Women entrepreneurship in the developing country: The effects of financial and digital literacy on SMEs’ growth

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Abstract

This study aims to investigate the effects of financial and digital literacy on growth of small and medium enterprises (SMEs) managed by women in Indonesia. Data were collected through questionnaires of women entrepreneurs in Palembang, Indonesia. For the purpose of comparison, data of men entrepreneurs were also collected. The variables employed are latent variables such as financial literacy, digital literacy, SME’s growth which are derived from a series of questions to indicate each variable. A total of 240 women and 240 men were analyzed using structural equation modelling (SEM). The results reveal that both financial and digital literacy had positive and significant effects on return on assets. On the other hand, only digital literacy had positive and significant effects on growth. The findings further evidence that women had a lower level of digital knowledge compared to men. Furthermore, the results show that in the short term, financial literacy and digital literacy are important to understand and implement. But in the long run, digital literacy plays an important role because it impacts business growth. This is in line with an increasingly fierce market competition where the market is also shifting from traditional markets to modern markets. Not only the market, but consumers are also shifting from traditional consumers to digital consumers.

Keywords: Women Entrepreneurship, Financial Literacy, Digital Literacy, SME, Developing Country

Authors’ individual contribution: Conceptualization – F.F.; Methodology – F.F.; Investigation – F.F., D.A., and E.S.; Resources – F.F.; Writing – F.F., D.A., and E.S.; Supervision – F.F.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: This study is fully funded by the Ministry of Research, Technology and Higher Education of Republic Indonesia for the period of 2019.

JEL Classification: G00, G50, G53, L26

Received: 23.10.2020
Accepted: 22.12.2020
Published online: 24.12.2020

How to cite this paper: Fauzi, F., Antoni, D., & Suwarni, E. (2020). Women entrepreneurship in the developing country: The effects of financial and digital literacy on SMEs’ growth. Journal of Governance & Regulation, 9(4), 106-115. https://doi.org/10.22495/jgrv9i4art9