The Effect of Financial Management Knowledge and Business Digitalization on MSME Sustainability in Pangkep Regency

Pahrul; Mahmuddin

doi:10.63922/ijevss.v5i02.3905

Pahrul State University of Makassar, Indonesia
Mahmuddin State University of Makassar, Indonesia

DOI: https://doi.org/10.63922/ijevss.v5i02.3905

Keywords: Financial Management Knowledge, Business Digitalization, MSME Sustainability, Pangkep Regency, PLS-SEM

Abstract

The sustainability of micro, small, and medium enterprises (MSMEs) is increasingly shaped by the interaction between internal financial capability and digital business adaptation. This study examines the effect of financial management knowledge and business digitalization on MSME sustainability in Pangkep Regency, South Sulawesi, a maritime-based local economy where small enterprises face market uncertainty, uneven digital infrastructure, and limited managerial resources. A quantitative cross-sectional survey was conducted with 120 active MSME owners selected through purposive sampling. The respondents were business owners or principal managers whose enterprises had operated for at least two years. Data were collected using structured questionnaires measured on a five-point Likert scale and analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that financial management knowledge has a positive and significant effect on MSME sustainability (β = 0.318; t = 3.124; p = 0.002), while business digitalization has a stronger positive and significant effect (β = 0.497; t = 6.841; p < 0.001). Together, both variables explain 58.7% of the variance in MSME sustainability (R² = 0.587). These findings suggest that sustainable MSME development is not only determined by the owner’s ability to budget, record transactions, and manage cash flow, but also by the enterprise’s capability to use digital channels for marketing, transactions, and customer interaction. The study contributes to MSME sustainability literature by positioning financial management knowledge and digitalization as complementary capability-based resources for strengthening local business resilience.

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