ENTREPRENEURIAL ORIENTATION AND FIRM PERFORMANCE OF GENERATION Z–LED MSMES IN THE DIGITAL ERA

Abstract

Digital transformation has become a primary driver of structural changes in the MSME sector in Indonesia, particularly among Generation Z who increasingly manage technology-based businesses. This study aims to examine the effect of entrepreneurial orientation on MSME performance managed by Generation Z, with digital competence as a mediating variable. The research employed Structural Equation Modeling (SEM) using 190 MSMEs in Jambi City as the sample. The results indicate that the entrepreneurial orientation of Generation Z has a positive and significant effect on digital competence. Digital competence also plays a crucial role in strengthening MSME performance, while entrepreneurial orientation has an indirect effect on performance through digital competence. These findings highlight that the combination of strong entrepreneurial orientation and digital proficiency is a key factor in enhancing the performance and sustainability of MSMEs in the digital era.