THE MEDIATING ROLE OF RISK MANAGEMENT ON TECHNOLOGICAL UNDERSTANDING, FINANCIAL LITERACY, AND SME PERFORMANCE IN MEDAN
Published:
2026-06-17Downloads
Abstract
This study examines the impact of technological understanding and financial literacy on Small and Medium Enterprise (SME) performance, with risk management practices as a mediating variable among SMEs in Medan. An explanatory sequential mixed-methods approach combining quantitative and qualitative methods was employed. The population comprised culinary SMEs registered with the Medan City Department of Cooperatives, SMEs, Industry, and Trade. Data were collected via questionnaires and in-depth interviews. Quantitative analysis used Structural Equation Modeling-Partial Least Square (SEM-PLS), while qualitative data utilized a thematic approach to strengthen quantitative results. The findings show that technological understanding and financial literacy both positively affect SME performance and risk management practices. Additionally, risk management practices positively influence SME performance and successfully mediate the effects of technological understanding and financial literacy on performance. These results indicate that SMEs' capability to comprehend technology and manage finances enhances business performance more effectively when supported by sound risk management. Ultimately, integrating technological understanding, financial literacy, and risk management serves as a strategic driver to boost SME competitiveness, resilience, and sustainability.
Keywords:
Financial Literacy Risk Management SME Performance Technological UnderstandingReferences
Gerson, RF (2004). Measuring Customer Satisfaction. Jakarta: PPM.
Appiah, T., & Agblewornu, V. V. (2024). Financial Literacy, Financial Access, and Small Business Performance in Secondi-Takoradi Metropolis of Ghana: The Mediating Effect of Financial Capability. African Journal of Business and Economic Research, 19(2), 299–321. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-85201226010&doi=10.31920%2F1750-4562%2F2024%2Fv19n2a13&partnerID=40&md5=a1e83f65d833d80bc92f0471206e3a44
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal Of Management, 17(1), 99–120.
Ciocoiu, C. N., Radu, C., Colesca, S. E., & Prioteasa, A. (2025). Exploring the link between risk management and performance of MSMEs: A bibliometric review. Journal of Economic Surveys, 39(4), 1523–1552. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-85205482635&doi=10.1111%2Fjoes.12664&partnerID=40&md5=312b5b72fdd184a67a9af12bdd9baa06
Cohen, W. M., & Levinthal, D. A. (1990). Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly, 35(1), 128–152. Retrieved from https://www.jstor.org/stable/2393553?origin=crossref
Gao, Y., Rojasavachai, R., Rouxelin, F., & Yang, L. (2025). Financial Illiteracy as a Systemic Risk: Implications for Household Resilience and Portfolio Vulnerability. Journal of Portfolio Management, 51(7), 216–229. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-105004456469&doi=10.3905%2Fjpm.2025.1.702&partnerID=40&md5=64457573f2015286a04d737e7a981630
Garg, S., & Agarwal, P. (2017). Micro, small and medium enterprises in India: A review of growth and challenges in the present scenario. International Journal of Applied Business and Economic Research, 15(4), 579–590. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-85016232815&partnerID=40&md5=5101bea4e6538736c11b7a8c2a7e3602
Grant, Robert M. (1991). The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation. California Management Review, 33(3), 114–135. SAGE Publications Inc. Retrieved from https://doi.org/10.2307/41166664
Grant, R. M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(S2), 109–122. John Wiley & Sons, Ltd. Retrieved from https://doi.org/10.1002/smj.4250171110
Harnida, M., Vasudevan, A., Mardah, S., Fajriyati, I., Mayvita, P. A., Hunitie, M. F. A., & Mohammad, S. I. S. (2024). Micro, Small, and Medium-Sized Enterprises (MSMEs) Sustainability: The Strategic Role of Digitalization, Financial Literacy, and Technological Infrastructure. Journal of Ecohumanism, 3(6), 1248–1260. Retrieved from https://ecohumanism.co.uk/joe/ecohumanism/article/view/4097
Holsapple, C. W., & Wu, J. (2010). Resource-based perspective on information technology, knowledge management, and firm performance. Enterprise Information Systems: Concepts, Methodologies, Tools and Applications (Vol. 2–3, pp. 1099–1112). Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-105014235297&doi=10.4018%2F978-1-60566-659-4.ch016&partnerID=40&md5=5d0051e8b4f6023091e59baa8f35a689
Indrawati, A. D., Troena, E. A., & Yuniarinto, A. (2024). Utilizing innovation and collective organizational engagement into SMEs’ sustainable competitive advantage. Uncertain Supply Chain Management, 12(3), 1589–1602. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-85191320524&doi=10.5267%2Fj.uscm.2024.3.021&partnerID=40&md5=299f90e42b64214dc0ea67473977388d
Krewski, D., Turner, M. C., & Tyshenko, M. G. (2011). Risk Management in Environmental Health Decision. Encyclopedia of Environmental Health (pp. 541–549). Elsevier. Retrieved from https://linkinghub.elsevier.com/retrieve/pii/B9780444639516006215
Kulathunga, K. M. M. C. B., Ye, J., Sharma, S., & Weerathunga, P. R. (2020). How does technological and financial literacy influence SME performance: Mediating role of ERM practices. Information (Switzerland), 11(6). Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-85087439913&doi=10.3390%2FINFO11060297&partnerID=40&md5=f506b80f5dd6320453f33031def6106f
Lentner, C., Tóth, R., Kása, R., & Nagy, V. (2025). The impact of financial culture ON THE financing of SMEs in Hungary. Investment Management and Financial Innovations, 22(2), 112–126. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-105002832816&doi=10.21511%2Fimfi.22%282%29.2025.10&partnerID=40&md5=743cbb15a6d4f0586f9ec1eac86a828a
Liang, T.-P., & You, J.-J. (2009). Resource-based view in information systems research: A meta-analysis. PACIS 2009 - 13th Pacific Asia Conference on Information Systems: IT Services in a Global Environment. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-85069300033&partnerID=40&md5=2c36a6631ae176c665292416a4c6faaf
Lusardi, A., & Mitchell, O. S. (2014). The Economic Importance Of Financial Literacy: Theory And Evidence. Journal of economic literature, 52(1), 5–44.
de Mattos, C. S., Pellegrini, G., Hagelaar, G., & Dolfsma, W. (2024). Systematic literature review on technological transformation in SMEs: a transformation encompassing technology assimilation and business model innovation. Management Review Quarterly, 74(2), 1057–1095. Retrieved from https://link.springer.com/10.1007/s11301-023-00327-7
Meldona, M., Soetjipto, B. E., Utaberta, N., Wardoyo, C., & Hermawan, A. (2023). Innovation capability and risk attitude mediate the effects of knowledge management and financial literacy on MSME performance. Journal of Social Economics Research, 10(4), 194–214. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-85183342379&doi=10.18488%2F35.v10i4.3555&partnerID=40&md5=9084bf9a63e76eed48d7c4fb3869f17c
Mustapha, B., Olaleye, B. R., Yetunde, O. B., Olanike, O. O., Akindele, G., Abdurrashid, I., Adedokun, J. O., et al. (2023). Risk Management Practice and Organizational Performance: The Mediating Role of Business Model Innovation. Journal of Law and Sustainable Development, 11(4). Retrieved from https://ojs.journalsdg.org/jlss/article/view/892
Nonaka, I., & Takeuchi, H. (1995). The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. New York: Oxford University Press.
Ntare, P. C., Shau, I. R., & Ojwang, E. (2022). Effects Of Enterprise Risk Management Practices On Performance Of Small And Medium Scale Enterprises. A Case Of Dar Es Salaam City, Tanzania. African Journal of Applied Research, 8(1), 182–199. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-85180170673&doi=10.26437%2Fajar.03.2022.13&partnerID=40&md5=a95b05c7e26ffb80b381a16d438324e6
Qamari, I. N., Ngetich, B. K., & Antarini, U. S. (2022). How information technology and sales skills improve business performance mediated by supply chain partnerships. International Journal of Information and Management Sciences, 33(3), 229–244. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-85160007743&doi=10.6186%2FIJIMS.202209_33%283%29.0004&partnerID=40&md5=db20202ea594121e9d98484d67c15acb
Rodriguez, E., & Edwards, J. S. (2015). Knowledge management in support of enterprise risk management. Transportation Systems and Engineering: Concepts, Methodologies, Tools, and Applications (Vol. 1–3, pp. 108–127). Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-84958871709&doi=10.4018%2F978-1-4666-8473-7.ch005&partnerID=40&md5=26e9cafa55667448114a1901d1e2f70b
Rumijati, A., & Rahman Hakim, A. (2023). Innovative work behavior and self-efficacy: Does entrepreneurial leadership impact MSME business performance? Problems and Perspectives in Management, 21(4), 304–315. Retrieved from https://www.businessperspectives.org/index.php/journals/problems-and-perspectives-in-management/issue-442/innovative-work-behavior-and-self-efficacy-does-entrepreneurial-leadership-impact-msme-business-performance
Sasono, E., Farida, N., & Soesanto, H. (2023). The Role Of Knowledge Creation In Mediating The Effect Of Network Capability On Performance Of Micro, Small, And Medium Enterprises. International Journal of Business and Society, 24(3), 1197–1212. Retrieved from https://publisher.unimas.my/ojs/index.php/IJBS/article/view/6417
Shahzad, A., Zulfiqar, B., Ali, M., Haq, A. ul, Sajjad, M., & Raza, A. (2022). Mediating role of formalization of RM methods among the perceived business risk and organization performance. Cogent Business & Management, 9(1). Retrieved from https://www.tandfonline.com/doi/full/10.1080/23311975.2021.2024116
Singh, D. (2019). Implementation of technology innovation in MSMEs in India. Journal of Science and Technology Policy Management, 10(3), 769–792. Retrieved from http://www.emerald.com/jstpm/article/10/3/769-792/248057
Singh, D., Khamba, J. S., & Nanda, T. (2015). Analysis of Major Problems Faced by Small Firms in North India. International Journal of Engineering Research in Africa, 15, 150–160. Retrieved from https://www.scientific.net/JERA.15.150
Singh, M. P. (2019). A study of sustainability reporting disclosures for manufacturing MSMEs: Evidence from India. International Journal of Entrepreneurship and Small Business, 38(4), 395–414. Retrieved from https://api.elsevier.com/content/abstract/scopus_id/85077326273
Suryani, E., Diswandi, D., & Afwani, R. (2024). Techno-finance Literacy and Company Performance: Mediating Role of Risk Management Practices based on Structural Equation Modeling. Journal of International Commerce, Economics and Policy. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-85206558623&doi=10.1142%2FS1793993324500169&partnerID=40&md5=638bcda08571e4043ce2cc6244438d48
Susan, M. (2020). Financial literacy and growth of micro, small, and medium enterprises in west java, indonesia. International Symposia in Economic Theory and Econometrics (Vol. 27, pp. 39–48). Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-85089554998&doi=10.1108%2FS1571-038620200000027004&partnerID=40&md5=75cca39b2afe4aeb2754727afe52f4b4
Tambunan, T. T. H. (2014). The readiness of MSMEs in facing ASEAN Economic Community 2015. The Readiness of MSMEs in Facing ASEAN Economic Community 2015. Retrieved from https://www.scopus.com/inward/record.uri?eid=2-s2.0-84952655660&partnerID=40&md5=45cda28b31e7fd8d9106782ee400790f
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533. John Wiley & Sons, Ltd. Retrieved from https://doi.org/10.1002/(SICI)1097-0266(199708)18:7%3C509::AID-SMJ882%3E3.0.CO
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180. John Wiley & Sons, Ltd. Retrieved from https://doi.org/10.1002/smj.4250050207
Wolor, C. W., Madli, F., Rababah, M. A., Mukhibad, H., & Hoo, W. C. (2024). Examining the Impact of Knowledge Management Use and Innovation on Business Performance of MSMEs in the Digital Age. Case Study MSMEs in Indonesia. Journal of Sustainability Research, 6(4), 1–18. Retrieved from https://sustainability.hapres.com/htmls/JSR_1667_Detail.html
Ye, J, & Kulathunga, K. M. M. C. B. (2019). How does financial literacy promote sustainability in SMEs? A developing country perspective. Sustainability (Switzerland), 11(10), 1–21. Retrieved from https://doi.org/10.3390/su11102990
Ye, Jianmu, & Kulathunga, K. (2019). How Does Financial Literacy Promote Sustainability in SMEs? A Developing Country Perspective. Sustainability.
Yuwono, T., Novandari, W., Suroso, A., & Setyanto, R. P. (2025). The importance of ICT adoption on MSMEs performance: the mediating role of distinctive competencies. Journal of Enterprising Communities: People and Places in the Global Economy, 19(3), 610–630. Retrieved from http://www.emerald.com/jec/article/19/3/610-630/1263864
Yuwono, T., Suroso, A., & Novandari, W. (2024). Information and communication technology in SMEs: a systematic literature review. Journal of Innovation and Entrepreneurship, 13(1), 31. Retrieved from https://innovation-entrepreneurship.springeropen.com/articles/10.1186/s13731-024-00392-6
License
Copyright (c) 2026 Afif Muis Fakhri Masysur, Keulana Erwin, Rina Br Bukit
This work is licensed under a Creative Commons Attribution 4.0 International License.
