Intellectual Capital, Innovation and Sustainable Growth in Micro, Small and Medium Enterprises in the Fashion Sector

Abstract

Purpose - This research examines how intellectual capital, innovation, and sustainable growth correlate in Micro, Small, and Medium Enterprises (MSMEs) within the fashion industry. Moreover, it investigates how innovation's mediating role influences the relationship between intellectual capital and sustainable growth. Methodology - This research employed a quantitative correlational approach. Data was gathered via online questionnaires distributed to 200 owners or managers of fashion sector MSMEs in Palembang City through a purposive sampling technique. The researchers analyzed data by employing Structural Equation Modeling (SEM). Findings - The analysis reveals that intellectual capital significantly and positively influences Inn, while Inn serves as a partial mediator linking intellectual capital to sustainable growth. The variance in Inn is explained by 79.1%, and the variance in sustainable growth is explained by 92.7% through the research model, highlighting the impact of effective intellectual capital management on fostering innovation and sustainable growth. Originality - This research makes a new contribution by integrating intellectual capital, innovation, and sustainable growth in the context of fashion sector MSMEs in developing countries. The research confirms the importance of intellectual capital management as a catalyst for innovation and sustainable growth, especially in MSMEs in Palembang.