Local Government Policies Supporting MSME Sustainability: A Systematic Literature Review (2016–2026)

Local governments shape the conditions under which micro, small, and medium enterprises (MSMEs) survive, adapt, and pursue social and environmental objectives. Evidence on these policies is dispersed across instrument types and institutional settings. This systematic review critically organizes the available relevant evidence around policy instruments, implementation mechanisms, and sustainability outcomes. The supplied review records report searches across Scopus, Web of Science, ScienceDirect, SpringerLink, and Google Scholar, followed by selection of 64 study entries. A narrative thematic synthesis examines regulatory and institutional arrangements, capability-building programmes, digital transformation and market access, and fiscal-financial instruments within a 2016–2026 scope. The findings suggest that coordination, administrative accessibility, and enterprise capabilities condition the benefits of policy support. Training may strengthen entrepreneurial intentions without securing sustained activity, while financial assistance and digital tools show context-dependent associations with performance. Null and contrasting findings challenge assumptions of uniform policy effectiveness. We propose an interpretive framework linking instrument design to enterprise uptake, capability formation, and sustainability under differing institutional conditions. The framework supports evaluation of policy combinations and post-programme support, rather than reliance on participation or disbursement counts alone. Missing search dates, inconsistent publication totals, and unresolved study identities require verification before the review can be considered fully reproducible.