WHEN RESOURCES ARE NOT ENOUGH: LOCAL KNOWLEDGE AS A KEY DRIVER OF SME’s PERFORMANCE

Ahmad Hafiyyan Shibghatalloh (Universitas Telogorejo Semarang)
Arisanti Ayu Wardhani (Universitas Telogorejo Semarang)
Hasan Aminda Syafrudin (Universitas Telogorejo Semarang)
Achmad Solechan (Universitas Telogorejo Semarang)
Albertus Setyo Sumargo (Universitas Telogorejo Semarang)
Lubertus Wahyu Priyo Dwiantoro (Universitas Telogorejo Semarang)

Stability: Journal of Management and Business
Vol. 8 No. 2 (2025): Vol 8 No 2 (2025)

This study aims to examine the relationships between resources, local knowledge, and SME’s performance by integrating the Resource-Based View and Knowledge-Based View perspectives. A quantitative cross-sectional approach was employed using primary data collected through a structured questionnaire. The study was conducted among batik MSMEs in Pekalongan, Central Java, Indonesia. A purposive sampling technique was applied with specific criteria. A total of 100 MSMEs were selected as the research sample. Data analysis was carried out using (PLS-SEM) with SmartPLS. The results show that resources do not have a significant direct effect on MSME performance, indicating that resource availability alone is insufficient to improve business outcomes. However, resources have a significant positive effect on local knowledge, and local knowledge significantly influences MSME performance. Furthermore, the mediation analysis confirms that local knowledge fully mediates the relationship between resources and MSME performance.