Linking Strategic Orientation to Competitive Advantage in Sharia Fintech Firms: Evidence from Indonesia

Abstract

The Sharia fintech sector in Indonesia has seen significant growth due to digital transformation and Sharia-compliant principles. With intense competition and regulatory challenges, securing a sustainable competitive advantage is vital. Strategic orientations (market, technology, learning, and entrepreneurial) are essential organizational capabilities. However, the role of organizational innovation in connecting these orientations to competitive advantage remains underexplored, especially in Sharia fintech firms. This study examines the impact of these orientations on competitive advantage, with organizational innovation as a mediating variable. A quantitative approach was employed, surveying 42 managerial employees from Sharia-compliant fintech companies in Indonesia, using Partial Least Squares Structural Equation Modeling (PLS-SEM) for analysis. Results showed that out of thirteen hypotheses, only three were supported. Entrepreneurial orientation significantly affects both organizational innovation and competitive advantage. Technology orientation impacts organizational innovation but not competitive advantage directly. Market and learning orientations had no significant effects. Organizational innovation did not mediate the relationship between strategic orientations and competitive advantage, indicating its limited role in value creation for Sharia fintech firms. Key findings emphasize the importance of entrepreneurial and technological capabilities in enhancing competitiveness. The lack of a mediating role for organizational innovation suggests a need for better innovation infrastructure and regulatory adaptability. This study contributes to strategic management literature in fintech by highlighting the role of innovation and providing insights for managers to develop sustainable competitive advantages.