The determinants of business performance among small and medium enterprise owners: Evidence from Indonesia

Type of the article: Research ArticleAbstractSmall and medium-sized enterprises (SMEs) play a pivotal role in driving economic growth, employment generation, and regional competitiveness in emerging economies such as Indonesia. Yet, they face increasing pressure to enhance innovation and performance amid dynamic market and sustainability demands. This study investigates the impact of supply chain management, corporate social responsibility, and intellectual capital on performance mediated by innovation. Data were collected through an online survey conducted in 2025 involving 453 SME owners across Indonesia and analyzed using a quantitative approach with structural equation modeling (SEM) through Smart PLS 4.0. The results demonstrate that supply chain management (t-statistic = 8.83, p = 0.004), corporate social responsibility (t-statistic = 5.15, p = 0.000), and intellectual capital (t-statistic = 5.64, p = 0.000) exert significant positive effects on innovation. Furthermore, SME performance is strongly influenced by supply chain management (t-statistic = 9.04, p = 0.000), directly affecting innovation. However, corporate social responsibility (t-statistic = 8.83, p = 0.004) and intellectual capital (t-statistic = 1.80, p = 0.070) do not affect innovation. Additionally, innovation partially mediates the relationship between supply chain management (t-statistic = 2.14, p = 0.030), corporate social responsibility (t-statistic = 2.14, p = 0.030), and intellectual capital (t-statistic = 2.36, p = 0.010) to performance. These findings highlight innovation as a critical transformational mechanism that converts strategic and intangible organizational resources into measurable performance gains within the SME context.