Recovery Speed of Micro, Small, and Medium Enterprises (MSMEs) Following the COVID-19 Pandemic: The Influence of Entrepreneurial Capacity and Characteristics

Abstract

This study examines the effect of entrepreneurial capacity, both directly and indirectly, through entrepreneurial characteristics on the performance recovery speed of Micro, Small, and Medium Enterprises (MSME) due to the COVID-19 pandemic. The entrepreneurial capacity consists of financial access and market access. Meanwhile, entrepreneurial characteristics include the need for achievement, risk-taking propensity, and internal locus of control. The data were obtained through a field survey of MSME entrepreneurs engaged in the food and beverage sector in three cities including; Semarang, Surakarta, and Salatiga, Indonesia. The total sample was 397 respondents and used SEM-PLS analysis to test the hypothesis. This study shows that financial access, the need for achievement, and the internal locus of control positively affect MSMEs' performance recovery speed after the COVID-19 pandemic. Furthermore, the mediating effect testing demonstrates that the need for achievement and internal locus of control mediate the effect of financial access on the performance recovery speed of MSMEs. Therefore, stakeholders interested in developing the MSMEs are suggested to intensify their efforts to increase their ability to access finance and strengthen the entrepreneurial characteristics among the MSME entrepreneurs.