The Effect of Customer and Competitor Market Sensing Capability on Business Performance of SMEs: An Empirical Study in Indonesia

The purpose of this study is to investigate and examine the role of specialized marketing capabilities (SMC) in mediating the relationship between customer sensing capability (CuSC) and competitor sensing capability (CoSC) with business performance (BP) at SMEs retail fashion in Indonesia. This study used 330 SMEs from ten regencies in Indonesia and examined the regression relationship between the four variables, SMC, CuSC, CoSC, and BP. Confirmatory factor analysis (CFA) was used to measure the validity and reliability of the construct used. For data analysis techniques, this study used structural equation modeling (SEM) with AMOS Version 22.0. This study found that SMC acts as a partial mediator in the relationship between CuSC and CoSC with SMC and BP. By examining the diverse literature on market sensing capability, marketing strategy, and BP, this study offers a unique analysis of market learning and its effects on SMC and BP in Retail Fashion SMEs in Indonesia. Furthermore, future research needs to broaden the findings and improve generalizations by conducting studies of SMEs in other industries, such as manufacturing, and services of small, medium and large scale. In addition, it needs to add some countries as research objects, not only Indonesia.