increased productivity.
Then, Figure 2 below presents the path significance test. Firstly, the technology resources
had significant effect on sustained competitive advantage (the t-value, 1.695 was higher than
the critical value of 1.65 at α = 0.10). Similarly, the path significance test resulted in a t-value
of 2.542 ≥ 1.65 at α = 0.10, indicated a significant effect of technology resources to sustained
competitive advantage. Likewise, there was a significance t-value in the relationship between
international competitiveness and sustained competitive advantage, with a t-value of 8.435 ≥
1.65 at α = 0.10, indicated that there is a positive significant effect of international
competitiveness to sustained sustained competitive advantage.
Nurdin Tampubolon, Dyah Budiastuti, Agustinus Bandur and Edi Abdurachman
http://www.iaeme.com/IJMET/index.asp 1189 editor@iaeme.com
Figure 2 Significance testing of t-value
The results of the study are in line with theories and previous studies [34], [7], [33], [24].
First of all, for instance, previous scholars [24] found that technological resources can affect a
company's competitive advantage even though it varies in different ways, depending on the
level of technological progress used. In this context, the sustained competitive advantage was
measured through endurance, which determines how long a company's competitive advantage
can last before the competitor's company is able to duplicate it. The entry of new technologies
or innovations can strengthen the company's resilience, so that it can compete with its
competitors. That is, the use of technology or innovation can affect the competitive advantage
in a sustainable manner. In this study, the results indicate that because of the technology
usage, both environmentally friendly technology, e-plantation technology, and the
development of innovation provided opportunities for companies to successfully improve
product quality, or be faster in responding to market demand.
This study also indicates that the development of technological innovation can ultimately
bring the company to a sustainable competitive advantage. This result is consistent with the
research findings of previous scholars [15] that companies that have the ability to use
technology resources can develop sustainable excellence in the future. To be able to compete
in the international market, companies must have high-level resources, especially resources
that utilize technology.
Then, the result of this study also support previous studies in terms of the positive and
significant effect of international competitiveness to sustained competitive advantage [36],
[6]. For instance, several researchers [6] found that international competitiveness has a
statistically significant and positive effect on the sustained competitive advantage. In the
global context, the creation of superior value is an absolute requirement for a company to
develop. In turn, the creation of superior values has a positive influence on the formation of
sustained competitiveness [6].
5. CONCLUSION
This study concludes that international competitiveness has significant roles in the provision
of sustained competitive advantage on the part of Indonesian palm oil industries. This means
that the key factors of international competitiveness, such as profits achievement, sales
growth, export performance, strategic objectives achievement, and increased productivity
have been proved to be the predominant elements for achieving sustained competitive
Building Sustained Competitive Advantage Through Technology Resources and
International Competitiveness
http://www.iaeme.com/IJMET/index.asp 1190 editor@iaeme.com
advantage. These elements, as shown in this study, have positive and significant mediating
role in the relationship between technology resources and sustained competitive advantage. In
this context, even though technology resources has direct positive and significant effect to
sustained competitive advantage, the strength of the relationship was relatively low, but its
indirect effect was higher through the international competitiveness.
This study suggests the urgency of using or applying technology resources to maintain
international competitiveness and sustained competitive advantage in the palm oil industries.
In this study, the use of technology, both environmentally friendly technology, e-plantation
technology, and innovation-related technologies have strongly supported the achievement of
international competitiveness and sustained competitive advantage. Accordingly, the use of
technology must be the focus of attention of oil palm companies. Environmentally friendly
technology is needed to ward off black champaign from other countries related to the issue of
deforestation, carbon emissions, and loss of biodiversity due to the expansion of oil palm
area. E-plantation technology is also needed to monitor the company's business processes,
starting from the cultivation process in oil palm plantations, the processing of palm oil in the
plant until CPO is ready to be marketed. Innovation development must also be a concern of
palm oil company’s human capital management in order to be able to maintain
competitiveness in the international market.
This paper has been written on the basis of quantitative survey research. Further studies
need to be focused on exploring the real conditions of why technological resources and
international competitiveness affect the sustained competitive advantage. Accordingly,
mixed-methods and experimental design or even longitudional survey needs to be applied in
future research. In addition, this study has been conducted in palm oil industries and thus,
future studies can be focused on other industries which have international orientation and
sustained competitive advantage.
* The authors address high appreciation to Dr. Mohammad Hamsal, MBA for
proofreading this paper prior to its submission.
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Ijmet 10 01_120

  • 1. http://www.iaeme.com/IJMET/index.asp 1183 editor@iaeme.com International Journal of Mechanical Engineering and Technology (IJMET) Volume 10, Issue 01, January 2019, pp. 1183-1192, Article ID: IJMET_10_01_120 Available online at http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=10&IType=1 ISSN Print: 0976-6340 and ISSN Online: 0976-6359 © IAEME Publication Scopus Indexed BUILDING SUSTAINED COMPETITIVE ADVANTAGE THROUGH TECHNOLOGY RESOURCES AND INTERNATIONAL COMPETITIVENESS Nurdin Tampubolon, BINUS Business School Doctor of Research in Management, Bina Nusantara University Jakarta, Indonesia Dyah Budiastuti, BINUS Business School Doctor of Research in Management, Bina Nusantara University Jakarta, Indonesia Agustinus Bandur, BINUS Business School Doctor of Research in Management, Bina Nusantara University Jakarta, Indonesia Edi Abdurachman BINUS Business School Doctor of Research in Management, Bina Nusantara University Jakarta, Indonesia ABSTRACT Crude palm oil is one of the mainstays of Indonesia's exports. In the midst of intense competition with vegetable oil producing countries in the world, Indonesia must have international competitiveness which is strongly supported by the technology in order to achieve a sustained competitive advantage. The major purpose of this paper is to examine the direct effect of technological resources to international competitiveness and sustained competitive advantage as well as measure the mediating effect of international competitiveness in the relationship between technological resources and sustained competitive advantage. For these purposes, an empirical survey was conducted with the active participation of 82 palm oil industries in Indonesia. In addition to the survey, in-depth interviews were conducted to follow up the quantitative results. On the basis of path analysis with SmartPLS, technology resources had positive and significant effect to sustained competitive advantage. This study suggests the importance of technological resources in achieving sustained competitive advantage on the part of palm oil industries in developing countries. Keywords: Sustained competitive advantage; International competitiveness; Technological resources; Palm oil industry; Indonesia.
  • 2. Building Sustained Competitive Advantage Through Technology Resources and International Competitiveness http://www.iaeme.com/IJMET/index.asp 1184 editor@iaeme.com Cite this Article: Nurdin Tampubolon, Dyah Budiastuti, Agustinus Bandur and Edi Abdurachman, Building Sustained Competitive Advantage through Technology Resources and International Competitiveness, International Journal of Mechanical Engineering and Technology, 10(01), 2019, pp. 1183-1192. http://www.iaeme.com/IJMET/issues.asp?JType=IJMET&VType=10&IType=1 1. INTRODUCTION Palm oil with particular reference to the crude palm oil (CPO) has been widely known as one of the driving forces of economic development in its producing countries, including Indonesia. The World Bank considers palm oil as a commodity that plays an important role in advancing economic development in its producing countries, ensuring a decent standard of living for rural farmers as well as contributing to global resilience, if the Government is able to handle environmental, social and economic risks [27]. Likewise, data report from the International Trade Center (ITC) shows that between 2012-2016 the average export value of palm oil and its fractions from Indonesia to many countries around the world reached 10% of the total export value of all products (www.trademap.org). The rapid growth of the world population has triggered an increase in demand for CPO as raw material, both for the food industry and for renewable energy. To meet this demand, since the 1990s the area of palm oil plantations in the world has increased by 43%, especially in Malaysia and Indonesia [27]. CPO has a competitive international market because it has to compete with other vegetable oils, such as soybean oil, sunflower oil, coconut oil, corn oil, and even peanut oil. In terms of competitiveness, however, CPO has been proven to be the best, because it has high productivity and production costs that are far lower than other vegetable oils [17]. With the very promising competitiveness in the international market, there is a very rapid area expansion in Indonesia, even Indonesia is able to surpass Malaysia as the world's largest CPO producer. Together, Indonesia's and Malaysia's CPO production reaches 85% of global production [27]. However, the Indonesian palm oil industry is often criticized for being seen as causing deforestation, carbon emissions, and loss of biodiversity. In 2017, EU countries issued a resolution entitled Report on Palm Oil and Deforestation of Rainforests. The resolution prohibits the use of CPO-based biodiesel starting in 2020 and will apply a single certification for palm oil. This will certainly have a negative impact on the Indonesian palm oil industry. Given that palm oil is an export commodity, the Indonesian palm oil industry must be able to compete with its competitors in the global market, both competitors in the vegetable oil industry and in the palm oil industry itself. In 2017, the Swiss-based International Institute for Management Development (IMD) World Competitiveness Center released the results of a survey that placed Indonesia in the 42nd rank out of 63 countries in the world competition level. This position is better than in 2016 which was ranked 48th, but fell from 37th in 2015 [13]. The IMD survey results also show that Indonesia's position is still far below other palm oil producing countries, such as Malaysia (24th rank) and Thailand (27th rank). In line with these publications, the World Economic Forum also announced the 2017-2018 Global Competitiveness Index (GCI) which presents competitiveness ratings from 137 countries. Based on GCI, Indonesia is ranked 36th, down from 2014 which is ranked 34th. The results of the ranking indicate that Indonesia must improve on the pillars of labor efficiency and technological readiness [29]. The survey results also concluded that the performance of the Indonesian economy was strongly supported by large market size and a strong macroeconomic environment.
  • 3. Nurdin Tampubolon, Dyah Budiastuti, Agustinus Bandur and Edi Abdurachman http://www.iaeme.com/IJMET/index.asp 1185 editor@iaeme.com From the results of the competitiveness research, it appears that Indonesia still has not achieved optimal competitiveness. This is also evident in the Indonesian palm oil industry. Although the area of Indonesian oil palm plantations (7.80 million ha) is far greater than Malaysia (3.38 million ha), Malaysia is actually the price maker of CPO in the international market, while Indonesia is only a 'price taker'. Because CPO has become a world commodity, Indonesian oil palm companies need to be transformed into world-class companies to be able to compete in the international market. Previous scholars [26] affirm that the survival of a company in the international market is strongly influenced by resources, especially technological resources. Companies that are better able to obtain and manage adequate resources during the internationalization process tend to be able to maintain their activities in the international market. Accordingly, resources are important because of the inherent uncertainty in the foreign environment. Optimal use of technological resources is very supportive to overcome environmental changes. Companies with adequate resources are able to adjust their routines and allow them to react more quickly to changes in the environment [23]. Resources, more particularly the technological resources, also support the strategy of developing and promoting palm oil and increasing the competitiveness of Indonesian CPO products in the international market [21]. In the palm oil industry where most of its products are used for exports, management of technology resources can help companies to achieve sustainable competitiveness. The major purpose of this paper is to examine the direct effect of technological resources to sustained competitive advantage, as well as its indirect effect through international competitiveness. In particular reference to the effect of technology resources to sustained competitive advantage, this paper is highly significant in filling the gap in existing literature, as previous studies on information technology (IT) and competitive advantage has predominantly focused on ‘desciribing how, rather than systematically why’ IT can lead to achieve competitive advantage [2]. Accordingly, qualitative research was mixed with quantitative research to explore the context of relationship among variables. Moreover, several leading scholar in competitive advantage [2] reports that while IT might be able to create sustained competitive advantage for firms is provocative, work in this area is relatively underdeveloped, both empirically and theoretically. This paper is then to fill these gaps. 2. LITERATURE REVIEW AND HYPOTHESES This study was built on the basis of resource-based theory. For almost three decades, the resource-based theory of the firm has been widely applied in strategic management [1], [4], [5], [10], [35]. More particularly, Davis [10] affirms that “the resource-based theory (RBT) of competitive advantage argues that a firm’s internal resources can be a source of sutained competitive advantage (SCA) for the firm.” The resource-based theory of the firm postulates that a firm earns a competitive advantage by controlling and utilizing a unique set of resources [4]. Within the context of this paper, technology is one component of resources [37]. Other resources are to include natural resources, human resources, capital resources, and infrastructure resources. Meanwhile, several researchers [19] categorizes resources into six elements, including: financial, physical, human, technological, reputation and organization. Other scholar [2] divides resources into three categories: physical capital resources, human capital resources and organizational capital resources. Physical resources include physical technological resources used by the company, internal infrastructure, machine tools, raw material materials, geographical location, and access to raw materials. The main resources that involve the uses of technology, can positively affect the company's commitment to
  • 4. Building Sustained Competitive Advantage Through Technology Resources and International Competitiveness http://www.iaeme.com/IJMET/index.asp 1186 editor@iaeme.com international competition. In the following sections, hypotheses are formulated on the basis of relevant literature and previous empirical studies. 2.1. Effect of Technology Resources to International Competitiveness Previous studies in the last decade show that the use of information technology and communication has a positive effect on international competitiveness of firms in developing countries [31], [19], [32]. More particularly, several researchers [32] conducted an empirical research of 100 small to medium-sized enrepresises (SMEs) in Peru. The study was primarily aimed at evaluating the effect of ITCs usage on international competitiveness. The findings of the study have shown that the ITCs have a positive effect on the international competitiveness of the firms. Similarly, the main resources that involve the use of technology, can positively affect the company's commitment to international competition [19]. Other scholars [31] also found that provisions of new technology development such as machineries can enhance the competitiveness of firms. They then suggest that it is urgent to link the science and technology system with firm production units which lead to increase its international competitiveness. Accordingly the firms should be strengthened for the provisions of their personnels and members to continuously learn about new technology for enhancing their competitiveness. Hypothesis 1: Technology resources have positive and significant effect on international competitiveness. 2.2. The Effect of Technology Resources to Sustainable Competitive Advantage Scholars in the last two decades have conducted research to examine the effect of technology to competitive advantage [34], [7], [33], [9], [24], [30]. More specifically, several researchers [33] found a positive effect of technology resource capability to competitive advantage. Similarly, other recent researchers [34] found on the basis of a quantitative study in Indonesian Carefors managers that information technology strategy had significant effect on competitive advantage. These recent studies support the theory that attributes of IT have been considered as the sources of sustained competitive advantage technology [3]. For instance, firms which achieve sustained competitive advantage are strongly linked to technical and managerial IT skills owned by the firms. In this context, “the technical skills refer to the know-how needed to build IT applications using the available technology and to operate them to make products or provide services” [3]. The managerial IT skill is, for an example, the ability to work with functional managers, suppliers, and customers to develop appropriate IT applications. Hypothesis 2: Technology resources have positive and significant effect on the achievement of sustained competitiveness advantage. 2.3. The Effect of International Competitiveness to Sustainable Competitive Advantage Globalization and changes have globally known as the drivers of world economy which have led to raise new challenges for firms, industries, and countries [36]. They further clarify that as the result, competitiveness has become a “hot topic” among managers, policy makers, and academics. More particularly, the study of firm-level international competitiveness have been built upon the areas of international business, marketing, and strategic management literatures. In this context, several authors [6] assert that the concept of sustained competitiveness requires a geographical configuration that covers many countries, where specific advantages and locations of companies in several countries can complement or
  • 5. Nurdin Tampubolon, Dyah Budiastuti, Agustinus Bandur and Edi Abdurachman http://www.iaeme.com/IJMET/index.asp 1187 editor@iaeme.com compete with each other. In Indonesian context, international market has become one of main objectives of the Indonesian palm oil industry as evidenced by the high Indonesian CPO exports abroad. Hypothesis 3: International competitiveness has positive and statistical significant effect to sustainable competitive advantage 3. RESEARCH METHODS 3.1. Research Design This paper is built on the basis of quantitative research with particular reference to an empirical survey. The quantitative research was aimed primarily at examining the direct effect of technology resources on international competitiveness and competitive advantage, as well as to measure the indirect of technology resources to competitive advantage through the role of international competitiveness. The population of this study was the Indonesian palm companies which are members of the Indonesian Palm Oil Association (or known as Gabungan Pengusaha Kelapa Sawit Indonesia/GAPKI), comprising of 682 companies. Cluster random sampling was used to select companies that represent all areas of palm oil companies across the Indonesian islands. The islands or a group of islands as cluster, from which random samples seleted proportionaly. Accordingly, a hundred (100) companies were selected and participated in the study. As the study was focuses on palm oil industries’ competitive advantage, both managers or general managers were considered appropriate to be the samples. The managers or managers were viewed to have sufficient knoledge about the business processes in the oil palm company. Therefore, a hundred questionnaires were delivered and 82 questionnaires were returned with an good response rate of 82%. 3.2. Research Instrument For the purpose of this study, questionnaire was used in collecting quantitative data. The questionnaire was adapted from Likert-type scale: 1 = Strongly Disagree, 2 = Disagree, 3 = Tend to Disagree, 4 = Tend to Agree, 5 = Agree, 6 = Strongly Agree). To measure the sustained competitive advantage, there were four indicators, including price advantage, quality superiority, innovation excellence, and speed response to market. Then, five indicators to measure international competitiveness were: profits achievement, sales growth, export performance, strategic objectives achievement, and increased productivity [19]. To measure technology resources, three indicators were studied, including: usage of environmentally friendly technologies, utilization of e-planatation technology, and innovation development technologies [19]. These data were then measured its validity with analysis factor as well as relationship among variables with path analysis with Smart-PLS (Partial Least Square) analysis software. 4. RESULTS AND DISCUSSION In this section, results and discussion are presented. As shown in Figure 1, all indicators have required minimum value standard of loading factor ≥ 0.5. Four indicators reflected the sustained competitive advantage had acceptable loading factor, ranged between .73 and .85. Meanwhile, five indicators that measured the international competitiveness in this study were valid with the loading factors ranged between .58 until .90. The three indicators represented technology resources had also the acceptable loading factors, ranged between .76 and .83. For the purpose of measuring reliability of the items, Cronbach’s Alpha and Composite Reliability were applied. On the basis of minimum standard [22], 38], the internal consistency
  • 6. Building Sustained Competitive Advantage Through Technology Resources and International Competitiveness http://www.iaeme.com/IJMET/index.asp 1188 editor@iaeme.com coefficient of technology resources ( 3 items) and sustained competitive advantage (4 items) were considered acceptable (.70 and .77 respectively), while the international competitiveness had a good reliability (.88, 5 items). Figure 1 Results of Data Analysis Note: SBD (Sumber Daya) =Technology resources; DSI (Daya Saing International) = International competitiveness; KDB (Keuntungan Daya Saing Berkelanjutan) = Sustained competitive advantage Figure 1 also shows the magnitude of the direct effect of technology resources to both international competitiveness and sustained competitive advantage. In the study, the technology resources had direct positive medium effect to international competitiveness (β = 0.366). Moreover, there was a positive direct effect of technology resources to sustained competitive, even though the strength of the relationship was low β = 0.206). Furthermore, there had been a high direct positive effect of international competitiveness to sustained competitive advantage (β = 0.647). This implies that there had been a greater indirect effect of technology resources to sustained competititive advantage through the mediating effect of international competitiness. It can be concluded that variables related to international competitiveness are crucial in achieving the sustained competitive advantage, especially the profit achievement which had the highest loading factor (.92), followed by sales growth, export performance, strategic objectives achievement, and increased productivity. Then, Figure 2 below presents the path significance test. Firstly, the technology resources had significant effect on sustained competitive advantage (the t-value, 1.695 was higher than the critical value of 1.65 at α = 0.10). Similarly, the path significance test resulted in a t-value of 2.542 ≥ 1.65 at α = 0.10, indicated a significant effect of technology resources to sustained competitive advantage. Likewise, there was a significance t-value in the relationship between international competitiveness and sustained competitive advantage, with a t-value of 8.435 ≥ 1.65 at α = 0.10, indicated that there is a positive significant effect of international competitiveness to sustained sustained competitive advantage.
  • 7. Nurdin Tampubolon, Dyah Budiastuti, Agustinus Bandur and Edi Abdurachman http://www.iaeme.com/IJMET/index.asp 1189 editor@iaeme.com Figure 2 Significance testing of t-value The results of the study are in line with theories and previous studies [34], [7], [33], [24]. First of all, for instance, previous scholars [24] found that technological resources can affect a company's competitive advantage even though it varies in different ways, depending on the level of technological progress used. In this context, the sustained competitive advantage was measured through endurance, which determines how long a company's competitive advantage can last before the competitor's company is able to duplicate it. The entry of new technologies or innovations can strengthen the company's resilience, so that it can compete with its competitors. That is, the use of technology or innovation can affect the competitive advantage in a sustainable manner. In this study, the results indicate that because of the technology usage, both environmentally friendly technology, e-plantation technology, and the development of innovation provided opportunities for companies to successfully improve product quality, or be faster in responding to market demand. This study also indicates that the development of technological innovation can ultimately bring the company to a sustainable competitive advantage. This result is consistent with the research findings of previous scholars [15] that companies that have the ability to use technology resources can develop sustainable excellence in the future. To be able to compete in the international market, companies must have high-level resources, especially resources that utilize technology. Then, the result of this study also support previous studies in terms of the positive and significant effect of international competitiveness to sustained competitive advantage [36], [6]. For instance, several researchers [6] found that international competitiveness has a statistically significant and positive effect on the sustained competitive advantage. In the global context, the creation of superior value is an absolute requirement for a company to develop. In turn, the creation of superior values has a positive influence on the formation of sustained competitiveness [6]. 5. CONCLUSION This study concludes that international competitiveness has significant roles in the provision of sustained competitive advantage on the part of Indonesian palm oil industries. This means that the key factors of international competitiveness, such as profits achievement, sales growth, export performance, strategic objectives achievement, and increased productivity have been proved to be the predominant elements for achieving sustained competitive
  • 8. Building Sustained Competitive Advantage Through Technology Resources and International Competitiveness http://www.iaeme.com/IJMET/index.asp 1190 editor@iaeme.com advantage. These elements, as shown in this study, have positive and significant mediating role in the relationship between technology resources and sustained competitive advantage. In this context, even though technology resources has direct positive and significant effect to sustained competitive advantage, the strength of the relationship was relatively low, but its indirect effect was higher through the international competitiveness. This study suggests the urgency of using or applying technology resources to maintain international competitiveness and sustained competitive advantage in the palm oil industries. In this study, the use of technology, both environmentally friendly technology, e-plantation technology, and innovation-related technologies have strongly supported the achievement of international competitiveness and sustained competitive advantage. Accordingly, the use of technology must be the focus of attention of oil palm companies. Environmentally friendly technology is needed to ward off black champaign from other countries related to the issue of deforestation, carbon emissions, and loss of biodiversity due to the expansion of oil palm area. E-plantation technology is also needed to monitor the company's business processes, starting from the cultivation process in oil palm plantations, the processing of palm oil in the plant until CPO is ready to be marketed. Innovation development must also be a concern of palm oil company’s human capital management in order to be able to maintain competitiveness in the international market. This paper has been written on the basis of quantitative survey research. Further studies need to be focused on exploring the real conditions of why technological resources and international competitiveness affect the sustained competitive advantage. Accordingly, mixed-methods and experimental design or even longitudional survey needs to be applied in future research. In addition, this study has been conducted in palm oil industries and thus, future studies can be focused on other industries which have international orientation and sustained competitive advantage. * The authors address high appreciation to Dr. Mohammad Hamsal, MBA for proofreading this paper prior to its submission. REFERENCES [1] J. B. Barney, M. Wright, M., D.J. Ketchen Jr., D.J, The resource-based view of the firm: Ten years after 1991, Journal of Management, vol. 32 no. 6, 2001, pp.625-641. [2] J.B.Barney, Purchasing, Supply Chain Management and Sustained Competitive Advantage: The Relevance of Resource‐based Theory, Journal of Supply Chain Management, vol. 48 no.2, 2012, pp.3-6. [3] J. B. Barney & D.N. Clark, Resources-Based Theory: Creating and sustaining competitive advantage, New York: Oxford University Press, 2007. [4] J. B.Barney & W.S. Hesterly, Strategic management and competitive advantage: Concepts and cases, England: Pearson Education, 2015. [5] J. B.Barney, Firm resources and sustained competitive advantage, Journal of Management, vol. 17. no.1, 1991, pp.99-120. [6] D.S. Cho, H.C. Moon & M.Y.Kim, Characterizing international competitiveness in international business research: A MASI approach to national competitiveness, Research in International Business and Finance, vol. 5, 2013, pp.175-192. [7] M.I. Eraqi, IT as a means for enhancing competitive advantage, Anatolia: An International Journal of Tourism and Hospitality Research, vol.17 no.1, 2006, pp. 25-42. [8] P.U. Hadi, Strategi penguatan daya saing berkelanjutan agribisnis Indonesia, Agrimedia, vol.15 no. 1, 2010, pp. 13-14.
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