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September 5, 2025West Science Journal Economic and Entrepreneurship0 citationsOpen Access

The Influence of Financial Literacy and Entrepreneurial Orientation on the Performance of MSMEs in Indonesia with Business Innovation as a Mediating Variable

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NQNanang QosimUniversitas Alkhairaat

Key Points

  • Financial literacy significantly enhances the performance of MSMEs in Indonesia, indicating the need for better financial education.
  • The study shows that entrepreneurial orientation positively impacts MSME performance, suggesting strategic behavior is crucial for success.
  • Business innovation effectively mediates the relationship between financial literacy and entrepreneurial orientation on MSME performance.
  • These findings underscore the importance of integrated support systems for MSMEs, including financial literacy and innovation.

Abstract

This study investigates the influence of financial literacy and entrepreneurial orientation on the performance of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia, with business innovation acting as a mediating variable. A quantitative research design was employed, using data collected from 200 MSME owners and managers across diverse sectors through structured questionnaires based on a 5-point Likert scale. The data were analyzed using Structural Equation Modeling with Partial Least Squares (SEM-PLS 3.0). The results reveal that both financial literacy and entrepreneurial orientation have a positive and significant effect on MSME performance. Furthermore, business innovation significantly mediates the relationship between the two independent variables and business performance. These findings underscore the importance of financial capability, strategic entrepreneurial behavior, and innovation adoption in enhancing MSME sustainability and competitiveness. The study provides practical recommendations for policymakers and business development stakeholders to support integrated capacity-building efforts for MSMEs in Indonesia.

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Cite This Study

Nanang Qosim (2025) studied this question.

synapsesocial.com/papers/68bb46c96d6d5674bccff368https://doi.org/10.58812/wsjee.v3i03.2136
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Also Consider

Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1The Influence of the Use Financial Technology, Owner Financial Literacy, and Risk Tolerance on the Performance of MSMEs in Indonesia2024 · 4 citations
  2. 2Navigating the Business Landscape: The Influence of Infrastructure, Financial Inclusion, Innovation, and Government Policy on Indonesian MSMEs2024 · 5 citations
  3. 3LINKING ENTREPRENEURIAL ORIENTATION TO MSME PERFORMANCE IN THE CONTEXT OF MICRO, SMALL AND MEDIUM ENTERPRISES: THE MEDIATING ROLES OF INNOVATION AND CONTEXTUAL AMBIDEXTERITY2025
  4. 4Digital Marketing, Entrepreneurial Orientation, and Business Capital on the Financial Performance of MSMEs in Indonesia2024 · 1 citations
  5. 5Unlocking Business Success: The Role of Financial Literacy, Innovation Capability, and Government Support2024