“Social capital, entrepreneurial skills, and business performance among rural micro-enterprises in times of crisis”

The unprecedented COVID-19 crisis has adversely affected enterprise performance, which has led to inequalities, particularly for rural micro-entrepreneurs. Therefore, ensuring business survival through social capital and entrepreneurial skills as coping strategies for the rural micro-entrepreneurs is important to sustain their livelihoods. Both coping strategies can enhance the survival rate during a crisis, but there is limited knowledge on how enterprise performance of rural micro, Small and Medium-sized Enterprises (SMEs) can be improved. This study examined the linkages between social skills, entrepreneurial skills (knowledge, experience), and enterprise performance during a crisis. The Federal Land Development Authority (FELDA) Triangle Village was selected as a proxy for the rural population, and sampling frame of 543 micro-entrepreneurs was obtained from the Local District Office. A total of 150 questionnaires were distributed in a systematic random order based on a minimum sample size of 85 calculated using the G*Power statistical tool. The final 134 usable samples were analyzed using Structural Equation Modelling (SEM). The results ascertained that the direct positive effect of social capital on enterprise performance was significant (β = 0.521, t = 8.060, p < 0.001) and that social capital had a specific and indirect effect on enterprise performance through entrepreneurial skills (β = 0.520, LCL = 0.378, UCL = 0.651, p < 0.001). The study also reported the full mediating effect of entrepreneurial skills on the social capital-enterprise performance relationship. This study proposes practices to develop adaptive entrepreneurs that can adapt to crisis challenges.


INTRODUCTION
Recently, the world faced a worldwide crisis due to the COVID-19 pandemic.Businesses, particularly micro-enterprises, do not operate in a vacuum and are embedded in an entrepreneurial ecosystem influenced by external influences (Rashid & Ratten, 2021).The global COVID-19 pandemic has caused devastating economic impacts on enterprises, particularly SMEs, as the Malaysian government placed tight restrictions and movement control orders (MCO).Social capital (SC) has emerged as a potential approach to increase living standards, and contribute to the development, growth, and change promotion among micro-entrepreneurs.In addition, micro-entrepreneurs require SC networks and relationships to manage emergencies (Muniandy et al., 2014).Most businesses require additional resources to maintain or gain a competitive advantage when competing.Therefore, businesses must build their networks to achieve that goal.Establishing good connections and improving business relationships are vital for long-term success (Nikolić et al., 2019).Entrepreneurial skills (ES), such as effective communication, creativity, and critical thinking are associated with being an entrepreneur and aid businesses to become more compelling and capable.Poor training results in low competitiveness affects long-term sustainability, entrepreneurial abilities, and growth (Zainol, 2018).Various studies have investigated the mediating effect of SC on micro-enterprise success, such as microfinance (Nordin et al., 2019) and cultural generality (Baron & Tang, 2009).Nonetheless, there are limited studies on how ES can mediate the relationship between SC and micro-enterprise performance.Therefore, it is critical to investigate the mediating influence of ES (knowledge, experience) in the relationship between SC and micro-enterprise performance to understand how these skills can contribute to micro-enterprise performance.

LITERATURE REVIEW, AIM AND HYPOTHESES
Various countries around the world are elevating entrepreneurial activities to boost the economy and promote social change.The Malaysian government has enhanced entrepreneurial activity by implementing various government initiatives, and the new entrepreneurship policy was also introduced to create a holistic entrepreneurial ecosystem and develop Malaysia into an entrepreneurial nation by 2030.Entrepreneurial empowerment is a crucial government agenda to ensure a sustainable economy and alleviate poverty.Inclusively, SME entrepreneurship in the FELDA community has given a priority to ensure a rampant economic development for FELDA settlers and promote sustainable livelihoods for rural people (Shuhaimi et al., 2019).Many countries have enacted travel restrictions and movement controls due to the COVID-19 pandemic, affecting small enterprises.Micro-enterprises will be affected harder than larger ones (Fabeil et al., 2020) because they do not have a structured or systematic crisis management strategy and utilize ad-hoc actions to minimize impacts.Access to resources and facilities is challenging for microbusiness owners in developing countries.Therefore, it is vital to provide assistance and support services targeted to their needs to manage their enterprises during a crisis (Fabeil et al., 2020 (Batjargal, 2003).Furthermore, trust, networks, and norms, which make up SC, can significantly impact micro-enter-prises output, internal procedures, performance and resources (Analia, et al., 2020).Businesses that operate in a dynamic environment are more likely to generate monetary achievement, indicating strong business performance (Tajeddini & Mueller, 2018).The ES are critical for micro-entrepreneurs to develop strong networks, positive social interactions, lower transaction costs between firms, and positive new enterprises performances (Chen et al., 2007).
The SC theory served as the foundation for this study.According to Bourdieu (1977), SC is a sum of existing or potential resources linked to a durable mutual knowledge and recognition network.People can profit from using interpersonal embedded links, such as neighborhood, peers, colleagues, and family interactions, to develop SC and wealth.
The SC creates a strong sense of community and the ability to run a business more efficiently due to social connections with family members, friends, co-workers.Entrepreneurs often make decisions based on relationships, recommendations from colleagues, and other connections, which can impact small businesses ( Therefore, in view of previous literature study, the current study proposes a research model (see Figure 1) to develop a crisis coping mechanism framework for small businesses to ensure sustainable rural economic development.
As the study aims to investigate the link between social capital, entrepreneurial, and micro-enterprise performance, the four (4) hypotheses were formulated as follows: H1: SC positively influences micro-enterprise performance.
H4: An entrepreneur's ES positively mediates the relationship between SC and micro-enterprise performance.

METHODS
The

RESULTS
The study reported that 70.9% of the 134 micro-entrepreneurs were female, 63.4% were below 29 years old, and 6.7% were above 50 years old.50.7% of respondents completed their secondary school education, while 49.3% obtained their tertiary education.In addition, approximately 51.5% had concentrated their business in the service sector, while others focused on selling household essentials, such as apparel, women's accessories, electrical, books and stationaries, plastics, and hardware appliances.Notably, 36.6% of respondents operated for less than three years, and 29.9% have operated their business for more than 10 years.For instance, approximately 54.5% of enterprises used internal or self-financing, followed by 23.9% that obtained loan arrangements from banking institutions, and 22.2% obtained financial assistance from various government-linked agencies.3) met the threshold value of 3.3 and 5.0 (Hair et al., 2017).Therefore, the single-source data bias in this study was irrelevant.In addition, the reliability and validity of the outer model were also assessed.Firstly, the reflective constructs (EP [EP1-EP6] and SC [SC1-SC3]) were examined, followed by the three first-order ES reflective constructs (marketing skill [MK1-MK8], finance skill [FIN1-FIN4], and people skill [PS1-PS8]).Subsequently, the ES reliability and validity as a second-order composite construct were calculated based on the three first-order reflective constructs scores, thus representing the ES second-order construct and dimensions weight (Rasoolimanesh et al., 2019).Msomi and Nzama (2022) argue that financial knowledge has a beneficial effect on SME loan repayments.Moreover, SMEs with financial knowledge have no problem paying off their loans.
The value of the associated items outer loadings, average variance extracted (AVE), and composite reliability (CR), as depicted in Table 4, was higher than the acceptable thresholds of 0.7, 0.5, and 0.7, respectively (Falahat et al., 2020;Hair et al., 2017).None of the associated items outer loadings were removed from the reliability and convergent validity assessment.
Further assessment was carried out to evaluate the discriminant validity of the constructs using the Heterotrait-Monotrait Ratio of Correlations (HTMT) criterion (Henseler et al., 2015).As depicted in Table 5, the lowest and the highest HTMT values were 0.646 and 0.857, respectively.The highest value was above the threshold value based on Franke and Sarstedt's (2019) study, which corroborated the correlations ratio between the SC and people skills (HTMT 0.90 or HTMT 0.85 ).All the HTMT values confirm the discriminant validity.

DISCUSSION
This study investigated the mediating role of ES in the relationship between SC and EP in rural FELDA Triangle Village micro-entrepreneurs during the COVID-19 crisis.Based on the results, the ES positively mediated the relationship between SC and EP during the pandemic and was found to be an acceptable model (see Figure 2 and Table 7).Additionally, SC significantly and positively contributed to micro-enterprises performance levels during the crisis.Hypotheses H2 and H3 were also accepted as there was a positive and significant relationship contributing to ES and EP of micro-entrepreneurs.

CONCLUSION
The objective of the study is to examine the relationship between social capital and performance of micro-entrepreneurs in a rural, regional community of FELDA.The study findings demonstrated that social capital has a positive and significant influence on enterprise performance.Furthermore, entrepreneurial skills that comprise marketing, finance, and people skills (knowledge, experience) were found as a significant mediator that had an indirect positive effect on the social capital and enterprise performance relationship.These findings postulated that understanding the role of entrepreneurial skills through the social capital and performance perspective is vital to equip micro-entrepreneurs to manage adversity.This study elucidated that micro-entrepreneurs in rural segments can minimize the negative crisis impacts if they are willing to equip themselves with the appropriate entrepreneurship skills.It can be observed that acquiring appropriate skills is vital for generating adaptive entrepreneurs to overcome unexpected future challenges.Ongoing training programs that emphasize recent technology development can be incorporated into existing marketing, finance, and people knowledge modules to generate adaptive entrepreneurs.Social media marketing, such as Facebook and Instagram, has assisted small business entrepreneurs in surviving the crisis.As business environments are becoming more complex and volatile, therefore, skill-based modules and training programs should be developed.Additionally, continuous learning is a crucial skill to ensure entrepreneurs' survival, and mentoring is an effective learning tool for small businesses.Mentoring can enhance business performance by facilitating knowledge, skills transfer, and increasing survival likelihood during a crisis.The study therefore opens up an opportunity for future research to examine additional factors that can expand the theoretical view of crisis management in small businesses, particularly in rural regions. ).

Table 1 .
Descriptive results

Table 3 .
Full collinearity assessment

Table 6 .
Structural path analysis: direct effects

Table 7 .
Structural path analysis: the mediation effect of entrepreneurial skills