Revealing the Hidden Pathways

Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in driving the national economy, yet many struggle with significant performance challenges and declining revenues. Recent studies on knowledge management (KM) often focus on large enterprises, neglecting the specific difficulties faced by MSMEs and limiting the applicability of findings across various industries. This study seeks to fill this gap by exploring how KM and process innovation can enhance the operational performance of MSMEs, with a particular focus on investigating the mediating mechanism of process innovation linking the KM-operational performance relationship. A survey of 100 MSMEs in Yogyakarta, Indonesia, was conducted to gather data. The findings reveal the essential impact of KM and process innovation on improving MSME performance, highlighting the importance of these elements in overcoming operational challenges. The result of the mediation mechanism of process innovation within the KM-operational performance relationship is also comprehensively revealed in this study. This study offers new insights into leveraging KM practices and process innovation to boost MSMEs’ operational performance, making it a valuable resource for scholars and practitioners alike.