Innovation Capabilities and Market-Based Competitive Advantage of Indonesian Manufacturing Companies

Abstract

Innovation capability is an important factor for a company's competitive advantage. This study aims to prove the effect of innovation capability on market/industry-based competitive advantage in manufacturing companies in Indonesia. The study population was all manufacturing companies that listed on the IDX. The research sample was taken by purposive sampling by selecting manufacturing companies that are committed to building innovation capabilities through investment in research and development (R&D). The data collection method used documentation techniques. The data source is the company's financial statements. annual reports, summaries of listed companies, and the IDX Facts Book. The data analysis technique includes descriptive and inferential analysis using linear regression analysis. The results of the analysis conclude that innovation capability has a positive and significant effect on Operating Liability Leverage; innovation capability has a significant negative effect on Inventory Turnover (ITO) and Receivable Turnover (RTO). The innovation capability has no significant effect on Financial Leverage and Excess Funds. Expenditures for companies in R&D must be able to substantially increase innovation capabilities so that they have an impact on competitive advantage.

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