Exploring entrepreneurial capabilities and firm innovativeness to leverage financial technology start-up business performance

Abstract

Objective: This article examines the role of entrepreneurial capabilities and firm innovativeness in driving the business performance of financial technology (fintech) start-ups. By cultivating entrepreneurial orientation, innovation capacity, and knowledge creation, firms can enhance their competitive edge, adapt to market shifts, and achieve sustainable performance. Research Design & Methods: We conducted a quantitative study using a self-administered questionnaire and partial least squares structural equation modelling (PLS-SEM) to test our hypotheses. The sample included the management teams of 144 Indonesian fintech start-ups, each in operation for at least three years. Findings: Our analysis reveals that both entrepreneurial capabilities and firm innovativeness significantly and positively impact the business performance of fintech start-ups. Furthermore, firm innovativeness mediates the relationship between entrepreneurial capabilities and business performance. Specifically, entrepreneurial capabilities and firm innovativeness collectively explain 58.3% of the variance in business performance, while entrepreneurial capabilities account for 48% of the variation in firm innovativeness. Implications & Recommendations: This study demonstrates that firms with robust entrepreneurial capabilities are better equipped to identify and seize opportunities, leading to higher innovation and, consequently, stronger business performance. These findings suggest that fintech firms can enhance performance through increased market share, greater profitability from new products, and more efficient operations. We recommend that managers and entrepreneurs in the fintech sector use these insights to make informed decisions regarding resource allocation, strategic planning, and organisational design. Policymakers can also leverage these insights to develop programs that promote entrepreneurial capabilities and innovation, foster economic growth and boost competitiveness within the sector. Contribution & Value Added: Our study adds valuable insights to the dynamic and competitive fintech sector by demonstrating that cultivating entrepreneurial capabilities and fostering innovation within fintech firms can significantly enhance their performance outcomes. This research provides actionable guidance for both industry practitioners and policymakers seeking to drive growth and competitiveness in the fintech ecosystem.