Does innovation bridge entrepreneurial competencies and business sustainability? Evidence from SMEs in Tanah Datar, Indonesia.

Abstract

This Study aims to examine the influence of entrepreneurial competencies on business sustainability and to investigate whether innovation mediates this relationship among SMEs in Tanah Datar, West Sumatera, Indonesia. The Study was conducted using a quantitative approach involving 40 SMEs owners or managers as respondents. Data were collected through questionnaires and analysed using SPSS, including validity testing, regression analysis, and mediation testing. The result show that entrepreneurial competencies have a positive and significant effect on business sustainability. This finding indicates that SMEs owners or managers with stronger competencies are more capable maintaining business continuity, managing resources, responding to business challenges, and developing their enterprises in a sustainable way. However, entrepreneurial competencies were found to have a positive but insignificant effect on innovation. Innovation also showed a positive but insignificant effect on business sustainability. The mediation test further reveals that innovation does not mediate the relationship between entrepreneurial competencies and business sustainability. This indicates that, in the context of SMEs in Tanah Datar, business sustainability is more directly shaped by the competencies of business owners or managers rather than through innovation as a mediating variable. These findings highlight the importance of strengthening entrepreneurial competencies , particularly in business planning, decision making, opportunity recognition, and resource management, to support the long tem sustainability of SMEs.