Predicting SME's business performance : integrating stakeholder theory and performance based innovation model

Empirical evidence and study investigating the effects of social capital on innovation and business performance remains limited. Moreover, the current debate about the role of innovation on business performance remains, given the application effects that would differ particular in SMEs. The study examines the implications of social capital in affecting business performance by integrating stakeholder theory and a performance-based innovation model. Subsequently, we examined strategic agility's role in moderating social capital and business performance's relationship. The present study used a quantitative approach that included 855 respondents out of 285 sample frames in Indonesia, representing three levels of SME management. Data collection was conducted using Likert scale questionnaires and analyzed by SmartPLS software. The study suggested that social capital combined with collaborative knowledge creation and technology adoption offer new insights to predict future innovation and business performance. All of this highlighted the critical role that was played by social capital in defining innovation and business performance and how collaborative knowledge creation can drive innovation.