The Impact of Digital Transformation on MSME Competitiveness and Economic Growth
Article Sidebar
Main Article Content
Abstract
Micro, Small, and Medium Enterprises (MSMEs) play a vital role in economic development by driving job creation and contributing to GDP growth. The rapid advancement of digital technology has transformed the business landscape, providing MSMEs with opportunities to enhance their competitiveness. This study examines the impact of digital transformation on MSMEs, focusing on the adoption of e-commerce platforms, financial technology (fintech), and digital marketing strategies. The findings indicate that digital tools enable MSMEs to expand their market reach, improve operational efficiency, and respond effectively to changing consumer behavior. However, challenges such as limited digital literacy, inadequate internet infrastructure, and high adoption costs hinder full digital integration. To optimize the benefits of digital transformation, policymakers and stakeholders must support MSMEs through financial assistance, training programs, and improved digital infrastructure. This study highlights the need for a collaborative approach between government, industry, and academia to foster a sustainable digital ecosystem for MSMEs, ensuring their resilience and long-term growth in an increasingly digital economy.
Article Details
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
This is a state of publication that makes writers respect the copyright of their articles and enables us to ensure full copyright protection and to disseminate international journals. Authors are asked to transfer copyrights to ensure the widest possible dissemination of information. Notification will be sent to the relevant Author who confirms receipt of the manuscript. If citations from other copyrighted works are included, the Author must obtain written permission from the copyright owner and give credit to the source in the article.
References
Al-Mamun, A., Olowolayemo, A., Wani, S., & Sofiadin, A. (2022). Exploring the impact of digital entrepreneurship education among graduates in Bangladesh. JISDT, 4(2).
Aminullah, E., Fizzanty, T., Nawawi, N., Suryanto, J., Pranata, N., Maulana, I., & Budiatri, A. (2022). Interactive components of digital MSMEs ecosystem for inclusive digital economy in Indonesia. Journal of the Knowledge Economy, 15(1), 487–517.
Appel, G., Grewal, L., Hadi, R., & Stephen, A. (2019). The future of social media in marketing. Journal of the Academy of Marketing Science, 48(1), 79–95.
Appio, F., Frattini, F., Petruzzelli, A., & Neirotti, P. (2021). Digital transformation and innovation management: A synthesis of existing research and an agenda for future studies. Journal of Product Innovation Management, 38(1), 4–20.
Awonuga, K., Nwankwo, E., Oladapo, J., Okoye, C., Odunaiya, O., & Scholastica, U. (2024). Driving sustainable growth in SME manufacturing: The role of digital transformation, project, and capture management. International Journal of Science and Research Archive, 11(1), 2012–2021.
Bakri, A., & Kisswani, N. (2015). Social media: Adoption and legal issues impact on business innovation. International Journal of Business Innovation and Research, 9(4), 486.
Batmetan, J. (2023). A cybersecurity and digital transactions to educate the micro, small, and medium business community. IJITE, 2(4), 1–11.
Bejinaru, R. (2021). Key issues of transition to digital entrepreneurship. Proceedings of the International Conference on Business Excellence, 15(1), 91–101.
Bouncken, R., Kraus, S., & Roig‐Tierno, N. (2019). Knowledge- and innovation-based business models for future growth: Digitalized business models and portfolio considerations. Review of Managerial Science, 15(1), 1–14.
Canhoto, A., Quinton, S., Pera, R., Molinillo, S., & Simkin, L. (2021). Digital strategy aligning in SMEs: A dynamic capabilities perspective. The Journal of Strategic Information Systems, 30(3), 101682.
D'Angelo, S., Ghezzi, A., Cavallo, A., Rangone, A., & Gatti, M. (2023). Tapping into digital technologies in corporate entrepreneurship: An exploratory multiple case study. European Conference on Innovation and Entrepreneurship, 18(1), 217–224.
Dutta, A., Doszhan, R., Kuanova, L., & Beisembayev, G. (2023). Impact of COVID-19 on fintech industry of Kazakhstan: New challenges. Eurasian Journal of Economic and Business Studies, 1(67), 70–81.
Fuadi, D., Akhyadi, A., & Saripah, I. (2021). Systematic review: Strategi pemberdayaan pelaku UMKM menuju ekonomi digital melalui aksi sosial. Diklus Jurnal Pendidikan Luar Sekolah, 5(1), 1–13.
Gosal, G., & Nainggolan, R. (2023). The influence of digital financial literacy on Indonesian SMEs’ financial behavior and financial well-being. International Journal of Professional Business Review, 8(12), e04164.
Hazudin, S., Sabri, M., Kader, M., & Ishak, M. (2021). Empowering women-owned businesses in the era of digital transformation: A review of the opportunities and challenges. International Journal of Academic Research in Business and Social Sciences, 11(19).
Indrajaya, T., Primasyah, D., Yulianti, S., Rosmiati, E., & Sova, M. (2022). Peran e-bisnis dalam pengembangan UMKM. Jurnal Economina, 1(2), 239-247.
John, L. (2022). Can MSMEs in tourism survive the COVID-19 storm? An MSME view of their stakeholders. Benchmarking: An International Journal, 30(6), 2166–2188.
Jones, N., Borgman, R., & Ulusoy, E. (2015). Impact of social media on small businesses. Journal of Small Business and Enterprise Development, 22(4), 611–632.
Kollmann, T., Kleine-Stegemann, L., Cruppe, K., & Then-Bergh, C. (2021). Eras of digital entrepreneurship. Business & Information Systems Engineering, 64(1), 15–31.
Korchagina, I. V., Sychjova-Peredero, O. V., & Korchagin, R. L. (2019, December). Digital technology entrepreneurship in modern regional development. In International Scientific and Practical Conference on Digital Economy (ISCDE 2019) (pp. 26–30). Atlantis Press.
Kusjuniati, K. (2020). Strategi dan peran penting Komite Nasional Ekonomi dan Keuangan Syariah (KNEKS) dalam mendukung ketahanan ekonomi nasional. Widya Balina, 5(1), 112-123.
Kwayu, S., Lal, B., & Abubakre, M. (2018). The influence of social media on engendering strategic organisational practices: The case of two Tanzanian telecommunications companies. Springer, 47-59.
Langelo, L., Ngangi, C., & Rengkung, L. (2024). Agro digitalization capability of the UMKM sector in Bitung City in the era of digital agro economy. Jurnal Agroekoteknologi Terapan, 5(1), 37-51.
Lei, J., Indıran, L., & Kohar, U. (2022). The digital transformation of SMEs: The difference between East and West in China. International Journal of Academic Research in Business and Social Sciences, 12(12).
Li, S., Bu, Y., Zhang, Z., & Huang, Y. (2024). Digital entrepreneurship intention and digital entrepreneurship behavior: The mediating role of managing learning and entrepreneurship education. Education + Training, 66(2/3), 195-212.
Lu, C., Yu, B., Zhang, J., & Dan, X. (2020). Effects of open innovation strategies on innovation performance of SMEs: Evidence from China. Chinese Management Studies, 15(1), 24-43.
Mahesh, K., Aithal, P., & Sharma, K. (2023). Government initiatives and digital innovation for Atma Nirbhar MSMEs/SMEs: To achieve sustainable and inclusive economic growth. International Journal of Management Technology and Social Sciences, 68-82.
Mattos, C., Pellegrini, G., Hagelaar, G., & Dolfsma, W. (2023). Systematic literature review on technological transformation in SMEs: A transformation encompassing technology assimilation and business model innovation. Management Review Quarterly, 74(2), 1057-1095.
Min, H. (2022). Assessing the impact of a COVID-19 pandemic on supply chain transformation: An exploratory analysis. Benchmarking: An International Journal, 30(6), 1765-1781.
Mustafa, M. (2021). Impact of digital strategy in business for small and medium enterprises in developing countries. International Journal for Modern Trends in Science and Technology, 7(09), 205-210.
Noerchoidah, N., Suhardiyah, M., Nurcahyanie, Y., & Sawitri, A. (2025). Optimization of digital literacy knowledge sharing and human capital on digital economy for MSMEs business sustainability. International Journal of Human Capital and Information Technology Professionals, 16(1), 1-18.
North, K., Aramburu, N., & Lorenzo, O. (2019). Promoting digitally enabled growth in SMEs: A framework proposal. Journal of Enterprise Information Management, 33(1), 238-262.
Novianti, W., & Erdiana, E. (2020). Advertisement in business through social media. Proceeding of International Conference on Business Economics Social Sciences and Humanities, 1, 53-58.
Noya, S., Taneo, S., & Melany, M. (2023). Triple helix innovation ecosystem: The role of small and medium enterprises community in enhancing performance. Quality Innovation Prosperity, 27(1), 46-61.
Nursyamsu, N., Ningsih, F., & Nurdin, N. (2022). Business sustainability in the era of Society 5.0: Optimizing the utilization of social media and fintech for Muslim millennial entrepreneurs. Iqtishodia Jurnal Ekonomi Syariah, 7(2), 21-28.
Olazo, D. (2022). Marketing competency, marketing innovation and sustainable competitive advantage of SMEs: A mixed-method analysis. Asia Pacific Journal of Marketing and Logistics, 35(4), 890-907.
Pelletier, C., & Cloutier, L. (2019). Conceptualising digital transformation in SMEs: An ecosystemic perspective. Journal of Small Business and Enterprise Development, 26(6/7), 855-876.
Perdana, E., Hermana, B., & Kuswanto, A. (2024). Determinants and impact of digital transformation on small business performance in the Jabodetabek area. Return Study of Management Economic and Business, 3(10), 755-768.
Pergelova, A., Manolova, T., Simeonova-Ganeva, R., & Yordanova, D. (2018). Democratizing entrepreneurship? Digital technologies and the internationalization of female-led SMEs. Journal of Small Business Management, 57(1), 14-39.
Popović, J., Dudaš, I., Milosevic, D., & Luković, J. (2022). Digital transformation as a chance for small business development. International Journal of Management Trends Key Concepts and Research, 1(1), 29-38.
Prodanova, J., & Looy, A. (2019). How beneficial is social media for business process management? A systematic literature review. IEEE Access, 7, 39583-39599.
Quinton, S., Canhoto, A., Molinillo, S., Pera, R., & Budhathoki, T. (2017). Conceptualising a digital orientation: Antecedents of supporting SME performance in the digital economy. Journal of Strategic Marketing, 26(5), 427-439.
Ragazou, K., Passas, I., & Sklavos, G. (2022). Investigating the strategic role of digital transformation path of SMEs in the era of COVID-19: A bibliometric analysis using R. Sustainability, 14(18), 11295.
Ramadhona, D., Syafri, W., Maryani, D., & Achmad, M. (2023). Government support and policy design to improve MSME’s performance. Journal of Social Research, 2(7), 2157-2172.
Rapaccini, M., Paiola, M., Cinquini, L., & Giannetti, R. (2023). Digital servitization journey in small- and medium-sized enterprises: The contribution of knowledge-intensive business firms. Journal of Business and Industrial Marketing, 38(6), 1362-1375.
Riswandi, R., & Permadi, I. (2022). Business sustainability through technology adoption: Readiness and acceptance of e-commerce technology in MSMEs. KNE Social Sciences.
Rupeika-Apoga, R., & Petrovska, K. (2022). Barriers to sustainable digital transformation in micro-, small-, and medium-sized enterprises. Sustainability, 14(20), 13558.
Sachitra, V., & Chinthaka, D. (2022). Deriving solutions to the contemporary issues in entrepreneurship: Determinants of establishing digital entrepreneurship ecosystem in Sri Lanka. South Asian Journal of Social Studies and Economics, 1-14.
Sang, T. (2023). Digital transformation toward sustainable development in Vietnamese small and medium enterprises. Management & Marketing, 18(S1), 459-473.
Santoso, H., Priatna, W., Wijaya, A., & Nugroho, D. (2023). Strengthening the resilience and competitiveness of MSMEs for digital independence of tourism villages through marketing communication in Pesudukuh Village, Bagor District, Nganjuk Regency, East Java. International Journal of Multidisciplinary Research and Analysis, 7(1).
Saridakis, G., Lai, Y., Mohammed, A., & Hansen, J. (2018). Industry characteristics, stages of e-commerce communications, and entrepreneurs and SMEs revenue growth. Technological Forecasting and Social Change, 128, 56-66.
Satalkina, L., & Steiner, G. (2020). Digital entrepreneurship and its role in innovation systems: A systematic literature review as a basis for future research avenues for sustainable transitions. Sustainability, 12(7), 2764.
Shafi, M., Liu, J., & Ren, W. (2020). Impact of COVID-19 pandemic on micro, small, and medium-sized enterprises operating in Pakistan. Research in Globalization, 2, 100018.
Srivastava, D. (2024). The transformative role of fintech in modern business organizations: A comprehensive analysis. International Journal of Scientific Research in Engineering and Management, 8(3), 1-5.
Sulastri, S., Mulyadi, H., Disman, D., Hendrayati, H., & Purnomo, H. (2023). Resilience acceleration model of small and medium enterprises through digital transformation. Journal of Eastern European and Central Asian Research (JEECAR), 10(4), 609-619.
Troise, C., Dana, L., Tani, M., & Lee, K. (2021). Social media and entrepreneurship: Exploring the impact of social media use of start-ups on their entrepreneurial orientation and opportunities. Journal of Small Business and Enterprise Development, 29(1), 47-73.
Vardarlıer, P., & Zafer, C. (2020). Sosyal medya ve kriz yönetimi: Cambridge Analytica örneği. Celal Bayar Üniversitesi Sosyal Bilimler Dergisi, 31-44.
Varma, A. (2019). Fintech adoption choices of small businesses: A technology organization environment (TOE) framework study. Accounting and Finance Research, 8(2), 86.
Williams, S., & Schaefer, A. (2012). Small and medium‐sized enterprises and sustainability: Managers' values and engagement with environmental and climate change issues. Business Strategy and the Environment, 22(3), 173-186.
Xiong, C., & Fu-sheng, Z. (2021). Influence of digital finance on efficacy of entrepreneurship by returning migrant workers. Discrete Dynamics in Nature and Society, 2021, 1-11.
Zhou, T. (2023). Unveiling the potential of social media marketing in enhancing e-marketplace performance. Journal of Digitainability Realism & Mastery (DREAM), 2(5), 53-57.