Bridging Capability Gaps for MSMEs in the Digital Era: The Role of Financial Literacy, Digital Technology, and Business Coaching

This study aims to analyze the effect of financial literacy and business coaching on MSMEs performance, with digital technology as a moderating variable in the digital era. The research was conducted on 76 MSMEs in Kupang, Indonesia, using a closed-ended questionnaire. Data analysis was performed using SEM–PLS with the assistance of WarpPLS software to examine both direct effects and the moderating effects. The findings show that the impact of financial literacy as well as business coaching on MSMEs performance is elevated by digital technology. In addition, business coaching is shown to be effective in enhancing MSME performance; however, financial literacy, on its own, and the presence of digital technology do not directly influence MSME performance. The research that integrated three variables into one empirical framework offers fresh perspectives on the MSME performance. The study further stresses the impact of business coaching and technology on the performance of MSMEs. The conclusions emphasize the importance of digital technology initiatives in enhancing the performance of MSMEs in the contemporary digital age.