Online and offline social capital for better social and business performance: The mediating role of digital innovation

Aim/purpose – This study aims to analyze the effect of offline and online social capital on social performance and business performance in SMEs, specifically, the mediating effect of digital innovation on the relationship between offline and online social capital on social performance and business performance in SMEs. Design/methodology/approach – This research is a quantitative study of the population of fashion SMEs fostered by SOEs in West Java, Indonesia. The sampling technique was selected using a purposive sampling method with the criteria of SMEs: (1) have been fostered for at least 3 years; (2) have adopted social media for business purposes; and (3) are creative SMEs that focus on fashion. The sample in this study was 258 SMEs in West Java Province located in Cirebon and Bandung. Furthermore, the collected data were analyzed using a structural equation model with SmartPLS. Findings – The results of the analysis show that offline social capital has a positive effect on digital innovation, social performance, and SMEs’ business performance. Furthermore, online social capital has a positive effect on digital innovation, social performance and business performance of SMEs. This study also found that digital innovation can mediate the effect of offline and online social capital on SMEs’ social performance and business performance. Research implications/limitations – This study analyzes SMEs’ performance in the fashion sector and under government guidance. The findings recommend that SMEs increase offline and online social capital when conducting business. Furthermore, SMEs are also expected to be able to carry out digital innovation continuously. Originality/value/contribution – This study describes online and offline social capital in SMEs in the fashion sector and under government guidance. Keywords: business performance, digital innovation, offline social capital, online social capital, social performance. JEL Classification: M3, O1, O3.