Accelerating MSME Performance in Bantul Yogyakarta Through Product Innovation: The Role of Financial Literacy, Digital Marketing, Capital Access, and Financial Reporting Capability

Micro, Small, and Medium Enterprises (MSMEs) are the main pillars of the national and regional economy, contributing more than 60% of GDP and absorbing around 97% of the workforce. In Bantul Regency, Yogyakarta, MSMEs dominate local economic activity. However, MSME performance still faces structural challenges. The level of financial literacy of MSME actors is still below 40%, the use of digital marketing is not optimal (around 15–20%), and access to capital is limited, reflected in the portion of MSME credit, which is only 20–22%. Weak ability to prepare financial reports has an impact on low product innovation, so that the acceleration of MSME performance is not sustainable. This condition has an impact on low product innovation and MSME performance on an ongoing basis. Therefore, this study aims to analyze the influence of financial literacy, digital marketing, access to capital, and the ability to prepare financial reports on MSME performance with product innovation as an intervening variable. This study uses a quantitative approach with a survey method on MSME actors in Bantul Regency, Yogyakarta. Primary data were collected through structured questionnaires distributed to selected MSME owners or managers using purposive sampling techniques. Data analysis was conducted using the Structural Equation Modeling–Partial Least Squares (SEM-PLS) method to test direct and indirect relationships between variables, including the mediating role of product innovation.