Digital adoption, innovation capability, and financial inclusion as drivers of MSME performance and creative industry development toward economic inclusivity in Indonesia

The immense and rapid growth of micro, small, and medium-sized enterprises (MSMEs), together with the creative industry, has kept these sectors as the primary engines for inclusive expansion in emerging economies despite empirical knowledge of how their performance supports NEI remaining insufficient. Regardless of their considerable economic presence in Indonesia, structural constraints related to financial access, digital capability, and innovation resources keep on impeding MSMEs’ transformative contribution. The main objective of this study is to investigate the role that innovation capability, digital adoption, and financial inclusion play in cementing the connection between the development of creative industry, MSME performance, and NEI. In so doing, the team conducted a cross-sectional survey with 210 MSME actors all over Indonesia, who were later analyzed utilizing partial least squares structural equation modeling. In the study, the findings show that financial inclusion and digital adoption immensely improve the performance of MSMEs, whereas the development of creative industry sturdily drives NEI through pathways of innovation. Despite that, innovation capability depicts insufficient direct impact on performance, which suggests that benefits of innovation materialize only under enough financial resources and absorptive capacity. The study provides a holistic conceptual framework that connects financial inclusion, innovation and digitalization to agendas of inclusive development. In contributing to MSME literature, the study integrates variables that were previously fragmented into a single empirical model in addition to offering actionable implications for policy makers in Indonesia who strive for inclusive digital economic transformation.