Social Capital and Improving MSME Performance Through Entrepreneurial Orientation

Abstract

This study aims to demonstrate the impact of social capital on the entrepreneurial orientation and performance of micro, small, and medium enterprises (MSMEs), with entrepreneurial orientation acting as a mediator. A quantitative methodology was employed to examine a diverse sample of MSME proprietors in Malang City, located in the East Java province of Indonesia. Utilising Structural Equation Modeling (SEM), research demonstrates that social capital influences both entrepreneurial orientation and the success of MSMEs. Furthermore, the entrepreneurial mindset influences the performance of MSMEs and mediates social capital and MSME performance. The research findings indicate that MSMEs in Malang City may effectively manage their human resources by using social capital. This is achieved through a confluence of elements encompassing the configuration of social networks, the accessibility of social resources, the cultivation of social aptitudes and conduct, the establishment of social identity, and adherence to social norms and values. Through participating in this activity, these MSMEs are able to cultivate an entrepreneurial mindset, leading to improved performance. MSMEs showcase their marketing efficacy by augmentation of revenue growth and expanding their consumer base. It is recommended that MSME participants adjust to environmental changes in order to promote future market orientation research and enhance MSME performance.