The Effect of Product Innovation and Product Differentiation on Competitive Advantage: Evidence from Rattan MSMEs in Cirebon Regency

Abstract

Rattan MSMEs in Cirebon Regency play a strategic role in supporting the local economy, employment, and the preservation of traditional handicrafts. However, increasing market competition, changing consumer preferences, and the demand for unique and high-quality products require these businesses to continuously strengthen their competitive advantage. Product innovation and product differentiation are widely recognized as important strategies for improving business performance and sustaining competitiveness in dynamic markets. This study aims to analyze the influence of product innovation and product differentiation on the competitive advantage of rattan MSMEs in Cirebon Regency. The research uses a quantitative method with an associative approach. The sample was determined through a purposive sampling technique with a total of 102 respondents. Data were collected using a Likert scale questionnaire and analyzed using multiple linear regression through SPSS. The results showed that product innovation had a positive but not significant effect on competitive advantage, while product differentiation had a positive and significant effect and became the most dominant variable. Simultaneously, both variables had a significant effect on competitive advantage. These findings indicate that the competitiveness of rattan MSMEs is more strongly influenced by the ability to create product differentiation, while product innovation needs to be further enhanced to generate a stronger impact. This research provides practical implications for MSMEs in developing effective strategies to strengthen sustainable competitive advantage.