The Influence of Managerial Capabilities, Financial Literacy, and Risk Mitigation On Msmes Business Sustainability

Abstract

Purpose: The purpose of this study was to analyze the relationship between managerial capabilities on MSMEs business sustainability, the relationship between financial literacy on MSMEs business sustainability, the relationship between financial literacy on MSMEs business sustainability. Method: This research uses quantitative research methods. Quantitative research methods are used because in this study, the relationship between the variables to be studied has a causal relationship, to examine certain populations and samples, and aims to test the established hypotheses. The measurement scale in this study uses a Likert scale of 1 to 5 with categories namely strongly disagree, disagree, disagree, agree and strongly agree. With data collection techniques using online questionnaires. The analysis technique uses SEM (Structural Equation Modeling) with SmartPLS 3.0 software tools. Respondents in this study were 876 MSME owners who were determined by simple random sampling. Data analysis techniques use variable calculations based on variable operational definitions. Result: From the analysis that has been done, it can be concluded as follows. Managerial ability partially has a significant effect on the Defensive Strategy of MSMEs actors, Financial Literacy partially has a significant effect on the Survival Strategy of MSMEs actors. Partially, Risk Mitigation has a significant effect on the Survival Strategy for MSMEs actors Implication: To encourage an increase in MSMEs Business Sustainability, MSMEs management must encourage an increase in managerial capabilities, financial literacy, and risk mitigation variables. the higher the managerial ability, the more suitable the competitive strategy that is formulated and implemented in SMEs. Managers are the main actors of the company, thus the better the managerial ability of a manager, the company's performance will increase.