Digitalization and Green Innovation on MSME Performancewith Government Policy as A Moderator

This study aims to analyze the impact of digitalization, green innovation, and tax incentives on MSME performance with government policy ‎as a moderating variable. Digitalization is expected to improve operational efficiency, green innovation supports the development of environmentally friendly products, and tax incentives provide financial encouragement for MSMEs to transform toward sustainable business practices. This research uses primary data obtained through questionnaire distribution to MSME actors in Jakarta and Bogor. The ‎sample size was determined using Hair et al.’s (2022) approach. Data analysis was conducted using the Structural Equation Modeling–Partial ‎Least Squares (SEM-PLS) method to test both direct effects and the moderating role of government policy. Research results show that only ‎the green product innovation variable has a significant impact on MSME performance. Meanwhile, digitalization and tax incentives do not ‎provide meaningful effects on MSME performance improvement. Furthermore, government policy is also not proven capable of moderating ‎the relationship between independent variables and MSME performance. These findings confirm that green product innovation is a key ‎factor in driving MSME performance, while support from digitalization, tax incentives, and the role of government policy have not yet ‎provided the real impact as expected‎.