Financial Literacy on Business Performance: The Moderating Effect of Religiosity Among SMEs In Sumatera, Indonesia

Abstract

Business performance represents how well the company can make use of business assets and generate receivable. Business performance is a result of company activities or investments over a given period. It is a specific business goal achievement measured against standards, completeness, and costs. The business performance was the result of corporate strategies employed to achieve market-oriented. In the years between , the Enterprise Survey (2015 has conducted a financial survey of Indonesian private sector/micro, and the result was lower-middle-income economies and small firms (5-19 employees) had the worst performance. The owners of SMEs should manage their financial business effectively to achieve good business performances. A low level of financial literacy causes a bad effect on business performances. This paper aims to analyze the influence of financial literacy on SME's business performance with religiosity as the moderating variable. A questionnaire survey has been distributed among SMEs owners in Sumatera, Indonesia. From 387 respondents as the samples of this study, the result shows that financial literacy affects business performance, religiosity affects business performance and religiosity strengthens the relationship between financial literacy and business performance.

Financial Literacy, Lifestyle, Consumption Behavior K-Pop Fans in Covid-19 Pandemic With Religiosity as Moderating Variable

“…They will be taking their money for saving rather than for pleasure or buying something unnecessary. The research results also support the above statement by Desiyanti & Kassim (2020), who state that religiosity can strengthen the influence of financial literacy and business performance. From the description above, the following hypothesis is obtained: H4: Religiosity can moderate the influence of financial literacy on consumption behavior Lifestyle is directly related to religion which is part of the culture that can shape a person's behavior.…”

“…Because financial literacy is an essential aspect of human life, a person must have good financial literacy to improve his consumption behavior regardless of whether the person is religious or not. The results of the above study are not from the research by Desiyanti & Kassim (2020), whose results state that religiosity can strengthen the influence of financial literacy and business performance.…”

Incorporating Islamic Value in Corporate Social Responsibility (CSR) Practice of Malaysia Small Medium Enterprises (SMEs) Food Operators: Does Manager’s Religiosity Influence CSR Practice?

“…It may foster buyers' confidence that the firms have concern on the quality standards, enhance the corporate reputation and cares about the community and environmental welfares. Previous studies also confirmed that CSR practice is important as a sustainable strategy to growth and compete longer in the business (Desiyanti & Kassim, 2020;Ghadas et al, 2018;Samuel et al, 2011).…”

“…The finding from this study also has proved that managers' religiosity has relationship with CSR practice. Religious orientation has a strong influence on business success (Alharbi et al, 2021;Desiyanti & Kassim, 2020). Firms that incorporate the Islamic ethical values such as truthfulness, tolerance, firmness and fairness are more encouraged to sacrifice, give up and spend their wealth on the needy society and community, while expected reward only from Allah.…”

“…CSR exercise may also be driven by various personal values and interests of individual managers, guided by their religiosity (Iguchi et al, 2021;Mazereeuw et al, 2014). Previous studies had shown that managers' religiosity plays an important role as contributing factor towards SMEs' performance such as in Saudi Arabia (Alharbi et al, 2021) and Indonesia (Desiyanti & Kassim, 2020). Moreover, Ghadas et al (2018) revealed that it is crucial for managers to include the religiosity aspect in their business in terms of CSR so that it can give the highest benefit to the society and increase organizational performance and reputation.…”