The mediating and moderating of absorptive capacity on human capital toward product innovation within MSMEs in Indonesia

Abstract

The purpose of this study is to explore the role of absorptive capacity as a mediating and moderating factor to enhance the impact of human resources on product innovation in MSMEs engaged in the culinary creative industry. This study adopts a quantitative approach and collects primary data through a survey conducted among a couple of MSMEs in the culinary creative industry. The data is later analyzed using Smart PLS. The findings indicate that human capital and absorptive capacity have an impact on product innovation. The relationship between human capital and product innovation is negatively moderated by absorptive capacity, which also mediates this relationship. The conclusion of this study highlights several key points. Firstly, it emphasizes that MSMEs possess significant potential for generating new and unique product innovations by leveraging increased human capital. Additionally, the study emphasises the importance for MSMEs in order to enhance their absorptive capacity by strengthening external connectivity within their organizations. Lastly, it points out that the moderating effect of absorptive capacity can potentially reduce the positive influence of human capital on product innovation.