The effect of innovation capability on business performance: The role of social capital and entrepreneurial leadership on SMEs in Indonesia

The presence of small and medium-sized enterprises (SMEs) in Indonesia will contribute to the movement
of the Indonesian economy, so its growth is an essential part that must be considered by the government. The
goal of this study was to explore the role of innovative capabilities in improving the performance of
Indonesian SMEs. A variable approach to social capital, entrepreneurial leadership, innovation ability and
SME efficiency was used in this research. The research included a sample of 352 small and medium-sized
enterprises in Pekanbaru, Indonesia, consisting of 19 medium-sized enterprises and 333 small enterprises out
of a total population of 2887 small and medium-sized enterprises (the sampling methodology used was
chance sampling and simple random sampling methods). The findings show that social capital does not
explicitly have a substantial impact on the business performance of SMEs in Pekanbaru, but if it is mediated
by creative capacities, social capital indirectly plays a role in improving the performance of SMEs.
Entrepreneurial leadership has a big influence on SMEs.
Keywords: Innovation Capability, SMEs Performance
Social Capital, Entrepreneurial Leadership