OIDA International Journal of Sustainable Development
Open-access peer-reviewed journal
https://doi.org/10.64211/oidaijsd190519
Entrepreneurship Education, Capability Development, and SME Performance in a Developing Economy: Evidence from Indonesia
Nilawati Fiernaningsih ¹*, Pudji Herijanto 2, Anna Widayani 3
1,2 Department of Business Administration, State Polytechnic of Malang, Malang City, Indonesia
3 Department of Digital Offices Operationalization, State Community College of Putra Sang Fajar, Blitar, Indonesia.
*Correspondence authour: nilafh@polinema.ac.id
Volume 19, Issue 05, Pg. 257-272, 2026
Abstract: Entrepreneurship education and training (EET) is widely promoted as a strategic instrument to strengthen small and medium-sized enterprises (SMEs) and support inclusive economic development in emerging economies. However, empirical evidence on how EET translates into superior SME performance remains mixed, particularly in contexts characterized by institutional constraints and resource scarcity. This study aims to examine whether the effects of EET on SME performance operate primarily through entrepreneurial competence and entrepreneurial intention or whether EET exerts a more direct influence on business outcomes. The study draws on survey data from 400 SME owners in five cities in East Java, Indonesia. The relationships between EET, entrepreneurial competence, entrepreneurial intention, and SME performance were analyzed to test both direct and mediated pathways linking education to firm performance. The results show that EET has a positive and significant direct effect on SME performance and significantly enhances both entrepreneurial competence and entrepreneurial intention. Entrepreneurial competence also positively influences entrepreneurial intention. However, neither competence nor intention significantly affects SME performance, and neither variable mediates the relationship between EET and performance. These findings reveal a persistent intention–action gap under institutional weakness and resource constraints, where improvements in skills and motivation do not automatically translate into superior firm outcomes. The study demonstrates that education-driven capability building alone is insufficient to generate sustainable SME growth and highlights the need to integrate EET with broader ecosystem support to enable performance gains.
Keywords: emerging economies; entrepreneurial competence; entrepreneurship education; intention–action gap; SME performance
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