Does risk management and intellectual capital improving SME's performance during Covid-19 outbreak?

Covid-19 has triggered the collapse of SME businesses. Nevertheless, most SMEs in developing countries have not implemented risk management practices, including Indonesian SMEs. Also, SMEs need to optimize their intellectual capital capacity in facing emerging issues like COVID-19. This study aims to prove the role of risk management practice and intellectual capital in improving competitive advantage and SME performance. This study was conducted on 438 SMEs in the Bali Province, Indonesia. The survey is conducted by sending a questionnaire directly to SME owners or managers. This study evidences that risk management supports SMEs to create a competitive advantage. Nevertheless, risk management is not directly improving the SME's performance. Although risk management cannot directly increase SME profits, risk management helps SME owners to focus on managing the negative risks posed by the Covid-19 pandemic. SMEs maintain employees' productivity by innovating or creating new products. The creativity ultimately creates a competitive advantage that will increase the SME's performance. Therefore, competitive advantage completely mediates the relationship between risk management and performance. Other findings state that three elements of intellectual capital support the research hypothesis. Human capital contributes to developing new ideas with competitive differentiation. Structural capital encourages employee knowledge collaboration to innovate continuously. Meanwhile, relational capital allows organizations to create innovation with stakeholders. Human and structural capital also strengthens the influence of risk management on competitive advantage. Specifically, the moderation test result represents that relational capital has a lower contribution than human and structural capital. The last, competitive advantage positively affects SME performance. The finding indicates that competitive advantage enables SMEs to adapt to the Covid-19 impact, which leads to increased performance.