The Utilization of Information and Communication Technology (ICT) on SMEs Performance: The Mediating Role of Financial Innovation

The progress of small and medium enterprises (SMEs) is closely related to the development of information technology. As a result, SMEs are expected to have the capacity to effectively utilize a variety of innovative alternatives derived from these technological advances. The purpose of this study was to examine the direct effect of the use of ICT on the performance of SMEs, and also examine the indirect effect of the mediating role of financial innovation on the relationship between ICT and the performance of SMEs. A surveying technique was used to collect data among SMEs in Bukit Tinggi municipality of West Sumatra province, Indonesia. This study uses a quantitative approach. The data was collected by distributing questionnaires via Google Forms with a sample size of 210. The hypothesis testing technique was carried out using Smart PLS. The findings show that there is a significant effect of the use of ICT, financial innovation on the performance of SMEs. The study also proved that financial innovation as mediating factor in the relationship between ICT and the performance of SMEs. The implication of the findings gave benefits for SMEs in developing their business by paying attention to aspects of digitizing the use of ICT and financial innovation.