Perception MSME Actors Towards Indication Geographical as Drivers of Financial Strategy and Business Sustainability
Abstract
Background: Geographical Indications (GI) serve not only as product identity markers but also as economic instruments that can support business strategy development and sustainability. However, studies examining the influence of MSME actors’ perceptions of Geographical Indications on financial strategies and business sustainability remain limited.
Method: This study aimed to analyze the influence of Micro, Small, and Medium Enterprises (MSMEs) actors’ perceptions of Geographical Indications (GI) on financial strategy and business sustainability. The research focused on cinnamon commodity MSMEs in Loksado District, Hulu Sungai Selatan Regency. A quantitative approach was employed using a survey method, with data collected through paper-based questionnaires distributed to 150 respondents. Data were analyzed using Structural Equation Modeling based on Partial Least Squares (SEM-PLS).
Results: The findings indicate that MSME actors’ perceptions of Geographical Indications have a positive and significant effect on financial strategy. Furthermore, perceptions of GI positively and significantly influence business sustainability. Financial strategy also has a significant effect on business sustainability and serves as a mediating variable in the relationship between GI perception and business sustainability. These findings demonstrate that Geographical Indications function not only as product identity markers but also as economic signaling mechanisms that can be utilized in developing effective business strategies.
Conclusion: This study concludes that positive perceptions of Geographical Indications contribute to stronger financial strategies and improved business sustainability among MSMEs. Financial strategy plays a crucial role in translating the benefits of Geographical Indications into sustainable business outcomes. The study contributes to the literature by integrating Signaling Theory and Value-Based Management to explain how identity-based products can generate economic value while supporting the sustainability of MSMEs.
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