Financial Information System as a Strategic Moderator: Strengthening the Impact of Governance, Risk, and Financial Distress on SME Sustainability

Abstract

Introduction: Small and Medium Enterprises (SMEs) play a vital role in Indonesia’s economy but remain financially vulnerable, particularly during economic shocks such as the COVID-19 pandemic. Financial Information Systems (FIS) has emerged as crucial elements in managing business risks and ensuring strategic financial planning. FIS, as a part of financial technology (FinTech), enables SMEs to access real-time financial data, automate transactions, and enhance transparency.

Objectives: This research investigates the impact of corporate governance, risk management, and financial distress on the financial sustainability of SMEs, with a particular focus on the moderating role of FIS.

Methods: This research adopts a quantitative explanatory design using data between 2020 and 2023. To enhance statistical power and model reliability—especially for moderated regression and PLS-SEM analysis—a total of 525 valid responses were collected from SMEs across various sectors, including trade, manufacturing, services, and agriculture.

Results: The results indicate that corporate governance and risk management positively and significantly influence financial sustainability, while financial distress exerts a negative impact. More importantly, FIS significantly moderates all three relationships: it strengthens the positive effects of governance and risk management, and it mitigates the negative influence of financial distress on sustainability.

Conclusions: These findings highlight the strategic value of FIS as a digital enabler that enhances transparency, decision-making, and internal control. This study contributes to the growing literature on digital transformation and SME resilience by demonstrating that FIS is not merely a technological tool, but a strategic moderator that can transform internal practices into sustainable outcomes. Practical implications suggest that SMEs, policymakers, and fintech developers should prioritize the integration of FIS into governance and risk frameworks to enhance long-term financial viability.