From Resources to Performance: How Social and Intellectual Capital Drive MSME Innovation
How to cite (SHIRKAH) :
Micro, small, and medium enterprises (MSMEs) operate under persistent resource constraints, making the effective mobilization of intangible resources increasingly important for sustaining business performance. This study examines how social capital and intellectual capital contribute to MSME performance and investigates whether innovation serves as a mechanism through which these resources are transformed into business outcomes. It also examines the role of managerial ability in strengthening the relationship between social capital and MSME performance. Drawing on Resource-Based Theory, the study employed a quantitative explanatory design involving 204 ultra-micro food and beverage entrepreneurs. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS. The findings demonstrate that social capital contributes to both innovation and MSME performance, while intellectual capital strengthens innovation and has a particularly important contribution to performance. Innovation also functions as a significant pathway linking both social capital and intellectual capital with MSME performance. Managerial ability contributes directly to performance but does not significantly moderate the social capital–performance relationship. These findings indicate that MSME performance depends not simply on possessing relational and knowledge-based resources, but on the capacity to mobilize and transform these resources through innovation and effective managerial action. The study extends the resource-based perspective by highlighting innovation as a critical resource-conversion mechanism in ultra-micro enterprises.
Agustia, D., Haryanto, S. D., Permatasari, Y., & Midiantari, P. N. (2022). Product innovation, firm performance and moderating role of technology capabilities. Asian Journal of Accounting Research, 7(3), 252–265. https://doi.org/10.1108/AJAR-12-2021-0266 DOI: https://doi.org/10.1108/AJAR-12-2021-0266
Ahmed, S. S., & Guozhu, J. (2020). Intellectual capital and business performance: the role of dimensions of absorptive capacity. Journal of Intellectual Capital, 21(1), 23-29. https://doi.org/10.1108/JIC-11-2018-0199 DOI: https://doi.org/10.1108/JIC-11-2018-0199
Aisjah, S., Prabandari, S. P., & Wati, C. R. (2024). Social capital on firm performance : The role of knowledge sharing behavior as mediation. Journal of Law and Sustainable Development, 14(1), 1–21. https://doi.org/10.55908/sdgs.v12i1.1100 DOI: https://doi.org/10.55908/sdgs.v12i1.1100
Ali, S., & Castro, G. M. (2025). Debt financing as moderator in the relationship between intellectual capital and SMEs performance. Management Research, 48(13), 1–19. https://doi.org/10.1108/MRR-07-2022-0505 DOI: https://doi.org/10.1108/MRR-07-2022-0505
Aljuboori, Z. M., Singh, H., Haddad, H., Al-Ramahi, N. M., & Ali, M. A. (2022). Intellectual Capital and Firm Performance Correlation: The mediation role of innovation capability in Malaysian manufacturing SMEs perspective. Sustainability (Switzerland), 14(1). https://doi.org/10.3390/su14010154 DOI: https://doi.org/10.3390/su14010154
Amimakmur, S. A., Saifi, M., Damayanti, C. R., & Hutahayan, B. (2024). Assessing the moderating effect of IT innovation on the interplay among company size , financial performance , and company value. Journal of Open Innovation: Technology, Market, and Complexity, 10(3), 100318. https://doi.org/10.1016/j.joitmc.2024.100318 DOI: https://doi.org/10.1016/j.joitmc.2024.100318
Amoa-gyarteng, K., Dhliwayo, S., & Adekomaya, V. (2024). Innovative marketing and sales promotion : Catalysts or inhibitors of SME performance in Ghana. Cogent Business & Management, 11(1). https://doi.org/10.1080/23311975.2024.2353851 DOI: https://doi.org/10.1080/23311975.2024.2353851
Analia, D., Syaukat, Y., Fauzi, A., & Rustiadi, E. (2020). The impact of social capital on the performance of small micro enterprises. Jurnal Ekonomi Malaysia, 54(1), 81–96. https://doi.org/10.17576/JEM-2020-5401-6 DOI: https://doi.org/10.17576/JEM-2020-5401-6
Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. In Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108 DOI: https://doi.org/10.1177/014920639101700108
Ekaterina, A., Daria, P., Wim, V., & Podmetina, D. (2021). Open innovation in SMEs: A process view towards business model innovation. Journal of Small Business Management, 6(1), 2519-2560. https://doi.org/10.1080/00472778.2021.1913595 DOI: https://doi.org/10.1080/00472778.2021.1913595
Faturachman, D. (2023). The effect of innovation on company performance with ownership concentration as a moderating variable. Jurnal Akuntansi Dan Keuangan Indonesia, 20(2), 206–221. https://doi.org/10.21002/jaki.2023.11 DOI: https://doi.org/10.21002/jaki.2023.11
Hair, J. (2023). Partial Least Squares Structural Equation Modelling (PLS-SEM) in second language and education research: Guidelines using an applied example. January. https://doi.org/10.1016/j.rmal.2022.100027 DOI: https://doi.org/10.1016/j.rmal.2022.100027
Hama, N. O., & Cavusoglu, B. (2023). The sustainability of intellectual capital in enhancing organizational innovation: A case study of Sulaimani Polytechnic University. Sustainability (Switzerland), 15(15). https://doi.org/10.3390/su151512068 DOI: https://doi.org/10.3390/su151512068
Hao, X. (2024). How does managerial ability affect R & D efficiency of emerging-economy high-tech enterprises. Technology Analysis & Strategic Management, April, 1–15. https://doi.org/10.1080/09537325.2024.2306611 DOI: https://doi.org/10.1080/09537325.2024.2306611
Haque, F., & Puwanenthiren, P. (2025). Managerial Ability and Audit Outcomes. Journal of Accounting, Auditing & Finance 2025, 41(2), 1–40. https://doi.org/10.1177/0148558X251335528 DOI: https://doi.org/10.1177/0148558X251335528
Hasan, M. M., & Alam, N. (2025). Managerial Ability and Debt Choice. 61(2). https://doi.org/10.1111/abac.12334 DOI: https://doi.org/10.1111/abac.12334
Hutahayan, B. (2021). The relationships between market orientation, learning orientation, financial literacy, on the knowledge competence, innovation, and performance of small and medium textile industries in Java and Bali. Asia Pacific Management Review, 26(1), 39–46. https://doi.org/10.1016/j.apmrv.2020.07.001 DOI: https://doi.org/10.1016/j.apmrv.2020.07.001
Ibeku, S. E. & Nwagwu, W. E. (2024). Innovative culture , innovative behaviour , social capital and performance of small and medium ICT enterprises in Lagos, Nigeria. Information Development, 42(3), 1–28. https://doi.org/10.1177/02666669241266819 DOI: https://doi.org/10.1177/02666669241266819
Jannah, M., Hakim, L., & Nurkholif, P. P. (2023). Implementation of the administration application for the Taman Harapan Baru (THB) MSME association in Bekasi City. Pengabdian Nasional (JPN) Indonesia, 4(2), 356–363. https://doi.org/10.35870/jpni.v4i2.211 DOI: https://doi.org/10.35870/jpni.v4i2.211
Ji, W., & Suwandej, N. (2024). Model of the mediating role of open innovation between social capital and smes performance success inguangdong, china. International Conference on Management, Innovation, Economics and Social Sciences, 1193–1201.
Kadiyono, A. L., & Susanto, H. (2025). Human capital and entrepreneurial performance : the mediating effect of entrepreneurial innovation in Indonesia. Cogent Social Sciences, 11(1), 1–25. https://doi.org/10.1080/23311886.2025.2474191 DOI: https://doi.org/10.1080/23311886.2025.2474191
Kanini, K. S. (2022). Social capital, organizational innovation and performance of manufacturing MSMEs in Kenya. International Journal of Social Science and Education Research Studies, 02(10), 517–534. https://doi.org/10.55677/ijssers/v02i10y2022-04 DOI: https://doi.org/10.55677/ijssers/V02I10Y2022-04
Khalique, M., J. & Abdul, J. (2020). Intellectual capital in tourism SMEs in Azad Jammu and Kashmir, Pakistan. Journal of Intellectual Capita, 21(3), 333–355. https://doi.org/10.1108/JIC-11-2018-0206 DOI: https://doi.org/10.1108/JIC-11-2018-0206
Khalique, M. (2022). The impact of innovation, organizational, technological capital on innovation performance of SMEs : The mediating effect of innovative intelligence. International Journal of Business and Society, 23(1), 427–443. https://doi.org/10.33736/ijbs.4623.2022 DOI: https://doi.org/10.33736/ijbs.4623.2022
Liu, L., Zhang, J., & Xu, J. (2022). Intellectual capital and financial performance of Chinese manufacturing SMEs : An analysis from the perspective of different industry types. Sustainability Article, 14(8), 1–17. https://doi.org/https://doi.org/10.3390/ su141710657 DOI: https://doi.org/10.3390/su141710657
Muna, N., Sukresna, I. M., & Praswati, A. N. (2024). Collaborative marketing innovation : How to energize social capital to enhance MSME’s performance ? Asian Management and Business Review, 4(2), 205–220. https://doi.org/10.20885/AMBR.vol4.iss2.art3 DOI: https://doi.org/10.20885/AMBR.vol4.iss2.art3
Ojokuku, R. M., Olomu, J. B., & & David, J. O. (2024). Dimension of social capital and performance of manufacturing Small And Medium Enterprises in lagos and oyo states, Nigeria. International Journal of Humanities, Literature and Art Research, 06(6), 53–74. https://doi.org/10.70382/mejhlar.v6i6.004 DOI: https://doi.org/10.70382/mejhlar.v6i6.004
Ozgun, A. H., Tarim, M., Delen, D., & Zaim, S. (2022). Social capital and organizational performance: The mediating role of innovation activities and intellectual capital. Healthcare Analytics, 2(March), 100046. https://doi.org/10.1016/j.health.2022.100046 DOI: https://doi.org/10.1016/j.health.2022.100046
Pasko, O. (2024). Does managerial ability matter in corporate sustainability-related dynamics ? An empirical investigation. Business Perspective, 22(January), 128-146. https://doi.org/10.21511/ppm.22(1).2024.12 DOI: https://doi.org/10.21511/ppm.22(1).2024.12
Prasad, R., & Mondal, A. (2025). Does intellectual capital impact the financial performance of Indian-listed SMEs ? Evidence from GMM estimation. Learning and Intellectual Capital, Vol., 22 (1)(May), 1–25. https://doi.org/10.1504/IJLIC.2025.146010 DOI: https://doi.org/10.1504/IJLIC.2025.146010
Rasoulkhan, M. B. (2024). Managerial ability and income smoothing. Journal of Accounting Knowledge, 15(1). https://doi.org/10.22103/jak.2023.20986.3848
Ratnawati, R., Rokhman, M. T. N., & Rahayu, Y. N. (2021). Managerial ability as an effort to improve SME performance through competitive advantage in the pandemic time Covid 19. Jurnal Aplikasi Manajemen, 19(2), 363–375. https://doi.org/10.21776/ub.jam.2021.019.02.12 DOI: https://doi.org/10.21776/ub.jam.2021.019.02.12
Rehman, S. U., Elrehail, H., & Alsaad, A. (2021). Intellectual capital and innovative performance: A mediation- moderation perspective. Journal of Intellectual Capital, 23(5), 998-1024. https://doi.org/10.1108/JIC-04-2020-0109 DOI: https://doi.org/10.1108/JIC-04-2020-0109
Rideg, A., Szerb, L., & Varga, A. R. (2023). The role of intellectual capital on innovation: Evidence from Hungarian SMEs. Tec Empresarial, 17(2), 1–19. https://doi.org/10.18845/te.v17i2.6695 DOI: https://doi.org/10.18845/te.v17i2.6695
Rosari, R., Nugrahanti, T. P., Noor, L. S., & Zaroni, A. N. (2024). The Effect of Intellectual Capital on MSME Performance Through Innovation as an Intervening Variable. International Journal of Social Science and Business, 8(1), 161–168. https://doi.org/10.23887/ijssb.v8i1.68776 DOI: https://doi.org/10.23887/ijssb.v8i1.68776
Rosyidiana, R. N., & Narsa, I. M. (2024). Micro, small, and medium-sized enterprises (MSMEs) during the post-pandemic economic recovery period: digitalization, literation, innovation, and its impact on financial performance. Cogent Business & Management, 11(1). https://doi.org/10.1080/23311975.2024.2342488 DOI: https://doi.org/10.1080/23311975.2024.2342488
Rustiarini, N. W., Bhegawati, D. A. S., & Mendra, N. P. Y. (2022). Does green innovation improve SME performance? Economies, 10(12). https://doi.org/10.3390/economies10120316 DOI: https://doi.org/10.3390/economies10120316
Ruwanti, S., & Harymawan, I. (2024). Does managerial ability play a role in increasing the value relevance of intellectual capital ? International Journal of Learning and Intellectual Capital, 21 (1), 45–53. https://doi.org/10.1504/IJLIC.2023.10058303 DOI: https://doi.org/10.1504/IJLIC.2024.136383
Saefullah, E. (2022). Micro, Small and Medium Enterprise Management. 1–23.
Saleh, I., & Koliby, A. (2024a). Unveiling the linkages between entrepreneurial culture, innovation capability, digital marketing capability and sustainable competitive performance of manufacturing SMEs: evidence from emerging countries. Sustainable Competitive Performance, July. https://doi.org/10.1108/BL-08-2023-0241
Saleh, I., & Koliby, A. (2024b). Unveiling the linkages between entrepreneurial culture, innovation capability, digital marketing capability and sustainable competitive performance of manufacturing SMEs: Evidence from emerging countries. The Bottom Line, 37(4), 1–29. https://doi.org/10.1108/BL-08-2023-0241 DOI: https://doi.org/10.1108/BL-08-2023-0241
Sekaran & Bougie, 2016. (2016). Research Methods For Business : A Skill-Building Approach. In Sekaran dan Bougie.
Sewpersadh, N. S. (2025). Managerial ability , intellectual property rights , R & D : does fi rm age play a role ? 34(7), 25–51. https://doi.org/10.1108/CR-10-2023-0248 DOI: https://doi.org/10.1108/CR-10-2023-0248
Shahbaz, M. H., & Ahmad, S. (2024). Green intellectual capital heading towards green innovation and environmental performance : assessing the moderating effect of green creativity in SMEs of Pakistan. International Journal of Innovation, 17(3), 683-704. https://doi.org/10.1108/IJIS-08-2023-0169 DOI: https://doi.org/10.1108/IJIS-08-2023-0169
Shehzad, M. U., Zhang, J., & Ahmad, M. S. (2022). Linking green intellectual capital , ambidextrous green innovation and firms green performance: Evidence from Pakistani manufacturing firms. Journal of Intellectual Capital, November, 1–29. https://doi.org/10.1108/JIC-02-2022-0032 DOI: https://doi.org/10.1108/JIC-02-2022-0032
Sinuraya, C., & Mayangsari, S. (2024). The effect of earnings smoothing and earnings informativeness on firm value with managerial ability as a moderating variable. International Journal of Economics and Financial Issues, 14(2), 178–185. https://doi.org/10.32479/ijefi.15746 DOI: https://doi.org/10.32479/ijefi.15746
Sohu, J. M., Hongyun, T., Junejo, I., Akhtar, S., Ejaz, F., Dunay, A., & Hossain, B. (2024). Driving sustainable competitiveness : unveiling the nexus of green intellectual capital and environmental regulations on greening SME performance. Frontier in Environmental Science, February, 1–13. https://doi.org/10.3389/fenvs.2024.1348994 DOI: https://doi.org/10.3389/fenvs.2024.1348994
Susanto, H., Mubarok, A. A., Oetomo, H., & Kurniawan, D. (2024). The Role of Intellectual Capital in Mediating the Impact of Knowledge Management and Innovation in the Halal Batik Industry of Yogyakarta. Global Review of Islamic Economics and Business, 12(1), 018-033. https://doi.org/10.14421/grieb.2024.121-02 DOI: https://doi.org/10.14421/grieb.2024.121-02
Vijayakumar, V., & Chandrasekar, K. (2022). Moderating role of commercial capabilities on firm performance through innovative capability in manufacturing MSMEs. International Journal of Professional Business Review, 7(3), 1–17. https://doi.org/10.26668/businessreview/2022.v7i3.0620 DOI: https://doi.org/10.26668/businessreview/2022.v7i3.0620
Welhelmina, M., Manafe, N., Rizani, A., Purnawati, E., Kristen, U., Wacana, A., Raya, U. P., & Agama, S. T. (2024). Analysis of the Influence of Technical Expertise, Market Orientation, Social Capital, and Innovation on the Performance of Micro and Small Businesses in the Technology Sector. International Journal Law and Education, 5(1), 983–995. https://ijble.com/index.php/journal/index DOI: https://doi.org/10.56442/ijble.v5i1.493
Xu, J., Haris, M., & Liu, F. (2023). Intellectual capital efficiency and firms' financial performance based on business life cycle. Journal of Intellectual Capital, 24(3), 653-682. https://doi.org/10.1108/JIC-12-2020-0383 DOI: https://doi.org/10.1108/JIC-12-2020-0383
Yilmaz, A. A. (2023). The relation between intellectual capital and digital transformation : a bibliometric analysis. EmeraldPublishingLimited 1757-2223, September. https://doi.org/10.1108/IJIS-08-2022-0145 DOI: https://doi.org/10.1108/IJIS-08-2022-0145
Zahid, Z., Zhang, J., Shahzad, M. A., Junaid, M., & Shrivastava, A. (2024). Green Synergy: Interplay of corporate social responsibility, green intellectual capital, and green ambidextrous innovation for sustainable performance in the industry 4 . 0 era. PLOS ONE, 19(8), 1–23. https://doi.org/10.1371/journal.pone.0306349 DOI: https://doi.org/10.1371/journal.pone.0306349
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Copyright
Copyright aims to protect the specific way the article has been written to describe an experiment and the results. Shirkah: Journal of Economics and Business is committed to its authors to protect and defend their work and their reputation and takes allegations of infringement, plagiarism, ethical disputes, and fraud very seriously. Automotive Experiences is published under the terms of the Attribution-NonCommercial 4.0 International (CC BY-NC 4.0). Authors retain copyright and grant the journal right of first publication (online and print) with the work simultaneously. We use the restrictive license (non-commercial) as follows:
BY (attribution): Users are allowed to share, distribute and redistribute the published article in any medium or format, with an identification of the authors and its initial publication in this journal. Authors are encouraged to post and distribute their articles immediately after publication (e.g., institutional or public repositories, personal websites). Authors are allowed to enter into additional contractual arrangements for the non-exclusive distribution of the published and an acknowledgment of its initial publication in this journal.
NC (non-commercial): Users are not allowed to use the article commercially without the permission of the authors. Authors agree explicitly that the published article is indexed worldwide in databases, repositories and indexation services, even if these services operate on a commercial basis. Authors grant Shirkah: Journal of Economics and Business explicit the right to include the published articles in databases, repositories and indexation services. License
License to Publish
The non-commercial use of the article will be governed by the Attribution-NonCommercial 4.0 International (CC BY-NC 4.0). The author hereby grants Shirkah: Journal of Economics and Business an exclusive publishing and distribution license in the manuscript include tables, illustrations or other material submitted for publication as part of the manuscript in print, electronic and all other media (whether now known or later developed), in any form, in all languages, throughout the world, for the full term of copyright, and the right to license others to do the same, effective when the article is accepted for publication. This license includes the right to enforce the rights granted hereunder against third parties.
Author's Warranties
The author warrants that the article is original, written by stated author/s, has not been published before, contains no unlawful statements, does not infringe the rights of others, is subject to copyright that is vested exclusively in the author and free of any third party rights, and that any necessary written permissions to quote from other sources have been obtained by the author(s).
User Rights
Under the Creative Commons Attribution-Non Commercial 4.0 International (CC BY-NC 4.0) license, the author(s) and users are free to share (copy and redistribute the material in any medium or format) and adapt (remix, transform, and build upon the material). Users must give appropriate credit, provide a link to the license, and indicate if changes were made.
Rights of Authors
Authors retain the following rights:
- Copyright, and other proprietary rights relating to the article, such as patent rights,
- The right to use the substance of the article in future own works, including lectures and books,
- The right to reproduce the article for own purposes, provided the copies are not offered for sale, and
- The right to self-archive the article.
Co-Authorship
If the article was prepared jointly with other authors, the signatory of this form warrants that he/she has been authorized by all co-authors to sign this agreement on their behalf, and agrees to inform his/her co-authors of the terms of this agreement.
Royalties
This agreement entitles the author to no royalties or other fees. To such extent as legally permissible, the author waives his or her right to collect royalties relative to the article in respect of any use of the article by Shirkah: Journal of Economics and Business or its sublicensee.
Miscellaneous
Shirkah: Journal of Economics and Business will publish the article (or have it published) in the Journal if the article's editorial process is successfully completed and Shirkah: Journal of Economics and Business or its sublicensee has become obligated to have the article published. Shirkah: Journal of Economics and Business may conform the article to a style of punctuation, spelling, capitalization, and usage that it deems appropriate.