The Influence of Social Media and Business Strategy on Business Performance in Bantul, Yogyakarta, Indonesia: Innovation Capability as a Mediating Variable
Abstract
This study analyzes the influence of social media and business strategy on business performance, with innovation capability as a mediating variable, among 145 MSMEs in Bantul, Yogyakarta. Using Partial Least Squares–Structural Equation Modeling (PLS-SEM) via Smart PLS 4.1, all seven hypotheses were accepted. Social media positively impacted business performance (β=0.423; p<0.001) and innovation capability (β=0.661; p<0.001). Business strategy positively impacted business performance (β=0.313; p<0.001) and innovation capability (β=0.523; p<0.001). Innovation capability positively impacted business performance (β=0.255; p<0.01) and partially mediated the influence of both predictor variables. The findings strengthen the relevance of Resource-Based View (RBV) and Dynamic Capabilities theories in managing MSMEs in the digital era.
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