The Influence of Entrepreneurial Leadership and Financial Capability on Business Performance with Innovation Ability as a Mediating Variable on Entrepreneurial Students of Universities in Jambi City
Keywords:
Business Performance, Entrepreneurial Leadership, Financial Capability, Innovation Capability, Mediating Role
Abstract
This study examines the influence of entrepreneurial leadership and financial capability on the business performance of students in Jambi City, with innovation capability as a mediating variable in the context of Resource-Based View. The study used a quantitative approach with a causal-explanatory design, involving 100 student entrepreneurs from various universities in Jambi City who had been running their businesses for at least six months. Data were collected through a closed-ended questionnaire and analyzed using Partial Least Squares-based Structural Equation Modeling (SEM).-PLS) to test the measurement model and structural model. The results show that entrepreneurial leadership (t = 2.821; p = 0.005) and financial capability (t = 2.135; p = 0.033) have a positive and significant effect on business performance, and each-each significantly influenced innovation capability (t = 2.976; p = 0.003 and t = 7.852; p = 0.000). Innovation then had a positive and significant influence on performance (t = 3.349; p = 0.001) and acted as a partial mediator between entrepreneurial leadership and performance (t = 1.970; p = 0.049), as well as a strong mediator between financial capability and performance (t = 3.275; p = 0.001). These findings confirm that innovation serves as a crucial enabler linking leadership and financial capacity to higher business performance, while emphasizing the need to strengthen leadership competencies and financial literacy through university-based mentoring programs to increase the competitiveness and sustainability of student businesses in the local entrepreneurial ecosystem
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Renko, M., El Tarabishy, A., Carsrud, A.L., & Brännback, M. (2015). Understanding and measuring entrepreneurial leadership style. Journal of Small Business Management, 53(1), 54–74.https://doi.org/10.1111/jsbm.12086
Rosing, K., Frese, M., & Bausch, A. (2011). Explaining the heterogeneity of the leadership-innovation relationship: Ambidextrous leadership. The Leadership Quarterly, 22(5), 956–974.https://doi.org/10.1016/j.leaqua.2011.07.014
Schumpeter, J. A. (1934). The theory of economic development. Harvard University Press.
Seo, Y. W., & Lee, Y. H. (2019). Effects of internal and external factors on business performance of start-ups in South Korea: The engine of new market dynamics. International Journal of Engineering Business Management, 11, 1–12.https://doi.org/10.1177/1847979018824231
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Teece, D.J. (2007). Explicating dynamic capabilities: The nature and microfoundations of sustainable enterprise performance. Strategic Management Journal, 28(13), 1319–1350.https://doi.org/10.1002/smj.640
Unger, J. M., Rauch, A., Frese, M., & Rosenbusch, N. (2011). Human capital and entrepreneurial success: A meta-analytical review. Journal of Business Venturing, 26(3), 341–358.https://doi.org/10.1016/j.jbusvent.2009.09.004
Venkatraman, N., & Ramanujam, V. (1986). Measurement of business performance in strategy research: A comparison of approaches. Academy of Management Review, 11(4), 801–814.https://doi.org/10.5465/amr.1986.4283976
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180.https://doi.org/10.1002/smj.4250050207
Wang, C.L., & Ahmed, P.K. (2004). The development and validation of the organizational innovativeness construct using confirmatory factor analysis. European Journal of Innovation Management, 7(4), 303–313.https://doi.org/10.1108/14601060410565056
Zimmerer, T. W., Scarborough, N. M., & Wilson, D. (2008). Essentials of entrepreneurship and small business management (5th ed.). Pearson.
Al-Sharif, AM, Ali, MH, Jaharuddin, NS, Abdulsamad, A., & Jandab, A. (2023). The role of innovation capability in the relationship between entrepreneurial leadership and innovation performance in the SMEs service industry. Advances in Social Sciences Research Journal, 10(1), 264–278.https://doi.org/10.14738/assrj.101.13802
Antonakis, J., & Day, D. V. (Eds.). (2018). The nature of leadership (3rd ed.). Sage Publications.
Atkinson, A., & Messy, F.-A. (2012). Measuring financial literacy: Results of the OECD/International Network on Financial Education (INFE) pilot study. OECD Working Papers on Finance, Insurance and Private Pensions, No. 15. OECD Publishing.https://doi.org/10.1787/5k9csfs90fr4-en
Bagheri, A., & Akbari, M. (2018). The impact of entrepreneurial leadership on nurses' innovation behavior. Journal of Nursing Scholarship, 50(1), 28–35.https://doi.org/10.1111/jnu.12354
Calantone, R. J., Cavusgil, S. T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management, 31(6), 515–524. https://doi.org/10.1016/S0019-8501(01)00203-6
Cogliser, C. C., & Brigham, K. H. (2004). The intersection of leadership and entrepreneurship: Mutual lessons to be learned. The Leadership Quarterly, 15(6), 771–799.https://doi.org/10.1016/j.leaqua.2004.09.004
Crossan, M. M., & Apaydin, M. (2010). A multi-dimensional framework of organizational innovation: A systematic review of the literature. Journal of Management Studies, 47(6), 1154–1191.https://doi.org/10.1111/j.1467-6486.2009.00880.x
Demirgüç-Kunt, A., Klapper, L., & Singer, D. (2017). Financial inclusion and inclusive growth: A review of recent empirical evidence (World Bank Policy Research Working Paper No. 8040). World Bank.
Ferreira, J., Fernandes, C., & Ratten, V. (2021). Entrepreneurship and innovation: The role of small and medium-sized businesses. Journal of Business Research, 123, 196–206.https://doi.org/10.1016/j.jbusres.2020.09.025
Ghozali, I. (2021). Partial least squares: Concepts, techniques, and applications using SmartPLS 3.2.9 (4th ed.). Diponegoro University Publishing Agency.
Ghozali, I., & Latan, H. (2020). Partial least squares: Concepts, techniques, and applications using the SmartPLS program (3rd ed.). Diponegoro University Publishing Agency.
Gupta, V., MacMillan, I. C., & Surie, G. (2004). Entrepreneurial leadership: Developing and measuring a cross-cultural construct. Journal of Business Venturing, 19(2), 241–260.https://doi.org/10.1016/S0883-9026(03)00040-5
Hair, J.F., Hult, G.T.M., Ringle, C.M., Sarstedt, M., Danks, N.P., & Ray, S. (2021). Partial least squares structural equation modeling (PLS-SEM) using R. Springer.https://doi.org/10.1007/978-3-030-80519-7
Hair, J.F., Hult, G.T.M., Ringle, C.M., & Sarstedt, M. (2022). A primer on partial least squares structural equation modeling (PLS-SEM) (3rd ed.). Sage Publications.
Hensellek, S., Kleine-Stegemann, L., & Kollmann, T. (2023). Entrepreneurial leadership, strategic flexibility, and venture performance: Does founders' span of control matter? Journal of Business Research, 157, Article 113544.https://doi.org/10.1016/j.jbusres.2022.113544
Huang, S., Ding, D., & Chen, Z. (2014). Entrepreneurial leadership and performance in Chinese new ventures: A moderated mediation model of exploratory innovation, exploitative innovation and environmental dynamism. Creativity and Innovation Management, 23(4), 453–471.https://doi.org/10.1111/caim.12085
Jin, SH, & Choi, SO (2019). The effect of innovation capability on business performance: A focus on IT and business service companies. Sustainability, 11(19), 5246.https://doi.org/10.3390/su11195246
Kuswanto, K., Suratno, S., & Wulandari, MT (2022). The impact of entrepreneurial attitudes and entrepreneurial competence on students' business success. International Journal of Entrepreneurial Knowledge, 10(2), 42–53.https://doi.org/10.37335/ijek.v10i2.169
Lee, N., Sameen, H., & Cowling, M. (2015). Access to finance for innovative SMEs since the financial crisis. Research Policy, 44(2), 370–380.https://doi.org/10.1016/j.respol.2014.09.008
Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and Evidence. Journal of Economic Literature, 52(1), 5–44. https://doi.org/10.1257/jel.52.1.5
Mailani, D., Hulu, MZT, Simamora, MR, & Kesuma, SA (2024). Resource-based view theory to achieve a sustainable competitive advantage of the firm: Systematic literature review. International Journal of Entrepreneurship and Sustainability Studies, 4(1), 1–15.https://doi.org/10.31098/ijeass.v4i1.2002
Nguyen, PV, Huynh, HTN, Lam, LNH, Le, TB, & Nguyen, NHX (2021). The impact of entrepreneurial leadership on SMEs' performance: The mediating effects of organizational factors. Heliyon, 7(6), e07326.https://doi.org/10.1016/j.heliyon.2021.e07326
Nor, NF, Shafii, SNS, & Mohamad, NK (2024). Digital financial capability towards improving entrepreneurs' business performance. Journal of Financial Services Marketing, 29(1), 45–60. https://doi.org/10.1057/s41264-023-00218-7
Nugraha, SS (2021). Investigating SMEs performance: Innovation, leadership, or investment driven? EkBis: Jurnal Ekonomi dan Bisnis, 5(1), 43–56.https://doi.org/10.14421/ekbis.2021.5.1.1257
OECD. (2020). OECD/INFE toolkit for measuring financial literacy and financial inclusion. OECD Publishing.
OECD. (2022). OECD/INFE toolkit for measuring financial literacy and financial inclusion 2022. OECD Publishing.
Paudel, S. (2019). Entrepreneurial leadership and business performance: Effect of organizational innovation and environmental dynamism. South Asian Journal of Business Studies, 8(3), 348–369.https://doi.org/10.1108/SAJBS-11-2018-0136
Purwati, AA, Budiyanto, B., Suhermin, S., & Hamzah, ML (2021). The effect of innovation capability on business performance: The role of social capital and entrepreneurial leadership on SMEs in Indonesia. Accounting, 7(2), 323–330.https://doi.org/10.5267/j.ac.2020.11.021
Ranjan, S. (2018). Entrepreneurial leadership: A review of measures, antecedents, outcomes and moderators. Asian Social Science, 14(12), 104–111.https://doi.org/10.5539/ass.v14n12p104
Renko, M., El Tarabishy, A., Carsrud, A.L., & Brännback, M. (2015). Understanding and measuring entrepreneurial leadership style. Journal of Small Business Management, 53(1), 54–74.https://doi.org/10.1111/jsbm.12086
Rosing, K., Frese, M., & Bausch, A. (2011). Explaining the heterogeneity of the leadership-innovation relationship: Ambidextrous leadership. The Leadership Quarterly, 22(5), 956–974.https://doi.org/10.1016/j.leaqua.2011.07.014
Schumpeter, J. A. (1934). The theory of economic development. Harvard University Press.
Seo, Y. W., & Lee, Y. H. (2019). Effects of internal and external factors on business performance of start-ups in South Korea: The engine of new market dynamics. International Journal of Engineering Business Management, 11, 1–12.https://doi.org/10.1177/1847979018824231
Sugiyono. (2024). Quantitative, qualitative, and R&D research methods (Rev. ed.). Alfabeta.
Teece, D.J. (2007). Explicating dynamic capabilities: The nature and microfoundations of sustainable enterprise performance. Strategic Management Journal, 28(13), 1319–1350.https://doi.org/10.1002/smj.640
Unger, J. M., Rauch, A., Frese, M., & Rosenbusch, N. (2011). Human capital and entrepreneurial success: A meta-analytical review. Journal of Business Venturing, 26(3), 341–358.https://doi.org/10.1016/j.jbusvent.2009.09.004
Venkatraman, N., & Ramanujam, V. (1986). Measurement of business performance in strategy research: A comparison of approaches. Academy of Management Review, 11(4), 801–814.https://doi.org/10.5465/amr.1986.4283976
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180.https://doi.org/10.1002/smj.4250050207
Wang, C.L., & Ahmed, P.K. (2004). The development and validation of the organizational innovativeness construct using confirmatory factor analysis. European Journal of Innovation Management, 7(4), 303–313.https://doi.org/10.1108/14601060410565056
Zimmerer, T. W., Scarborough, N. M., & Wilson, D. (2008). Essentials of entrepreneurship and small business management (5th ed.). Pearson.
Published
2026-04-28
How to Cite
Nandita juliana, Rike Setiawati, & Logi Mulawarman. (2026). The Influence of Entrepreneurial Leadership and Financial Capability on Business Performance with Innovation Ability as a Mediating Variable on Entrepreneurial Students of Universities in Jambi City. International Journal of Economics, Business and Innovation Research, 5(03), 950-967. https://doi.org/10.63922/ijebir.v5i03.3314
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