Does Financial Resource Development Effort Affect the Dynamic Entrepreneurial Capability and Performance of SMEs?

Authors

  • Liana Mangifera Universitas Muhammadiyah Surakarta
  • Winny Perwihosuci Muhammadiyah University of Surakarta
  • Siti Aisyah Muhammadiyah University of Surakarta
  • Mega Wahyu Widawati Muhammadiyah University of Surakarta

DOI:

https://doi.org/10.37301/jmubh.v19i1.24553

Keywords:

digital technology capability; relational capability; innovation capability; innovation capability; financial resource development

Abstract

The changes and uncertainty of the business environment in the VUCA era are serious challenges that must be faced, especially for SMEs. The unpreparedness of business actors to face these changes can impact the decline in SME performance and business sustainability. SMEs must continue to adapt to all changes that occur in their capabilities. Thus, SME players must have a business strategy using their resources by increasing dynamic entrepreneurial capabilities supported by financial resources to compete in the market. This research aims to analyze the relationship between digital technology capability, relational capability, innovation capability, financial resource development, and SMEs’ performance in Surakarta. The results of 120 SME respondents in Surakarta show that dynamic entrepreneurial capability, in this case, is measured using the variables digital technology capability (DTC), relational capability (RC), and innovation capability (IC) which are proven to have a significant influence on SMEs performance and also the development of financial resources can only partially mediate digital technology capability, however Financial resource development cannot mediate the influence of relational capability or innovation capability on SMEs performance. This research implies that it is important for SMEs to have dynamic entrepreneurial capabilities and develop their financial resources to maintain and improve their business performance.

References

Agostini, L., & Nosella, A. (2020). The adoption of Industry 4.0 technologies in SMEs: results of an international study. Management Decision, 58(4), 625–643. https://doi.org/10.1108/MD-09-2018-0973

Anwar, M., Clauss, T., & Issah, W. B. (2021). Entrepreneurial orientation and new venture performance in emerging markets: the mediating role of opportunity recognition. Review of Managerial Science, 0123456789. https://doi.org/10.1007/s11846-021-00457-w

Battistoni, E., Gitto, S., Murgia, G., & Campisi, D. (2023). Adoption paths of digital transformation in manufacturing SME. International Journal of Production Economics, 255(October 2022), 108675. https://doi.org/10.1016/j.ijpe.2022.108675

Bleady, Abbas, Hafiez Ali, Abdel, & Balal Ibrahim, S. (2018). Dynamic Capabilities Theory: Pinning Down a Shifting Concept. Academy of Accounting and Financial Studies Journal, 22(2), 1–16.

Bleady, A., Ali, A. H., & Ibrahim, S. B. (2018). Dynamic capabilities theory: Pinning down a shifting concept. Academy of Accounting and Financial Studies Journal, 22(2), 1–16.

Bongiorno, G., & Rizzo, D. (2018). CIOs and the Digital Transformation. In CIOs and the Digital Transformation. https://doi.org/10.1007/978-3-319-31026-8

Feliciano-Cestero, M. M., Ameen, N., Kotabe, M., Paul, J., & Signoret, M. (2023). Is digital transformation threatened? A systematic literature review of the factors influencing firms’ digital transformation and internationalization. Journal of Business Research, 157(December 2022), 113546. https://doi.org/10.1016/j.jbusres.2022.113546

Ferreira, J., Cardim, S., & Coelho, A. (2021). Dynamic Capabilities and Mediating Effects of Innovation on the Competitive Advantage and Firm’s Performance: the Moderating Role of Organizational Learning Capability. Journal of the Knowledge Economy, 12(2), 620–644. https://doi.org/10.1007/s13132-020-00655-z

Fitriati, T. K., Purwana, D., & Buchdadi, A. D. (2020). Dynamic Capabilities and SMES Performance: The Mediating Effect of Innovation (Study of SMES in Indonesia). Proceedings of the 1st International Conference on Science, Health, Economics, Education and Technology (ICoSHEET 2019), 27(ICoSHEET 2019), 457–464. https://doi.org/10.2991/ahsr.k.200723.115

Ismail, I. J. (2022). Entrepreneurs’ Dynamic Capabilities, Financial Resource Development and Financial Performance Among Small and Medium Enterprises in Emerging Markets: Experience from Tanzania (pp. 15–36). https://doi.org/10.1007/978-3-031-04980-4_2

Khurana, I., Dutta, D. K., & Singh, A. (2022). SMEs and digital transformation during a crisis : The emergence of resilience as a second-order dynamic capability in an entrepreneurial ecosystem. Journal of Business Research, 150(June), 623–641. https://doi.org/10.1016/j.jbusres.2022.06.048

Kijkasiwat, P., & Phuensane, P. (2020). Innovation and Firm Performance: The Moderating and Mediating Roles of Firm Size and Small and Medium Enterprise Finance. Journal of Risk and Financial Management, 13(5), 97. https://doi.org/10.3390/jrfm13050097

Mangifera, Dyah, L. (2023). The Role Of Government Support In The Enhancement Of Financial Ability And Technology Ability On Smes Financial Performance. Midyear International Conference 2023, 89(6), 61002.

Mangifera, L., & Mawardi, W. (2022). Digital Transformation and Its Impact on Financial Performance: in the Food and Beverage Small Business Sector. Proceding International Conference On Business & Social Sciences, 49–61.

Mangifera, L., Wajdi, F., Amalia, F., & Khasah, A. U. (2022). The Role of Digital Innovation in SMEs : A Financial Performance Perspective. Jurnal Manajemen Universitas Bung Hatta, 17(02), 157–170.

Maulana, M. A. (2021). Pengaruh Dinamisme Lingkungan, Kemampuan Dinamis, dan Literasi Keuangan terhadap Kinerja UMKM di Kota Mojokerto. Jurnal Ilmu Manajemen, 9(2), 559. https://doi.org/10.26740/jim.v9n2.p559-571

Moscalu, M. (2020). SMEs’ growth under financing constraints and banking markets integration in the euro area. Journal of Small Business Management, 58(4), 707–746. https://doi.org/10.1080/00472778.2019.1668722

Muriithi, S. (2017). African Small and Medium Enterprises (Smes) Contributions, Challenges and Solutions. European Journal of Research and Reflection in Management Science, 5(March). www.idpublications.org

Naughton, S., Golgeci, I., & Arslan, A. (2020). Supply chain agility as an acclimatisation process to environmental uncertainty and organisational vulnerabilities: insights from British SMEs. Production Planning & Control, 31(14), 1164–1177. https://doi.org/10.1080/09537287.2019.1701130

Newman, A., Obschonka, M., Moeller, J., & Chandan, G. G. (2021). Entrepreneurial Passion: A Review, Synthesis, and Agenda for Future Research. Applied Psychology, 70(2), 816–860. https://doi.org/10.1111/apps.12236

Nugraha, D. P., Setiawan, B., Nathan, R. J., & Fekete-Farkas, M. (2022). Fintech Adoption Drivers for Innovation for SMEs in Indonesia. Journal of Open Innovation: Technology, Market, and Complexity, 8(4), 208. https://doi.org/10.3390/joitmc8040208

Oquaye, M., Owusu, G. M. Y., & Bokpin, G. A. (2020). The antecedents and consequence of financial well-being: a survey of parliamentarians in Ghana. Review of Behavioral Finance. https://doi.org/10.1108/RBF-12-2019-0169

Ottemoesoe, R. S. D., Lovely, L., & Devie, D. (2021). Information Technology Capabilities, Organizational Agility, and Competitive Advantage: A Study of Micro, Small, and Medium Enterprises in Indonesia. Petra International Journal of Business Studies, 4(2), 131–141. https://doi.org/10.9744/ijbs.4.2.131-141

Owusu, J. (2021). Impact of financial resource building effort on financial resource availability among small and medium enterprises. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.1920676

Pham, T. T. T., Nguyen, K. S., Nguyen, H. H., Nguyen, L. T., & Vo, V. X. (2021). Dynamic entrepreneurship, planned innovation, and firm profitability: evidence from a Southeast Asian country. Heliyon, 7(7), e07599. https://doi.org/10.1016/j.heliyon.2021.e07599

Proksch, D., Rosin, A. F., Stubner, S., & Pinkwart, A. (2021). The influence of a digital strategy on the digitalization of new ventures: The mediating effect of digital capabilities and a digital culture. Journal of Small Business Management, 00(00), 1–29. https://doi.org/10.1080/00472778.2021.1883036

Ravichandran, T. (2017). Journal of Strategic Information Systems Exploring the relationships between IT competence , innovation capacity and organizational agility.

SIJABAT, F. N. (2018). Entrepreneurial Orientation, Barriers, Business Networks, and Internationalization Readiness: A Conceptual Framework for the SMEs. International Journal of Academic Research in Accounting, Finance and Management Sciences, 8(3). https://doi.org/10.6007/ijarafms/v8-i3/4533

Sudrartono, T., Nugroho, H., Irwanto, I., Agustini, I. G. A. A., Yudawisastra, H. G., Maknunah, L. U., Amaria, H., Witi, F. L., Nuryanti, N., & Sudirman, A. (2022). Kewirausahaan Umkm Di Era Digital. In Cv Widina Media Utama.

Suryani, T. (2017). Financial Capability Study of Micro, Small and Medium Enterprises Owner With Superior Product in Madiun Regency. Journal of Business & Banking, 6(1). https://doi.org/10.14414/jbb.v6i1.895

Teece, D. J. (2007). Explicating Dynamic Capabilities: The Nature And Microfoundations Of (Sustainable) Enterprise Performance. Strategic Management Journal, 920(August), 1319–1350. https://doi.org/10.1002/smj.640

Teece, D. J., Pisano, G., & Shuen, A. (2009). Dynamic capabilities and strategic management. Knowledge and Strategy, 18(March), 77–116. https://doi.org/10.1093/0199248540.003.0013

Ullah, F., Degong, M., Anwar, M., Hussain, S., & Ullah, R. (2021). Supportive tactics for innovative and sustainability performance in emerging SMEs. Financial Innovation, 7(1). https://doi.org/10.1186/s40854-021-00284-8

Wajdi, M. F., Mangifera, L., & Isa, M. (2020). Strategi penguatan inkubator bisnis dalam pengembangan usaha kecil dan menengah. Jurnal Ekonomi Manajemen Sumber Daya, 22(2), 101–107.

Wang, G., Dou, W., Zhu, W., & Zhou, N. (2015). The effects of firm capabilities on external collaboration and performance: The moderating role of market turbulence. Journal of Business Research, 68(9), 1928–1936. https://doi.org/10.1016/j.jbusres.2015.01.002

Wellalage, N. H., & Locke, S. (2020). Formal credit and innovation: Is there a uniform relationship across types of innovation? International Review of Economics and Finance, 70(July), 1–15. https://doi.org/10.1016/j.iref.2020.07.004

Wu, H., Chen, J., & Jiao, H. (2016). Dynamic capabilities as a mediator linking international diversification and innovation performance of firms in an emerging economy. Journal of Business Research, 69(8), 2678–2686. https://doi.org/10.1016/j.jbusres.2015.11.003

Yao, R., & Xiao, J. J. (2022). Financial capability and informal bankruptcy : comparing student loan holders and non-holders. International Journal of Bank Marketing. https://doi.org/10.1108/IJBM-05-2022-0207

Yoshino, N. (2019). Unlocking SME finance in Asia: Roles of credit rating and credit guarantee Schemes. Unlocking SME Finance in Asia: Roles of Credit Rating and Credit Guarantee Schemes, 1–400. https://doi.org/10.4324/9780429401060

Zhao, F., Barratt-Pugh, L., Standen, P., Redmond, J., & Suseno, Y. (2022). An exploratory study of entrepreneurial social networks in the digital age. Journal of Small Business and Enterprise Development, 29(1), 147–173. https://doi.org/10.1108/JSBED-10-2020-0359

Downloads

Published

2024-01-29

Issue

Vol. 19 No. 1 (2024): Jurnal Manajemen Universitas Bung Hatta

Section

Articles

License

Copyright (c) 2024 Liana Mangifera, Winny Perwithosuci, Siti Aisyah, Mega Wahyu Widawati

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish with Jurnal Manajemen Universitas Bung Hatta agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Creative Commons Attribution-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in Jurnal Manajemen Universitas Bung Hatta. 
  2. The author holds the copyright of the submitted and published articles, with the understanding that articles are disseminated under the Creative Commons Attribution-ShareAlike 4.0 International License..
  3. The editor team is entitled to do the editing in accordance with the guidelines for writing or template in the Jurnal Manajemen Universitas Bung Hatta.

 

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.