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The Mediating Role of Innovation in Financial Literacy and Financial Performance: An Implementation in SMEs
Abstract
The purpose of this study was to determine the relationship between financial literacy, innovation capability, and financial performance; and to determine the effect of mediators of innovation capability on the relationship between financial literacy and financial performance with implementation in small and medium enterprises (SMEs). To test the hypothesis in the research model, a field study was conducted using a survey method with a total of 189 owners and managers, out of 189 SMEs operating in the manufacturing sector of tempe chips and dinoyo ceramics. The data collected from 189 owners and managers were analyzed using correlation and regression analysis with the SEM Structural Equation Model. The analysis was carried out using SPSS and AMOS software. As a result of this study, it is evident that innovation capability has a partial mediator effect on the dimensions of market orientation and export performance. This empirical finding contributes to the achievement of the competitive advantage of SMEs through increasing market-based innovation capabilities.
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