Social capital and the improvement of SMEs performance: A multi group analysis

This research examines the relationship between social capital and the success of SMEs in developing countries, particularly Indonesia. Specifically, this research incorporates innovation capability and financial literacy as mediating variables. This research employs a survey design and cross-sectional data gathered through questionnaires from 200 brass copper craftsmen in the Central Java Province. The research data were processed using PLS-SEM through a multivariate analytical approach and multi-group analysis (MGA). The research findings indicate that social capital focusing on the domestic sector has a positive and significant influence on the performance of SMEs. In contrast, the scenario differs in the foreign sector. The research’s results offer implications for the government and SMEs concerning the enhancement of social capital, which remains underutilized for business objectives. It is also essential to improve financial literacy and innovation capabilities within the brass copper creative industry to enhance competitiveness in export markets.