Cooperative Governance and Knowledge-based Innovation in Indonesian MSMEs: The Roles of Resource Pooling, Training Support and Policy Environment

This article examines the impacts of cooperative governance (CG), resource pooling (RP) and training support on the local economic performance of MSMEs in Indonesia via knowledge sharing (KS), culture of innovation, trust and the policy environment (PE). The study uses partial least squares structural equation modelling based on cross-sectional survey data on 206 MSMEs enrolled in cooperative programmes. Ethical considerations were addressed by voluntary involvement, informed consent, confidentiality and institutional ethical clearance in advance. The results show that KS presents the highest direct predictor of local economic performance. RP and CG are both very effective in enhancing KS, whereas RP is strong in enhancing trust, and innovation culture (IC) and trust are not directly linked to performance gains. The relationship between IC and performance is positively moderated by supportive PE, suggesting that innovation-oriented practices can only bring economic value in a coordinated institutional support. The study adds that cooperative mechanisms do not work equally well; structural mechanisms yield more readily than symbolic or weakly institutionalised mechanisms. This refines the theory of CG and innovation within the emerging economy setting because it recognises KS as the surest channel through which cooperative arrangements enhance the performance of MSMEs.