Strengthening MSME Legal Compliance by Examining Legal Literacy, Licensing Readiness and Contract Quality

Authors

  • Jemi Universitas Riau Kepulauan
  • Rizki Tri Anugrah Bhakti Universitas Riau Kepulauan
  • Dwi Afni Maileni Universitas Riau Kepulauan
  • Edwar Kelvin Universitas Riau Kepulauan

DOI:

https://doi.org/10.38035/sjam.v4i2.1084

Keywords:

MSME Legal Compliance, Legal Literacy, Licensing Readiness, Contract Quality, SEM-PLS

Abstract

Abstract: Legal compliance among Micro, Small, and Medium Enterprises (MSMEs) remains a critical issue in strengthening business governance, as many business actors operate adaptively without being adequately supported by legal preparedness. This study analyzes the effects of legal literacy, licensing readiness, and contract quality on MSME legal compliance. A quantitative approach with a cross-sectional survey design was employed. Data were collected through Likert-scale questionnaires administered to 120 MSME actors selected purposively according to the research criteria. The data were analyzed using Structural Equation Modeling-Partial Least Squares (SEM-PLS). The measurement model assessment indicates that all constructs satisfy the required validity and reliability criteria. In the structural model, an R² value of 0.694 shows that 69.4% of the variance in MSME legal compliance is explained by legal literacy, licensing readiness, and contract quality. Hypothesis testing demonstrates that legal literacy has a positive and significant effect on MSME legal compliance (β = 0.241; p = 0.006), licensing readiness has a positive and significant effect (β = 0.287; p = 0.002), and contract quality has a positive and significant effect (β = 0.356; p = 0.000). Among the three predictors, contract quality emerges as the most dominant determinant. These findings affirm that MSME legal compliance should not be understood merely as the fulfillment of administrative obligations, but as the outcome of interaction among legal understanding, legal-administrative preparedness, and the quality of contractual arrangements in business relationships. This study contributes to empirical business law scholarship and provides a practical basis for designing legal education programs, licensing assistance, and contract-drafting support for MSMEs.

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Published

2026-08-31

How to Cite

Jemi, J., Bhakti, R. T. A., Maileni, D. A., & Kelvin, E. (2026). Strengthening MSME Legal Compliance by Examining Legal Literacy, Licensing Readiness and Contract Quality. Siber Journal of Advanced Multidisciplinary, 4(2), 539–552. https://doi.org/10.38035/sjam.v4i2.1084

Issue

Vol. 4 No. 2 (2026): Siber Journal of Advanced Multidisciplinary (July - September 2026)

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Articles

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Copyright (c) 2026 Jemi, Rizki Tri Anugrah Bhakti, Dwi Afni Maileni, Edwar Kelvin

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