Determinants of business success among SME food and beverages industry in Malaysia: the mediating role of competitive advantage

A successful business under small and medium enterprise categories is crucial to the country’s economy because of several reasons such as poverty and generating revenue to the government. In short, successful business is not only beneficial to the entrepreneur itself but also to the regional/domestic economic system or even the global economy. However, Department of Statistic Malaysia reported that the annual economic census of food and beverages of Malaysian SME for the year assessment 2021 showed a decreasing gross output value by 7%, which never happened before. The main issue beyond the situation is consumer price index in Malaysia that shows an increasing trend almost every year, causing the purchasing power to decrease. Moreover, health consciousness after pandemic has put much pressure on the cost and survival rate of Malaysian SME F&B. This paper aims to identify the significant factor that may contribute towards successful SME F&B in Malaysia. The factor such as proposed by the theory of dynamic capability is applied to determine the relationship between business strategy, business performance, business innovation on the business success of SME F&B. To further explain the influence of the relationship between business innovation, business performance and business strategy on business success, the competitive advantage is included into the framework as a mediator. The inclusion of competitive advantage theory within the framework enhances the capability of how these variables impact business success of SME F&B in Malaysia. Data were collected through a questionnaire survey of 292 SME F&B established in Malaysia. The data were analysed by using SPSS and PLS-SEM. The result showed that all hypotheses are supported except for business strategy on business success. Thus, future research may explore the moderating or mediating role of business strategy to enhance its predictive relevance. The most elucidating factor of business success is business innovation and business performance as it fosters competitive advantage in an organisation. In conclusion, organisations must have the capability to differentiate their business as it will lead to generating more profits, thus achieving success in long term. The present study provides prominent contributions to the academicians in fulfilling the gaps of the theory, as well as to the government and policymakers and of course to the SME F&B entrepreneur.