Talent Management and Innovation Capacity as Determinants of the Economic Performance of Creative Entrepreneurs Based on Local Wisdom

Abstract

The creative economy is a sector that relies on creativity, knowledge, skills, and innovation to generate economic value. The sustained performance of creative business operators depends not only on the ability to produce unique products but also on the capacity to manage talent and develop innovation capabilities to respond to changes in the business environment. This study aims to analyze the influence of talent management and innovation capacity on the economic performance of creative business operators rooted in local wisdom. A quantitative approach with an explanatory design was employed. Data were collected via questionnaires distributed to 100 creative business operators using a five-point Likert scale. Talent management was measured using eight indicators, innovation capacity using six indicators, and economic performance using five indicators. The data were analyzed using the Partial Least Squares-Structural Equation Modeling (PLS-SEM) approach. The analysis results indicate that talent management has a positive and significant effect on economic performance (β = 0.322; t = 3.790; p < 0.001). Innovation capacity also has a positive and significant effect on economic performance (β = 0.444; t = 5.225; p < 0.001). An R² value of 0.416 indicates that talent management and innovation capacity explain 41.6% of the variation in economic performance. The findings confirm that the ability to manage talent and foster innovation constitutes a crucial internal capability for enhancing the economic performance of creative businesses.