| Abstrak/Abstract |
The potential of micro, small, and medium enterprises in Indonesia accounts for 99% of the businesses. The MSME sector contributes 61% to the national gross domestic product and employs almost 97% of the workforce. MSMEs’ high labor absorption and relatively low investment capital requirements make MSMEs more flexible and resilient in adjusting to highly dynamic market conditions. However, the sector faces various internal and external obstacles, such as capital, production, competitiveness, and marketing issues. Competition levels in MSMEs are highly dependent on adopting digital technology. This research identified the potential of Indonesian MSMEs, analyzed MSME digitalization development, and identified challenges and opportunities in adopting digital transformation. This research is an initial literature review, followed by an applicative study of an MSME implementing digitalization technology. The study outlined that since the COVID-19 pandemic, more than 12 million MSMEs (18% of national MSMEs) have entered the digital ecosystem. After switching to digital platforms, 50.6% of MSMEs can increase their profit and turnover. However, Indonesian MSMEs face problems in the adoption of digitalization, such as low digital literacy, small and non-uniform production capacity, and suboptimal market access. To prepare for digitalization adoption challenges, human resources, adoption readiness, service readiness, infrastructure readiness, and business owners’ motivation must be addressed. The opportunity for adopting MSME digitalization is to strengthen the innovation ecosystem through collaboration between the government, business actors, educational institutions, and stakeholders. |
