In 2019, the
decline in the
financial performance of
Micro and Small Enterprises (MSEs)
in Indonesia signaled
an early indication
of potential bankruptcy and
business closure. This
condition represents a
critical issue that warrants in-depth investigation, with
MSEs serving as the unit of analysis. Within the third
level of the
conceptual accounting framework,
financial statements are prepared based on the assumption that the
reporting entity will continue to operate on a going concern basis.
Accordingly, the going concern assumption implies that an entity is expected to
sustain its operations in the foreseeable future and not to liquidate or
significantly curtail its activities.This study aims
to examine the
effect of human
resources, from a Leadership Theory perspective, on the
financial performance of Micro and Small Enterprises (MSEs). The study proposes
three leadership dimensions derived from a
synthesis of eight
leadership theories as
its primary theoretical
novelty. Specifically, Knowledge, Communication, Ability
to Lead, Entrepreneurship, Teamwork, and
Problem-Solving are employed
as independent variables conceptualized from
these eight leadership
theories. In addition,
Digital Technology is tested
as a moderating
variable in the
relationship between two independent variables—Knowledge and
Communication—and the financial performance of MSEs.This study employs a quantitative research design with a
population of 307 Micro and Small
Enterprises (MSEs) and
187 owners or
managers serving as respondents. The financial performance of
MSEs is measured using sales growth as the
primary performance indicator.
The independent variables—Knowledge, Communication, Leadership
Capability,
Entrepreneurship, Teamwork, and Problem-Solving—as well
as the moderating
variable, Digital Technology,
are measured using a
five-point Likert scale
administered through a
structured questionnaire.
The findings of
this study indicate
that the independent
variables— Knowledge, Communication, Leadership Capability,
Entrepreneurship, Teamwork, and
Problem-Solving—have a positive
and statistically significant
effect on the financial
performance of Micro
and Small Enterprises
(MSEs). Furthermore, the partial effects of Knowledge and
Communication on MSEs’ financial performance are strengthened by Digital Technology,
which functions as a moderating variable in the proposed model.
