ISSN (Online): 2321-3418
server-injected
Economics and Management
Open Access

The Effect of Financial Literacy (FL), Financial Access (FA), Financial Risk Attitude (FRA) on Business Sustainability (BS): Mediating Role of Local Cultural Innovation (CI) and Moderating Role of Dynamic Capabilities (DCs)

, ,
DOI: 10.18535/ijsrm/v13i08.em14· Pages: 9634-9642· Vol. 13, No. 08, (2025)· Published: August 31, 2025
PDF
Views: 437 PDF downloads: 138

Abstract

The financial competencies are not alone able to ensure sustainability unless backed by cultural and organizational capabilities in the fast-changing business environment. It is crucial to understand the factors that facilitate businesses to become environmentally responsible in today’s dynamic world. Hence, the objective of this study is to develop a model to further examine the impact of Financial Literacy (FL), Financial Access (FA), and the Financial Risk Attitude (FRA) on Business Sustainability (BS). Further, to examine the role of Cultural Innovation (CI) and Business Performance (BP) as mediating and Dynamic Capabilities (DCs) as moderating variable on the relationship of FL, FA, and FRA by integrating Cultural Embeddedness Theory (CET) Resource Based View (RBV) and Diffusion of Innovation (DOI) theory. The study has devised a quantitative research design which employed a structured questionnaire. The data will be collected from the employees working in Micro and Small Medium Enterprises (MSMEs), Malang, Indonesia. Data is recommended to be analysed through Partial least Square-Structural Equation Modelling (PLS-SEM) to assess the direct, mediating, and moderating impact of FL, FA, FRA, BP, and DA on SB.  The findings of the study will reveal that FL, FA, FRA impact on BS. Further the results will reveal the mediating CI and BP and moderating role of DCs. Furthermore, the results will be highlighting the importance of integrating different variables into business strategies. The study has contributed to the existing scholarship by integrating CET, RBV, and DOI theories to develop a framework to investigate the impact of different factors on BS. Furthermore, the study has provided integration of DCs and CI to better understand the phenomenon under investigation. By offering a unique understanding of how cultural and financial factors interact with dynamic environments. The study provides a practical and theoretical insight for policymakers, businesses, and MSMEs to foster sustainable business models in developing economies.

Keywords

Business Performance (BP)Business Sustainability (BS)Cultural Embeddedness Theory

References

  1. Aini, S. N., Harymawan, I., Nasih, M., & Kamarudin, K. A. (2024). CEO Overseas Experience and Sustainability Report Disclosure: Evidence from Indonesia. Corporate Social Responsibility and Environmental Management, 31(6), 5837–5849. https://doi.org/10. 1002/csr.2883Google Scholar ↗
  2. Armstrong, R. A., & Hilton, A. C. (2014). Principle Components and Factor Analysis. In Statistical Analysis in Microbiology (pp. 145–152). https://doi.org/http://dx.doi.org/10.1002/9780470905173.ch28DOI ↗Google Scholar ↗
  3. Babajide, A., Osabuohien, E., Tunji-Olayeni, P., Falola, H., Amodu, L., Olokoyo, F., … Ehikioya, B. (2021). Financial Literacy, Financial Capabilities, and Sustainable Business Model Practice Among Small Business Owners in Nigeria. Journal of Sustainable Finance & Investment, 13(1), 1–23. https://doi.org/https://doi.org/10.1080/20430795.2021.1962663DOI ↗Google Scholar ↗
  4. Bagozzi, R. P., & Yi, Y. (2012). Specification, Evaluation, and Interpretation of Structural Equation Models. Journal of the Academy of Marketing Science, 40(1), 8–34. https://doi.org/https://doi.org/10.1007/s11747-011-0278-xDOI ↗Google Scholar ↗
  5. Barbara Bird, Harold Welsch, Astrachan, J. H., & Pistrui, D. (2002). Family Business Research: The Evolution of an Academic Field. Family Business Review, 15(4), 337–350. https://doi.org/https://doi.org/10.1111/j.1741-6248.2002.00337.xDOI ↗Google Scholar ↗
  6. Bozintan (Cosma-Guler), I.-C., & Badulescu, D. (2023). Public Policies to Support SMEs’ Access to Financing: Between Challenges of Crises and the Functioning of Markets. The Annals of the University of Oradea. Economic Sciences, 32(1), 58–71.Google Scholar ↗
  7. Broccardo, L., Zicari, A., Jabeen, F., & Bhatti, Z. A. (2023). How Digitalization Supports A Sustainable Business Model: A Literature Review. Technological Forecasting and Social Change, 187, 122146. https://doi.org/https://doi.org/10.1016/j.techfore.2022.122146DOI ↗Google Scholar ↗
  8. Caliendo, M., Fossen, F., & Kritikos, A. (2010). The Impact of Risk Attitudes on Entrepreneurial Survival. Journal of Economic Behavior & Organization, 76(1), 45–63. https://doi.org/https://doi.org/10.1016/j.jebo.2010.02.012DOI ↗Google Scholar ↗
  9. Cantele, S., & Zardini, A. (2020). What Drives Small and Medium Enterprises Towards Sustainability? Role of Interactions Between Pressures, Barriers, and Benefits. Corporate Social Responsibility and Environmental Management, 27(1), 126–136. https://doi.org/https://doi.org/10.1002/csr.1778DOI ↗Google Scholar ↗
  10. do Nascimento, J. C. H. B., & da Silva Macedo, M. A. (2016). Structural Equation Models Using Partial Least Squares: An Example of the Application of SmartPLS® in Accounting Research. Revista de Educação e Pesquisa Em Contabilidade, 10(3), 282–305. https://doi.org/http://dx.doi.org/10.17524/repec.v10i3.1376DOI ↗Google Scholar ↗
  11. Du, Y., & Wang, H. (2022). Green Innovation Sustainability: How Green Market Orientation and Absorptive Capacity Matter? Sustainability, 14(13), 8192. https://doi.org/https://doi.org/10.3390/su14138192DOI ↗Google Scholar ↗
  12. Efendi, Z., Wati, L. N., & Kuraesin, A. D. (2023). The Role of Financial Literacy in Strengthening the Effect of Digital Platforms and Financial Technology Peer-to-Peer Lending on Capital Access and MSME Growth: An Empirical Study of MSMEs in DKI Jakarta. International Journal of Marketing and Digital Creative, 1(1), 26–36. https://doi.org/https://doi.org/10.31098/ ijmadic.v1i1.1447Google Scholar ↗
  13. Ferli, O. (2023). Financial Literacy for Better Access to Finance, Financial Risk Attitude, and Sustainability of MSMEs in Indonesia. Jurnal Manajemen, 14(1), 111–112. https://doi.org/https://doi.org/10.32832/jm-uika.v14i1.9792DOI ↗Google Scholar ↗
  14. Gao, J., Siddik, A. B., Abbas, S. K., Hamayun, M., Masukujjaman, M., & Alam, S. S. (2023). Impact of E-Commerce and Digital Marketing Adoption on the Financial and Sustainability Performance of MSMEs during the COVID-19 Pandemic: An Empirical Study. Sustainability, 15(2), 1594. https://doi.org/https://doi.org/10.3390/su15021594DOI ↗Google Scholar ↗
  15. Gärling, T., Kirchler, E., Lewis, A., & van Raaij, F. (2009). Psychology, Financial Decision Making, and Financial Crises. Psychol Science in the Public Interest, 10(1), 1–47. https://doi.org/https://doi.org/10.1177/1529100610378437DOI ↗Google Scholar ↗
  16. Golam, M. Y., Akhtari, M., & Lasmiatun, K. (2024). Analysis of Public Sector Involvement in Local Economic Empowerment as Implementation of Micro and Small Enterprise Development Policies. Multifinance: Jurnal Ekonomi, Manajemen Dan Perbankan, 1(3), 259–271. https://doi.org/https://doi.org/10.61397/mfc.v1i3.113DOI ↗Google Scholar ↗
  17. Guba Y. S, E. G. & L. (1994). Competing Paradigms in Qualitative Research. In N. K. Denzin & Y. S. Lincoln (Eds.), Handbook of Qualitative Research. Sage Publications, Inc.Google Scholar ↗
  18. Hair, J. F., Risher, J. J., Sarstedt, M., & Ringle, C. M. (2019). When to Use and How to Report The Results of PLS-SEM. European Business Review, 31(1), 2–24. https://doi.org/https://doi.org/10.1108/EBR-11-2018-0203DOI ↗Google Scholar ↗
  19. Harrison, R., Li, Y., Vigne, S. A., & Wu, Y. (2022). Why do Small Businesses have Difficulty in Accessing Bank Financing? International Review of Financial Analysis, 84, 102352. https://doi.org/https://doi.org/10.1016/j.irfa.2022.102352DOI ↗Google Scholar ↗
  20. Jiang, Y., Cai, W., & Wang, Y. (2024). Change Starts Within: Does Managerial Ability Matter to Green Innovation? Humanities and Social Sciences Communications, 11, 1–14. https://doi.org/https://doi.org/10.1057/s41599-024-03331-8DOI ↗Google Scholar ↗
  21. Kareem, M. A., Kummitha, H. R., & Kolloju, N. (2024). The Mediating Role of Innovation Capabilities on the Relationship between Dynamic Capabilities and Firm Competitive Performance. Organizacija, 57(1), 56–71. https://doi.org/10.2478/orga-2024-0004DOI ↗Google Scholar ↗
  22. Lee, N., Sameen, H., & Cowling, M. (2015). Access to Finance for Innovative SMEs since the Financial Crisis. Research Policy, 44(2), 370–380. https://doi.org/https://doi.org/10.1016/j.respol.2014.09.008DOI ↗Google Scholar ↗
  23. León, H. C. M., & Calvo-Amodio, J. (2017). Towards Lean for Sustainability: Understanding the Interrelationships between Lean and Sustainability from a Systems Thinking Perspective. Journal of Cleaner Production, 142(4), 4384–4402. https://doi.org/https://doi.org/10.1016/j.jclepro.2016.11.132DOI ↗Google Scholar ↗
  24. Lestari, D. A., Savitri, E., & Natariasari, R. (2021). Kinerja Umkm Ditinjau Dari Budaya Organisasi, Orientasi Kewirausahaan, Manajemen Kualitas Total, Dan Modal Sosial. Current, 2(2), 217–238. https://doi.org/https://doi.org/10.31258/jc.2.1.217-238DOI ↗Google Scholar ↗
  25. Liu, G., Ding, Y., Wen, C., Gao, K., Wang, T., & Sun, R. (2022). Understanding the Role of Sustainable Oriented and Process Innovation with Lean Practices in Achieving Sustainability Paradigm: A Chinese Perspective. Fron. Environ. Sci, 10, 905112. https://doi.org/10.3389/fenvs.2022. 905112DOI ↗Google Scholar ↗
  26. Mahran, K., & Elamer, A. A. (2024). Chief Executive Officer (CEO) and Corporate Environmental Sustainability: A Systematic Literature Review and Avenues for Future research. Business Strategy and the Environment, 33(3), 1977–2003. https://doi.org/https://doi.org/10.1002/bse.3577DOI ↗Google Scholar ↗
  27. Majid, R., & Nugraha, R. A. (2022). MSMEs and Islamic Securities Crowdfunding: The Importance of Financial Literacy. Muslim Business Econnomic Review, 1(2), 281–304.Google Scholar ↗
  28. Molina‑García, A., Galache‑Laza, M. T., González‑García, V., & Diéguez‑Soto1, J. (2025). Financial Literacy and Environmental Sustainability in SMEs: Process Innovation as an Association Mechanism. Eurasian Business Review. https://doi.org/https://doi.org/10.1007/s40821-025-00289-8DOI ↗Google Scholar ↗
  29. Palich, L. E., & Bagby, D. R. (1995). Using Cognitive Theory to Explain Entrepreneurial Risk-Taking: Challenging Conventional Wisdom. Journal of Business Venturing, 10(6), 425–438. https://doi.org/https://doi.org/10.1016/0883-9026(95)00082-JDOI ↗Google Scholar ↗
  30. Pearl, J. (2003). Causality: Models, Reasoning, and Inference. Economic Theory, 19, 675–685. https://doi.org/10+10170S0266466603004109Google Scholar ↗
  31. Purnomo, S., Purwandari, S., & Sentosa, I. (2022). Sustainability MSMEs Performance and Income Distribution: Role of Intellectual Capital and Strategic Orientations. Journal of Distribution Science, 20(4), 85–94. https://doi.org/http://dx.doi.org/10.15722/jds.20.04.202204.85DOI ↗Google Scholar ↗
  32. Puspitowati, I., Firdausy, C. M., & Handoyo, S. E. (2024). Do Financial Access, Digitalization Adoption, Innovation, and Market Orientation Influence Business Performance of Micro-Small Enterprises? Proceeding of The International Conference on Business and Economics, 2(1), 14–24. https://doi.org/https://doi.org/10.56444/icbeuntagsmg.v2i1.1530DOI ↗Google Scholar ↗
  33. Putri, M. A., Hanida, T., Tarwisah, I. S., Wati, V., Maulana, Z. A., & Firmansyah, I. (2022). The Influence of Digital Marketing, Access to Capital, and Financial Management on the Competitiveness of MSMEs Products in the Regency/City of Tasikmalaya. Saudi JJ Econ Fin, 7(6), 300–306. https://doi.org/10.36348/sjef.2023.v07i06.003DOI ↗Google Scholar ↗
  34. Sarapung, S. D., Andi Chairil Furqan, Zahra, F., & Megawati. (2024). The Role of Credit Facilities and Micro and Small Enterprises (MSEs) in Enhancing Rural Development Performance (A Study in Villages in Central Sulawesi Province). KnE Social Sciences, 9(20), 413–433. https://doi.org/https://doi.org/10.18502/kss.v9i20.16547DOI ↗Google Scholar ↗
  35. Sekaran, U., & Bougie, R. (2016). Research Methods for Business: A Skill-Building Approach (7th ed.). Wiley.Google Scholar ↗
  36. Sufyati, H., Handayani, T., Marzuki, F., & Zaelani, A. H. (2022). Socialization of Islamic Financial Institution Literacy in MSMEs Upscale in DKI Jakarta: Sosialisasi Literasi Lembaga Keuangan Syariah pada UMKM Naik Kelas DKI Jakarta. Mattawang: Jurnal Pengabdian Masyarakat, 3(4), 409–414. https://doi.org/https://doi.org/10.35877/454RI.mattawang1196DOI ↗Google Scholar ↗
  37. Tabachnick, B. G., & Fidell, L. S. (2021). Using Multivariate Statistics (7th ed.). Pearson.Google Scholar ↗
  38. Teece, D. J. (2007). Explicating Dynamic Capabilities: The Nature and Microfoundations of (Sustainable) Enterprise Performance. Strategic Management Journal, 28(13), 1319–1350. https://doi.org/https://doi.org/10.1002/smj.640DOI ↗Google Scholar ↗
  39. The General Assembly of United Nations. (2015). Transforming our world: the 2030 Agenda for Sustainable Development. Retrieved from https://www.un.org/ga/search/view_doc.asp?symbol=A/RES/70/1&Lang=EGoogle Scholar ↗
  40. Trupp, A., Salman, A., Stephenson, M. L., Chan, L.-F., & Gan, J.-E. (2025). A Systematic Review of Challenges Faced by Micro and Small Enterprises in Tourism Destinations: Producing Solutions Through Resilience Building and Sustainable Development. Tourism Planning & Development, 22(3), 301–323. https://doi.org/https://doi.org/10.1080/21568316.2024.2307970DOI ↗Google Scholar ↗
  41. Willebrands, D., Lammers, J., & Hartoq, J. (2012). A Successful Businessman is not a Gambler. Risk Attitude and Business Performance among Small Enterprises in Nigeria. Journal of Economic Psychology, 33(2), 342–354. https://doi.org/https://doi.org/10.1016/j.joep.2011.03.006DOI ↗Google Scholar ↗
  42. Xiaohong Chen, Yi, N., Zhang, L., & Li, D. (2018). Does Institutional Pressure Foster Corporate Green Innovation? Evidence from China’s Top 100 Companies. Journal of Cleaner Production, 188, 304–311. https://doi.org/https://doi.org/10.1016/j.jclepro.2018.03.257DOI ↗Google Scholar ↗
  43. Ye, J., & Kulathunga, K. (2019). How Does Financial Literacy Promote Sustainability in SMEs? A Developing Country Perspective. Sustainability, 11(10), 2990. https://doi.org/https://doi.org/10.3390/su11102990DOI ↗Google Scholar ↗
  44. You, Z., Hou, G., & Wang, M. (2024). Heterogeneous Relations among Environmental Regulation, Technological Innovation, and Environmental Pollution. Heliyon, 10(7), e28196. https://doi.org/https://doi.org/10.1016/j.heliyon.2024.e28196DOI ↗Google Scholar ↗
  45. Zulfadhli, Z., Desfitriana, D., & Pramajaya, J. (2024). The Effect of Financial Literacy, Access to Capital, Entrepreneurial Orientation, and Market Orientation on the Growth and Sustainability of Micro and Small Enterprises in Palembang. The Es Economics and Entrepreneurship, 3(02), 189–201. https://doi.org/https://doi.org/10.58812/esee.v3i02.376DOI ↗Google Scholar ↗
Author details
Trisetia Wijijayanti
Department of Management, Faculty of Economics and Business,Universitas Negeri Malang
✉ Corresponding Author
👤 View Profile →
Heri Pratikto
Department of Management, Faculty of Economics and Business, Universitas Negeri Malang
👤 View Profile →🔗 Is this you? Claim this publication
Yuli Agustina
Department of Management, Faculty of Economics and Business, Universitas Negeri Malang
👤 View Profile →🔗 Is this you? Claim this publication