Meliza Meliza and Ruslan Prijadi, The Effect of Human Capital, Social Capital, and Financial Capital on Micro and Small Business (MSE) Survival: A Study in DKI Jakarta (2023)

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Conference paper by Meliza Meliza and Ruslan Prijadi of Universitas Indonesia, published in 2024 in the GCBME 2022 proceedings, on what kept micro and small businesses in DKI Jakarta alive during COVID-19. An online survey of 150 owners, analysed with correlation and regression, found that access to finance, trust in networks and internal and external social capital affected survival, while human capital did not. The paper cites 64.2 million SMEs in 2018 contributing 61.07% of GDP, and a fall in their GDP share from 60.3% to 37.3% in 2020.

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“Meliza Meliza and Ruslan Prijadi, The Effect of Human Capital, Social Capital, and Financial Capital on Micro and Small Business (MSE) Survival: A Study in DKI Jakarta (2023).” Original at www.atlantis-press.com. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/meliza-meliza-and-ruslan-prijadi-the-effect-of-human-capital-social-ca-003e230938/, SHA-256 272c9083424716774cf2e5c4d4d134de5f438ef22f9893de4328b390d87d3f11.

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The Effect of Human Capital, Social Capital,
and Financial Capital on Micro and Small
Business (MSE) Survival: A Study in DKI
Jakarta

Meliza Meliza(B) and Ruslan Prijadi

Master of Management, Faculty of Economics and Business, Universitas Indonesia, Salemba,
Indonesia
Meliza01@ui.ac.id

Abstract. The most important pillar of the Indonesian economy is SMEs. Accord-
ing to data, there were 64.2 million SMEs in 2018 and they contributed 61.07%
of the GDP, or 8,573.89 trillion rupiahs to the economy. The emergence of the
COVID-19 pandemic in 2019 resulted in severe economic losses across the coun-
try due to restrictions on communal activities. Actors in microbusiness make up
the majority of MSMEs, accounting for 98.68% of all businesses with a workforce
of about 89%. In 2019, there were 64.6 million microenterprise, 798.9 thousand
units are small businesses, and 65 thousand units are medium enterprises. Small
businesses have been particularly hard hit by the COVID-19 crisis. Many are tem-
porarily closing their businesses due to cash flow issues. The contribution to GDP
in 2020 decreased by 23% on an annual basis, from 60.3% to 37.3%. The COVID-
19 pandemic had a major impact on the business survival of micro and small busi-
nesses. This study analyses the impact of financial, social, and human capital on
the survival of micro and small businesses in DKI Jakarta during COVID-19 by
examining access to finance, trust in networks, human capital, internal social cap-
ital, and external social capital as predictors. An online structured questionnaire
was conducted to gather data from 150 micro and small business owners in DKI
Jakarta. The data were analyzed using SPSS software for correlation analysis and
regression. The results revealed that access to finance, trust in networks, internal
social capital, and external social capital affected MSEs’ survival, while human
capital did not affect MSEs’ survivability. This study is considered useful for micro
and small enterprises in DKI Jakarta to develop their businesses by focusing on
the main factors that affect the survival of MSEs. MSEs seeking to be resilient in
the face of any disturbance that may cause disruption in their business may find
these insights advantageous.

Keywords: Financial Capital · Human Capital · Micro and Small Business ·
SME Survivability · Social Capital

© The Author(s) 2024
R. Hurriyati et al. (Eds.): GCBME 2022, AEBMR 255, pp. 1682–1696, 2024.
https://doi.org/10.2991/978-94-6463-234-7_177
The Effect of Human Capital, Social Capital, and Financial Capital 1683

1 Introduction

SMEs are crucial to social inclusion and have a significant impact on Indonesia’s eco-
nomic progress. From generating employment to being able to reduce poverty, SMEs
in Indonesia provide almost 97% of household work and 56% of business investment.
According to data, there were 65.5 million MSMEs in 2019 and they contributed 61.07%
of the GDP. In 2018, there were 120.6 million workers in Indonesia, 116.9 million
of whom were employed by MSMEs (or 97% of all workers). Microbusiness players
account for 98.68% of SMEs and have an approximate 89% potential to absorb new
workers. If specific, there were 64.6 million micro-enterprises in the world in 2019.
As many as 798.9 thousand of the total units are small businesses, while 65,000 are
medium-sized firms.
The COVID-19 pandemic is affecting DKI Jakarta’s micro- and small-business sur-
vival and performance. One of the reasons their performance will be disrupted in 2020
is due to the traits of micro and small firms that connect directly. The COVID-19 pan-
demic has impacted a variety of industries but the most affected economic sector is the
household sector [1]. Micro and small businesses are among the biggest ones. Due to
the COVID-19 crisis, micro and small businesses have closed their business temporarily
and face cash flow constraints [2]. Based on the data of the Central Bureau of Statistics,
the contribution to GDP in 2020 decreased by 23% on an annual basis from 60.3% to
37.3%.
A previous study conducted by Yadav in 2018 found that human capital consists of the
knowledge, qualifications, experience, and skills of employees in businesses that affect
business sustainability. Higher levels of education and work experience are important
factors in identifying and taking advantage of business opportunities. Education is a
critical component of human capital which can assist the growth of knowledge and
skills of entrepreneurship [3].
The strategy to maintain business continuity is something that must be considered. To
maintain business survival, social capital is needed. Social capital helps companies seek
new knowledge about how the current market operates and what can be done proactively
to understand and satisfy customer needs and wants. Companies are not isolated entities
and constantly use social networks to get ideas and gather information. Social capital is
a combination of business relationships that are owned in a social network that connects
business partners and the community [3]. Each human capital and social capital have an
impact on increasing business survival substantially [4].
The positive correlation between financial capital and SME performance and com-
pany survival was proven by [5]. Meanwhile, [6] emphasized that government sup-
port will make the impact of financial capital on SME performance greater. Financial
limitations are one of the elements that hinder business continuity, according to sev-
eral research. Research by Torstensson in 2014 on micro and small textile and apparel
sectors in Sweden revealed there are numerous key drivers for resilience, which were
classified into three categories: resources (material resources, financial resources, social
resources, network resources, and intangible resources); competitiveness (flexibility,
resource redundancy, robustness, and networks); and learning and culture (leadership
and management).
1684 M. Meliza and R. Prijadi

Business survivability refers to the ability of an organization to withstand a disaster
or a hostile environment without significant disruption to its normal operations. Long-
term business viability is a meaningful performance measure for many stakeholders in
a business. The survival and failure of a business affect other stakeholders, including
employees, suppliers, distributors, and the public, who are related to the business. Busi-
ness survivability leads to the success of a business in dynamic competition, as seen by
how well the business meets the needs of stakeholders [7]. Business survival is some-
thing that is used to develop and protect the resources within it. The capacity of an entity
to continue in the market is interpreted as a company’s ability to survive.
Basic levels of profitability, scale, and scope have an impact on a business’s long-
term sustainability, according to a prior study [8]. Two sets of indicators—financial and
strategic—derived from Barbosa’s research are used to assess the viability of businesses
(2016).
The community, employees, customers, and suppliers all gain from a company’s
ability to survive [9]. Researchers affirm that a component of a firm’s performance is its
viability [9]. If a business can adapt to the circumstances and the environment, it will
survive [7].
Financial indicators include four things that are used to measure the availability of
company cash: profitability, the amount of debt, cash reserves, and accounts receivable.
Companies with greater profitability will last longer than less profitable companies.
The relationship between profit and survival is fundamental. The company’s profitability
shows its ability to generate profits during a certain period, which comes from compo-
nents of sales, assets, and certain share capital. Understanding the determinants of prof-
itability is the key to success and will assist managers in developing effective corporate
strategies [9].
Based on the literature, there are some negative impacts of debt on the viability of
small businesses. First, the increase in debt causes an increase in debt payments for the
company and there is always a possibility of a gap between debt and receivables, which
is difficult for every SME to avoid. Therefore, SMEs need additional funds to carry out
their operational activities. A common reason for SMEs to fail is that they cannot address
the gap between cash inflows and outflows.
Without having sufficient cash, the survival of a business can be threatened. SMEs
also depend on the availability of cash to maintain their business activities. Cash manage-
ment reflects cash management principles, namely activities that involve cash planning
and control [8]. The availability of cash can support production activities, which in turn
contribute to the creation of profits from SME operations. Without adequate cash, it
will hamper operational activities and make it difficult for SMEs to generate profits. In
addition, SMEs need to implement cash management because businesses that are ablcan
cash have the power to survive in the business environment [9].
Receivables are a form of sales made by a company whose payments are not
made in cash but installments. Trade receivables include all claims for the company’s
subscriptions arising from the sale of merchandise or services on credit [9].
According to [7], a greater level of trust in customers will encourage companies to
provide longer receivables so that it will increase sales and increase profitability. The
The Effect of Human Capital, Social Capital, and Financial Capital 1685

company needs to determine the trade credit policy that will be given to customers
because it has an important effect on the profitability and the company’s worth.
The strategic indicators used are the company’s products and market segments, sales
turnover, and [9]. An important factor that affects the success and continuity of the
business is having a quality product where the business can produce goods with added
value. Anything supplied to a market to satiate a need or want is a product. Everything
that consists of tangible items, services, occasions, locations, businesses, concepts, or a
combination of them. Product strategy is one of the most important elements because it
can influence other marketing strategies. The choice of the type of product to be produced
will determine the promotional activities to be carried out, as well as the determination
of prices and how to distribute them [10].
To achieve goals, develop businesses, earn profits, and maintain the viability of the
company itself, marketing is an important activity in the life of the company. Some
economists believe that the definition of marketing is as follows: organizing, selling
prices, promoting, and distributing want-satisfying goods and services to both customers
and companies. Marketing is closely related to customers, which means that marketing is
a process of managing good and profitable relationships with customers. Customers in a
company understand customer needs, produce goods and services, set prices, distribute
products to reach customers, and communicate products to customers in the form of
promotions so that customer satisfaction can be achieved [10].
One of the crucial resources is capital in terms of money. The entrepreneur, the
founding team, opportunity, and resources all have a role in business success. When a
person gets access to financing, they can create their own company. Small and medium-
sized enterprises (SMEs) rely on both resources respectively internal and external to
preserve and strengthen their competitive edge, and a lack of financial capital can be a
hindrance [11].
Financial capital is essential for businesses to invest in, expand, and grow, yet on
average, SMEs have poor financial literacy and limited access to financial capital [3].
Financial capital is considered a significant factor that defines the success and surviv-
ability of a business [4]. The greater the level of financial capital, the greater the expected
business growth rate.
Financing through credit is one of the important determinants of the survival of
the micro and smbusinessesness, and one of the elements affect a company’s ability to
succeed is financial support. The melementments influencing entrepreneurship success
and business continuity is a lack of finance. Access to capital is very important for small
businesses. Small businesses cannot create new products and services to fulfill market
demands without sufficient capital [4]. Based on this, this study develops the following
hypotheses:
H1. Access to finance positively affects micro and small businesses’ survivability.
Social capital is the network of relationships that enables a business owner to gain
the material and immaterial resources necessary for the success of his enterprise. Social
capital is a formal and informal resource for entrepreneurs to be able to access social
connections through their networks so that they can identify business opportunities.
1686 M. Meliza and R. Prijadi

In this study, the entrepreneur’s formal or unofficial connections to other agents
and the resources that can be accessed through social capital from an individual point of
view were examined [12]. According to the definition of social capital, an organization’s
networks, trust, and other factors may help it behave more strategically and efficiently.
At the corporate level, social capital is divided into two categories: internal and exter-
nal social capital. Internal social capital refers to financial loans or gifts from family,
friends, and professional colleagues, as well as strategic business advice. According to
[13], internal social capital is derived from the structure of social networks and relation-
ships between specific members of the organization (employees), community (such as
neighbors), or system (such as associate members).
An entrepreneur’s internal social network tends to influence financial performance
at the stage of formation and introduction of a business through mobilizing financial
resources to start a business. One of the primary sources of funding for most informal
enterprises typically consists of financial assistance and interest-free loans from family,
friends, coworkers, or business partners [12]. The loans are among the internal social
capital assets offered to unregistered enterprises [12]. Based on that, this study develops
the following hypotheses:
H2. Internal Social Capital positively affects micro and small businesses survivability.
Relationships with external entities, including partners and suppliers, can be viewed
as external social capital. This network permits referrals from devoted clients, the deliv-
ery of reliable market information, and credit help from creditors. The term “external
social capital” also refers to social ties to external entities like buyers, distributors, mar-
ket authorities, creditors, and intangible assets derived from social network structures
like loyalty, trust, and referrals that are rooted in these connections and the connec-
tion between a person, group, or community and significant outside parties, such as an
organization’s connection to its clients, suppliers, or rivals [13]. Information is accessed
through networks, network ties involve specifically how related actors have an advan-
tageous effect on business success [14]. Relationships with suppliers or customers are
critical to the development of entrepreneurship. To be competitive in the market effec-
tively, network links offer opportunities to gain a durable competitive advantage [3].
Based on that, this study develops the following hypotheses:
H3. External Social Capital positively affects micro and small businesses survivability.
Trust is an important component when running a business or production activity.
Trust is fundamental to forming and carrying out cooperation. Between two or more
entities (people or organizations), trust is an expectation that suggests regular behavior
is well-ordered, truthful, cooperative, and predictable based on common standards. By
lowering transaction costs and conflicts, trust among businesses has a substantial impact
on each company’s performance [14].
A sustainable small firm must be built on a foundation of trust [15], which is a critical
requirement for success. Direct effects of trust include higher sales and a better return
on investment [14]. Hence, this study develops the following hypotheses:
H4. Trust in the network positively affects micro and smbusinessesses’ survivability.
The Effect of Human Capital, Social Capital, and Financial Capital 1687

Human capital is a theory that requires competent human resources. The presence of
competent human resources can influence increasing the productivity of a business. To
achieve quality human resources, human capital formation is needed, namely obtaining
a number of severals who have strong characteristics as important capital. The character
is in the form of education level and skill level. Human capital is an important element
because it creates competitiveness for the company. Human capital plays a role as a
driver of performance improvement and the ability to create relational value.
Education is among the determinants of entrepreneurial success. The success of
businesses and the survival of SMEs are positively correlated with education levels [3].
Similar to this, concludes that one of the key elements determining company success is
education.
Entrepreneurs who have more experience have a greater chance of success [3]. One
of the primary things preventing entrepreneurs from succeeding is a lack of experience
[4]. One of the key elements impacting business success is experience. Hence, this study
develops the following hypotheses:
H5. Human Capital positively affects micro and small businesses survivability.

1.1 Micro and Small Enterprise

The micro and small enterprises are regulated based on the Law of Republic of Indonesia
Number 20, 2008, which states that:
Micro Enterprise:
• Having a maximum net worth of Rp. 50,000,000.00 (fifty million Rupiah), excluding
the land and building of their place of business;
• A maximum annual sales revenue of Rp. 300,000,000.00 (three hundred million
Rupiah)
Small Enterprise:
• possessing net assets, excluding the land and building of their place of business, of
at least Rp. 50,000,000.00 (fifty million Rupiah) and up to Rp. 500,000,000.00 (five
hundred million Rupiah); or
• earning more than Rp. 300,000,000.00 (three hundred million Rupiah) in annual sales
earnings, up to a maximum of Rp. 2,500,000,000.00 (two billion and five hundred
million Rupiah)
Based on the Central bureau of statistics, the definition of Micro and Small
Enterprises based on the number of workers is as follows.
• Small businesses are those that employ between 5 and 19 workers.
• Businessesss with a workforce of 20 to 99 workers are considered medium firms.

2 Methods

The research used primary and secondary data. Owners of micro and small companies in
DKI Jakarta made up the study population. Non-probability sampling using a purposive
sampling approach was the sampling method employed in this study. The questionnaire
1688 M. Meliza and R. Prijadi

Fig. 1. The conceptual model.

consisted of closed and open questions. Statements in a closed questionnaire were mea-
sured using interval data measurements. Measurement of interval data was carried out
using a bipolar adjective technique (agree-disagree scale) using a 1–6-point scale to
obtain interval data with a score or value of 1 (strongly disagree) and 6 (strongly agree).
The analysis technique is cluster analysis, a tool used with SPSS.
The independent variables consist of financial capital and social capital. The financial
capital factor is access to finance. Social Capital factors consist of internal social capital,
external social capital and trust in the network, and human capital. The dependent variable
is the business survival of SMEs, financial factors (cash reserve, debt, cash reserves,
account receivables) and strategy (company’s products, and market segments) (Fig. 1).

2.1 Data Collection

A survey method was used to gather primary data. The proprietors of 150 micro and
small companies in the DKI Jakarta area were given a structured questionnaire. In this
case, the sample was taken based on the characteristics of micro and small enterprises
that have at least three years of business experience. Questionnaires were distributed
using Google forms and through social media, email, and MSE community groups via
WhatsApp.
Secondary data was gathered from already-published sources including books, web-
sites, and journals. These data were helpful to develop a theoretical basis and become
supporting material in this research.

2.2 Measurement Models

The research includes independent variables such as financial capital, social capital, and
human capital. MSE survivability is the dependent variable. The research measurement
model is shown in Table 1.

2.3 Data Analysis

The sample data collected using an online questionnaire were analyzed. Quantitative
data analysis was conducted by using SPSS for reliability analysis using Cronbach’s
alpha, correlation analysis to measure the strength of the relationship between micro and
The Effect of Human Capital, Social Capital, and Financial Capital 1689

Table 1. Measurement of Variables

Variable Name Items Reference Likert Scale
Social Capital 24 [12] Likert Disagree 1 to strongly agree 6
[14]
[15]
Human Capital 5 [3] Likert Disagree 1 to strongly agree 6
[16]
Financial Capital 4 [3] Likert Disagree 1 to strongly agree 6
MSE 17 [7] Likert Disagree 1 to strongly agree 6
Survivab ility [9, 10]

small business survivability and the 5 independent variables, a linear regression test to
measure to what extent there is a linear relationship between micro and small business
survivability and five independent variances, and finally multiple regression to check
the dependency between the micro and small business survivability and 5 independent
variables and to test the model fit.

3 Results and Discussion
3.1 Respondents’ Profile

The proportions of the two genders were approximately equal. The most common types
of MSE businesses were food and beverage and service businesses. The majority of
assets owned by MSEs were in the range of 5–25 million. The most common MSE sales
turnover was in the range of 51–150 million. There were more male respondents than
female respondents. The most recent education, according to the order, was high school,
bachelor’s, and diploma. Most of the respondents’ ages were in the range of 31–40 years
and 41–50 years. The majority of MSEs had 1–5 employees.

3.2 Construct Validity and Reliability Analysis

Cronbach’s Alpha Analysis was utilized in this research. The data in Table 2 shows that
all Cronbach’s Alpha coefficients on each variable indicator show a value greater than
0.6. Thus, it can be said that all questions in the questionnaire are reliable and support
the research construct.
In this research, 150 participants were involved in the validity assessment. Making
choices based on the value of r count, which is the question, is valid. The formula for
the r table function is df = N-2, so 150-2 = 148, so r table = 0,1603. The value of r
count (Corrected Item-Total Correlation) > r table is 0,1603, making all questions for
variables valid.
1690 M. Meliza and R. Prijadi

Table 2. Reliability of Measured Variables

Variables Cronbach’s Alpha Remarks
Internal Social Capital 0.943 Reliable
External Social Capital 0.851 Reliable
Trust in Networks 0.932 Reliable
Access to Finance 0.881 Reliable
Human Capital 0.899 Reliable
MSE Survival 0.837 Reliable
Source: Field Survey, 2022

3.3 Classic Assumption Test

Normality Test
The Kolmogorov-Smirnov normalcy test can be used to perform a normality test sta-
tistically. The results of the normality test indicate that the Kolmogorov-Smirnov has a
significant value of 0.114. The residual regression results are determined to be normal
(Fig. 2).
Multicollinearity Test
If the tolerance value is greater than 0.1 and the VIF value of each independent variable
is 10, multicollinearity is not present in the data, according to this test.
According to Table 3’s multicollinearity test results, all independent variables have
tolerance values of more than 0.1 and a VIF value of less than 10. According to Table 3’s
multicollinearity test results, all independent variables have tolerance values of more
than 0.1 and a VIF value of less than 10. This demonstrates that the multicollinearity
assumption of the regression model has been met.

Fig. 2. P-P Plot
The Effect of Human Capital, Social Capital, and Financial Capital 1691

Table 3. Multicollinearity Test Results

Variables Tolerance VIF
Internal Social Capital 0.341 2.936
External Social Capital 0.256 3.902
Trust In Network 0.305 3.284
Access To Finance 0.193 5.176
Human Capital 0.328 3.045
Source: Field Survey, 2022

Table 4. Heteroscedasticity Test Results

t Sig.
Internal Social Capital -0.424 0.672
External Social Capital -1.116 0.089
Trust In Network 0.062 0.951
Access To Finance -0.244 0.808
Human Capital 0.376 0.708
Source: Field Survey, 2022

Heteroscedasticity Test
The heteroscedasticity test is to determine whether the variance between different obser-
vations in the regression model is unequal. The Glacier test can be used to statistically
perform the heteroscedasticity test. In this test, if all independent variables have signif-
icant values more than 0.05, the model is deemed to be free of heteroscedasticity. The
regression model has no heteroscedasticity (Table 4).

3.4 Regression Model Test

Partial Test (t-Test)
The regression analysis’s findings in Table 5 show the regression constant value of 71.463
with an internal social capital regression coefficient of 0.404, the external social capital
regression coefficient of 0.254, trust regression coefficient of 0.391, the human capital
regression coefficient of 0.308, and financial capital regression coefficient of 1.131, so
that the regression equation that can be used to predict MSEs survival based on the
value of internal social capital, external social capital, trust, human capital, and financial
capital is as follows:

Y = 71, 463 + 0, 404 X1 + 0, 254 X2 + 0, 391 X3 + 0, 308 X4 + 1, 131 X5
1692 M. Meliza and R. Prijadi

Table 5. t-Test Results

Variables Independent Beta Standard Error t Sig.
Constanta 71.463 4.534 15.762 .000
Internal Social Capital .404 .127 3.182 .002
External Social Capital .254 .201 2.466 .007
Trust In Network .391 .297 2.319 .009
Human Capital .308 .328 1.157 .113
Access to Finance 1.131 .285 3.975 .000
Source: Field Survey, 2022

Table 6. F Test Result

ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 6757.188 5 1351.438 13.616 .000b
Residual 14292.952 144 99.257
Total 21050.140 149
Source: Field Survey, 2022. a. Dependent Variable: SMES_Survival. b. Predictors: (Constant),
FC, NTI, TRUST, NTE, HC

Simultaneous F Test
According to the regression analysis results in Table 5, a significant value of the F test was
obtained at 0.0001. Due to the significant value of the simultaneous test result of 0.05,
H0 is rejected, and it is concluded that trust, human capital, financial capital, internal
social capital, and external social capital all have an impact on MSEs’ survival at the
same time (Table 6).

Coefficient of Determination
It indicates that 59.7% of the variance in company value is caused by external factors,
with the remaining 40.3% being caused by the simultaneous influence of internal and
external social capital, trust, human capital, and financial capital.

3.5 Hypothesis Test

The results of the multiple linear regression analysis used in this study are the base for
the hypothesis testing. The findings of analyzing all of the study’s hypotheses are listed
in Table 7 based on the analysis findings.
Hypothesis 1 in this study states that internal social capital has an effect on MSEs,
and the key is that internal social capital has a positive and significant effect on the
survival of MSEs.
The Effect of Human Capital, Social Capital, and Financial Capital 1693

Micro and small business survivability will be created if social capital can be utilized
properly by managing the ability of business actors to increase and expand their capital.
This is consistent with the research presented by [12], which shows that social capital
is related to business growth and sustainability. Research by [14], which demonstrates
that social capital has a considerable favorable impact on the survivability of micro and
small businesses, also supports this finding.
Hypothesis 2: external social capital has a positive and significant effect on an’s
survival. A good business is a business that not only benefits itself but also the community
around it. The involvement of business actors with the surrounding community is a form
of relationship that builds mutual trust that the business will not harm the community
and the environment around the business. The sense of trust that arises in the community
can increase entrepreneurial success because the business will be supported.
This study’s findings are consistent with those of [17] research which views social
capital as the capacity to actualize resources—both actual and potential—between people
and groups. Business actors must have the ability to obtain high social capital by building
relationships between individuals and groups that benefit and support entrepreneurial
success.
Hypothesis 3: trust in networks has a positive and significant effect on MSEs’ sur-
vival. Trust is an important thing in building entrepreneurial activities that are being
carried out by the actors. Business actors can build relationships (social networks) both
with the community, suppliers and customers in the form of reciprocal relationships
so that mutual trust is built in the order of social life. As in Yadav’s (2018) research,
which conducted research on the role of social capital in micro and small businesses in
Nepal, it was revealed that trust, social networks, and norms had an important role in
the continuity of trading activities. The amount of information absorbed from various

Table 7. Summary of Hypothesis Testing Results

No Hypothesis Result Conclusion
1 Internal Social Capital affects Coef Path = 0.404; T Statistics = Accepted
MSEs Survival. 3.182; p value = 0.002
2 External Social Capital affects Coef Path = 0.254; T Accepted
MSE’s Survival. Statistics = 2,466; p
value = 0.007
3 Trust effect on MSEs Coef Path = 0.391; T Accepted
Survival Statistics = 2,319; p
value = 0.009
4 Human Capital affects MSE’s Coef Path = 0.308; T Not Accepted
Survival. Statistics = 1.157; p
value = 0.113
5 Financial Capital affects MSE’s Coef Path = 1.131; T Accepted
Survival. Statistics = 3.975; p
value = 0.000
Source: Field Survey, 2022
1694 M. Meliza and R. Prijadi

outside sources and the interaction connections serve as indicators of interaction quality,
the stronger a bond allows increased trust in small businesses as social capital to access
external resources. This is also in line with Akintmehin’s research (2019) that trust in
networks had a positive influence on MSE performance and business survival.
Hypothesis 4: This study shows that MSE business actors lack managerial skills or
experience in managing their businesses. In general, small and micro business actors in
DKI Jakarta still keep simple company financial records. Likewise, the marketing they
do in business is still done conventionally.
According to research conducted by [18] on the viability of small companies in
Madiun, human capital—which comprises ability, intellectual agility, and skills—did
not significantly affect the survivability of MSEs’ operations. This is supported by a
study by [19], which found that while MSE entrepreneurs care about human capital,
they do not manage it coherently or strategically and that business players continue to
utilize conventional techniques to ensure the survival of MSE businesses.
Hypothesis 5 in this study is accepted that financial capital has a positive and sig-
nificant effect on MSE’s survival. This means that the greater the financial capital, the
greater the MSE’s survival. Increasing financial capital can significantly increase an
MSE’s survival.
Financial capital can be defined as expertise regarding the financial resources used by
the owner in managing the business. Generally, the owner builds a business with personal
capital. However, as the business progresses, business owners usually take out loan funds
to increase personal capital for business expansion. Reference [16] show that financial
capital has a positive impact on MSEs’ ability to maintain business operations. This
can be influenced by the availability of sufficient capital as a source of business capital
which makes it easier to run a business. In addition to financial capital, to achieve good
performance in business activity, business owners need to understand how to manage
finances well, namely by knowing about financial literacy.

4 Conclusions
The research findings showed that there was a significant influence of internal social
capital, external social capital, financial capital, and trust in networks on micro and
small business survivability in DKI Jakarta. performance. However, human capital does
not significantly affect the survivability of micro and small businesses.
This research suggests, especially for micro and small business owners, to make
changes to the company’s financial flow arrangements to be able to maintain a sustain-
able business in the current difficult conditions. The solution is cost-effectiveness to
maintain operations, which will enable the business to use its cash flow for a longer
period in the face of market shifts. The government must support the growth of MSEs
by facilitating access to financing and investing in human resources, allowing micro and
small-scale enterprises to expand their managerial capabilities. Based on the study’s find-
ings, which show that the growth of micro and small firms were significantly influenced
by business networks, and MSEs are expected to be able to cooperate with suppliers,
financial institutions, workers, and intermediaries. Higher business competitiveness can
be achieved through business networks so that businesses are more efficient, reduce
transaction costs, and increase flexibility due to the presence of trusted partners.
The Effect of Human Capital, Social Capital, and Financial Capital 1695

There are two limitations to this study. First, the number of samples in this study is
still limited so future research can broaden the scope of the study because a large sample
can represent the true state of micro and small businesses in DKI Jakarta. Second, due
to the time limitation, the questionnaire could only involve 150 respondents, namely the
owner and manager. This study does not generalize the results of the study to all micro
and small businesses in Indonesia because this study was only conducted in the DKI
Jakarta area.

Acknowledgment. The author would like to express gratitude to the Faculty of Economics
and Business Universitas Indonesia for their assistance. The authors also thank two anonymous
reviewers for their insightful comments that helped us revise the paper.

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