Does financial literacy drive SME success in resource-rich regions?

Lusiana Desy Ariswati; Muhammad Ramadhani Kesuma; Rohana Nur  Aini; Ellen D. Oktanti Irianto; Chandika Mahendra Widaryo; Margareth Henrika

doi:10.55942/pssj.v5i11.714

Authors

Lusiana Desy Ariswati Mulawarman University https://orcid.org/0009-0006-1476-4396
Muhammad Ramadhani Kesuma Mulawarman University https://orcid.org/0009-0001-5816-5786
Rohana Nur Aini Mulawarman University https://orcid.org/0009-0004-4676-5743
Ellen D. Oktanti Irianto Mulawarman University https://orcid.org/0009-0002-3710-1772
Chandika Mahendra Widaryo Mulawarman University https://orcid.org/0009-0004-4049-0355
Margareth Henrika Mulawarman University https://orcid.org/0009-0006-0325-2459

DOI:

https://doi.org/10.55942/pssj.v5i11.714

Keywords:

Financial Literacy, Product Innovation, Risk Management, Financial Performance, SMEs

Abstract

This study investigates the relationships among financial literacy, product innovation, risk management, and financial performance in small and medium-sized enterprises (SMEs) located in East Kalimantan, a region in Indonesia characterized by its resource abundance. While prior studies underscore the importance of financial literacy and innovation for SME success, there is limited research focusing on non-urban, commodity-reliant settings. Using a quantitative methodology, this study employs Partial Least Squares Structural Equation Modeling to analyze data gathered from 200 SME owners in non-extractive industries through a structured survey. This study explores whether financial literacy and product innovation directly affect financial performance and whether risk management mediates these dynamics. The findings reveal that financial literacy has a significant positive effect on financial performance, whereas product innovation strengthens risk management but does not directly influence financial outcomes. Additionally, risk management does not mediate these relationships, indicating potential contextual constraints in resource-limited environments. These insights advance the understanding of SME operations in non-urban, resource-dependent regions and highlight the need for customized financial education and innovation. This study provides actionable recommendations for policymakers to enhance SME resilience through targeted strategies, addressing a key gap in the literature on economies tied to natural resources.

Author Biographies

Lusiana Desy Ariswati, Mulawarman University

Lusiana Desy Ariswati is a lecturer in the Department of Management, Faculty of Economics and Business, Mulawarman University, Samarinda, Indonesia. With expertise in capital markets and finance, her academic and research activities focus on financial instruments, market dynamics, and investment strategies in emerging economies.

Muhammad Ramadhani Kesuma, Mulawarman University

Muhammad Ramadhani Kesuma is a lecturer in the Department of Management, Faculty of Economics and Business, Mulawarman University, Samarinda, Indonesia. With a background in financial management and expertise in international financial management, his research encompasses qualitative and quantitative studies across various industrial sectors. His current interests include financial technology (fintech) and financial literacy, with a focus on fostering sustainable economic behaviors.

Rohana Nur Aini, Mulawarman University

Rohana Nur Aini is a lecturer in the Department of Management, Faculty of Economics and Business, Mulawarman University, Samarinda, Indonesia. Her expertise lies in organizational behavior, with research interests in leadership, employee engagement, and organizational culture in both public and private institutions.

Ellen D. Oktanti Irianto, Mulawarman University

Ellen D. Oktanti Irianto is a lecturer in the Department of Management, Faculty of Economics and Business, Mulawarman University, Samarinda, Indonesia. Her research expertise focuses on sustainable finance, particularly on integrating environmental, social, and governance (ESG) considerations into financial and investment practices.

Chandika Mahendra Widaryo, Mulawarman University

Chandika Mahendra Widaryo is a lecturer in the Department of Management, Faculty of Economics and Business, Mulawarman University, Samarinda, Indonesia. With expertise in corporate governance, compliance, and the ethics of financial management, his academic interests include transparency, accountability, and ethical practices in corporate financial systems.

Margareth Henrika, Mulawarman University

Margareth Henrika is a lecturer in the Department of Management, Faculty of Economics and Business, Mulawarman University, Samarinda, Indonesia. Specializing in household finance, her research explores financial decision-making at the household level, consumer behavior, and financial resilience in diverse socioeconomic contexts.

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