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This research objective is to (1) examine the effect of organizational factors on quality performance, (2) examine the effect of quality performance on competitive advantage and (3) examine the mediating role of quality performance between organizational factors and competitive advantage.

The research sample includes 140 employees in the Windusari village-owned enterprise, in Magelang, Indonesia. Data are collected using 5-Likert scale questionnaires which follow Ferdousi et al. (2019). The dependent variable is a competitive advantage. The Independent variable is organizational factors which are top management support, employee empowerment, employee involvement, reward and recognition, training and customer focus. The mediating variable is quality performance. Data analysis uses path analysis provided by structural equation modeling.

Based on path analysis, organizational factors have a positive effect on quality performance, quality performance has a positive effect on competitive advantage and quality performance mediates the effect of organizational factors on competitive advantage. The results confirm the concept of quality management where continuous improvement of products and services can meet customer expectations and bring the organization to a better position in the industry to face other competitors.

This research extends the previous studies of the relationship between organizational factors and organizational outcomes by considering the effectiveness of the organizational process. This research also contributes to giving new evidence about the relationship between organizational factors, quality management and competitive advantage in the village-owned enterprise in Magelang, Indonesia. This research also contributes to updating the literature on the theory of quality management.