ISLAMIC ECONOMIC PRINCIPLES AND THE SUSTAINABILITY OF MICRO, SMALL, AND MEDIUM ENTERPRISES: A STRUCTURAL EQUATION MODEL APPROACH

Abstract

This study examines the effect of Islamic economic principles on the sustainability of micro, small, and medium enterprises (MSMEs), with sharia business ethics and MSME performance as mediating variables and sharia economic literacy as a moderating variable. Using a quantitative survey of 200 MSME owners or managers in Medan City and analyzed through PLS-SEM, the findings indicate that several dimensions of Islamic economic principles positively influence MSME performance and sustainability. Sharia business ethics and MSME performance significantly mediate this relationship, while sharia economic literacy strengthens ethical business practices. The results support the Maqāṣid al-Sharī‘ah perspective, emphasizing ethical and sustainable business development.