| dc.description.abstract | Purpose: This study discusses the phenomenon of the uncertain sustainability of SMEs in developing countries. SMEs face various
challenges in the dynamics of a competitive environment, which threaten their growth and sustainability. This study aims to address a
research gap between company's internal resources, in the form of absorptive capacity, and its business performance. By using product
quality as a mediator, which has never been studied before, this research presents a novelty to answer the existing research gap using
the Resource Based Theory (RBT) perspective. Research design, data and methodology: Using quantitative method, data are collected
from 164 respondents, who are owners or managers of furniture manufacturing SMEs in Gerbangkertosusila Area, East Java, Indonesia.
The data are analyzed using Partial Least Square (PLS) – Structural Equation Modeling (SEM). Results: The findings show that
absorptive capacity has a direct and significant effect on business performance and indirectly through product quality. Conclusion:
Furniture manufacturing SMEs are advised to focus on developing absorptive capacity reflected in good product quality, in order to
improve their business performance. This is especially important to survive the crisis caused by the Covid-19 pandemic. Thus, the results
of this study contribute to the development of RBT, and there are several suggestions for further research. | en_US |
