The Resource-Based View (RBV) theory, first introduced by (Wernerfelt, 1984) emphasizes the importance of rare, valuable, difficult-to-imitate, and irreplaceable internal resources as the basis of competitive advantage. According to this theory, firm performance is largely determined by managers' ability to utilize and maintain unique and valuable resources (Barney & Arikan, 2005). (Nimtrakoon, 2015) states that not all company resources have the same value in creating sustainable competitive advantage. RBV allows companies to achieve sustainable competitive advantage through the use of diverse resources. Companies that have rare and valuable competencies will gain a greater competitive advantage over their competitors. RBV also states that firm resources are more influential than industry structure in gaining and maintaining competitive advantage. This approach sees organizations as a collection of unique assets and capabilities, where each company has different experiences, assets, capabilities, and cultures that affect the efficiency and effectiveness of its operations. By utilizing the right and optimal resources, companies can achieve sustainable competitive advantage.

Innovation capability, as one form of internal resource, plays an important role in RBV. A company's ability to innovate, create new products, and develop more efficient processes are assets that can provide a sustainable competitive advantage. Continuous innovation enables companies to adapt to market changes, better fulfill customer needs, and face industry challenges. Thus, innovation capabilities that are unique and difficult to replicate can strengthen a company's competitive position in the market. In addition, human capital is also an important component in RBV. High-quality human resources with rare skills and knowledge play a role in the development of innovation capabilities and operational effectiveness of the company. Skilled and dedicated managers and employees can manage the company's assets and capabilities more effectively, create and implement innovative strategies, and maintain competitive advantage through hard-to-replace capabilities.

The literature about Village-Owned Enterprises in Indonesia, governance, and accounting information systems are widely recognized as foundational to their operational success. Research by (Sabilla et al., 2022) demonstrates how robust governance practices, characterized by transparency and accountability, significantly enhance the performance of these enterprises. This aligns with broader findings in the field, which suggest that well-governed organizations are more efficient and effective in their operations (Sofyani et al., 2019). Additionally, integrating sophisticated accounting information systems is crucial, as (Sabilla et al., 2022) highlighted, for providing timely and accurate financial data, facilitating informed decision-making, and maintaining fiscal accountability.

The performance of VOEs is also significantly influenced by human factors such as team member engagement and leadership. (Sofyani et al., 2019) identify the patriotism and passion of employees, motivated by a strong sense of community and commitment to local welfare, as key drivers of organizational success. Furthermore, transformational leadership is pivotal in VOE performance, where leaders who inspire and foster innovation can elevate organizational effectiveness. These factors suggest that a comprehensive approach that combines effective management practices with a supportive and motivational human resource strategy is essential for the sustainable success of VOEs. Human capital is a critical determinant in the performance of VOEs, playing a pivotal role in shaping their effectiveness and sustainability. A study conducted in middle-income countries found that disparities in human capital have contributed to income inequality (Mohd Arshad & Ab Malik, 2015). In the context of VOEs, human capital refers to the attributes, knowledge, skills, and experiences that employees bring to their roles within these enterprises (Saroj et al., 2024). The quality of human capital directly influences how these organizations manage their resources, execute operational strategies, and fulfill their economic and social objectives in rural areas.

Training and education are the cornerstone for enhancing employees' capabilities within VOEs. The landscape in which these enterprises operate often involves complex socio-economic dynamics due to their deep integration within local communities. This integration demands a versatile skill set from employees, spanning technical knowledge to nuanced community engagement strategies. Continuous professional development programs tailored specifically for VOEs can address these needs by providing training that enhances the technical skills required for specific industries, such as agriculture or crafts, and soft skills, such as leadership, communication, and conflict resolution (Roh et al., 2021). This multifaceted training approach ensures that employees are proficient in their technical roles and adept at fostering relationships within the community, which is vital for the success of any community-centered business (Prasetya et al., 2023).

Furthermore, specialized training programs can focus on specific areas crucial for the operation and growth of VOEs, such as financial management, digital literacy, and marketing strategies. These training programs help bridge the gap between traditional business management methods and modern techniques that leverage technology and innovative business practices. For example, educating VOE employees on e-commerce platforms can open up new market opportunities that were previously inaccessible. This not only enhances the business prospects of VOEs but also brings them into the larger digital economy, substantially boosting their competitiveness and market reach (Ihsan et al., 2021). Based on the background and literacy that has been mentioned, the hypothesis proposed is:

H1. Human Capital is positively related to Village-Owned Enterprises Performance

The capacity for innovation within Village-Owned Enterprises significantly impacts their performance and sustainability, shaping their ability to respond to environmental changes and meet community needs effectively. Innovation capability in VOEs is developing new products, services, or processes that enhance the enterprise's competitive advantage and community value. This capability is crucial as it enables VOEs to exploit local resources creatively and introduce solutions well-adapted to the unique challenges and opportunities of rural economies (Huang et al., 2020). One of the primary drivers of innovation in VOEs is the adoption of technological advancements. By integrating new technologies into their operations, whether in agricultural practices, product development, or customer service, VOEs can improve efficiency and expand their market reach. For instance, leveraging digital tools for better inventory management or online marketing can open up new sales channels and improve the visibility of their products beyond local boundaries (Prasetya et al., 2023).

However, the challenge often lies in accessing these technologies, given the limited infrastructure in rural areas, which calls for targeted support from governmental and non-governmental organizations. Collaboration is another crucial aspect that enhances the innovation capabilities of VOEs. By forming partnerships with local universities, research institutions, and other businesses, VOEs can tap into a wider pool of knowledge and resources. These collaborations can lead to the development of new products tailored to local tastes and resources or innovative business models that address specific community needs, such as cooperative marketing systems or community-based tourism initiatives. Such collaborative efforts drive innovation and strengthen the community's social fabric.

The capability of Village-Owned Enterprises (VOEs) fundamentally determines their effectiveness and sustainability, influencing their ability to adapt and respond to the changing economic and social landscapes of rural communities. Capability in this context encompasses various dimensions, including operational efficiency, innovation, community engagement, and strategic resource management (FarCˇnik & IsteniCˇ, 2020). These capabilities are crucial as they enable VOEs to utilize local resources optimally and develop solutions that effectively address specific community needs. Operational efficiency is a crucial capability for VOEs, ensuring that these enterprises can manage their day-to-day activities to maximize resource use and minimize waste. This involves adopting effective business practices, streamlined processes, and utilizing productivity technologies. For instance, VOEs might implement advanced agricultural techniques in farming communities or introduce efficient logistical systems to improve the distribution of goods and services. By improving operational efficiency, VOEs increase their profitability and ability to deliver value to the community sustainably (Nugroho, 2020).

Innovation is another critical capability that allows VOEs to stay relevant and competitive. This includes developing new products or services, implementing new business models, and adapting processes that meet the community's and market's evolving demands. Innovation in VOEs often requires a deep understanding of local challenges and opportunities, encouraging culturally and contextually appropriate solutions. Whether through developing new agricultural products, leveraging digital technologies for market access, or creating sustainable tourism offerings, innovation helps VOEs generate significant social and economic impact (Sabilla et al., 2022).

Community engagement capability is vital for the success of VOEs, given their community-centered missions. This capability involves effectively communicating with community members, understanding their needs and preferences, and involving them in decision-making. VOEs with strong community engagement practices are better positioned to build trust and secure community buy-in, essential for the smooth implementation of projects and initiatives. Moreover, active community participation can provide VOEs with valuable insights and ideas, fostering a collaborative approach to local development. Strategic resource management is another essential capability, enabling VOEs to allocate and utilize their financial, human, and natural resources efficiently. Effective resource management ensures that VOEs can sustain their operations over the long term while maximizing the benefits delivered to their communities. This might involve financial planning, talent development, and the strategic use of natural resources, all aligned with the enterprise's goals and the community's well-being (Asmawanti et al., 2022). Based on the background and literacy that has been mentioned, the hypothesis proposed is:

H2. Innovation Capability is positively related to Village-Owned Enterprises Performance

The moderating role of government support in the operational success and sustainability of Village-Owned Enterprises (VOEs) is increasingly recognized as vital, especially in rural areas where economic activities face numerous constraints. These constraints often include limited market access, inadequate infrastructure, and a need for more investment. Government interventions can profoundly influence the effectiveness of these enterprises by providing the necessary resources, frameworks, and incentives that foster growth and innovation. In rural settings, where VOEs primarily operate, the challenges can be particularly daunting. Infrastructure deficits, such as poor road networks, unreliable power supplies, and inadequate digital connectivity, can severely limit the operational capacity of VOEs. Government support in this context can take several forms, including physical infrastructure development. By improving transportation networks, enhancing electricity accessibility, and expanding internet coverage, governments can significantly reduce the operational hurdles faced by VOEs. This infrastructure development not only supports the current needs of VOEs but also attracts external businesses and investors to rural areas, thus creating a more dynamic economic environment (Sofyani et al., 2019).

Subsidies or grants from the government enhance the financial stability of VOEs, helping alleviate capital constraints and enabling these enterprises to scale operations or invest in new technologies. Such financial support is essential during the early stages of a VOE's development, where risks and financial burdens can impede growth. Additionally, government programs aimed at training and building capacity equip VOE managers and employees with the skills and knowledge needed to manage operations and compete in broader markets effectively. These training programs cover crucial areas such as financial management, marketing, and strategic planning, which are fundamental for the long-term sustainability of VOEs. Moreover, supportive government policies that create favorable regulatory environments can dramatically reduce the administrative burden on VOEs. These policies include simplifying licensing processes, providing tax incentives, or offering benefits designed for rural and community-based enterprises. Such a regulatory framework enables VOEs to focus more on core activities than bureaucratic hurdles (Carvache-Franco et al., 2022).

Infrastructure development also plays a crucial role in the success of VOEs. Government investment in infrastructure such as roads, telecommunications, and utilities can significantly enhance the operational capabilities of VOEs (Sebayang & Sebayang, 2020). For example, improved transportation networks facilitate more accessible market access, while enhanced internet connectivity opens digital avenues for business expansion. It is crucial for VOEs looking to broaden their market reach and operational scope. The government can foster partnerships between VOEs and critical stakeholders like private companies, non-governmental organizations, and academic institutions. These collaborations can provide VOEs access to additional resources, expertise, and networks, facilitating innovation and diversification of their operations. Government facilitation of such partnerships enhances the competitiveness and impact scope of VOEs.

Government initiatives to promote Village-Owned Enterprises (VOEs) through public campaigns and other marketing strategies are essential for enhancing the visibility and credibility of these entities. When governments actively engage in promoting the successes of VOEs, they help create a positive public perception, which is crucial for building trust and support among the community (Saygılı & Özdemir, 2021). Public campaigns can highlight success stories, showcase the benefits of VOEs to the local economy, and demonstrate their role in promoting sustainable development. Such promotional activities increase community support and encourage other regions to adopt similar models, thereby broadening the impact of VOEs. Targeted marketing initiatives can help VOEs attract new customers and enter previously inaccessible markets. By leveraging traditional and digital media, governments can effectively broadcast the unique products or services offered by VOEs to a broader audience. This can include features on local news channels, articles in major publications, and active social media campaigns highlighting specific products, seasonal offers, or the unique aspects of VOEs that appeal to socially conscious consumers. Such exposure is invaluable for VOEs, opening new business opportunities and diversifying their customer base. Based on the background and literacy that has been mentioned, the hypothesis proposed is:

H3. Government Support is positively related to moderating the relationship between Human Capital and Village-Owned Enterprises' Performance.

H4. Government Support is positively related to moderating the relationship between Innovation Capability and Village-Owned Enterprises Performance

Based on the hypothesis proposed, the research framework can be seen in Figure 1.

Based on the results of this study, the effect of Human Capital on the performance of Village-Owned Enterprises (VOEs) was found to be positive but not significant. This suggests that although an increase in Human Capital slightly improves VOE performance, the effect is not strong enough to be considered statistically significant. This finding is consistent with existing literature, such as Mohd Arshad & Malik (2015) study which states that the quality of human capital has a direct impact on the effectiveness of an organization's resource management and operational strategies. However, this influence may not be maximized in VOE if it is not supported by other factors, such as technical support and adequate resources. Previous research by (Saroj et al., 2024) also emphasized that human capital, which includes knowledge, skills and experience, is critical to VOE performance. However, in this study, it is evident that simply increasing employee participation and work effectiveness is not enough to significantly improve VOE performance if there is no strong support in the form of training or additional resources. These results indicate the need for a more comprehensive approach, which relies not only on human capital but also on other aspects of operational support.

The results show that Innovation Capability has a positive and significant influence on VOE performance. This means that VOE's ability to create new ideas, innovations, and encourage individual initiative has a strong impact on improving performance. This finding is in line with the Resource-Based View (RBV) theory by (Barney & Arikan, 2005), where innovation is one of the valuable and difficult-to-imitate internal resources, which can be a sustainable competitive advantage. Previous research by (Huang et al., 2020) also found that high innovation capabilities enable organizations to adapt to market changes, as well as better meet consumer needs. Thus, VOEs that can continuously innovate will be more responsive to environmental changes and market demands. For example, in the context of VOEs, innovation in local product development and the application of digital technology can help open new markets and increase competitiveness at the national and international levels (Prasetya et al., 2023).

This study also shows that government support is not able to significantly moderate the influence of Human Capital and Innovation Capability on VOE performance. This indicates that although government support in the form of technical, financial, raw materials, and training exists, it is not strong enough to strengthen the influence of Human Capital and Innovation Capability on VOE performance. Previous research by (Sofyani et al., 2019) also highlighted the importance of government support, especially in the form of infrastructure development and human resource training. However, this research confirms that such support should be more focused and relevant to the specific needs of VOEs to make its impact more pronounced. (Roh et al., 2021) suggested that training programs tailored to the needs of VOE industry sectors, such as agriculture and crafts, would be more effective in improving employee competencies. (Sabilla et al., 2022) highlighted that government support in the form of training and infrastructure is crucial to the success of VOE in Indonesia. However, if this support is not targeted or intensive enough, its impact on VOE performance may be limited. This research emphasizes that government support needs to be more strategic and relevant in order to truly strengthen the influence of Human Capital and Innovation Capability.

The results of this study demonstrate that, despite the training's clearly defined goal and the best possible government support, government assistance is insufficient to raise VOE performance by enhancing the impact of human capital and innovation capability. This is evident from the fact that despite the training, there was no discernible increase in performance. The lack of a defined standard to guarantee that the training is truly applied by VOE staff is one of the primary causes of the lack of effect that government support has on the organization's performance. Even though the training is perhaps highly beneficial and educational, its effect on VOE performance cannot be assessed in the absence of a system to track and measure its implementation. Furthermore, the VOEs staff members themselves must be willing and committed to putting the training outcomes into practice. The efficacy of training is contingent upon the employees' strong motivation to apply the acquired knowledge and abilities. The training won't significantly alter daily procedures or, ultimately, the VOE performance if the staff members lack a strong drive to do so.