Enhancing Sustainable Performance In Handicraft Smes Through Digital Marketing Capability And Strategic Orientation

Noor Suroija; Andi Setiawan; Bagus Yunianto Wibowo; M Nahar; Jati Nugroho

Noor Suroija Semarang State Polytechnic, Indonesia
Andi Setiawan Semarang State Polytechnic, Indonesia
Bagus Yunianto Wibowo Semarang State Polytechnic, Indonesia
M Nahar Semarang State Polytechnic, Indonesia
Jati Nugroho Semarang State Polytechnic, Indonesia

Keywords: Digital Marketing Capability, Social Media Marketing, Business Capacity, Strategic Orientation, Sustainable Performance

Abstract

The rapid digitalization of business activities has transformed the competitive landscape for small and medium-sized enterprises (SMEs), particularly those operating in the creative industry. This study investigates how Digital Marketing Capability, represented by Social Media Marketing, Strategic Orientation, and Government Regulation, enhances Sustainable Performance through Business Capacity among handicraft SMEs in Indonesia. Drawing upon the Dynamic Capability Theory and the Resource-Based View, the study proposes that digital marketing capability enables SMEs to develop organizational competencies that improve long-term sustainability. Data were collected from 120 handicraft SMEs located in Magelang Regency using purposive sampling. Structural Equation Modeling (SEM) with AMOS 24 was employed to examine the proposed relationships. The empirical findings reveal that Social Media Marketing significantly improves Business Capacity and Sustainable Performance. Strategic Orientation and Government Regulation also positively contribute to organizational capability development and sustainability outcomes. Furthermore, Business Capacity exerts the strongest influence on Sustainable Performance, confirming its important role in translating digital marketing capability into organizational success. This study contributes to the digital marketing literature by demonstrating that sustainable SME performance depends not only on digital platform adoption but also on organizational capability development supported by strategic management and institutional policies. The findings offer practical implications for SME managers and policymakers seeking to accelerate digital transformation while strengthening long-term business sustainability.

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