Abstract
This study investigates how Knowledge Management impacts Competitive Advantage, with Leadership Agility and Ambidextrous Innovation as mediators, focusing on coffee shops in Subdistrict Lowokwaru, Malang City. Using Structural Equation Modeling (SEM) with the Partial Least Square approach, the research analyzed data from coffee shop workers to examine the relationships between the variables. Knowledge Management significantly enhances Leadership Agility, Ambidextrous Innovation, and Competitive Advantage. Leadership Agility and Ambidextrous Innovation also positively affect Competitive Advantage. Coffee shop SMEs can improve their competitive edge by implementing effective knowledge management practices that foster leadership agility and innovation, thereby adapting better to market changes and boosting customer satisfaction. This study offers new insights into how knowledge management influences competitive advantage through leadership and innovation in the coffee shop sector, providing actionable strategies for SMEs to thrive.