The Effect of External Business Advice on SME Performance with Motivation and Managerial Skills as Mediating Variables

Abstract

The SME (Small and Medium Enterprises/UKM) environment provides a unique opportunity to examine the influence of external business advice, motivation, and managerial skills on SME performance. External business advice is defined as advice provided by external parties to support management information needs in business operations. The external business advice in this study comes from the Department of Cooperatives and SMEs. The purpose of this study is to determine and provide empirical evidence on the effect of external business advice, motivation, and managerial skills on SME performance. The object of this research is Small and Medium Enterprises (SMEs) assisted by the Department of Micro Enterprises and Cooperatives of Semarang City. The sample in this study consisted of 48 assisted SMEs in Central Semarang District, using a purposive sampling method. The study used SmartPLS for data analysis and questionnaires for data collection. The results show that external business advice has a positive effect on SME performance through intervening variables, namely motivation and managerial skills.