Human capital and open innovation: Do social media networking and knowledge sharing matter?

Latifah, Lyna; Doddy Setiawan; Aryani, Y. Anni; Sadalia, Isfenti; Al Arif, Mohammad Nur Rianto Article Human capital and open innovation: Do social media networking and knowledge sharing matter? Journal of Open Innovation: Technology, Market, and Complexity Provided in Cooperation with: Society of Open Innovation: Technology, Market, and Complexity (SOItmC) Suggested Citation: Latifah, Lyna; Doddy Setiawan; Aryani, Y. Anni; Sadalia, Isfenti; Al Arif, Mohammad Nur Rianto (2022) : Human capital and open innovation: Do social media networking and knowledge sharing matter?, Journal of Open Innovation: Technology, Market, and Complexity, ISSN 2199-8531, MDPI, Basel, Vol. 8, Iss. 3, pp. 1-14, https://doi.org/10.3390/joitmc8030116 This Version is available at: https://hdl.handle.net/10419/274417 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Citation: Latifah, L.; Setiawan, D.; Aryani, Y.A.; Sadalia, I.; Al Arif, M.N.R. Human Capital and Open Innovation: Do Social Media Networking and Knowledge Sharing Matter? J. Open Innov. Technol. Mark. Complex. 2022,8, 116. https:// doi.org/10.3390/joitmc8030116 Received: 7 June 2022 Accepted: 2 July 2022 Published: 7 July 2022 Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. Copyright: © 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). Journal of Open Innovation: Technology, Market, and Complexity Article Human Capital and Open Innovation: Do Social Media Networking and Knowledge Sharing Matter? Lyna Latifah 1, Doddy Setiawan 2,* , Y. Anni Aryani 2, Isfenti Sadalia 3and Mohammad Nur Rianto Al Arif 4 1Faculty of Economics, Universitas Negeri Semarang, Semarang 50229, Indonesia; [email protected] 2Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia; [email protected] 3Faculty of Economics and Business, Universitas Sumatera Utara, Medan 20222, Indonesia; [email protected] 4Faculty of Economics and Business, Universitas Islam Negeri Syarif Hidayatullah, Jakarta 15415, Indonesia; nur[email protected] *Correspondence: doddy[email protected] Abstract: This study provides empirical evidence of the effect of human capital on innovation in young entrepreneurs’ SMEs. Furthermore, this study also examines the role of social media networking and knowledge sharing, as a mediating variable, on the effect of human capital on open innovation. The current study employs the survey method to collect data. The respondents of this study are 438 young entrepreneurs who attended incubators by universities in Central Java and Yogyakarta, Indonesia. Data analysis techniques include using Structural Equation Modeling (SEM) with AMOS software. The result shows that human capital, knowledge sharing, and social media networking directly affect innovation. Social media networking and knowledge sharing partially mediate the effect of human capital on innovation. Keywords: human capital; social media networking; knowledge sharing; innovation; a young entrepreneur 1. Introduction Young entrepreneurs have an essential role in economic development for several reasons. First, people 15–29 years old make up 26% of the proportion of the world’s population. Second, young entrepreneurs create jobs for themselves and others. Third, it has the potential to positively influence society in terms of innovation [ 1 ]. An entrepreneur is a person who has his own business by trying to create value and increase economic activity by identifying and exploiting new products, processes, or markets [ 2 ]. Someone can be included in the young entrepreneur’s category if they are between 15–29 years old. In order to face intense business competition, young entrepreneurs are required to create a competitive advantage. A key component for young entrepreneurs to survive and grow in a dynamic and competitive environment is innovation [ 3 ]. The previous study shows that innovation has a significant effect on performance [ 4 , 5 ]. Companies with more innovation will have more probability to achieve better performance [ 6 ]. There is a positive effect of innovation activity to form performance. Thus, it is suggested that a company spends more of its resources to improve the firm’s innovation capability. Furthermore, it helps the company with better performance [ 7 , 8 ]. The innovation process requires a lot of knowledge, experience, intelligence, and education from human resources or human capital [ 9 ]. Generally, human capital is seen as the most fundamental knowledge asset in organizations [ 10 ]. An organization will excel in innovation if it has a good understanding of developing creativity in its human capital [ 11 ]. Previous studies show the importance of intellectual capital on innovation [ 10 , 12 , 13 ] and especially the role of human capital, as part of intellectual capital, to improve innovation [14,15]. J. Open Innov. Technol. Mark. Complex. 2022,8, 116. https://doi.org/10.3390/joitmc8030116 https://www.mdpi.com/journal/joitmc J. Open Innov. Technol. Mark. Complex. 2022,8, 116 2 of 14 One important aspect that has emerged recently is open innovation [ 16 ]. Companies work to adopt open innovation to improve firm performance [ 17 ]. Previous studies provide an argument for the importance of the study of open innovation [ 18 – 21 ]. Antecedent factors such as technological innovation technology [ 22 ], human resources [ 23 ], and knowledge management [24] have a significant effect on open innovation. A previous study has highlighted the importance of human capital for innovation performance. Several studies have shown the positive effect of human capital on innovation, e.g., Delgado-Verde, Cooper [ 9 ]; Buenechea-Elberdin, Sáenz [ 10 ]; Dakhli and De Clercq [ 25 ]; De Winne and Sels [ 26 ]; Kianto, Sáenz [ 12 ]; and Prajogo and Ahmed [ 27 ]. Some results show that there is no effect of human capital (education and experience) on innovation e.g., [ 28 , 29 ]. Consistent findings indicate the possibility of certain variables that mediate the effects of human capital on innovation. The inconsistency of the findings indicates the possibility of certain variables that mediate the effect of human capital on innovation. Therefore, it is essential to test which mediation variables play an important role in increasing the effect of human capital on innovation. Resource-Based View (RBV) theory states that unique and scarce resources become a competitive advantage for the company [ 30 , 31 ]. These resources include human capital, which Schultz [ 32 ] defines as the knowledge, skills, or abilities of employees in the organization. Organizational knowledge comes from human capital, while the creation of innovation comes from that knowledge. If an organization develops its human capital, including knowledge, skills related to creativity, and the development of new ideas, then innovation will be created [ 33 , 34 ]. However, in creating innovation, knowledge that is initiated by an individual needs to be shared with all employees in the company [ 35 ]. Human capital is a form of tacit knowledge within each individual, and in order to change it into organizational knowledge, it must be shared with other employees. Thus, the existence of knowledge sharing is fundamental to making human capital create innovation. In this digital era, social media in various forms has created a context for entrepreneurial activities and new businesses by providing information and knowledge-sharing spaces and providing opportunities to enhance innovation and economic growth [36]. Young entrepreneurs’ way of taking advantage of information and technology includes social media to implement knowledge sharing. Knowledge sharing allows the knowledge that individuals or groups own both from within and outside the organization to be transferred to the organizational level to develop new products, services, and processes [ 37 ]. This fact supports social network theory, which focuses on the role of social relationships in conveying information through media, enabling behavioral change. A company has the opportunity to strategically use social media networks to increase the firm’s capability to improve innovation performance [ 38 ]. Social media networks also provide a platform to interact more closely with the customer and enhance innovation capability [ 39 ]. Previous studies provide empirical evidence of the effect of social media networks on innovation [40–42]. The research questions of this study are (1) does human capital affect innovation? (2) do social media networks mediate the relationship between human capital and innovation?; and (3) does knowledge sharing mediate the relationship between human capital and innovation? Furthermore, the research objective of the current study consists of three objectives. First, the current study provides empirical evidence that human capital improves innovation. Secondly, the current study demonstrates the role of social media networks in mediating the relationship between human capital and innovation, and thirdly, the current study demonstrates the role of knowledge sharing to mediate the relationship between human capital and innovation. This study focuses on the effect of human capital and innovation on young entrepreneurs in developing countries—in this study, Indonesia. It becomes interesting because developing countries face more challenges with information technology compared to developed countries. However, social media users in developing countries spend more time on them compared to developed countries. It provides an opportunity for the company J. Open Innov. Technol. Mark. Complex. 2022,8, 116 3 of 14 to explore social media networks. Indonesia has the second-highest rate of active social media use in Asia [ 43 ]. Furthermore, there are differences in the quality of human capital between developed and developing countries, which raises the question of whether it will affect innovation performance. This study contributes to innovation literature in three important ways. First, our findings link two kinds of literature that have not been much highlighted in previous studies—human capital and innovation. Second, we demonstrate the role of internet social media networks in mediating the effect of human capital on innovation. Third, we discuss how the role of knowledge sharing contributes to translating internet social media networks to improve innovation. 2. Materials and Methods 2.1. Literature Review and Hypotheses Development 2.1.1. The Open Innovation of Young Entrepreneurs’ Context in Indonesia Based on data from the 2018 Survey of Entrepreneurs and MSMEs in Indonesia, there is a gap between the number of young entrepreneurs (40%) and old entrepreneurs (60%) of the respondents. This is because Indonesia has not provided strong support for entrepreneurial activities and innovation [ 44 ]. In fact, in very tight emerging market competition, it is necessary to support young people to become entrepreneurs [45]. Young entrepreneurs face big challenges in high competition in this global era. The main obstacle for young entrepreneurs is that the ability to innovate is still weak [ 1 ]. This can be seen from the ranking of the Global Innovation Index in 2021, in which Indonesia ranked 87th out of 132 countries. In addition, Indonesia also ranked 120th in terms of the ability of countries and industries to innovate. Based on data from the MSME survey in Indonesia by the Asia Foundation of Canada, the main problem for innovation according to the survey is the lack of investment in Research and Development (R&D) and the lack of skills. Indonesia only budgeted around 2% of GDP for (R&D), which is less than Singapore and Vietnam by 2.5% [44]. The challenge faced by the Indonesian government is overcoming unemployment caused by the lack of employment opportunities, especially for educated young people. Meanwhile, entrepreneurship offers opportunities for someone to create job opportunities for themselves and others. Thus, it is crucial to provide education and formal training and encourage the development of entrepreneurial skills at universities as a means of helping young Indonesians become young entrepreneurs. Young entrepreneurs can push the country out of the crisis through entrepreneurship. This is because young entrepreneurs have high creativity and the ability to utilize information technology to create competitive advantages [44]. Open innovation is one of the mechanisms to provide the growth of SMEs in Indonesia [ 18 ]. Young entrepreneurs have the opportunity to grow with the current form of open innovation [ 16 ], especially with the founder in SMEs that have higher entrepreneurial characteristics [ 46 ]. Entrepreneurs have significant relations with open innovation [ 47 ] to create an impact on social and business values [48]. 2.1.2. The Effect of Human Capital on Knowledge Sharing Knowledge is a crucial factor in gaining a competitive advantage. There are two kinds of knowledge, including explicit knowledge and tacit knowledge. Explicit knowledge is the knowledge that is easier to communicate, process, send and store. Meanwhile, tacit knowledge is the knowledge hidden in the individual that is more personal and difficult to communicate. Thus, it is necessary to communicate this knowledge to other employees so that it becomes the knowledge of the company; thus, knowledge sharing plays an important role. Social Cognitive Theory explains that the behavior of every person is shaped, controlled, and influenced by social networks and individual cognition. Based on this theory, if individuals do not have the confidence to share knowledge, they will not share it [ 49 ]. Human and social factors are essential factors in the process of knowledge sharing. Researchers argue that if training and character building are built for employees to J. Open Innov. Technol. Mark. Complex. 2022,8, 116 4 of 14 increase their loyalty to the company, self-confidence and the intention to share knowledge will be built to share their knowledge. The hypothesis developed is: H1. Human capital has a positive effect on knowledge sharing. 2.1.3. The Effect of Human Capital on Social Media Networking The formation of creative ideas and innovation occurs because of constant interaction with the environment. Thus, social networking enables companies to exchange information, get problem-solving ideas, identify new opportunities and find new markets [ 50 ]. The ability to link specific knowledge and commercial opportunities require certain knowledge, insights, and skills. In their study, Mosey and Wright [ 51 ] found that the level of education and experience possessed by the owner affects the ability to develop social networks. A higher level of experience and education that an entrepreneur has will lead to more effective social network development. The current development of information and technology provides opportunities for SMEs to take advantage of social media to build networks. The open innovation trend supports the entry of more networks and expanding the ecosystem through the internet of things, such as social media networks [52]. The hypothesis developed is: H2. Human capital has a positive effect on social media networking. 2.1.4. The Effect of Human Capital on Open Innovation Human capital is a set of knowledge, skills, and abilities that are embedded in the company’s employees [ 26 ]. Organizations cannot create knowledge without individuals. Knowledge creation and innovation are processes where the hidden knowledge is internalized as part of organizational knowledge [ 37 ]. Employees who have higher education will be easier to adapt to new tasks and technologies [ 28 ]. In addition, companies that have a high level of human capital will be easier to create knowledge and innovation. The literature also shows that innovation activities increase because of the exchange and combination of existing knowledge [53]. A study by Hayton and Kelley [ 54 ] concludes that individuals with high cognitive, educational, training, and practical capabilities tend to be more innovative. The conclusion from the results of the study conducted by [ 26 ] is that human capital is an important determinant of innovation. In contrast to the results of that study, Capozza and Divella [ 28 ] and Hsu [ 55 ] show that human capital has no direct effect on innovation. This shows that there are inconsistencies in the results of a study on the effect of human capital on innovation. A previous study shows that strategic human resources management has a significant effect on open innovation [ 23 ]. The better practice of human resources management provides a better environment to develop open innovation practices. Strategic human resources, such as human capital, have positively influenced open innovation. Furthermore, top management knowledge as part of human capital has a positive effect on open innovation [17]. Thus, the next hypothesis is as follows: H3. Human capital has a positive effect on innovation. 2.1.5. The Effect of Social Media Networking on Open Innovation The innovation process requires the integration of internal and external knowledge obtained from within the organization and outside the organization [ 56 ]. An open innovation approach enables SMEs constrained by limited resources, to seek, gather, and absorb knowledge from the external environment [ 40 ]. The development of information technology provides opportunities for young entrepreneurs to use it to innovate, one of which is through social media networking. Through social media, young entrepreneurs can establish reciprocal social relationships to build relationships, trust, norms, and networks [ 42 ]. Social media networking is an open-source online platform that is based on dyadic ties that come from individuals to the collective. Thus, young entrepreneurs can J. Open Innov. Technol. Mark. Complex. 2022,8, 116 5 of 14 seek and transfer knowledge by involving various users without any geographical and organizational limitations [40]. Networks enable SMEs to synthesize information and knowledge to create new knowledge and achieve innovation [ 57 ]. The relevance of social media networking for innovation has been debated by some previous researchers [ 56 ]. A result of a study shows that social media has a positive effect on the process of creating value that will drive the innovation process. Meanwhile, another study [ 40 ], which focuses more on social media networks, provides the conclusion that SMEs that adopt social media networks can increase innovation and the creation of new products. Previous studies also show the significant effect of social media on open innovation [58,59]. Thus, the next hypothesis is as follows: H4. Social media networking has a positive effect on innovation. 2.1.6. The Effect of Knowledge Sharing on Open Innovation Knowledge sharing in the context of social media is defined as a condition where an individual shares knowledge with others through social media or vice versa [ 60 ]. When young entrepreneurs face competitive pressures in a dynamic economic and social environment, knowledge becomes a source of competitive advantage in their business. Entrepreneurs need to capture strategic knowledge. The current technological sophistication through the internet and digital tools enables entrepreneurs to obtain sources of knowledge easily [ 55 ]. Innovation not only involves technology but also, the most important thing is how the knowledge is collected and put together in a configuration [ 42 ]. Existing knowledge in an individual is a raw material for creating knowledge and innovation, but it will not be very meaningful if the individual does not share it with others. This is because the knowledge that is not shared will remain in the individual domain, so it will be difficult to create innovation. Therefore, knowledge sharing is the most important part of innovation because it allows SMEs to combine ideas, views, facts, and information so that new knowledge can be created to create and innovate [37]. A previous study provides evidence on the effect of knowledge sharing on innovation. Seidler-de Alwis and Hartmann [ 61 ] show that organizations that implement knowledge sharing will be more successful in innovating. A study conducted by Ebrahimi, Ahmadi [ 36 ] provides empirical evidence of knowledge sharing in encouraging the creation of new ideas for innovation. Thus, the hypothesis is as follows: H5. Knowledge sharing has a positive effect on innovation. 2.1.7. Mediating Effects Human capital represents company-specific assets that are unique and cannot be imitated by competitors. Knowledge, skills, and experience embedded in individuals play an important role in the innovation process [ 32 ]. Entrepreneurs who have a high level of human capital will tend to collaborate with external relations to exchange information and knowledge to create innovation [ 52 ]. The entrepreneur’s typical ability to coordinate knowledge spread among different individuals is learned through education and previous work experience [ 62 ]. Coordination of this knowledge can be done through social media networking by combining team members to communicate effectively. The creation of knowledge is intrinsically related to corporate human capital. Individuals with a high level of knowledge, skills, and experience become a source of new ideas for the company. Innovation activities occur because of the exchange and incorporation of knowledge. Thus, higher human capital has a more excellent opportunity for the process of knowledge exchange [ 63 ]. Knowledge sharing can be a means to pass on specific knowledge and can increase organizational knowledge competencies. In order to create innovation, young entrepreneurs can exchange knowledge through network connections without organizational boundaries [ 53 ]. Figure 1provides the research model of the study and the structural relationship between variables. Thus, the sixth and seventh hypotheses are: J. Open Innov. Technol. Mark. Complex. 2022,8, 116 6 of 14 H6. Knowledge sharing mediates the positive relationship between human capital and innovation. H7. Social media networking mediates the positive relationship between human capital and innovation . J. Open Innov. Technol. Mark. Complex. 2022, 8, x FOR PEER REVIEW 6 of 15 knowledge spread among different individuals is learned through education and previous work experience [62]. Coordination of this knowledge can be done through social media networking by combining team members to communicate effectively. The creation of knowledge is intrinsically related to corporate human capital. Individuals with a high level of knowledge, skills, and experience become a source of new ideas for the company. Innovation activities occur because of the exchange and incorporation of knowledge. Thus, higher human capital has a more excellent opportunity for the process of knowledge exchange [63]. Knowledge sharing can be a means to pass on specific knowledge and can increase organizational knowledge competencies. In order to create innovation, young entrepreneurs can exchange knowledge through network connections without organizational boundaries [53]. Figure 1 provides the research model of the study and the structural relationship between variables. Thus, the sixth and seventh hypotheses are: H6. Knowledge sharing mediates the positive relationship between human capital and innovation. H7. Social media networking mediates the positive relationship between human capital and innovation. Figure 1. Conceptual Model. Notes: HC = Human Capital. SMN = Social Media Networking. KS = Knowledge Sharing. INO = Innovation. 2.2. Methodology 2.2.1. Data Collection and Sample Data is collected through surveys of young entrepreneurs who have attended incubators at the University. The survey was conducted using Google Docs (online questionnaire). Questionnaires were distributed through WhatsApp groups of young entrepreneurs empowered by some universities in Central Java and Yogyakarta. The sampling technique in this research was random sampling. There were 465 responses received, but only 438 could be used because some responses were incomplete. In this study, we define SME according to Indonesia Law No. 20 year 2008. A small– medium enterprise is a productive business owned by an individual or an individualowned business entity that meets the criteria of a micro business. Table 1 provides descriptive statistics of the study. Criteria for micro, small and medium enterprises based on Law No. 20 of 2008 are as follows: 1. Micro-enterprises include: (1) have maximum net assets around USD 3369.55, excluding land and buildings; (2) have sales/year around USD 20,217.27; 2. Small enterprises: (1) net assets owned between USD 3369.55–33,695.45, excluding land and buildings (2) sales/year of USD 20,217.27–168,477.25; 3. Medium-sized enterprise: (1) net assets between USD 33,695.45–673,909.00, excluding land and building for business; (2) sales revenue/year is USD 168,477.25– 3369,545.00. Figure 1. Conceptual Model. Notes: HC = Human Capital. SMN = Social Media Networking. KS = Knowledge Sharing. INO = Innovation. 2.2. Methodology 2.2.1. Data Collection and Sample Data is collected through surveys of young entrepreneurs who have attended incubators at the University. The survey was conducted using Google Docs (online questionnaire). Questionnaires were distributed through WhatsApp groups of young entrepreneurs empowered by some universities in Central Java and Yogyakarta. The sampling technique in this research was random sampling. There were 465 responses received, but only 438 could be used because some responses were incomplete. In this study, we define SME according to Indonesia Law No. 20 year 2008. A small– medium enterprise is a productive business owned by an individual or an individualowned business entity that meets the criteria of a micro business. Table 1provides descriptive statistics of the study. Criteria for micro, small and medium enterprises based on Law No. 20 of 2008 are as follows: 1. Micro-enterprises include: (1) have maximum net assets around USD 3369.55, excluding land and buildings; (2) have sales/year around USD 20,217.27; 2. Small enterprises: (1) net assets owned between USD 3369.55–33,695.45, excluding land and buildings (2) sales/year of USD 20,217.27–168,477.25; 3. Medium-sized enterprise: (1) net assets between USD 33,695.45–673,909.00, excluding land and building for business; (2) sales revenue/year is USD 168,477.25–3369,545.00. Table 1. Descriptive Statistic of Respondents. Respondents Measure Total of Respondents n% Gender Male 195 44.5 Female 243 55.5 Age of SMEs <2 years 143 32.6 2–5 years 272 62.1 >5 years 23 5.3 Criteria Micro 233 53.2 Small 158 36.1 Medium 47 10.7 Types of Business Food 140 32.0 Craft 21 4.8 Fashion 107 24.4 Service 144 32.9 Source: AMOS 25. J. Open Innov. Technol. Mark. Complex. 2022,8, 116 7 of 14 2.2.2. Measures Human Capital Six items were adopted from [ 4 ] to measure human capital from SMEs. By using the Likert scale 1–5, respondents were asked about how much funds were allocated for training employees, training conducted for employees, employee skills in carrying out tasks, employee loyalty, employee education, and employee motivation in working. Innovation Innovation is measured by using a composite index of various types of innovations developed by [ 64 ]. Respondents were asked to answer questions about how often the various types of innovations are carried out by SMEs on a Likert scale of 1–5. The types of innovation include product innovation, services, and operational processes, as well as organizational and marketing methods. Social Media Networking We adopt the instrument used by Pratono [ 42 ] to measure the social media networking variable. There are four questions for the respondents on how often with Likert scale 1–5 about the number of business relationships established, communication with business partners through social media, product development through social media, and contribution to business decision making through social media. Knowledge Sharing This research use instruments developed by Kwahk and Park [ 60 ] to measure knowledge sharing. Question items addressed to respondents include how often they share knowledge through social media, how much time they spent sharing activities through social media, how active they are in knowledge sharing activities with others through social media, how much interaction is done in discussing business difficulties in social media, and how often they participate discussions through social media. Measurement is done using a Likert scale of 1–5. The data analysis technique uses a Structural Equation Model (SEM) using the AMOS 25 software. This SEM method is used to analyze the direct effect of human capital on innovation; human capital on knowledge sharing; human capital on social media networking; knowledge sharing on innovation; and social media networking on innovation. Furthermore, the SEM method is also used to indirectly check (1) human capital to innovation, with knowledge sharing as the intermediate variable, and (2) human capital to innovation, with social media networking as the intermediate variable. 3. Results 3.1. Goodness of Measures Testing the validity of the data is done by looking at the correlation among the question items. The test results at Table 2show that HC5 and KS 5 items are invalid, so both items are dropped from further testing. After that, testing the validity of the measurement model with Confirmatory Factor Analysis (CFA) was conducted. The first test obtained a value of χ 2 is 676,441, Comparative Fit Index (CFI) of 0.867, and root mean square error of approximation (RMSEA) of 0.103. The results of this test indicate that the data is not good; this is also evident from the loading factor value of HC1 and HC2, which is still below 0.5. To fulfill the requirements, we also remove outlier data. After the question items that have a loading factor below 0.5 are removed, the CFA test results show a value of χ 2 is 294.74; CFI of 0.93, and RMSEA of 0.08. The Composite Reliability (CR) values of all variables are above 0.8, as required [ 65 ], while the Average Variance Extracted (AVE) values of all variables are above 0.5 as recommended. Based on the results of the CFA test, it can be concluded that the measurement variables are valid and reliable so that the next testing phase can be done. J. Open Innov. Technol. Mark. Complex. 2022,8, 116 8 of 14 Table 2. CFA Test Results. Constructs and Item Factors Loading AVE CR Innovations (INO) 0.533 0.887 INO1 How often do companies introduce innovative products/services to customers? 0.617 INO2 How often do companies teach methods of product processing innovation to employees? 0.78 INO3 How often does the company make organizational innovations/changes? 0.714 INO4 How often do companies make changes in product packaging innovation design? 0.731 INO5 How often do companies make innovations in marketing? 0.695 Human capital (HC) 0.536 0.893 HC1 My company provides funds for training 0.449 HC2 How often does the company provide training for employees 0.476 HC3 The skills of my employees in carrying out work 0.875 HC4 How big is employees’ loyalty to the company? 0.905 HC6 How big is employees’ motivation at work? 0.815 Knowledge Sharing (KS) 0.547 0.890 KS1 How often do you share knowledge through social media? 0.843 KS2 How often do you spend time contributing to knowledge-sharing activities on social media? 0.876 KS4 How often do you talk about anything on social media 0.738 KS5 How often do you get new knowledge from the results of discussions through social media? 0.706 Social Media Networking (SMN) 0.636 0.925 SMN1 How many business relations are connected through social media? 0.756 SMN2 How often do companies establish communication with business partners through social media? 0.801 SMN3 How often do companies exchange information in relations on product development through social media? 0.819 SMN4 How often does a company’s collogue contribute to business decision-making through social media? 0.722 Note: INO: Innovation; HC: Human Capital; KS: Knowledge Sharing; SMN: Social Media Networking. Table 3shows the descriptive statistics, namely the minimum, maximum, average, and standard deviation scores of each variable in this study. The average scores for the human capital, knowledge sharing, social media networking, and innovation variables were 15.21; 14.49; 13.79, and 15.33, all falling into the high category. This shows that young entrepreneurs have high human capital, knowledge sharing, social media networking, and innovation. Table 3. Descriptive statistics and correlation matrix. Min Max Mean SD 1 2 3 4 1. Human Capital (HC) 5 25 15.21 4.705 2. Knowledge sharing (KS) 4 20 14.49 3.512 0.339 ** 3. Social media networking (SMN) 4 20 13.79 3.455 0.435 ** 0.618 ** 4. Innovation (INO) 5 25 15.33 4.121 0.498 ** 0.519 ** 0.587 ** Note: correlation ≥0.22 or <−0.22 is significant at the 0.01 level, ** p< 0.01.