THE EFFECT OF LEGAL COMPLIANCE ON THE FINANCIAL PERFORMANCE OF MSMES IN INDONESIA

2026-04-27T08:40:31+00:00

This study examines the influence of legal compliance on the financial performance of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia, with a particular focus on financial stability, profitability, and competitiveness. Employing a descriptive-analytical design with a conceptual approach, this research synthesizes legal and financial theories through an extensive review of secondary data, including academic literature, regulatory frameworks, and governance studies. Legal compliance is operationalized across four key dimensions: business licensing, taxation, employment, and consumer protection. The findings indicate that legal compliance plays a strategic role in enhancing financial stability by reducing regulatory risks, minimizing unexpected costs, and improving cash flow management. Furthermore, compliance contributes to profitability through cost efficiency and improved access to financing with more competitive capital costs. In terms of competitiveness, legally compliant MSMEs demonstrate stronger reputational capital, greater market access, and higher adaptability within digital and global markets. The study also highlights that compliance should not be perceived merely as a regulatory obligation but as a financial strategy that strengthens governance quality and long-term business sustainability. However, the effectiveness of compliance is contingent upon regulatory simplification and MSME capacity, including legal literacy and administrative readiness. This study contributes to the integration of business law and financial performance perspectives in the MSME context and offers policy-relevant insights for strengthening MSME resilience.

Reparative Justice and State Responsibility: Reactualizing the Due Diligence Principle in Ensuring Civil Remedies for Human Rights Violations

2026-06-04T14:29:13+00:00

The right to civil redress is a central pillar of reparative justice for victims of human rights violations. Although international legal instruments, such as the United Nations Basic Principles on the Right to Remedies and Reparation, affirm states’ obligation to guarantee this right, many have failed to establish mechanisms that are effective and accessible to victims. This article conceptualizes the principle of due diligence as a binding international legal standard that obliges states to prevent and respond to human rights violations and ensure the availability of accessible and enforceable civil restitution. Employing a normative legal method and a comparative case study of Argentina, Germany, and Indonesia, the analysis demonstrates that civil restitution remains the most fragile dimension of state accountability frameworks, with reparations frequently regarded as discretionary policies rather than legal mandates. To address this gap, this study advances a set of normative indicators for assessing states’ compliance with their reparation obligations. The findings highlight the imperative of embedding the principle of due diligence within national legal systems as a concrete legal obligation, thereby advancing victim-centered justice.

PENA LAW: International Journal of Law

THE EFFECT OF LEGAL COMPLIANCE ON THE FINANCIAL PERFORMANCE OF MSMES IN INDONESIA

Reparative Justice and State Responsibility: Reactualizing the Due Diligence Principle in Ensuring Civil Remedies for Human Rights Violations