From coopetition to economic sustainability in cooperative–MSME networks: the moderating roles of governance quality and absorptive capacity

Cooperative–MSME networks have re-emerged as important organisational arrangements for sustaining competitiveness amid market rivalry and economic volatility. This study examines whether coopetition intensity affects economic sustainability through knowledge sharing and innovation performance, and whether cooperative governance quality and absorptive capacity strengthen these relationships. A quantitative explanatory survey was conducted using firm-level data from 258 MSMEs affiliated with multipurpose cooperatives in Central Java, Indonesia. The moderated serial mediation model was analysed using PLS-SEM in SmartPLS with bootstrapped tests of direct, indirect, and interaction effects. The results show that coopetition intensity positively influences knowledge sharing, which improves innovation performance and economic sustainability. Governance quality strengthens the relationship between coopetition intensity and knowledge sharing, while absorptive capacity strengthens the relationship between knowledge sharing and innovation performance. Although the direct effect of coopetition intensity on economic sustainability is not significant, its sequential indirect effect through knowledge sharing and innovation performance is significant. These findings indicate that coopetition supports economic sustainability when cooperative interaction facilitates knowledge exchange and MSMEs can translate shared knowledge into innovation. Cooperative leaders and policymakers should therefore strengthen governance, knowledge-sharing mechanisms, and MSME learning capabilities.