Women entrepreneurship in the developing country: The effects of financial and digital literacy on SMEs’ growth

Abstract

This study aims to investigate the effects of financial and digital literacy on growth of small and medium enterprises (SMEs) managed by women in Indonesia. Data were collected through questionnaires of women entrepreneurs in Palembang, Indonesia. For the purpose of comparison, data of men entrepreneurs were also collected. The variables employed are latent variables such as financial literacy, digital literacy, SME’s growth which are derived from a series of questions to indicate each variable. A total of 240 women and 240 men were analyzed using structural equation modelling (SEM). The results reveal that both financial and digital literacy had positive and significant effects on return on assets. On the other hand, only digital literacy had positive and significant effects on growth. The findings further evidence that women had a lower level of digital knowledge compared to men. Furthermore, the results show that in the short term, financial literacy and digital literacy are important to understand and implement. But in the long run, digital literacy plays an important role because it impacts business growth. This is in line with an increasingly fierce market competition where the market is also shifting from traditional markets to modern markets. Not only the market, but consumers are also shifting from traditional consumers to digital consumers.

Are women's entrepreneurial intentions and motivations influenced by financial skills?

“…Recent studies have recognized the need for financial education and literacy among business owners, entrepreneurs and society in general (Binks et al , 2006; Hussain et al , 2008; Njoroge, 2013; Wise, 2013; Fatoki, 2014; Li and Qian, 2019). However, the relationship between financial skills and entrepreneurship and the gender gap has been very largely under-investigated (Fauzi et al , 2020; Oggero et al , 2020; Ughetto et al , 2020). A lack of financial literacy in nascent entrepreneurs can undermine the outcome and chances of success of their new venture.…”

Analysis of the Influence of Financial Literacy on Business Sustainability Through the Utilization of E-Commerce: A Study of MSMEs in the Food and Beverage Industry Sector in Balikpapan City

“…This can be seen from the many businesses and employment that dominate in the country (Adomako et al, 2016;Sarfiah et al, 2019) data for 2019, The number of MSME actors reached 65.5 million business units or contributed 99.99% to the total industrial sector as a whole and was able to absorb as much as 96.92% of the total 119.6 million workers in the industrial sector (kemenkopukm.go.id). With the contribution and role of MSMEs, it is important for the government to continue to support the strengthening of MSMEs so that their role as a pillar in building the nation's economy can run optimally (Gunartin, 2017;Dhamayantie & Fauzan, 2017;Fauzi et al, 2020).…”

The Necessity of Financial Literacy for Women Business Triumph: A Qualitative Study

“…The importance of financial literacy is particularly significant for women entrepreneurs since it directly affects their capacity to efficiently oversee (Hasan et al, 2022), maintain (Burchi et al, 2021), and grow their firms (Fauzi et al, 2020). The failure to effectively tackle the problem of insufficient financial literacy among women entrepreneurs can result in various negative outcomes (Fauzi et al, 2020), highlighting the significance of addressing this issue.…”

“…The importance of financial literacy is particularly significant for women entrepreneurs since it directly affects their capacity to efficiently oversee (Hasan et al, 2022), maintain (Burchi et al, 2021), and grow their firms (Fauzi et al, 2020). The failure to effectively tackle the problem of insufficient financial literacy among women entrepreneurs can result in various negative outcomes (Fauzi et al, 2020), highlighting the significance of addressing this issue. These consequences include impeded business growth (Egbo et al, 2020), increased risk of business failure (Rachapaettayakom et al, 2020), restricted access to financing (Andriamahery & Qamruzzaman, 2022), missed opportunities (GEM, 2021), and perpetuation of gender inequality (Filimonau et al, 2022).…”