The Influence of Internal and External Factors on MSMEs' Sustainability Performance: The Limited Mediating Role of Business Networks

Yuni Rosdiana; Elly Halimatusadiah; Lasmanah Lasmanah; Alya Salsabila Zaid; Aura Shalihah Ekaputri

doi:10.55227/ijerfa.v4i2.412

Authors

Yuni Rosdiana Faculty of Economics and Business, Islamic University of Bandung
Elly Halimatusadiah Faculty of Economics and Business, Islamic University of Bandung
Lasmanah Lasmanah Faculty of Economics and Business, Islamic University of Bandung
Alya Salsabila Zaid Faculty of Economics and Business, Islamic University of Bandung
Aura Shalihah Ekaputri Faculty of Economics and Business, Islamic University of Bandung

DOI:

https://doi.org/10.55227/ijerfa.v4i2.412

Keywords:

Business Networks, External Factors, Internal Factors, Sustainability Performance

Abstract

This research is motivated by the low sustainability performance of MSMEs (Micro, Small, and Medium Enterprises) under the guidance of Rumah BUMN, particularly in the environmental aspect, as well as the weak integration of Sustainable Development Goals (SDGs) principles in daily business activities. The purpose of this study is to analyze the influence of internal and external factors on the sustainability performance of MSMEs, as well as to explore the synergistic form of both factors in supporting SDG-based MSME empowerment. This study uses a quantitative approach with a survey method. The research sample consists of 144 MSME actors selected using purposive sampling, with the criteria being MSMEs that have received SDG guidance from Rumah BUMN in West Java Province. The data used in this study are primary data collected and analyzed using exploratory analysis with the assistance of SMART-PLS. The results indicate that internal factors do not have a significant effect on the role of business networks in MSMEs under Rumah BUMN’s guidance, while external factors show a stronger contribution and are statistically verified to influence network strengthening, particularly through partnerships, community involvement, and support from the business environment. However, despite the strategic function of networks in business growth, this study finds that networks have not significantly influenced MSME sustainability performance, as reflected in the model where network contribution remains relatively small. In contrast, both internal and external factors positively and significantly improve sustainability performance, with the structural model indicating that these variables collectively explain more than four-fifths of the variation in sustainability outcomes. This affirms that strengthening human resources, innovation capacity, and access to supportive external ecosystems is crucial in accelerating SDG-oriented MSME empowerment. The mediating role of business networks was also not supported, suggesting that internal and external factors exert a more direct influence without requiring network intermediation — highlighting that current network structures are not yet optimal in bridging sustainability enhancement pathways.

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