Measurement of model technological literacy, financial literacy, and financial risk attitude and SMEs’ performance

Abstract

This study aims to verify the construct validity of the measurement model, confirmatory factor analysis (CFA) of technological literacy, financial literacy, financial risk attitude, and performance of SMEs in West Sumatra, to test the similarity of the measurements that have been hypothesized by the model on the collected data. In this study, structural equation modeling (SEM) was used to answer research questions. Based on the results of observations of 344 SMEs, it was found that the hypothesized measurement model was following the data indicated by the fit index and significant loading factor. The technological literacy variable has the following factor loading values ​​(0.76), (0.72), (0.84), (0.69), (0.44), (0.73). The technological literacy indicator has a value of more than 0.3 which indicates that convergent validity is achieved. Each financial literacy variable has a loading factor value as follows (0.85), (0.67), (0.73), (0.60), (0.76), (0.73), ( 0.77), (0.67), (0.73), (0.59). The financial literacy indicator has a value of more than 0.3 which indicates that convergent validity is achieved. In addition, the financial risk attitude variable has the following factor loading values ​​(0.57), (0.41), (0.97), (0.60), (0.88), (0.66). The financial risk attitude indicator has a value of more than 0.3 which indicates that convergent validity is achieved. And lastly, the SME performance variable has the following factor loading values ​​(0.82), (0.95), (0.66), (0.82), (0.92), (0.93). This means that all measures can describe the company's performance.