Unlocking Business Success: The Role of Financial Literacy, Innovation Capability, and Government Support

Abstract

Purpose: This study aims to analyse the effect of financial literacy and innovation capability on business performance with government support as a mediating variable.   Theoretical framework: Government Support as a mediation was analyzed the effect of financial literacy and innovation capability on business performance.   Method: A quantitative methods approach was used by distributing questionnaires to 110 Food & Beverage MSME in Jakarta Area. The data collection process was carried out using google form, then analysed using path analysis processed using Smart-PLS.   Result: This study found that financial literacy has positive impact on government support but innovation capability has not, then innovation capability and government support have the positive effect on MSME performance, but financial literacy has no impact on MSME performance. The mediation test found that government support mediates the effect of innovation capability and financial literacy on MSME performance.   Research, Practical & Social implications: This finding suggests that the government as a regulator should continue to increase its support for MSME actors so as to improve the performance of MSME businesses. This finding encourages MSME actors to have strong instincts in creating and implementing the latest innovations in their business to get government support in improving their business.   Originality/value: This study uses 3 business performance indicators using primary data which are usually used in analysing the company's secondary data, with sufficient validity and reliability results, the use of these indicators is also suitable in analysing business performance in primary data.