The Role of Social Capital and Digital Literacy on Entrepreneurial Performance

Objective: this study examines how social capital and digital literacy influence entrepreneurial performance directly and indirectly toward entrepreneurial orientation among small and medium enterprises (SMEs). Theoretical approach: this study is grounded in the Resource-Based View (RBV) and Social Capital Theory, extended by the dynamic capabilities perspective, to explain how social capital and digital literacy influence entrepreneurial orientation and, ultimately, the performance of SMEs. Method: data were collected through online and offline surveys, and a total of SME owners participated in this study. Structural equation modeling (SEM) was used to validate the research hypotheses. Results: social capital and digital literacy have a positive effect on SMEs’ owners’ entrepreneurial orientation. Furthermore, entrepreneurial orientation partially mediates the relationship between predictor variables (e.g., social capital and digital literacy) and outcome variables (e.g., entrepreneurial performance). Conclusions: the role of social capital, in terms of internal and external relationships, social networks, and values and beliefs, can improve the business performance of SMEs. In addition, the role of digital literacy in understanding information technology, communication, digital content creation, and social media use greatly influences SMEs’ performance.