Boosting Business Performance in East Java Msmes: Unleashing Network Capability Through Knowledge Creation

Abstract

This study addresses the challenges faced by MSMEs in the food and beverage sector in Indonesia, especially in East Java Province, which have undergone significant environmental shifts, including the rapid transformation of the digital era and the pressing need to enhance performance in the post-pandemic recovery phase. MSMEs play a crucial role in sustaining regional economic growth, making their adaptability and resilience essential. To thrive in this dynamic environment, leveraging network capabilities becomes a key strategy, particularly by fostering knowledge creation to improve business performance. This study surveyed 228 MSME owners in East Java's food and beverage sector. Data were collected through structured questionnaires and analyzed using the Partial Least Squares (PLS) method. The findings demonstrate that network capabilities positively influence business performance, both directly and indirectly, through the mediating role of knowledge creation. These results highlight the importance of strategic collaboration and knowledge management as essential tools for MSME sustainability and growth in dynamic market conditions.