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Abstract
Micro and Small Enterprises (MSEs) in Indonesia face various challenges in improving competitiveness, such as limited capital, human resources, and marketing difficulties. One proposed solution is partnerships, which can provide financial support, training and market access. However, only a small proportion of MSE actors choose to partner, even though partnerships are considered to improve business performance. The main problem in this study is to analyze the factors that influence MSEs' decision to partner and how partnerships impact MSE performance. MSE performance is measured through revenue and number of workers. This research is important because MSEs have a significant role in the Indonesian economy, especially in creating jobs and increasing income. This study aims to analyze the factors that influence the decision to partner in MSEs, as well as the impact of partnership implementation on the performance of MSEs in Indonesia. The data used in this study are secondary data from the 2019 Micro and Small Enterprise Survey, with the Propensity Score Matching (PSM) method to analyze the impact of partnerships on MSE performance. The results show that factors such as education, training, raw material barriers, and business age have a positive and significant effect on MSEs' decision to partner. The implementation of partnerships has a significant positive impact on increasing revenue in the food micro sector and the non-food micro and small sector. The effect of partnerships on the number of workers has a significant impact on the food and non-food MSE sector.