Financial Literacy, Digital Literacy and Financing Preferences Role to Micro and Small Enterprises’ Performance
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Mar 31, 2022
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Abstract
Purpose: This research aims to examine financial literacy, digital literacy and financing preferences influences toward micro and small enterprises (MSEs) performance
Design/methodology/approach: This research used quantitative method and SmartPLS were employed to test the hypotheses
Findings: financial literacy and digital literacy has significant positive influence to MSEs performance. External financing has negatively significant influence toward performance. Financial literacy is positively significant to internal financing.
Research limitations/implications: Due to limitations of response rate, this research model for external financing preferences results limited adjusted r-square. We suggest that next research can expand the samples, and variables.
Practical implications: This research implies that MSEs need literacy supports to get reliable information about market access, analyzing financial performance and budget, government policies which affect their financial condition, from universities and governments as policy-maker.
Originality/value: There were limited studies which examining MSEs performance for surviving in crisis period. This research provides data about financial literacy, digital literacy and financing preferences to enhance MSEs performance.
Paper type: Research paper
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References
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Amoah, C., & Mungai, J. N. (2020). Financial Literacy Training and Micro Insurance on The Financial Performance of SMEs in the Sekondi-Takoradi Metropolis, Ghana. International Journal of Research in Business and Social Science, 9(7), 247–256.
Baker, K. H., Kumar, S., & Rao, P. (2020). Financing Preferences and Practices of Indian SMEs. Global Finance Journal, 43. https://doi.org/10.1016/j.gfj.2017.10.003
Bannier, C. E., & Heyden, T. (2019). The Dynamics of SMEs’ Capital Structure and Performance: Evidence from a Panel VAR (No. 8; Behavioral and Social Finance & Accounting).
Curado, C. (2006). The Knowledge Based-View of The Firm: From Theoretical Origins to Future Implications (Department of Management Working Paper Series).
Delic, A., Peterka, S. O., & Kurtovic, I. (2016). Is There a Relationship between Financial Literacy, Capital Structure and Competitiveness of SMEs? Econviews-Review, XXIX(1), 37–50.
Endarwati, O. (2020, November). Akses Kredit Perbankan Masih Jadi Tantangan UMKM. Sindonews.Com.
Handayani, S. (2015). Analisis Faktor-Faktor yang Mempengaruhi Keputusan UMKM dalam Memilih Lembaga Keuangan Mikro Sebagai Sumber Pembiayaan (Studi Kasus Pada Pedagang di Pasar Simpang Limun Medan). Jurnal Akuntansi Dan Bisnis, 1(2), 98–112.
Jodua, Z. A., & Mostapha, N. F. (2020). The Effect of Access to Debt on Lebanese Small and Medium Enterprises Performance. ACRN Oxford Journal of Finance & Risk Perspectives, 9, 32–44.
Kanojia, S., Aggarwal, V., & Bhargava, A. (2020). Descendants of Financing Decision with Reference to Capital Structure: An Empirical Analysis of Indian SMEs. SEDME (Small Enterprises Development, Management & Extension Journal), 47(1), 33–42. https://doi.org/10.1177/0970846420930449
Kim, H. S., & Cho, K.-S. (2020). Financing Resources of SMEs and Firm Performance: Evidence from Korea. Asian Journal of Business and Accounting, 13(2), 1–26.
Kulathunga, K. M. M. C. ., Ye, J., Sharma, S., & Weerathunga, P. R. (2020). How Does Technological and Financial Literacy Influence SME Performance: Mediating Role of ERM Practices. Information, 11(297), 1–20.
Kumalasari, B., & Asandimitra, N. (2019). Faktor-Faktor yang Memengaruhi Kinerja UMKM di Kabupaten Bojonegoro. Jurnal Ilmu Manajemen, 7(3), 784–795.
Kumar, S., & Rao, P. (2015). A Conceptual Framework for Identifying Financing Preferences of SMEs. Small Enterprise Research, 22(1), 99–112. https://doi.org/http://dx.doi.org/10.1080/13215906.2015.1036504
Latan, H., & Ghozali, I. (2012). Partial Least Squares: Konsep, Metode dan Aplikasi Menggunakan Program WarpPLS 2.0 untuk Penelitian Empiris. Badan Penerbit Universitas Diponegoro.
LIPI, L. I. P. I. (2020). Survei Kinerja UMKM di Masa Pandemi Covid-19.
Mandiefe, S. P., & Bafon, J. C. (2015). Determinants of Internal Resources of Small and Medium Sized-Enterprises in Cameroon. Scholedge International Journal of Management & Development, 2(9), 37–52.
Nguyen, N., & Luu, N. (2013). Determinants of Financing Pattern and Access to Formal-Informal Credit: The Case of Small and Medium Sized Enterprises in VietNam. Journal of Management Research, 5, 240–259.
OECD INFE. (2019). OECD/INFE Survey Instrument to Measure the Financial Literacy of MSMEs.
Ohman, P., & Yazdanfar, D. (2017). Short- and Long-Term Debt Determinants in Swedish SMEs. Review of Accounting and FInance, 16(1), 106–124.
Penrose, E. (1959). The Theory of The Growth of The Firm. Oxford: Basil Blackwell Publisher.
Prihatiningtias, Y. W., & Wardhani, M. R. (2021). Understanding The Effect of Sustained Use of Cloud-Based Point of Sales on SMEs Performance during COVID-19 Pandemic. The Indonesian Accounting Review, 11(1), 33–46.
Ranatunga, R. V. S. P. ., Priyanath, H. M. S., & Megama, R. G. N. (2020). Digital Literacy, Business Uncertainty & Economic Performancec: An Empirical Study of Small Business in Sri Lanka. International Journal of Academic Research in Business & Social Sciences, 10(5), 51–76.
Rao, P., & Kumar, S. (2018). Reflection of owner’s attributes in financing decisions of SMEs. Small Enterprise Research, 25(1), 52–68. https://doi.org/10.1080/13215906.2018.1428908
Reddy, P., Sharma, B., & Chaudhary, K. (2020). Digital Literacy: A Review of Literature. International Journal of Technoethics, 11(2), 65–94.
Ringle, C. M., Wende, S., & Becker, J.-M. (2015). SmartPLS. SmartPLS 3.
Ripain, N., Amirul, S. M., & Mail, R. (2017). Financial literacy and SMEs’ potential entrepreneurs: The case of Malaysia. Journal of Administrative and Business Studies, 3(2), 60–68. https://doi.org/10.20474/jabs-3.2.1
Rita, M. R., & Huruta, A. D. (2020). Financing Access and SME Performance: A Case Study from Batik SME in Indonesia. International Journal of Innovation, Creativity and Change, 12(12), 203–224.
Santos, J. B., & Brito, L. A. L. (2012). Toward a Subjective Measurement Model for Firm Performance. Brazilian Administration Review, 9(6), 95–117. https://doi.org/https://doi.org/10.1590/S1807- 76922012000500007
Sariwulan, T., Suparno, Disman, Ahman, E., & Suwatno. (2020). Enterpreneurial Performance: The Role of Literacy and Skills. Journal of Asian Finance, Economics and Business, 7(11), 269–280.
Sharma, A. (2019). The Influence of Financial Literacy on the Performance of Smal and Medium-Scale Enterprises. The IUP Journal of Accounting Research & Audit Practices, XVIII(2), 52–61.
Siswanti, T. (2020). Analisis Pengaruh Faktor Internal dan Eksternal terhadap Kinerja Usaha Mikro Kecil dan Menengah (UMKM). Jurnal Bisnis Dan Akuntansi Unsurya, 5(2), 61–76.
Sohilaw, M. I., Nohong, M., & Sylvana, A. (2020). The Relationship between Financial Literacy, Rational Financing Decision, and Financial Performance: An Empirical Study of Small and Medium Enterprises in Makassar. Jurnal Pengurusan, 59, 1–15.
Tamara, Y., Agustanto, H., & Hadinugrono, B. (2019). Analisis Struktur Modal dan Profitabilitas Usaha Mikro, Kecil dan Menengah pada Era Pandemi Covid-19. Jurnal Bisnis Dan Manajemen, 19(2), 45–52.
Alavi, M., & Leidner, D. E. (2001). Review: Knowledge Management and Knowledge Management Systems. MIS Quarterly, 25(1), 107–136. https://doi.org/https://doi.org/10.2307%2F3250961
Amoah, C., & Mungai, J. N. (2020). Financial Literacy Training and Micro Insurance on The Financial Performance of SMEs in the Sekondi-Takoradi Metropolis, Ghana. International Journal of Research in Business and Social Science, 9(7), 247–256.
Baker, K. H., Kumar, S., & Rao, P. (2020). Financing Preferences and Practices of Indian SMEs. Global Finance Journal, 43. https://doi.org/10.1016/j.gfj.2017.10.003
Bannier, C. E., & Heyden, T. (2019). The Dynamics of SMEs’ Capital Structure and Performance: Evidence from a Panel VAR (No. 8; Behavioral and Social Finance & Accounting).
Curado, C. (2006). The Knowledge Based-View of The Firm: From Theoretical Origins to Future Implications (Department of Management Working Paper Series).
Delic, A., Peterka, S. O., & Kurtovic, I. (2016). Is There a Relationship between Financial Literacy, Capital Structure and Competitiveness of SMEs? Econviews-Review, XXIX(1), 37–50.
Endarwati, O. (2020, November). Akses Kredit Perbankan Masih Jadi Tantangan UMKM. Sindonews.Com.
Handayani, S. (2015). Analisis Faktor-Faktor yang Mempengaruhi Keputusan UMKM dalam Memilih Lembaga Keuangan Mikro Sebagai Sumber Pembiayaan (Studi Kasus Pada Pedagang di Pasar Simpang Limun Medan). Jurnal Akuntansi Dan Bisnis, 1(2), 98–112.
Jodua, Z. A., & Mostapha, N. F. (2020). The Effect of Access to Debt on Lebanese Small and Medium Enterprises Performance. ACRN Oxford Journal of Finance & Risk Perspectives, 9, 32–44.
Kanojia, S., Aggarwal, V., & Bhargava, A. (2020). Descendants of Financing Decision with Reference to Capital Structure: An Empirical Analysis of Indian SMEs. SEDME (Small Enterprises Development, Management & Extension Journal), 47(1), 33–42. https://doi.org/10.1177/0970846420930449
Kim, H. S., & Cho, K.-S. (2020). Financing Resources of SMEs and Firm Performance: Evidence from Korea. Asian Journal of Business and Accounting, 13(2), 1–26.
Kulathunga, K. M. M. C. ., Ye, J., Sharma, S., & Weerathunga, P. R. (2020). How Does Technological and Financial Literacy Influence SME Performance: Mediating Role of ERM Practices. Information, 11(297), 1–20.
Kumalasari, B., & Asandimitra, N. (2019). Faktor-Faktor yang Memengaruhi Kinerja UMKM di Kabupaten Bojonegoro. Jurnal Ilmu Manajemen, 7(3), 784–795.
Kumar, S., & Rao, P. (2015). A Conceptual Framework for Identifying Financing Preferences of SMEs. Small Enterprise Research, 22(1), 99–112. https://doi.org/http://dx.doi.org/10.1080/13215906.2015.1036504
Latan, H., & Ghozali, I. (2012). Partial Least Squares: Konsep, Metode dan Aplikasi Menggunakan Program WarpPLS 2.0 untuk Penelitian Empiris. Badan Penerbit Universitas Diponegoro.
LIPI, L. I. P. I. (2020). Survei Kinerja UMKM di Masa Pandemi Covid-19.
Mandiefe, S. P., & Bafon, J. C. (2015). Determinants of Internal Resources of Small and Medium Sized-Enterprises in Cameroon. Scholedge International Journal of Management & Development, 2(9), 37–52.
Nguyen, N., & Luu, N. (2013). Determinants of Financing Pattern and Access to Formal-Informal Credit: The Case of Small and Medium Sized Enterprises in VietNam. Journal of Management Research, 5, 240–259.
OECD INFE. (2019). OECD/INFE Survey Instrument to Measure the Financial Literacy of MSMEs.
Ohman, P., & Yazdanfar, D. (2017). Short- and Long-Term Debt Determinants in Swedish SMEs. Review of Accounting and FInance, 16(1), 106–124.
Penrose, E. (1959). The Theory of The Growth of The Firm. Oxford: Basil Blackwell Publisher.
Prihatiningtias, Y. W., & Wardhani, M. R. (2021). Understanding The Effect of Sustained Use of Cloud-Based Point of Sales on SMEs Performance during COVID-19 Pandemic. The Indonesian Accounting Review, 11(1), 33–46.
Ranatunga, R. V. S. P. ., Priyanath, H. M. S., & Megama, R. G. N. (2020). Digital Literacy, Business Uncertainty & Economic Performancec: An Empirical Study of Small Business in Sri Lanka. International Journal of Academic Research in Business & Social Sciences, 10(5), 51–76.
Rao, P., & Kumar, S. (2018). Reflection of owner’s attributes in financing decisions of SMEs. Small Enterprise Research, 25(1), 52–68. https://doi.org/10.1080/13215906.2018.1428908
Reddy, P., Sharma, B., & Chaudhary, K. (2020). Digital Literacy: A Review of Literature. International Journal of Technoethics, 11(2), 65–94.
Ringle, C. M., Wende, S., & Becker, J.-M. (2015). SmartPLS. SmartPLS 3.
Ripain, N., Amirul, S. M., & Mail, R. (2017). Financial literacy and SMEs’ potential entrepreneurs: The case of Malaysia. Journal of Administrative and Business Studies, 3(2), 60–68. https://doi.org/10.20474/jabs-3.2.1
Rita, M. R., & Huruta, A. D. (2020). Financing Access and SME Performance: A Case Study from Batik SME in Indonesia. International Journal of Innovation, Creativity and Change, 12(12), 203–224.
Santos, J. B., & Brito, L. A. L. (2012). Toward a Subjective Measurement Model for Firm Performance. Brazilian Administration Review, 9(6), 95–117. https://doi.org/https://doi.org/10.1590/S1807- 76922012000500007
Sariwulan, T., Suparno, Disman, Ahman, E., & Suwatno. (2020). Enterpreneurial Performance: The Role of Literacy and Skills. Journal of Asian Finance, Economics and Business, 7(11), 269–280.
Sharma, A. (2019). The Influence of Financial Literacy on the Performance of Smal and Medium-Scale Enterprises. The IUP Journal of Accounting Research & Audit Practices, XVIII(2), 52–61.
Siswanti, T. (2020). Analisis Pengaruh Faktor Internal dan Eksternal terhadap Kinerja Usaha Mikro Kecil dan Menengah (UMKM). Jurnal Bisnis Dan Akuntansi Unsurya, 5(2), 61–76.
Sohilaw, M. I., Nohong, M., & Sylvana, A. (2020). The Relationship between Financial Literacy, Rational Financing Decision, and Financial Performance: An Empirical Study of Small and Medium Enterprises in Makassar. Jurnal Pengurusan, 59, 1–15.
Tamara, Y., Agustanto, H., & Hadinugrono, B. (2019). Analisis Struktur Modal dan Profitabilitas Usaha Mikro, Kecil dan Menengah pada Era Pandemi Covid-19. Jurnal Bisnis Dan Manajemen, 19(2), 45–52.