EFFECT OF SOCIAL CAPITAL ON ENTREPRENEURIAL ORIENTATION AND TRANSACTION COST TO IMPROVE FIRM PERFORMANCE IN WOODEN CRAFT SMEs IN BALI PROVINCE, INDONESIA

The small medium enterprise (SME) gives contribution as the work field provider, to reduce unemployment and social gap, as well as making equal income distribution. SME is also acknowledged as the institution for seedling the entrepreneurship idea. The government has conduct various empowering programs to improve the SME performance, but the implementation is still constrained by still low entrepreneur culture and social dysfunction. Both fundamental obstacles cause not optimal SME development in Bali Province. This study aims to reveal how the Social Capital directs effect on the Entrepreneurial Orientation; the Entrepreneurial Orientation to the Firm performance, Social Capital on Firm performance. By surveying 333 entrepreneurs of wooden crafts in Bali Province, data analysis by Smart PLS-30, it is obtained that the Social Capital affects significantly and directly on the Entrepreneurial Orientation; directly, the Entrepreneurial Orientation and social Capital affects insignificantly on the Firm performance; By being mediated by Transaction Costs, Social Capital and Entrepreneurial Orientation affect significantly to the Firm performance. By being mediated by Entrepreneurial Orientation, the Social Capital affects significantly on transaction Cost efficiency. In this case, the Cost Transaction is willing to mediate overall the effects of social capital and Entrepreneurial Orientation to improve the firm performance, so that in this case it is acknowledged as the key mediator to improve the firm performance. While, the Entrepreneurial Orientation is found to mediate the partial effect of Social Capital on the Transaction Cost efficiency. Keywords: Social capital, entrepreneurial orientation, transaction cost, firm performance, SMEs