Sustainable Competitive Advantage of Riau Malay Weaving Industry Based on Local Wisdom

S A R I P A T I Vol. 13 | No. 3 ISSN: 2089-6271 | e-ISSN: 2338-4565 | https://doi.org/10.21632/irjbs Annisa Mardatillah; Rosmayani; Shafira Amalia Ramadani Departement of Business Administration, Universitas Islam Riau, Jl. Kaharudin Nasution KM 113, Simpang Tiga, Bukit Raya, Pekanbaru, Indonesia

This study aims to analyze the strategy of developing Riau Malay woven fabrics' competitiveness and what factors predominantly influence efforts to develop the sustainable competitive advantage of the Riau malay weaving industry based on local wisdom of Malay fabrics in Pekanbaru. The sampling technique chosen was using a purposive sampling of 14 SMEs of Riau Malay woven fabric in Pekanbaru. SWOT analysis was applied as an analysis tool. This research is more in looking at the Riau Malay woven fabric craftsmen based on their ethnic abilities to differ from previous research. The research findings show aspects of product strength consisting of authenticity values of motifs/patterns based on typical regional philosophies not possessed by other regions as a cultural identity. Human resources' knowledge and skills in producing Riau Malay Weaving fabrics inimitable, and there is no substitute for being a force that will not quickly transfer to other companies.

INTRODUCTION
Sustainable competitive advantage for the industry, including the woven fabric industry, becomes very important in facing competition and business challenges in the current global era.
The views of the last few decades provide that research on sustainability in the fashion industry is increasing. Referring to Jang et al.,(2016) research results, business sustainability can be seen from two aspects: managerial and consumer aspects; managerial aspects are always associated with product development and marketing strategy.
Simultaneously, the consumer aspect emphasizes how to increase the sustainability of product consumption by consumers.
The small industry is one of the essential components to support economic progress in Indonesia. It is because small industries can make a significant contribution to the country's economy.
Classical barriers encountered in developing small industries, including barriers related to human resources, management in business, capital, and inadequate information technology.
Previous research on the development of the woven fabric industry looked more at product quality and product innovation. It is limited to a strategic approach that focuses on company resources based on local wisdom resources that look at the value of authenticity and tacit knowledge.
One obstacle experienced by the Small and Medium Industries of Malay woven fabrics in Indonesia is that they make woven fabrics without conducting a market survey to determine what kind of woven products the market wants. Besides, the perpetrators also had difficulty innovating with products because not all of these businesses could create and innovate with Riau Malay woven fabrics.
The small industrial sector, in general, does not concern about sustainability. It is only limited to business defense. It is due to the obstacles faced by micro and small businesses, especially in developing countries such as Indonesia (Tambunan, 2009). Problems often faced by small industries are related to the inadequate promotion.
Others common obstacles that often occur are limited working capital and investment, marketing and product distribution problems, limited access to information about market opportunities, lack of quality human resources which are less skilled and less experienced, lack of partnership and coaching with related parties such as financial channeling institutions and business practitioners (Zairani & Zaimah, 2013).
The level of business competition in small industries continues to increase. The company has to concern about the right strategy. The strategy of sustainable competitive advantage is a tool to achieve corporate goals that are effective and efficient to increase corporate profits (Ferdinand, 2005). Competitive Advantage Sustainable company can obtain if the company has a difference in resources with competing companies. These organizational resources are valuable, rare, inimitable, and non-substitutable (Barney, 2001;Barney, 2007).
According to Barney & Clark (2007), the achievement of sustainable competitive advantage determined the role of resources consisting of human capital, structural capital, and relational capital to create value that is beneficial to consumers, difficult to emulate by its competitors supported by company management. There will be company resources that will be difficult for competitors to copy, especially in human resources. (Das & Teng, 2000) reinforce the previous opinion that company resources are essential for the heterogeneity of sustainable resources. However, that appropriate development needs to be made by making partnerships and the diversity of partnerships an essential aspect of forming strategic alliances. This previous research is in line Barney (2001;2007) as stated that company resources should not be homogeneous but heterogeneous.
The heterogeneity of resources means that all companies cannot have precisely the same resources in the industry. The heterogeneity of these resources is caused by company capabilities such as human resources, capital, production equipment, and the company's different pasts.
Several company resources would be difficult to copy by competitors, especially in terms of human resources. Resources in each region or region generally have unique potential. According to Fiol (1991), Barney (2001) does not emphasize cultural aspects.
In line with Aaltonen et al.,(2015), culture is the basis for achieving sustainable competitive advantage called local wisdom, which has meaningful values translated into physical forms in the form of local creative products (Mahyarni et al., 2015).
Likewise, with the natural and cultural resources in the Pekanbaru area, Riau has the potential to be promoted and developed because of its high and unique cultural value local wisdom as a cultural identity. The Riau Malay woven cloth is produced from local resources, local knowledge, and local skills acquired from generation to generation. It produces a local product with high heterogeneity with local authenticity from local resources that is not easy to imitate or replace.
According to Naisbitt (1995), global values are considered as a process to eliminate local values. Meanwhile, Giddens (2001) argues that globalization is an opportunity to revive local cultural identity so that it is better known in various parts of the world because the attraction of local culture's potential is currently becoming important amid boredom of the homogeneity of people's lifestyles due to globalization. Local people are very familiar with local wisdom because their daily habits start with having to live side-by-side with other people, which becomes a tradition to develop local wisdom (Vuspitasari & Ewid, 2020).
Local values can inspire the growth of local wisdom that grows from life values , meaning in life. Based on the above opinion, to face the competition, it is necessary to think about a sustainable competitive advantage strategy based on resource ownership by raising local values contained therein.
This study uses a SWOT analysis approach which analyzes strengths, weaknesses, opportunities, and threats to determine business strategy by aligning the suitability between commercial business, corporate resources, and the environment (Ansoff, 1965;Fahy & Smithee, 1999;Oreski, 2012;Valentin & Valentin, 2016). Based on the background of the above problems, this study will examine the sustainable competitive advantage of riau malay weaving industry based on local wisdom. This research will differ from previous research because its previous research mostly discusses Malay songket Riau as a creative and innovative regional product. However, this study provides a This research emphasizes somewhat intangible resources, in this case, local wisdom that will produce heterogeneity as a differentiator from competitors to achieve sustainable competitive advantage.

Concept of Strategy
Business strategies are policies and guidelines that determine the way a company competes in industry and how companies form competitive advantage . Business strategy refers to the improvement of the competitive position of the company's products or services in specific industries or market segments served by the business unit (Hunger & Wheelen, 2011).
According to two strategists, Hamel et al.(2003) define business strategies which are incremental actions (continually increasing) and continuously and are carried out based on the perspective of what is expected by customers in the future.

SWOT Analysis (Strength Weakness Opportunity Threats).
SWOT analysis is an overall evaluation of its strengths, weaknesses, opportunities, and threats as analysis tool widely used by companies in conducting strategy formulations (Rangkuti, 2013).
According to Ferrell & Harline (2005), the function of a SWOT analysis is to obtain information from situation analysis and separate it into points of internal issues (strengths and weaknesses) and external issues (opportunities and threats).
The SWOT analysis will explain whether the information indicates something that will help the company achieve its objectives or indicate that there are obstacles that must be faced or minimized to meet the desired income.
Capability is a unique combination made in utilizing available resources to create core competencies valued for sustainable competitive advantage (Barney, 2001;2007;Teece, 2000). The company's dynamic capabilities became known as the RBV extension. Dynamic capabilities are the company's ability to integrate, build and configure internal and external resources to cope with rapid environmental changes for the prerequisites to achieving sustainable competitive advantage at the heart of the business to be able to compete in exploring and exploiting the achievement of goals business (Teece, 2000).
According to RBV Barney (2001;2007) and Teece (2000) , it can be seen that RBV is very dependent on its resources, namely: first, Tangible assets, are natural resources that can be observed and more easily measured. Resources in physical form provide advantages for competitors because these resources can easily buy on the market. Second, Intangible assets, an asset that is not physical.
The development of the unique capabilities of resources results from individual company assets, both tangible and intangible. (Meritum, 2002) says the intangible resources of intellectual capital come from the ''human resource literature,'' while intangibles come from ''accounting perspectives».
Intangible resources consist of intangible resources such as employee expertise, company culture, company structure, organizational processes, and tangible resources are tangible resources such as factories, land, raw materials, machinery (Carmeli & Tishler, 2004;Eikelenboom, 2005;Jardon & Loureiro, 2013). In this study, researchers will discuss intangible resources consisting of human capital, partnerships, and local wisdom as a form of organizational processes that have the human capital to establish cooperative partnerships in increasing the ability to sustain a competitive advantage based on local wisdom.

Resources Based View
The competitive advantage becomes a sustainable competitive advantage, emphasizing its internal aspects, emphasizing more Barney (1991;2007). Moreover, Porter (1980;1990) emphasized the external aspect approach and did not refer to the company's internal aspects to achieve a competitive advantage. (Bain, 1959) ideas and Mason (1939) motivated Porter's thinking regarding the structure-conduct-performance paradigm then moves to transaction cost and agency theory. Porter analyzes homogeneous performance behavior, the strategic framework of industrial group companies. Besides, Porter applies this approach by using deductive analysis methods in large industrial companies. So that Porter's theory considered less relevant if applied to micro, small and medium businesses. The RBV view is a concept of the resource-based theory that explains the company's strategy to achieve sustainable competitive advantage through the strength of its internal resources that are valuable, rare, cannot be imitated, and have no substitutes Barney (1991).
According to Barney (1991;2007) sustainable competitive advantage can obtain if the resources owned by a heterogeneous company have value, rare resources, in-imitable, and non-constitutable.
The resources referred to explain that to achieve a sustainable competitive advantage, companies must have strength in resources consisting of human capital, relational capital, and structural capital companies that are valuable, rare, imitated, and no substitute for goods (Barney & Clark, 2007).
Based on Penrose (1959), the capability or capability concept is a firm capacity to convert the company's resources into good services. Services can be produced by adequate resources, the differences or uniqueness of a company primarily derived from this ability (Akio, 2005). The article of the work Barney (1991;2007)

''Firm
Resource and Sustained Competitive Advantage'' explained firm resources help companies improve the efficiency and effectiveness of the company's operations. According to Barney (1991;2007 Barney (1991;2007) and Bharadwaj et al., (1993). The resources referred to explain that in order to achieve a sustainable competitive advantage, companies must have strength in resources consisting of human capital, relational capital, and structural capital (Barney & Clark, 2007).
The company's ability is fundamentally not the same because it is seen from the ownership of its unique resources in the form of tangible assets and intangible assets and the company's capability to utilize those assets' assets. Barney (1991) says that resources are limited to traditional productive economic factors and include diverse social resources such as interpersonal relationships, corporate culture, or reputation with suppliers or customers.

Local Wisdom
The current of globalization raises a level of concern that thinks it will destroy local values that have been the order of life for (Naisbitt, 1995).
However, this is not always the case because Giddens (2001) says that authentic regional identity is a source of strength used in dealing with the boring homogeneity level in the era of globalization. Following the opinion of Giddens The essential thing is fertilization efforts and local wisdom development (Abbas, 2013).
Local wisdom is an intangible organizational resource in the form of local culture (Das & Teng, 2000), which can also be interpreted as Furthermore, it is also emphasized in (Tupamahu, 2015) that cultural integration is a capability for the mechanism to achieve sustainable competitive advantage. According to Pawennari et al., (2014), Tupamahu (2015), and Senanayake (2015) Weaknesses (Rangkuti, 2013).
This study's sample was obtained by a purposive sampling technique of 14 small Malay woven fabric industry entrepreneurs in Pekanbaru. The questionnaire was used in this study to retrieve data about strengths, weaknesses, challenges, and obstacles from internal and external factors. This data is taken from all study samples.

RESULT AND DISCUSSION
The strategy of developing the Riau Malay Weaving  However, Barney (1991;Bharadwaj et al., 1993) said that internal company resources with value, scarce, inimitable, and non-substitute would produce. Referring with research by Aaltonen et al., (2015) and Autio et al., (2013) stated that historical, cultural heritage that is thick with the values of past authenticity when used as a resource to achieve sustainable competitive advantage would create a strong memory for a product that is not owned by other similar products. So that then it becomes a distinguishing force that becomes an identity of unique value, rare, cannot be imitated and cannot easily be replaced in order to achieve a sustainable competitive advantage (Barney , 1991;2007;Bharadwaj et al., 1993). The higher the product's heterogeneity and different from competitors, the product will provide more added value because competitors are inimitable and non-substitution.

CONCLUSIONS
The SWOT research and analysis results on the Riau Malay Weaving Industry's development strategy in Pekanbaru can be concluded as follows: The industries of Riau Malay Weaving Fabrics in Pekanbaru have aspects of product strength consisting of motifs/patterns based on typical The potential of local SME resources is a determining factor for business development strategies.
Workforce expertise is imitated and cannot be replaced as a strength in producing a specific product with high heterogeneity. In the context of inimitability, it has a causal ambiguity, imitated by competitors.

LIMITATION AND SUGGESTIONS
This research is only limited to focus on the capability of company resources as an industrial development strategy. The next research can see from the perspective of entrepreneurship and explore tacit knowledge.