The Relationship of Business Strategy and MSMEs Performance: Innovation and Accounting Information System as Mediating Variables

Micro, Small, and Medium Enterprises (MSMEs) play a significant role in the national economic growth. This has made the performance of MSMEs a concern for many parties, including the government, which necessitates efforts to continuously maintain and enhance their performance. The performance of MSMEs is greatly determined by how they design, implement, and manage their business strategies. Designing appropriate business strategies can provide support for MSMEs in achieving superior and sustainable performance over the long term. Business strategies that focus on growth and competitive advantage often require innovation in their implementation. To help identify the necessary resources in the implementation of business strategies, Accounting Information Systems (AIS) are also required. The objective of this research is to test the relationship between business strategies and the performance of micro-enterprises through innovation and AIS in MSMEs. The research population consists of MSMEs in the food and beverage sector in the city of Malang. The data analysis tool used is Structural Equation Modelling (SEM).