Digital Innovation and Financial Governance as Catalysts for Investor Trust in Start-Up in Yogyakarta
DOI:
https://doi.org/10.58812/wsis.v2i12.1527Keywords:
Digital Innovation, Financial Governance, Investor Trust, Start-Up, YogyakartaAbstract
Investor trust is a cornerstone for the growth and sustainability of start-ups, particularly in competitive entrepreneurial hubs like Yogyakarta. This study investigates the influence of digital innovation and financial governance on investor trust in start-ups. Using a quantitative approach, data were collected from 50 start-ups through a structured questionnaire measured on a Likert scale of 1-5. Data analysis with SPSS version 26 reveals that both digital innovation and financial governance significantly and positively influence investor trust. Moreover, the combined effect of these factors accounts for 62% of the variance in investor trust, underscoring their complementary roles. These findings highlight the importance of leveraging technological advancements and robust financial practices to foster investor confidence. The study contributes to the existing literature by providing empirical evidence of these relationships and offers practical implications for start-up founders and policymakers.
References
A. Klabunde, “How Much Should an Investor Trust the Startup Entrepreneur?,” Ruhr Econ. Pap., no. 450, 2013.
J. Muldoon, A. Bauman, and C. Lucy, “Entrepreneurial ecosystem: do you trust or distrust?,” J. Enterprising Communities People Places Glob. Econ., vol. 12, no. 2, pp. 158–177, 2018.
M. Hadizadeh, J. Ghaffari Feyzabadi, Z. Fardi, S. M. Mortazavi, V. Braga, and A. Salamzadeh, “Digital Platforms as a Fertile Ground for the Economic Sustainability of Startups: Assaying Scenarios, Actions, Plans, and Players,” Sustainability, vol. 16, no. 16, p. 7139, 2024.
Y. D. Safitri, R. Pebriana, and E. Suasri, “Prioritizing Success Factors for Start-ups in Indonesia Using the Best Worst Method (BWM): A Decision-Making Approach,” Front. Manag. Sci., vol. 1, no. 2, pp. 29–36, 2024.
A. Delhi and A. Sijabat, “The role of technology adoption in scaling startupreneur business models in the digital economy,” Startupreneur Bus. Digit. (SABDA Journal), vol. 3, no. 2, pp. 141–147, 2024.
M. R. I. Bhuiyan, M. R. Faraji, M. Rashid, M. K. Bhuyan, R. Hossain, and P. Ghose, “Digital transformation in SMEs emerging technological tools and technologies for enhancing the SME’s strategies and outcomes,” J. Ecohumanism, vol. 3, no. 4, pp. 211–224, 2024.
A. Dubey and R. Ranjan, “Assessing the Impact of Digital Transformation on Business Operations: A Case Study Analysis,” Econ. Sci., vol. 20, no. 2, pp. 146–158, 2024.
H. Kurniadi and J. A. S. Rana, “THE POWER OF TRuST: HOW DOES CONSuMER TRuST IMPACT SATISFACTION AND LOYALTY IN INDONESIAN DIGITAL BuSINESS?,” 2023.
L. Prince, S. Marvile, E. C. John, F. Wiljohn, and C. Centeno, “Web-based ordering system for Start-UP business with forecasting,” World J. Adv. Res. Rev., vol. 22, no. 3, pp. 357–368, 2024.
A. Rerung, E. S. Paranita, R. A. A. AY, B. Budiandru, and E. M. Tandililing, “The Influence of Fintech Innovations, ESG Reporting, and Blockchain Technology on Financial Transparency and Accountability,” J. Acad. Sci., vol. 1, no. 2, pp. 111–117, 2024.
K. B. Adeusi, T. O. Jejeniwa, and T. O. Jejeniwa, “Advancing financial transparency and ethical governance: innovative cost management and accountability in higher education and industry,” Int. J. Manag. Entrep. Res., vol. 6, no. 5, pp. 1533–1546, 2024.
W. Martens, D. T. H. Pham, and J. M. Pang, “A computational approach to transparency in corporate governance across borders,” VMOST J. Soc. Sci. Humanit., vol. 65, no. 3, pp. 51–65, 2023.
C. A. Parluhutan, Ermawati, and S. Widyastuti, “The Influence of Auditor Ethics, Auditor Motivation, Locus of Control on Audit Quality: Role of Professional Skepticism,” Univers. J. Account. Financ., vol. 10, no. 1, pp. 267–275, Jan. 2022, doi: 10.13189/ujaf.2022.100127.
J. A. Akuffo and J. A. Akuffo, “Walking a Fine Line: Governance, Accountability Mechanisms and Disclosure Literature,” Corp. Gov. Account. Financ. Institutions Power Illusion Qual. Corp. Discl., pp. 71–118, 2020.
F. Kidschun, A. Gandhi, and F. Hecklau, “A Literature Review: The Impact of Digital Transformation on Financial Performance,” in Proceedings of The 19th European Conference on Innovation and Entrepreneurship, Academic Conferences International.
E. Susanti, R. Y. Mulyanti, and L. N. Wati, “MSMEs performance and competitive advantage: Evidence from women’s MSMEs in Indonesia,” Cogent Bus. Manag., vol. 10, no. 2, 2023, doi: 10.1080/23311975.2023.2239423.
M. Sharma et al., “The Role of Functional Foods and Nutraceuticals in Disease Prevention and Health Promotion,” Eur. J. Nutr. Food Saf., vol. 16, no. 2, pp. 61–83, 2024.
S. V. A. M. Ali, M. Sharma, R. KK, K. Sidhu, D. S. Bhadauria, and S. Gupta, “Exploring the Impact of Digital Transformation on Business Operations and Customer Experience,” Const. Court Rev., vol. 12, no. 1, pp. 10–2989, 2022.
A. A. Vărzaru and C. G. Bocean, “Digital Transformation and Innovation: The Influence of Digital Technologies on Turnover from Innovation Activities and Types of Innovation,” Systems, vol. 12, no. 9, p. 359, 2024.
J. Yin, Y. Li, Z. Ma, Z. Chen, and G. Guo, “Impact of entrepreneurship on technological innovation in the digital age: a knowledge management perspective,” J. Knowl. Manag., vol. 28, no. 9, pp. 2750–2772, 2024.
P. G. Njoka, “The relationship between corporate governance practices and financial performance of property management companies in Kenya.” University of Nairobi, Kenya, 2010.
J. D. Patel, R. Shah, and R. H. Trivedi, “Effects of energy management practices on environmental performance of Indian small- and medium- sized enterprises,” J. Clean. Prod., vol. 333, p. 130170, 2022, doi: https://doi.org/10.1016/j.jclepro.2021.130170.
Z. Lu, “Governance and the financial performance of charitable foundations.” Queensland University of Technology, 2022.
S. Mishra and P. Mohanty, “Does good governance lead to better financial performance?,” Int. J. Corp. Gov., vol. 9, no. 4, pp. 462–480, 2018.
N. Fatmawatie and E. Endri, “Implementation of the principles of financial governance in service companies,” J. Gov. Regul., vol. 11, no. 4, pp. 33–45, 2022.
H. Lu, H. Shuai, Y. Li, J. Liu, and B. Liang, “Confession and the Crime Control Model: an Analysis of Exonerated Death Penalty Cases in China,” Asian J. Criminol., vol. 17, no. Suppl 1, pp. 33–54, 2022.
T. Mickiewicz and A. Rebmann, “Entrepreneurship as trust,” Found. trends® Entrep., vol. 16, no. 3, pp. 244–309, 2020.
K. K. Ogujiuba, E. Olamide, A. I. Agholor, E. Boshoff, and P. Semosa, “Impact of Government Support, Business Style, and Entrepreneurial Sustainability on Business Location of SMEs in South Africa’s Mpumalanga Province,” Adm. Sci., vol. 12, no. 3, Sep. 2022, doi: 10.3390/admsci12030117.
N. Strauß, “The role of trust in investor relations: a conceptual framework,” Corp. Commun. An Int. J., vol. 23, no. 1, pp. 2–16, 2018.
J. Middelhoff, R. Mauer, and M. Brettel, “Antecedents of entrepreneurs’ trust in their investor in the postinvestment phase–do something good!,” Ventur. Cap., vol. 16, no. 4, pp. 327–347, 2014.
L. Bottazzi, M. Da Rin, and T. Hellmann, “The importance of trust for investment: Evidence from venture capital,” Rev. Financ. Stud., vol. 29, no. 9, pp. 2283–2318, 2016.
A. Klabunde, “How much should an investor trust the startup entrepreneur? A network model,” J. Econ. Interact. Coord., vol. 11, pp. 293–312, 2016.
F. Corea, G. Bertinetti, and E. M. Cervellati, “Hacking the venture industry: An Early-stage Startups Investment framework for data-driven investors,” Mach. Learn. with Appl., vol. 5, p. 100062, 2021.
R. Patil and S. V. Bharathi, “A Study on the Business Transformation, Security issues and Investors Trust in Fintech Innovation,” Cardiometry, no. 24, pp. 918–932, 2022.
J. W. Z. Lim and V. L. L. Thing, “Building Confidence In A World of Eroding Trust,” Digit. Gov. Res. Pract., 2024.
A. O. Adelaja, O. F. Ayodele, and S. C. Umeorah, “Enhancing consumer trust in financial services: the role of technological security innovations”.
M. Kaiser and E. S. C. Berger, “Trust in the investor relationship marketing of startups: a systematic literature review and research agenda,” Manag. Rev. Q., vol. 71, pp. 491–517, 2021.
S. Căpăţînă and E. Buşmachiu, “Trends in esg performance reporting (environment social and governance) in enterprise,” J. Res. Trade, Manag. Econ. Dev., vol. 21, no. 1, pp. 78–93, 2024.
N. Alnaser, O. S. Shaban, and Z. Al-Zubi, “The effect of effective corporate governance structure in improving investors’ confidence in the public financial information,” Int. J. Acad. Res. Bus. Soc. Sci., vol. 4, no. 1, p. 556, 2014.
A. P. Ebele and A. A. Sunday, “Enhancing public confidence in financial reporting: The role of corporate governance,” Eur. J. Bus. Strateg. Manag., vol. 1, no. 3, pp. 1–24, 2016.
B. Ionescu, F. Stoian, T. G. Gabrela, and G.-O. Petroianu, “Assurance of a Credible Financial Information: A Product of Convergence Between Prudence and Continuity by Statutory Audit and a Good Corporation Governance,” in Entrepreneurship, Business and Economics-Vol. 2: Proceedings of the 15th Eurasia Business and Economics Society Conference, Springer, 2016, pp. 113–126.
K. Li, Y. Xia, and J. Zhang, “CEOs’ multicultural backgrounds and firm innovation: Evidence from China,” Financ. Res. Lett., vol. 57, p. 104255, 2023, doi: https://doi.org/10.1016/j.frl.2023.104255.
Downloads
Published
Issue
Section
License
Copyright (c) 2024 Loso Judijanto, Septiana Na'afi, Siti Zuhroh
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Facebook 
Instagram 
Twitter 
Youtube 
westscience.journals@gmail.com