Exploring the relationship between social capital, innovation capability and innovation during the coronavirus pandemic

Abstract

Social restrictions during the pandemic Covid-19 have direct impacts on the survival of Small and Medium Enterperises (SMEs), since every citizen limits his/her activities, schools, campuses are closed and residents are advised to remain silent and do work from home. The purpose of this study is to examine and analyze the effect of social capital, business strategies, and innovation capabilities on business success. The study was conducted in Bali, Indonesia City with 145 samples taken based on a purposive sampling method and data analysis was accomplished using SEM-PLS. The results show that social capital was able to create and expand knowledge about customers, raw materials and competitors and is the key to obtain cheap and fast information that is useful for creating innovation. The support of parents, family members and business partners raise the confidence of entrepreneurs to achieve business success. Business strategy has a positive and significant effect on innovation capability and has no direct effect on success. The findings show that business strategy influences business success through innovation capabilities. At the time of the Covid-19 pandemic the business strategies developed and implemented by SMEs entrepreneurs in the city of Bali, Indonesia was not able to directly increase business success, but when they developed innovative business strategies, they were able to create something or a new system, unique and accepted by consumers, SMEs entrepreneurs success increases business.