Financial and Digital Literacy as Drivers of SMEs’ Competitive Advantage: The Mediating Role of Human Capital
DOI:
https://doi.org/10.26740/jaj.v17n02.p474-486Keywords:
Financial literacy, Digital literacy, Human capital, Competitive advantage, SMEsAbstract
Introduction/Main Objectives: The increasing digital transformation and business competition require SMEs to possess strong financial and digital capabilities to maintain competitiveness. This study aims to examine the effects of financial literacy and digital literacy on SMEs’ competitive advantage, with human capital acting as a mediating variable. Background Problems: Despite the rapid growth of SME digitalization in Indonesia, many SMEs still face challenges in financial management, technology utilization, and human resource development, leading to low competitiveness. This study addresses the question of whether human capital mediates the relationship between financial literacy, digital literacy, and competitive advantage. Novelty: This study integrates financial literacy and digital literacy within a single framework and examines the mediating role of human capital, providing a more comprehensive explanation of SMEs’ competitive advantage. Research Methods: A quantitative approach was employed using survey data collected from SME owners in Java, Indonesia. The data were analyzed using Structural Equation Modeling based on Partial Least Squares (SEM-PLS). Finding/Results: The results indicate that financial literacy and digital literacy positively influence competitive advantage. Human capital also partially mediates the relationships between financial literacy and competitive advantage, as well as between digital literacy and competitive advantage. Conclusion: The findings suggest that strengthening financial literacy, digital literacy, and human capital simultaneously can enhance SMEs’ competitive advantage. These results provide practical implications for policymakers and SME development programs in promoting sustainable business competitiveness.
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