THE EFFECT OF PAYMENT GATEWAY MEDIATION ON THE INFLUENCE OF HUMAN CAPITAL ON FINANCIAL PERFORMANCE MICRO, SMALL AND MEDIUM ENTERPRISES

Abstract

Purpose: The purpose of this research is to empirically examine the relationship between human capital and the financial performance of Micro, Small, and Medium Enterprises (MSMEs), with payment gateways serving as a potential mediator. Given the significant contribution of MSMEs to economic growth and the challenges they face in financial management, this study aims to explore the role of human capital and payment gateways in enhancing the financial performance of MSMEs, thereby providing insights into strategies for improving the economic viability of this sector. Methods: The research employs a descriptive quantitative approach utilizing primary data. Hypothesis testing is conducted using WarpPLS 7.0 software. The study population consists of all MSMEs in the city of Surabaya, with a total of 100 respondents selected through random sampling. Data are collected to analyze the influence of human capital on financial performance, the impact of payment gateways on financial performance, and the potential mediating role of payment gateways in the relationship between human capital and financial performance. Results and Discussion: The test results indicate that human capital has a positive and significant effect on both the financial performance of MSMEs and the utilization of payment gateways. Additionally, payment gateways demonstrate a positive and significant impact on the financial performance of MSMEs. Furthermore, the findings suggest that payment gateways mediate the relationship between human capital and financial performance, indicating that the adoption of payment gateways enhances the link between human capital and financial outcomes in MSMEs. Implications of the Research: The research findings hold several implications for policymakers, MSMEs, and stakeholders involved in economic development. By highlighting the importance of human capital and payment gateways in improving the financial performance of MSMEs, this study underscores the significance of investing in workforce development and adopting digital payment solutions. Encouraging the use of payment gateways among MSMEs can mitigate financial management risks and enhance financial performance, thereby contributing to the overall economic growth and sustainability of the MSME sector. Originality/Value: This research contributes to the literature by examining the interplay between human capital, payment gateways, and financial performance in the context of MSMEs. By empirically testing the mediating effect of payment gateways, this study offers new insights into the mechanisms through which digital payment technologies can facilitate financial management and improve the economic viability of MSMEs. The findings provide practical implications for policymakers and MSME stakeholders seeking to leverage human capital and digital innovation to foster sustainable economic development.