Optimizing MSME Performance: Revealing the Influence of Digital Marketing, Product Innovation, Service Quality and HR Competency

Abstract

This study attempts to elucidate the impact of human resource (HR) competency, product innovation, digital marketing, and service quality on the productivity of Micro, Small, and Medium-Sized Enterprises (MSMEs) in Jakarta. This study examines 120 MSME companies in Jakarta during the period 2003 to 2023. The research method used is Panel Vector Autoregression (PVAR) to analyze the influence effect of these variables on MSME performance. The research results show that digital marketing, product innovation, service quality and HR competency all have a significant positive impact on the performance of MSMEs in Jakarta. Improvements in digital marketing are consistently associated with improved MSME performance, while product innovation also contributes positively to performance. Better service quality and higher HR competency are also associated with improved MSME performance. Aside from that, digital marketing contributes significantly to increased HR proficiency competency, service quality, and product innovation. Product innovation also contributes positively to service quality and HR competency. Better service quality is associated with increased HR competency. These results support the hypothesis that these factors are interconnected and together improve the performance of MSMEs.