Purpose The purpose of this study is to investigate factors that influence the application of governance mechanism in family small and medium-sized enterprises (SMEs) in Indonesia. Design/methodology/approach This study used multiple regression analysis to examine the hypothesis. For data collection, questionnaires were distributed to 337 owners and managers of SMEs around 7 districts in Java Island in Indonesia. Findings The result indicates that uncertainty influences the application of formal governance in family SMEs in Indonesia. Meanwhile, asset specificity has impact on both formal and relational governance in the context of firms. Financial and non-financial objectives did not impact both formal and relational governance. Research limitations/implications Though this research was carried out in a particular cultural context, this study was not specifically designed to examine the interaction between cultural variables and family corporate governance variables. In the future, there is need for a study that examines how culture can influence the practice of formal and relational governance in family business. Practical implications The study will give guidance to owners or managers of family business in terms of governance mechanism when uncertainty increases. This evidence suggests that family firms need to adopt formal governance within family firms when uncertainty exists. Social implications The research finding indicated that uncertainty influenced the application of formal governance in family SMEs in Indonesia. This research finding suggests that family firms need to adopt formal governance when uncertainty exists. The adoption of formal governance, however, may implicate to some others organizational areas in family firms such as leadership, recruitment and selection and corporate culture. Originality/value This study is one of the few on family SMEs, which applied the transaction cost theory. Most of the studies use agency theory for investigating governance mechanism in the family business. This study is one of the few on family SMEs, which applied the transaction cost. This study provides an explanation about a factor that influences a family firm to choose formal and relational governance within the firm.

Micro, Small and Medium Enterprises (MSMEs) play an important role in socio-economic development in Indonesia. However, MSMEs are more vulnerable to changes that result in losses, because MSMEs have limited resources. The Covid-19 pandemic is a serious challenge for SME operations. The resilience of their MSMEs is a priority during the pandemic. This study was conducted to explore the factors that affect the resilience of SMEs in Solo Raya. Using a quantitative approach, hypothesis testing uses Partial Least Square (PLS). The results obtained that the characteristics of Islamic entrepreneurship and Islamic social capital together have a significant effect on the resilience of MSMEs, especially in the context of Covid-19. The results of the study highlight that improving the characteristics of Islamic entrepreneurship should be prioritized to increase the resilience of SMEs

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This paper discusses the relationship between uncertainty, trust and the application of formal governance mechanism in Indonesian family SMEs. The data were obtained through survey to 360 family firms in indonesia. This study used factor analysis to validate the construct and multiple regression analysis to examine the hypothesis. The moderation testing indicated that trust moderated the relationship between uncertainty and formal governance was negatively significant