Abstract: SMEs is a sector that contributes a lot to the economic growth and provide jobs for the community. The samples are focused on the SME field convection and foods are making use of labor around the company. The purpose of this study is to know and to explain how Islamic corporate governance implementation and impact to financial performance as measured by ROA and ROE, as well as the impact of the financial performance of the local community welfare is supported by Islamic Corporate governance.

The results show that (1) Islamic corporate governance (siddiq, amanah, tabligh, fathonah, istiqomah and qonaah) effect on financial performance (2) financial performance does not affect the welfare of the community (3) corporate governance of Islamic influence on the local community welfare (4) financial performance supported by Islamic corporate governance affect the local community welfare. This study also demonstrates the role of Islamic corporate governance to improve financial performance and well-being of society.

Keywords: Islamic Corporate Governance (ICG), financial performance, local community welfare.