This study investigates the impact of capital, production opportunities, regulation, and business motivation on the development of Micro, Small, and Medium Enterprises (MSMEs) in Batam City, Indonesia. Using a quantitative approach, 154 respondents were selected from 248 active cooperatives through Slovin's formula with a 5% margin of error. Data were collected through structured questionnaires and analysed using Structural Equation Modelling (SEM-AMOS). The results show that capital, regulation, and motivation positively influence MSME development, but the effects are statistically insignificant. On the other hand, production opportunities have a significant positive impact. Collectively, the four variables explain 43.1% of MSME development variance. The findings underscore the importance of production capacity, which is supported by financial literacy, simplified regulations, and motivational programs, all of which contribute to strengthening MSME sustainability. This study contributes to the Resource-Based View (RBV), Institutional Theory, and Self-Determination Theory in the context of emerging economies. The practical implications suggest the need for integrated strategies between government, financial institutions, and entrepreneurs to enhance MSME competitiveness.
Wibisono et al. (Wed,) studied this question.
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