The Influence of Leadership Strategies and Social Capital on the Business Performance and Resilience of Indonesian MSMEs

Abstract

This study aims to study how leadership strategies and business capital influence the performance and resilience of Micro, Small, and Medium-sized Enterprises (MSMEs) in the Bangka Belitung Islands Province, Indonesia, particularly in dealing with rapid financial fluctuations in 2023. The goal is to offer valuable insights for managing MSMEs effectively. This study used quantitative research to collect primary data from 101 MSMEs with valid business licenses in the Bangka Belitung Islands Province, Indonesia. It employed the partial least squares (PLS) analysis method, covering measurements and structural models. A leader’s management style does not directly affect how well a business can handle challenges, and having good business connections does not make a big difference. However, certain aspects of a leader’s plan can improve the business’s overall performance. Surprisingly, the business’s current performance does not strongly impact its ability to handle tough situations, and it does not change how a leader’s management style and connections influence this resilience. These findings help us understand how these factors interact in small businesses in the province. This study demonstrates the connections between leadership strategies, social capital, business performance, and resilience in a specific location. Small business leaders in the Bangka Belitung Islands Province can utilize this research to enhance their strategies. Improved resilience among MSMEs can contribute to the economic strength and growth of the local community in the Bangka Belitung Islands Province. This study is unique because it looks closely at one particular place and how leadership, social capital, business performance, and resilience are all connected in small businesses. The results help manage these businesses, especially when dealing with the challenges of fast-changing finances in 2023.