Business Survival of Small and Medium-Sized Restaurants through a Crisis: The Role of Government Support and Innovation

Abstract

This study aimed to investigate the effects of government support for the business survival of SME restaurants in Indonesia. In this study, we analyzed the impact of government support on the innovation of SME restaurants as well as the impact of entrepreneurial self-efficacy on innovation. Furthermore, this study analyzed the impact of entrepreneurial self-efficacy and innovation on business survival. A total of 120 owners or managers of SME restaurants participated in this study. The sample was collected based on a purposive method. To analyze the relationship among latent variables, we implemented structural equation modeling (SEM). The results show that government support has a positive impact on business survival through marketing and process innovation. In addition, the business survival of SMEs is affected by marketing innovation, process innovation, and entrepreneurial self-efficacy. In this study, the entrepreneurial factor had the highest impact on SMEs’ survival. This study established the body of knowledge related to the positive effect of government support on innovation in the perspective of small and medium-sized restaurants in the emerging market countries and developed a model of business survival of SMEs during pandemic crises by integrating external factors (government support) and an internal factor (entrepreneurial self-efficacy) through marketing and process innovation in the food processing industry.