Strategic Cost Management and Tax Compliance in MSMEs: Exploring Synergies to Strengthen Business Resilience

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Dhaniel Hutagalung, Sukriyah

Abstract

Strategic Cost Management (SCM) and tax compliance are important aspects of building the resilience of micro, small, and medium enterprises (MSMEs) amid global economic challenges. This study aims to analyze the relationship between SCM implementation and tax compliance, and explore the role of organizational performance as a mediator in the context of MSMEs in Indonesia. The research method uses a quantitative approach with the Structural Equation Modeling (SEM) technique through SmartPLS, based on data from 195 MSME respondents collected through questionnaires. The originality of this research lies in the analysis of the strategic relationship between SCM, tax compliance, and organizational performance in the context of MSMEs which is still minimal in the literature, especially in Indonesia. The results show that SCM has a significant direct influence on tax compliance, although it is negative, while organizational performance is proven to improve tax compliance but does not mediate the relationship between SCM and tax compliance. The implications of this study underscore the need for more effective cost management strategies that are not only efficiency-oriented but also pay attention to tax obligations as an integral part of business sustainability. In addition, this study provides insights for policymakers to strengthen training and support programs for MSMEs to better understand the importance of strategic cost management and tax compliance for long-term business resilience.

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