The Effects of Human, Social, and Financial Capital on SME Performance in Indonesia

Abstract

Small and Medium Enterprises (SMEs) play an important role in Indonesia’s economic development, yet their performance is often constrained by limited access to strategic resources. From a resource-based perspective, human capital, social capital, and financial capital represent critical resources that may collectively shape SME performance. This study examines the influence of human capital, social capital, and financial capital on the performance of SMEs in Indonesia, addressing a persistent gap in prior research that has predominantly tested each capital type in isolation. Grounded in the Resource-Based View and the tripartite capital framework, this study employed a quantitative cross-sectional survey design. Data were collected from 465 owners and top managers of Indonesian SMEs, explicitly excluding micro-enterprises, and analyzed using Partial Least Squares Structural Equation Modeling. The results confirm that all three capital types positively and significantly influence SME performance. Social capital emerged as the strongest predictor, followed by human capital and financial capital. Together, the three capital types explained 52.2% of the variance in SME performance, demonstrating their complementary nature. The findings conclude that human capital, social capital, and financial capital each have a positive and significant effect on SME performance in Indonesia, with social capital demonstrating the strongest influence.