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The research investigates the factors affecting the financial performance of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia and their impact on the countrys economic growth. The research methods of the studies involve data collection through surveys or interviews, followed by statistical analysis. The study found that entrepreneurial qualities such as motivation, entrepreneurial orientation, and risk behavior positively influence the financial performance of MSMEs. MSMEs that manage working capital optimally tend to increase profitability and growth, despite operational difficulties like worker shortages. MSMEs engaged in foreign trade usually achieve higher profitability. Bank loans can enhance profitability and sales, but the collateral requirement may hinder growth. The owners involvement doesnt affect growth but can enhance profitability. Factors like the Human Capital Index, interest rates, the Indonesian Rupiah exchange rate, and inflation do not significantly impact MSME investment. However, business units, labor, investment, and exports of MSMEs significantly influence Indonesias economic growth. MSMEs play a crucial role in job creation, rural development, economic diversification, and GDP contribution in Indonesia. Despite challenges, they have the potential for sustainable growth. The research also explores strategies for overcoming challenges faced by MSMEs and investigates the role of universities in supporting the MSME sector. The University of Indonesia (UI) supports the MSME sector through strategic initiatives, including education, training, mentoring, and internship programs. The research provides valuable insights into the operation of MSMEs in Indonesia and their contribution to the economy, highlighting areas for further exploration and potential strategies for supporting the growth and sustainability of these enterprises.
Harsono et al. (Tue,) studied this question.