Leadership Style, Innovation and MSME’s Performance: Evidence from Javanese Indonesian Culture

This study aims to examine the influence of the Javanese leadership style “Astra Brata” on innovation and MSME performance. Additionally, it explores the mediating role of innovation in the relationship between leadership style and MSME performance. The research adopts a quantitative approach, collecting survey data from 125 MSME owners in Solo, Yogyakarta and Semarang. Fata analysis was conducted using partial least squares structural equation modeling. The findings reveal that the Javanese leadership style imbued with “Asta Brata” positively and significantly impacts both innovation and MSME performance. Moreover, innovation partially mediates the relationship between leadership style and MSME performance, indicating its pivotal role in enhancing organizational outcomes. This highlights the importance of culturally rooted leadership in fostering innovation, which subsequently drives organizational success. The originality of this study lies in its focus on the integration of Javanese cultural values in leadership practices, an area underexplored in the existing literature dominated by Western-centric leadership styles. This research contributes to a deeper understanding of how local cultural elements shape leadership and business outcomes in emerging economies.