SMEs play a crucial role in Indonesia's economy by generating employment and contributing significantly to national economic growth. Despite their importance, many SMEs continue to face challenges such as limited capital, inadequate managerial capability, and insufficient adoption of digital technology. Financial Technology has emerged as a promising solution by offering digital payment systems, mobile banking, financing services, and financial management applications. Nevertheless, the study highlights that technology alone cannot guarantee stronger financial performance if business owners lack the capability to maximize its potential.
To better understand these relationships, Dominica Pricilia C. E. F. and Hariyati examined how Financial Technology, managerial capability, and technological capital influence the financial performance of SMEs in Surabaya. The researchers surveyed SME owners who actively use FinTech services and maintain business financial records. Responses were analyzed using the Structural Equation Modeling–Partial Least Squares (SEM-PLS) method, enabling the researchers to evaluate both direct and indirect relationships among the variables.
The study produced several noteworthy findings that challenge the common assumption that digital finance automatically improves business outcomes.
Key Findings
- Financial Technology does not have a significant direct effect on SME financial performance (β = -0.004; p = 0.482).
- Financial Technology positively and significantly improves technological capital (β = 0.266; p = 0.005).
- Managerial capability positively influences financial performance (β = 0.162; p = 0.022).
- Managerial capability also strengthens technological capital (β = 0.330; p < 0.001).
- Technological capital is the strongest determinant of financial performance (β = 0.633; p < 0.001).
- Technological capital fully mediates the relationship between Financial Technology and financial performance, while it partially mediates the relationship between managerial capability and financial performance.
These findings indicate that FinTech serves primarily as an enabling tool rather than a direct source of business growth. Digital financial applications contribute to better financial outcomes only when SME owners possess the technological skills needed to integrate them into broader business operations.
The study defines technological capital as the collection of digital capabilities that businesses possess, including proficiency in using digital applications, business software, technology infrastructure, and the ability to adapt to technological change. SMEs with stronger technological capital are more capable of improving operational efficiency, accelerating business processes, and managing financial resources effectively.
Managerial capability also emerged as a critical factor in business success. SME owners with stronger planning, organizing, decision-making, and controlling skills consistently achieved better financial performance. Moreover, effective management enhances a firm's ability to adopt and utilize technology, creating additional improvements in overall business performance.
According to Dominica Pricilia C. E. F. and Hariyati from Surabaya State University, the research reinforces the idea that successful digital transformation depends not only on investing in digital tools but also on developing the human capabilities required to use those tools strategically. Technology delivers value when supported by competent management and continuous learning.
The findings carry important implications for SMEs, policymakers, and business development organizations. For SME owners, the research suggests that FinTech should be viewed as more than a payment solution. It should become part of a broader business management strategy that includes financial planning, operational efficiency, and technology-driven decision-making. For governments and SME support institutions, the results highlight the importance of investing in digital literacy programs, managerial training, and technology mentoring rather than focusing solely on technology adoption.
From an academic perspective, the study strengthens two influential theories: the Technology Acceptance Model (TAM) and the Resource-Based View (RBV). TAM explains how perceived usefulness and ease of use encourage technology adoption, while RBV emphasizes that internal resources—such as managerial capability and technological capital—create sustainable competitive advantages. Together, these theories help explain why technology adoption alone cannot guarantee stronger financial performance without the necessary organizational capabilities.
The researchers also acknowledge several limitations. The study focused exclusively on SMEs located in Surabaya, limiting the generalizability of the findings to other regions. In addition, the research relied on questionnaire-based responses, making the results dependent on participants' perceptions. Future studies are encouraged to include broader geographical coverage, larger sample sizes, and additional variables such as financial literacy, innovation capability, entrepreneurial orientation, and external business factors. Longitudinal research is also recommended to better understand how technological capabilities evolve over time.
Author Profile
Dominica Pricilia C. E. F. is a researcher from the Faculty of Economics and Business, Surabaya State University (Universitas Negeri Surabaya/UNESA). Her research focuses on financial management, Financial Technology, digital transformation, and SME development.
Hariyati is a lecturer and researcher at the Faculty of Economics and Business, Surabaya State University (Universitas Negeri Surabaya/UNESA), specializing in management, business development, and technology-based business strategy.
Research Source
Article Title: The Effect of Financial Technology and Managerial Capability on Financial Performance Through Technological Capital in SMEs in Surabaya
Authors: Dominica Pricilia C. E. F. & Hariyati
Journal: International Journal of Management and Business Intelligence (IJBMI), Vol. 4 No. 3, 2026, pp. 475–488.
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