Abstract

E-commerce has experienced significant growth in recent years. The advancement of information and communication technology has enabled businesses, including Small, and Medium Enterprises (SMEs), to conduct their operations online more efficiently and effectively. This research aims to analyze the influence of e-commerce and innovation on the competitive advantage of SMEs. This study employs a quantitative approach using Structural Equation Modeling (SEM) method supported by Partial Least Squares (PLS). The quantitative approach was chosen to allow for the quantitative and objective measurement of the variables involved. An online Likert scale survey was conducted among SMEs in Semarang City from September to October 2023, resulting in 152 initial respondents. After excluding 11 respondents who did not meet the study's requirements, the final sample size was 141 SMEs. The results of the study indicate that the utilization of e-commerce and innovation significantly influences the competitive advantage of SMEs in Semarang City. Through e-commerce, SMEs can reach a wider market, optimize operations, and strengthen their brand image. MSMEs in Semarang City should focus on developing responsive and engaging e-commerce platforms, enhancing targeted online marketing and promotion efforts, investing in research and development of new products and services, adopting new technologies to improve operational efficiency and product quality, as well as fostering mutually beneficial partnerships to expand market reach and resources.