Integrative Analysis of Internal and External Factors: Determinants of SME Success and Sustainability in The Era of Global Competition

Abstract

Background: The research is driven by the necessity to comprehend how the combination of internal and external variables serves as a crucial determinant for MSMEs success and continuity, particularly when confronting the challenges of intensifying international competition.
Purpose: This study was conducted to determine the interaction between internal and external factors in creating synergy that supports the sustainability of MSMEs in the era of global competition. 
Design/methodology/approach: This was a quantitative study with an associative approach. The sample in this study consisted of micro-scale MSMEs in the food and beverage accommodation and processing industry sectors located in Sambas and Kubu Raya Regencies in West Kalimantan Province. The sample in this study consisted of 200 micro-scale MSMEs in Indonesia. The analysis technique used was Structural Equation Modeling (SEM) with Smart PLS.
Finding/Result: The analysis results show that the financing access variable has a very significant effect on the sustainability of MSMEs, especially micro-scale MSMEs. In addition, environmental changes significantly affect the sustainability of MSMEs, especially those on a micro scale. The environmental changes referred to in this study include market changes, technological changes, innovation, and changes in the MSME’s business environment.
Conclusion: MSME sustainability depends critically on two interconnected factors: access to financing and adaptability to environmental change. Limited capital access constrains micro-enterprises’ growth potential, while their inability to adapt to market shifts, digital transformation, and regulatory changes threatens their survival. These challenges are compounded by MSMEs' narrow market focus, lack of diversification strategies, and insufficient resources for technology adoption.
Originality/value (state of the art): This study fills the empirical gap by focusing on micro MSMEs in geographically underexplored areas, namely, Sambas Regency (bordering Malaysia) and Kubu Raya (bordering the provincial capital). Furthermore, this study employed a comprehensive integrative approach by simultaneously combining internal and external factors. 

Keywords:    access to financing, business continuity, environmental change, MSMEs, global competition