South Asian Journal of Social Studies and Economics

In developing countries, large-scale infrastructure projects are often perceived as catalysts for economic growth and urban integration. However, such developments can also lead to uneven benefits across regions and sectors, particularly for micro and small-scale enterprises that rely on localised demand. Major infrastructure projects, such as toll roads, can disrupt local economic ecosystems by altering accessibility and consumer flow. This study investigates the sustainability of Micro, Small, and Medium Enterprises (MSMEs) in Perbaungan, North Sumatra, following the construction of the Trans-Sumatra Toll Road, which diverted traffic away from traditional commercial hubs like Pasar Bengkel. A sample size of 60 MSMEs was determined using Slovin’s formula, assuming a population of 150 registered businesses and a 10% margin of error. Using a mixed-method approach that combines Structural Equation Modelling (SEM) with SWOT analysis, the research evaluates the effects of transportation infrastructure, government policy, and adaptive capacity on MSME sustainability. Findings reveal that adaptive capacity is the most significant predictor of MSME resilience (path coefficient = 0.784), followed by government policy (0.330), while infrastructure development exerts minimal direct influence (0.136). SWOT results position MSMEs in Quadrant II (diversification strategy), highlighting strengths in innovation and digital adoption, but weaknesses in market access and logistics. Opportunities include integration into toll road rest areas and supportive policy frameworks, while key threats involve declining foot traffic and exclusion from spatial planning. Using bootstrapping (5000 samples), the inner model assessed the causal impact of independent variables (X1, X2, X3) on the dependent variable (Y). The results indicate that adaptive capacity (X3) has the highest standardised coefficient and significance, followed by government policy (X2). This research underscores the importance of spatially-informed, participatory regional planning to ensure MSME survival amidst macro-infrastructure transitions. The study contributes to the discourse on place-based development and dynamic capabilities, offering actionable policy insights for inclusive, adaptive economic planning in peri-urban Indonesia.