The Effect of Financial Management Quality, Product Innovation, and Digital Marketing on Micro Business Growth in the Jakarta Culinary Sector

ABSTRACT


INTRODUCTION
The growth trajectory of microenterprises in Jakarta's culinary sector is influenced by factors such as financial management practices, product innovation, and adoption of digital marketing strategies.These factors play a crucial role in shaping the success and sustainability of micro-businesses in the city's vibrant food culture.Financial management practices, including effective capital management and efficient production processes, have a direct impact on the income and profitability of micro-enterprises [1].Additionally, product innovation is essential for staying competitive in the culinary sector, as it allows businesses to cater to changing consumer preferences and stand out in a crowded market [2].Furthermore, the adoption of digital marketing strategies, such as utilizing mobile applications and online platforms, can significantly enhance the visibility and reach of micro-enterprises, enabling them to connect with a wider customer base and increase sales [3], [4].By focusing on these factors, micro-enterprises in Jakarta's culinary sector can navigate the challenges and leverage the opportunities presented by the dynamic food industry.
Micro-enterprises in emerging markets such as Jakarta, Indonesia, have significant economic importance as they contribute to employment, economic vitality, and cultural identity.These enterprises face various challenges, including limited resources and the need to adapt to dynamic markets [5]- [7].Efforts to empower micro, small, and medium-sized enterprises (MSMEs) include providing access to financial resources, technical assistance, and business development support [8].In addition, it is crucial to consider the overlap between MSMEs and household business activities, as MSME performance is closely linked to household economic well-being [9].The role of MSMEs in the Indonesian economy can be seen from their contribution to labour absorption, gross domestic product, and fixed capital creation.However, many MSMEs in Jakarta and Lampung face classic problems related to capital and marketing, which highlights the need for initiatives to improve their financial literacy.To serve micro enterprises effectively, banking services must be tailored to their financial behaviour and needs, taking into account factors such as lack of clarity in recording transaction data and preference for informal financial services.Therefore, understanding the intricate relationship between financial management, product innovation, digital marketing, and business growth is crucial to the success of micro-enterprises in the culinary sector.Financial management, product innovation, and digital marketing are important factors for the growth of microenterprises in Jakarta's culinary sector.This study aims to investigate the dynamics and combined impact of these elements on microenterprise growth.The research will use quantitative analysis to provide empirical evidence on the individual and combined effects of quality financial management, product innovation, and digital marketing [1], [10].The study will fill the gaps in understanding these specific dynamics in the context of microenterprises in Jakarta's culinary sector.
This study aims to answer the aforementioned research problems through several main objectives.First, to evaluate the quality of financial management practices among micro-enterprises in Jakarta's culinary sector, with a focus on understanding financial decision-making processes, budgeting effectiveness, and overall resource management.Secondly, this study aims to evaluate the level of product innovation implemented by micro-enterprises in the culinary sector, by exploring the extent to which they undertake innovations such as menu diversification, culinary creativity, and responsiveness to consumer preferences.Next, the research will analyse the adoption and impact of digital marketing strategies on the growth of micro-enterprises in Jakarta's culinary sector, focusing on the use of digital marketing tools, platforms and strategies, and evaluating the correlation between digital marketing efforts and business growth.Finally, this research has the overarching goal of examining the combined influence of financial management, product innovation and digital marketing on micro-enterprise growth in the culinary sector, with the hope of providing a comprehensive understanding of how synergies between financial management practices, product innovation and digital marketing can contribute to the dynamic growth of micro-enterprises in Jakarta.

Financial Management Quality
Effective financial management is critical to the success and sustainability of any business, including micro-enterprises in the culinary sector.Good financial practices such as accurate budgeting, financial planning, and efficient resource allocation have been shown to have a positive correlation with business performance and growth [11], [12].Research has shown that businesses with strong financial management practices are better equipped to navigate economic uncertainty and position themselves for sustainable growth [13].For micro-businesses, understanding and optimising financial resources becomes critical for survival and expansion [14].By implementing effective financial management strategies, businesses can not only ensure their survival, but also position themselves for long-term growth and success [15].Thus, assessing the quality of financial management practices among micro businesses in the Jakarta culinary sector is crucial for understanding their growth dynamics.

Product Innovation
Product innovation is indeed a key driver of growth, especially in a dynamic industry like the culinary sector.Continuous innovation allows businesses to stay relevant and fulfill evolving consumer preferences.Research has shown that micro-enterprises that actively engage in product innovation often gain a competitive advantage in the market [16], [17].This includes not only traditional product development, but also includes menu diversification, culinary creativity, and the ability to respond quickly to changing tastes and trends.By embracing product innovation, micro-enterprises can differentiate themselves from competitors and attract customers with unique offerings [18].Moreover, product innovation can help micro-enterprises to stay ahead of the curve and adapt to the ever-changing market landscape.Therefore, micro-enterprises in the culinary sector must prioritise product innovation as a strategic approach to drive growth and maintain competitive advantage.Understanding the level of product innovation implemented by micro businesses in the Jakarta culinary sector is critical for discerning their capacity to adapt and thrive in a highly competitive market.

Digital Marketing
The advent of digital marketing has revolutionized the way businesses interact with consumers.In the culinary sector, micro businesses can leverage digital platforms for brand promotion, customer acquisition, and sales growth.Market orientation and digital marketing capabilities have been found to significantly impact the marketing performance of digital MSMEs in the culinary sector [19]- [20].Additionally, digital literacy and business strategy have been shown to have a positive effect on the performance of culinary micro, small, and medium enterprises [21].Effective utilization of digital marketing techniques can enhance brand engagement and influence consumer behavior, leading to improved business performance [22].Furthermore, the use of digital influencers as a marketing strategy has been found to provide a competitive advantage for businesses in the gastronomic market [23].The existence of digital food buying and selling platforms, such as Go Food and Grab Food, has also been shown to have a strong impact on increasing the profit of culinary businesses [24].Exploring the role of digital marketing in the Jakarta culinary sector is essential for understanding how micro businesses harness online platforms to augment their growth strategies.

Micro Business Growth
Micro business growth in the culinary sector is influenced by various factors.Financial inclusion and financial literacy have a significant and positive impact on the performance of micro, small, and medium enterprises (MSMEs) in the culinary sector [1].Market-driving practices, such as taking risks, innovativeness, and proactive category building, contribute to the growth of food micro-businesses in the local food sector [12].The success of MSMEs in the culinary sector is also influenced by the family environment, entrepreneurial characteristics, and innovation capabilities [25].Factors such as business capital, number of workers, length of business, and digital marketing play a role in determining the income of MSMEs in the culinary sector [26].Therefore, a combination of financial factors, market-driving practices, entrepreneurial characteristics, and effective marketing strategies can contribute to the growth and success of micro businesses in the culinary sector.By examining financial management quality, product innovation, and digital marketing in concert, this research seeks to elucidate the interconnectedness of these factors in driving micro-business growth.

METHODS
This study employs a quantitative research design to investigate the relationship between financial management quality, product innovation, digital marketing, and micro-business growth in the Jakarta culinary sector.The research design is cross-sectional, collecting data at a single point in time, and utilizing a survey instrument to gather information from micro businesses.This design allows for a comprehensive analysis of the selected variables and their interplay.

Sampling
A stratified random sampling approach will be employed to ensure representation from various subsectors within the Jakarta culinary industry.The target population includes micro businesses such as food stalls, small eateries, and family-owned restaurants.A sample size of 150 micro businesses will be selected based on statistical power analysis to ensure the reliability and validity of the findings.

Data Collection
Data will be collected through a structured survey instrument designed to capture information related to financial management practices, product innovation, digital marketing strategies, and growth indicators.The survey will include both closed-ended and Likert scale questions, allowing for quantitative data collection.The survey instrument will be pre-tested on a small subset of the target population to ensure clarity and relevance.

Variables and Measures
Financial Management Quality: This variable will be measured based on factors such as budgeting effectiveness, financial planning accuracy, and resource allocation efficiency.Respondents will be asked to rate their agreement with statements related to financial management practices on a Likert scale.
Product Innovation: The level of product innovation will be assessed by considering the frequency of menu updates, introduction of new dishes, and customer feedback on innovation.Respondents will be asked about their innovation practices and perceptions of innovation in the culinary sector.
Digital Marketing: The adoption and impact of digital marketing strategies will be measured through channels used, frequency of online promotions, and the correlation between digital marketing efforts and customer acquisition.Questions will cover the range and effectiveness of digital marketing practices employed by micro businesses.
Micro Business Growth: Growth indicators will include financial metrics (revenue increase, profit margins), market share expansion, and customer base growth.Respondents will be asked to provide quantitative data on their business performance over a specified period.

Data Analysis
The data analysis for this study will employ Structural Equation Modeling (SEM) with Partial Least Squares (PLS) path modeling.PLS-SEM is deemed suitable for its ability to examine complex relationships among multiple variables, even with a relatively small sample size (Hair et al., 2017).The analysis will comprise two stages: measurement model assessment and structural model assessment.In the measurement model assessment stage, Confirmatory Factor Analysis (CFA) will be utilized to evaluate the reliability and validity of the measurement model, ensuring that the selected variables effectively measure the underlying constructs.Moving to the structural model assessment stage, the analysis will assess the strength and significance of relationships between financial management quality, product innovation, digital marketing, and micro-business growth.This comprehensive evaluation will provide insights into both the direct and indirect effects of each variable on the overall growth of the businesses under study.

Demographic Sample
The Jakarta culinary sector exhibits a diverse landscape of micro-businesses, encompassing food stalls (40%), small eateries (35%), and family-owned restaurants (25%).This distribution ensures a comprehensive representation of the sector's culinary diversity.In terms of operational longevity, the majority (45%) of surveyed businesses have been in operation for 1-5 years, reflecting a youthful and dynamic nature.Concurrently, a substantial presence of more established businesses is noted, with 30% operating for 6-10 years and 10% for over a decade, offering insights into the impact of experience on business dynamics.Financially, the annual revenue distribution underscores the sector's economic variety.Approximately 38% report revenue below IDR 100 million, indicating a segment of smaller enterprises.Meanwhile, 22% fall within the IDR 100 million to IDR 500 million range, 20% between IDR 500 million and IDR 1 billion, and another 20% report revenue exceeding IDR 1 billion.This nuanced distribution provides a comprehensive view of the financial scales characterizing the micro businesses in the Jakarta culinary landscape.

Measurement Model
The loading factors, Cronbach's Alpha, composite reliability, and average variance extracted (AVE) for each variable in the measurement model.The model fit statistics comparing a saturated model and an estimated model reveal consistent interpretations across various fit indices.Both models exhibit a reasonable fit, as evidenced by identical Standardized Root Mean Square Residual (SRMR) values of 0.103, reflecting the average standardized difference between observed and predicted correlations.The Unweighted Least Squares discrepancy (d_ULS) values of 0.822 for both models indicate a good fit, with identical values suggesting that the estimated model is not significantly worse than the saturated model in terms of unweighted least squares discrepancy.Bentler's Comparative Fit Index (d_G) values of 0.430 for both models suggest a reasonable fit, and the identical values imply that the estimated model is comparable to the saturated model in terms of Bentler's Comparative Fit Index.Chi-Square values of 304.332 for both models indicate no significant difference between observed and expected covariance matrices.Normed Fit Index (NFI) values of 0.730 for both models suggest a reasonable fit, with identical NFI values indicating comparability to the saturated model in terms of the normed fit index.In conclusion, the consistent findings across these fit indices collectively support the assertion that the estimated model provides a good fit to the data and is not significantly inferior to the saturated model, affirming its adequacy as a representation of the underlying structure implied by the data.

R Square
The R-squared (R²) and adjusted Rsquared (R² adjusted) values are metrics used to assess the goodness of fit of a regression model.In this context, they provide insights into how well the independent variables explain the variability in the dependent variable, Micro Business Growth.The R-squared (R²) value of 0.602 (60.2%) signifies that 60.2% of the variance in the dependent variable, Micro Business Growth, is elucidated by the independent variables (Financial Management Quality, Product Innovation, and Digital Marketing) in the model.On the other hand, the Adjusted R-Squared (R² adjusted) value of 0.592 (59.2%) considers the number of independent variables and penalizes the R² for irrelevant predictors.This more conservative measure suggests that, even after accounting for the number of predictors, approximately 59.2% of the variability in Micro Business Growth is still explained by the chosen independent variables.In summary, the high R² value implies the model's effectiveness in explaining a significant portion of the variability in Micro Business Growth, and the slightly lower adjusted R² indicates a modest penalty for predictor inclusion.Nonetheless, both metrics underscore the collective contribution of the selected independent variables to elucidating the observed changes in Micro Business Growth.In assessing the hypotheses, the relationship between Digital Marketing and Micro Business Growth exhibits a substantial effect, with an Original Sample mean (O) of 0.626, a Sample Mean (M) of 0.624, and a Tstatistic of 5.565, resulting in a p-value of 0.000.This p-value, being less than conventional significance levels, provides robust evidence to reject the null hypothesis, strongly supporting the notion that Digital Marketing significantly impacts Micro Business Growth.The effect size, indicated by the T-statistic of 5.565, is large, further reinforcing the strength of this relationship.

Hypothesis Testing
Similarly, the hypothesis concerning Financial Management Quality and Micro Business Growth reveals a statistically significant impact.The Original Sample mean (O) is 0.442, the Sample Mean (M) is 0.443, and the T-statistic is 3.216, resulting in a p-value of 0.000.This low p-value supports the rejection of the null hypothesis, affirming the significant influence of Financial Management Quality on Micro Business Growth.Though the effect size, indicated by the T-statistic of 3.216, is slightly smaller than in the Digital Marketing hypothesis, it still denotes a substantial impact.
For the hypothesis involving Product Innovation and Micro Business Growth, the Original Sample mean (O) is 0.348, the Sample Mean (M) is 0.342, and the T-statistic is 2.395, yielding a p-value of 0.002.The p-value being less than conventional significance levels indicates significant evidence to reject the null hypothesis, supporting the idea that Product Innovation has a notable impact on Micro Business Growth.While the T-statistic is smaller than in the previous hypotheses, it still suggests a moderate effect size.In summary, all three hypotheses demonstrate statistically significant relationships, with varying effect sizes, affirming the importance of Digital Marketing, Financial Management Quality, and Product Innovation in influencing Micro Business Growth.

DISCUSSION Financial Management Quality and Micro Business Growth
The strong positive relationship between Financial Management Quality and Micro Business Growth aligns with prior research emphasizing the pivotal role of sound financial practices.Micro businesses exhibiting better financial management experience substantial growth, reinforcing the significance of financial acumen in the Jakarta culinary sector.

Product Innovation and Micro Business Growth
The positive impact of Product Innovation on Micro Business Growth underscores the adaptability and responsiveness of businesses to evolving consumer preferences.Innovation in culinary offerings is vital, with consumers seeking unique and diverse experiences, contributing significantly to business growth.

Digital Marketing and Micro Business Growth
The robust positive relationship between Digital Marketing and Micro Business Growth highlights the transformative power of effective digital strategies.In a digitally-driven era, businesses leveraging online platforms and marketing tools experience accelerated growth, showcasing the dynamic nature of the Jakarta culinary sector.

Comparison with Literature
The findings of this study align with existing literature on small business growth.Financial inclusion and financial literacy have a significant and positive influence on the performance of MSMEs in the culinary sector in Surakarta City [12]

Table 1 .
Validity and ReliabilityTo assess discriminant validity, the study examines the square root of the Average Variance Extracted (AVE) in comparison to the inter-construct correlations of the four constructs considered-Digital Marketing, Financial Management Quality, Micro Business Growth, and Product Innovation.The results indicate that Digital Marketing exhibits discriminant validity, with its square root of AVE (0.823) surpassing correlations with Financial Management Quality (0.714), Micro Business Growth (0.759), and Product Innovation (0.823).Financial Management Quality also demonstrates discriminant validity, as its square root of AVE (0.840) exceeds correlations with Digital Marketing (0.823), Micro Business Growth (0.653), and Product Innovation (0.732).Similarly, Micro Business Growth establishes discriminant These consistent findings affirm that each construct maintains discriminant validity, as the square root of AVE for each construct consistently surpasses the respective inter-construct correlations, confirming the distinctiveness of Digital Marketing, Financial Management Quality, Micro Business Growth, and Product Innovation within the study.

Table 5 .
Hypothesis Testing [19]ganizational agility and open innovation predict the competitive advantage of the culinary industry in MedanCity[27].Market orientation and digital marketing capabilities affect the marketing performance of digital MSMEs in Surabaya's culinary sector[19].Entrepreneurial orientation influences company performance through competitive advantage in SMEs in the culinary sector in Indonesia[28].Digital finance, digital payments, and digital marketing have a positive and significant influence on the financial performance of MSMEs in the food and beverage sector in Indonesia[29].These findings provide insights into the applicability and nuances of financial management, innovation, and digital marketing in fostering growth within the Jakarta culinary sector.