Social Capital and Entrepreneurial Orientation on Micro- business Performance: A Study on Business Actors in East Nusa Tenggara

Micro-enterprises play a crucial role in regional economic development, particularly in
employment creation and poverty reduction. However, their performance in less-developed
regions remain constrained by limited resources and structural challenges. This study
examines the effects of social capital and entrepreneurial orientation on micro-enterprises
performance in East Nusa Tenggara, Indonesia. Using a quantitative explanatory approach,
data were collected through a survey of 50 micro-entrepreneurs in Kupang City and analyzed
using Partial Least Squares–Structural Equation Modeling (PLS-SEM). The results indicate
that both social capital and entrepreneurial orientation have positive and significant effects on
micro-enterprise performance. Entrepreneurial orientation, reflected in innovativeness,
proactiveness, and risk-taking, exhibits a stronger influence than social capital. Furthermore,
the two variables jointly explain 58.7% of the variance in micro-enterprise performance,
indicating substantial explanatory power. These findings highlight that non-financial factors
play a vital role in enhancing micro-enterprise performance, particularly in regions
characterized by strong social ties but limited institutional support. This study contributes to
the entrepreneurship literature by integrating social capital and entrepreneurial orientation
within a single empirical model and offers practical implications for micro-enterprise
development policies that emphasize not only financial assistance but also the strengthening of
social networks and entrepreneurial capabilities.