The role of digital literacy and knowledge management on process innovation in SMEs

Abstract

Research on digital literacy, knowledge management and process innovation variables has not been widely carried out in Indonesia, therefore more studies need to be carried out immediately since small and medium enterprises (SMEs) play an important role in economic activities. The purpose of this research is to investigate the effect of digital literacy on knowledge management, digital literacy on process innovation and financial management on process innovation. The research method is quantitative using partial least square structural equation modeling (SEM) analysis with data analysis tools using SmartPLS 3.0 software. The study involved 489 respondents who owned SMEs and it was determined using simple random sampling. The type of variable scale used is the ordinal scale. The rating scale for each statement uses a rating scale technique with a Likert scale type. Online questionnaires are distributed through online media, the data analysis stage is the outer model test, namely the validity and reliability test and the inner model test, namely the hypothesis test or significance test. The independent variable of this research is digital literacy, the mediating variable is knowledge management, and the dependent variable is process innovation variable. Based on the results of research data analysis it was found that digital literacy had a positive and significant relationship on knowledge management, digital literacy had a positive and significant relationship on process innovation, knowledge management had a positive and significant relationship on process innovation. Knowledge management played as full mediators in the relationship between digital leisure variables and process innovation.