The Mediating Role of Absorptive Capacities on the Relationship of Human Capital and Social Capital on Innovation Capabilities (Study on Woman Entrepreuner in North Sulawesi, Indonesia)

Abstract

Purpose: The aim of this study is to examine the relationship between human capital and social capital on innovation capabilities mediated by absorptive capacities. The study was conducted on business in North Sulawesi Province, Indonesia managed by women entrepreneurs. Theoretical framework: The human capital, social capital and absorptive capacities are expected to be the causal relationship model to influence the business innovation ability of women entrepreneurs. Design/Methodology/Approach: The quantitative survey method was chosen to test the causal relationship established. This research was conducted in North Sulawesi, Indonesia. The 187 data collected were tested using PLS-SEM with the SmartPLS 3.29 application. Findings: The results of this study indicate that absorptive capacities significantly directly influence innovation capabilities. Absorptive capacities also mediate the relationship between human capital and innovation capabilities of business managed by women entrepreneurs in North Sulawesi. Research, practical & social implications: The study found the ability of business innovation managed by women entrepreneurs could develop if being supported by absorptive capacities. Absorptive capacities could become a significant mediating construct in the relationship between human capital and innovation capability due to the success of knowledge, abilities and skills to generate an innovation. Originality/Value: The causal relationship between human capital, social capital and absorptive capacities as mediating variables is not widely discussed in the entrepreneurship literature, especially for women entrepreneurs. Therefore, this is considered as novelty offered in this research.