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The purpose of this study is to prove the effect of social capital on the ability of innovation and the performance of MSMEs and the ability of innovation as a mediator. Using a quantitative approach with a sample of 110 MSME owners in Malang City, East Java, Indonesia. By using Structural Equation Modeling (SEM) analysis, it shows that social capital has an influence on the ability of innovation and the performance of MSMEs and the ability of innovation has an influence on the performance of MSMEs and the ability of innovation is able to mediate the relationship between social capitals on the performance of MSMEs. Based on the research findings, suggestions are put forward that MSME actors must be able to adapt to environmental changes so that future researchers can conduct studies on the business environment and market orientation in order to improve MSME performance. |
