STRENGTHENING MSME FINANCIAL MANAGEMENT EFFECTIVENESS THROUGH PERCEPTION OF AI AND WORKING CAPITAL MANAGEMENT
Keywords:
Perception Of AI, Working Capital Management, Financial Management Effectiveness, MsmesAbstract
This study investigates how AI perception and working capital management influence financial management effectiveness among MSMEs, using 440 MSME respondents in West Java, Indonesia. The analysis was conducted in two stages: first, multiple linear regression was applied to test the direct effects among variables; second, SEM-PLS was used to validate the measurement model and examine the structural relationships simultaneously. The results consistently indicate that AI perception and working capital management have positive and significant effects on financial management effectiveness, with working capital management emerging as the more dominant driver. Overall, the findings suggest that improving MSMEs’ financial outcomes requires strengthening day-to-day working capital practices while also building readiness and confidence in AI enabled tools that support financial monitoring and decision making.
Downloads
References
Ali, M. H., Breesam, H. M., Rashed, Y. A., Qusai, N., Flayyih, M. R., & Naser, S. J. (2024). Descriptive study on financial management practices, features and profitability of small and medium enterprises. Procedia Environmental Science, Engineering and Management, 11(2), 161–173.
Aveline, S., Deepika, M., & Ramesh Kumar, J. (2014). A study on working capital management of Amalgamations Repco Limited, Chennai. International Journal of Applied Business and Economic Research, 12(2), 179–187.
Banos, Caballero, S., García-Teruel, P. J., & Martínez-Solano, P. (2012). How does working capital management affect the profitability of Spanish SMEs? Small Business Economics, 39(2), 517–531. https://doi.org/10.1007/s11187-011-9317-8
Brauner, P., Hick, A., Philipsen, R., & Ziefle, M. (2023). What does the public think about artificial intelligence?—A criticality map to understand bias in the public perception of AI. Frontiers in Computer Science, 5, 1113903. https://doi.org/10.3389/fcomp.2023.1113903
Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3), 319–340. https://doi.org/10.2307/249008
Dinas Koperasi dan Usaha Kecil Jawa Barat. (n.d.). Proyeksi jumlah UMKM berdasarkan kabupaten/kota di Jawa Barat. Retrieved March 22, 2025, from https://opendata.jabarprov.go.id/id/dataset/proyeksi-jumlah-usaha-mikro-kecil-menengah-umkm-berdasarkan-kabupatenkota-di-jawa-barat
Erdogan, M. (2019). Working capital management and firm performance of Turkish companies. In Studies on Balkan and Near Eastern Social Sciences (Vol. 3, pp. 119–130).
Firmansyah, R. A., Luhukay, D., & Angelus, M. (2025). Systematic literature review: Impact of AI implementation in financial management. In Proceedings of the 8th International Conference on Inventive Computation Technologies (ICICT 2025) (pp. 1274–1280). https://doi.org/10.1109/ICICT64420.2025.11005304
Ghozali, I. (2021). Partial least squares: Konsep, teknik, dan aplikasi menggunakan program SmartPLS 3.2.9 untuk penelitian empiris (3rd ed.; A. Tejokusumo, Ed.). Badan Penerbit Universitas Diponegoro.
Goel, M., Tomar, P. K., Vinjamuri, L. P., Swamy Reddy, G., Al-Taee, M., & Alazzam, M. B. (2023). Using AI for predictive analytics in financial management. In 2023 3rd International Conference on Advance Computing and Innovative Technologies in Engineering (ICACITE 2023) (pp. 963–967). https://doi.org/10.1109/ICACITE57410.2023.10182711
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2021). *A primer on partial least squares structural equation modeling (PLS-SEM)* (3rd ed.). SAGE Publications.
Iyalla, O. M., & Ibrahim, U. A. (2023). Financial performance and working capital management practices of Nigeria’s consumer goods manufacturing firms. WSEAS Transactions on Business and Economics, 20, 2344–2352. https://doi.org/10.37394/23207.2023.20.201
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Muchina, S., & Kiano, E. (2011). Influence of working capital management on firms profitability: A case of SMEs in Kenya. International Business Management, 5(5), 279–286. https://doi.org/10.3923/ibm.2011.279.286
Nguyen, T. H., & Vu, T. Q. (2025). Perceptions of financial AI assistants and intentions toward AI-assisted financial products: Case study in Vietnam. International Journal of Asian Business and Information Management, 16(1). https://doi.org/10.4018/IJABIM.371629
Novianti, D., Mustika, I. W., & Eka, L. H. (2018). Pengaruh tingkat pendidikan, pelatihan akuntansi, umur usaha dan skala usaha pelaku UMKM terhadap penggunaan informasi akuntansi di Kecamatan Purwokerto Utara. JEBA: Jurnal Ekonomi, Bisnis dan Akuntansi, 20(3), 1–14.
Polehenka, M., Sitkovska, A., Viblyi, P., Danchak, L., & Khavarivska, H. (2025). The effectiveness of financial management in the system of ensuring the security of trading enterprises in the domestic market in wartime conditions. Financial and Credit Activity: Problems of Theory and Practice, 3(62), 383–392. https://doi.org/10.55643/fcaptp.3.62.2025.4804
Sugiyono. (2020). Metode penelitian kuantitatif, kualitatif, dan kombinasi (mixed methods). Alfabeta.
Sultana, R. F., Pawar, P. S., Binsuwadan, J., & Abuhaimed, A. (2024). Working capital analysis optimises business management efficiency—Young aspiring entrepreneurs’ perspective. Journal of Infrastructure, Policy and Development, 8(11), 7846. https://doi.org/10.24294/jipd.v8i11.7846
Tahir, M., & Anuar, M. B. A. (2016). The determinants of working capital management and firms performance of textile sector in Pakistan. Quality & Quantity, 50(2), 605–618. https://doi.org/10.1007/s11135-015-0166-4
Vural, G., Sökmen, A. G., & Çetenak, E. H. (2012). Effects of working capital management on firm’s performance: Evidence from Turkey. International Journal of Economics and Financial Issues, 2(4), 488–495.
Wang, G., Obrenovic, B., Gu, X., & Godinic, D. (2025). Fear of the new technology: Investigating the factors that influence individual attitudes toward generative artificial intelligence (AI). Current Psychology, 44(9), 8050–8067. https://doi.org/10.1007/s12144-025-07357-2
Wiska, Mayroza, & Colin, J. J. (2021). Pengaruh tingkat pendidikan, pelatihan akuntansi dan umur usaha terhadap pengguna informasi akuntansi pada UMKM dengan ketidakpastian lingkungan sebagai variabel moderating di Kabupaten Dharmasraya. Jurnal Manajemen dan Sains, 6(2), 406–415. https://doi.org/10.33087/jmas.v6i2.310
Yunia, D., Mulyasari, W., Nofianti, N., & Astuti, K. D. (2020). Pelatihan laporan keuangan UMKM menggunakan smartphone [MSME financial statement training using smartphones]. ARSY: Jurnal Aplikasi Riset Kepada Masyarakat, 1(1), 58–64. https://doi.org/10.55583/arsy.v1i1.37
Download Journal Template 
