Digital Governance Capability and Sustainability Performance: Empirical Evidence From Sharia-Based Msmes

Abstract

This study aims to examine the effect of Digital Governance Capability on Sustainability Performance among Sharia-based Micro, Small, and Medium Enterprises (MSMEs). This study employed a quantitative approach using a survey method. Data were collected from 35 owners and managers of Sharia-based MSMEs selected through purposive sampling. The research instrument was distributed using a structured questionnaire with a five-point Likert scale. The collected data were analyzed using IBM SPSS Statistics through Pearson correlation, reliability testing using Cronbach's Alpha, and simple linear regression analysis. The results revealed a positive and significant relationship between Digital Governance Capability and Sustainability Performance, with a Pearson correlation coefficient of 0.717 (p < 0.001). The simple linear regression analysis also confirmed that Digital Governance Capability had a positive and significant effect on Sustainability Performance. The coefficient of determination (R² = 0.515) indicates that Digital Governance Capability explains 51.5% of the variance in Sustainability Performance, while the remaining 48.5% is influenced by other factors outside the research model. The findings indicate that strengthening Digital Governance Capability through digital leadership, digital strategy, digital risk management, digital compliance, and data governance can significantly enhance the sustainability performance of Sharia-based MSMEs. These results provide practical implications for policymakers and MSME stakeholders in designing digital governance strategies to support sustainable business development and contribute to the achievement of the Sustainable Development Goals (SDGs).