Digital Innovation as A Strategic Capability for Transforming Social and Intellectual Capital into Sustainable Performance: Evidence From Indonesian Ultra-Micro (Umi)
DOI:
https://doi.org/10.38035/gmbr.v2i2.702Keywords:
Ultra-Micro, Digital Innovation, Social Capital, Intellectual Capital; Sustainable Performance; Dynamic CapabilityAbstract
Ultra-micro enterprises represent the backbone of Indonesia's entrepreneurial ecosystem by generating employment opportunities, stimulating local economic activities, and supporting inclusive economic development. Despite their considerable contribution to national growth, many of these enterprises continue to struggle with organizational sustainability because of limited managerial capability, inadequate knowledge resources, weak collaborative networks, and uneven adoption of digital technologies. While previous studies have separately examined the influence of social capital, intellectual capital, or innovation on business outcomes, limited empirical attention has been devoted to understanding how these strategic resources interact through digital innovation to enhance sustainable performance among ultra-micro enterprises. This study develops an integrated structural model explaining the mechanism through which social and intellectual capital contribute to sustainable business performance by strengthening digital innovation capability. The proposed framework combines the Resource-Based View, Knowledge-Based View, and Dynamic Capability Theory to explain how internal organizational resources and external relational assets jointly generate long-term competitive advantage. Empirical evidence was obtained from 204 owners of ultra-micro culinary enterprises in Bekasi City, Indonesia. Respondents were selected using purposive sampling based on predetermined operational criteria. The proposed hypotheses were examined using Partial Least Squares Structural Equation Modeling (PLS-SEM) implemented in Smart PLS 4. The analysis demonstrates that both social capital and intellectual capital positively influence digital innovation while simultaneously exerting significant direct effects on sustainable performance. Digital innovation also contributes positively to organizational sustainability and partially mediates the relationships between organizational resources and business performance. Among all explanatory variables, intellectual capital exhibits the strongest influence on sustainable performance, highlighting the strategic importance of entrepreneurial knowledge, managerial competence, and organizational learning. These findings suggest that sustainable competitiveness among ultra-micro enterprises depends not only on access to strategic resources but also on the capability to transform those resources into continuous digital innovation. The study extends contemporary strategic management literature by integrating three complementary theoretical perspectives into a unified explanatory framework and provides practical guidance for policymakers and entrepreneurship development institutions seeking to strengthen digital transformation within the ultra-micro sector.
References
Al-Omoush, K. S., Ribeiro-Navarrete, S., Lassala, C., & Skare, M. (2022). Networking and digital transformation for entrepreneurial resilience: Evidence from SMEs. Technological Forecasting and Social Change, 174, 121–139.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
Barney, J. B., Ketchen, D. J., & Wright, M. (2021). Resource-based theory and the future of strategic management. Journal of Management, 47(7), 1936–1954.
Bontis, N. (1998). Intellectual capital: An exploratory study that develops measures and models. Management Decision, 36(2), 63–76.
Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35(1), 128–152.
Grant, R. M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(Winter Special Issue), 109–122.
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.
Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135.
Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. Harvard Business School Press.
Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23(2), 242–266.
Nonaka, I., & Takeuchi, H. (1995). The Knowledge-Creating Company. Oxford University Press.
OECD. (2023). SME and Entrepreneurship Outlook 2023. OECD Publishing.
Putnam, R. D. (1993). Making Democracy Work: Civic Traditions in Modern Italy. Princeton University Press.
Ringle, C. M., Wende, S., & Becker, J. M. (2024). SmartPLS 4 User Manual. SmartPLS GmbH.
Sarstedt, M., Hair, J. F., Cheah, J. H., Becker, J. M., & Ringle, C. M. (2022). How to specify, estimate, and validate higher-order constructs in PLS-SEM. Australasian Marketing Journal, 30(3), 197–211.
Schumpeter, J. A. (1934). The Theory of Economic Development. Harvard University Press.
Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations of sustainable enterprise performance. Strategic Management Journal, 28(13), 1319–1350.
Teece, D. J. (2018). Business models and dynamic capabilities. Long Range Planning, 51(1), 40–49.
Teece, D. J., Peteraf, M., & Leih, S. (2016). Dynamic capabilities and organizational agility. California Management Review, 58(4), 13–35.
United Nations. (2024). The Sustainable Development Goals Report 2024. United Nations.
Vial, G. (2019). Understanding digital transformation: A review and a research agenda. The Journal of Strategic Information Systems, 28(2), 118–144.
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180.
World Bank. (2023). World Development Report 2023: Migrants, Refugees, and Societies. World Bank.
Xie, X., Huo, J., & Zou, H. (2019). Green process innovation, green product innovation, and corporate financial performance. Journal of Business Research, 101, 697–706.
Yoo, Y., Henfridsson, O., & Lyytinen, K. (2010). The new organizing logic of digital innovation. Information Systems Research, 21(4), 724–735.
Zahra, S. A., & George, G. (2002). Absorptive capacity: A review, reconceptualization, and extension. Academy of Management Review, 27(2), 185–203.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Ahmad Yani, Ella Padillah, Ferial Fahmi Kadir, Putri Julianti
This work is licensed under a Creative Commons Attribution 4.0 International License.
