Building Resilient Entrepreneurship: How Financial Literacy and Digital Inclusion Drive Performance in SMEs?

Abstract

Financial literacy and digital financial inclusion play an important role in SME performance, with financial resilience as a moderating variable. This study aims to evaluate the effect of financial literacy and financial inclusion on entrepreneurial performance. Using a quantitative approach, primary data were collected from 203 SME owners in Sidoarjo and Surabaya through questionnaires. The results of this study indicate that financial literacy has a significant positive impact on digital financial inclusion. Furthermore, digital financial inclusion is proven to significantly influence the improvement of SME entrepreneurial performance. Interestingly, although financial resilience was initially hypothesized to strengthen the relationship between digital financial inclusion and SME performance, the results of the path test showed that its role as a moderating variable was not statistically significant on entrepreneurial performance. This finding emphasizes the importance of efforts to improve financial literacy and expand access to digital financial services in supporting sustainable SME business growth and performance. However, this study also highlights the urgency to continue strengthening SME financial resilience so that they are better able to face various economic challenges and achieve long-term stability The practical implications of this research are recommendations to help SMEs face economic challenges and achieve sustainable growth.