The effect of social capital and knowledge sharing to the small medium enterprise's performance and sustainability strategies

Purpose The development of small- and medium-sized enterprises (SMEs) in Indonesia is one of the national economic development priorities. SMEs have given benefits for society, especially in creating a fair income distribution and supporting economic growth. This paper aims to examine and analyze the impact of social capital and knowledge sharing on the sustainability strategy and performance of SME and to formulate policies about SMEs in the future. Design/methodology/approach This research was carried out in Riau Province, which is the closest province to Malaysia and Singapore. The authors collected data from 56 SMEs in trading and craft industries by using the purposive sampling method. The data were analyzed using partial least square technique. Findings The result of data analysis shows that social capital and knowledge sharing significantly affect the sustainability strategy of SMEs. Furthermore, sustainability strategy and knowledge sharing affects SME performance significantly, whereas social capital does not affect its performance. Originality/value A participatory approach (partial least square) was used, the location of the research was Riau Province, Indonesia and the participants in this study are the perpetrators of the micro-, small- and medium-sized enterprises. This method and location have not been considered in earlier studies.