From Values To Compliance How Cooperative Institutions Shape Digital Tax Adoption And MSME Tax Compliance Evidence From Cooperative-Linked MSME In An Emerging Economy

Abstract

This study examines how collective values translate into tax-compliant behaviour in an increasingly digital taxation environment. It tests a From Values to Compliance model in which Cooperative Values & Institutional Framework (CIF) influences the Adoption of Digital Tax Systems (ADT), which subsequently strengthens MSME Tax Compliance (MTC). Using PLS-SEM with Smart-PLS, the study investigates cooperative-linked MSMEs in Medan, Indonesia, with three reflective constructs measured by 24 indicators. Although the broader project follows a sequential explanatory design, the available NVivo file contains a coding framework rather than completed transcripts; therefore, the qualitative component is presented as an explanatory framework. The results show that CIF significantly predicts ADT (β = 0.613, t = 8.823, p < 0.001), while ADT strongly predicts MTC (β = 0.768, t = 15.806, p < 0.001). The indirect effect of CIF on MTC through ADT is also significant (β = 0.471, t = 6.282, p < 0.001). The model explains 37.6% of the variance in ADT and 59.0% in MTC. The study contributes by shifting the digital-tax debate beyond a technology-only perspective and positioning cooperatives as meso-level intermediaries connecting collective values, technology adoption, and fiscal behaviour. However, the findings are cross-sectional and context-specific. Future research should employ longitudinal and comparative designs and examine factors such as trust, tax morale, and digital literacy. Practically, digital tax reform should involve cooperatives as trusted channels for tax education, reminders, peer learning, and hands-on assistance to make digital compliance easier, repeatable, and sustainable.