Imam Muhtadin, Zainal Arifin, Fenty Astrina, Cikita Berlian Hakim, Munzir Munzir, Eko Sudarmanto

The Influence of Digital Entrepreneurship and Digital Literacy on MSME Performance through Digital Technology Adoption in Indonesia

Introduction

The influence of digital entrepreneurship and digital literacy on msme performance through digital technology adoption in indonesia. Explore how digital entrepreneurship, literacy, and technology adoption boost MSME performance in Indonesia. This study uses SEM-PLS to show their significant positive impact.

Abstract

This study aims to examine the effect of digital entrepreneurship and digital literacy on the performance of Micro, Small, and Medium Enterprises (MSMEs) through the adoption of digital technology in Indonesia. A quantitative research approach was employed using primary data collected from 155 MSME actors through a structured questionnaire measured on a Likert scale. The data were analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS 3) to evaluate both the measurement and structural models. The results indicate that digital entrepreneurship and digital literacy have positive and significant effects on MSME performance. Furthermore, both variables significantly influence the adoption of digital technology, which in turn has a strong positive impact on business performance. The findings also confirm that digital technology adoption plays a mediating role in strengthening the relationship between digital entrepreneurship and MSME performance, as well as between digital literacy and MSME performance. Among the variables, digital literacy shows a stronger influence on technology adoption, highlighting the importance of digital skills in driving digital transformation. This study contributes to the literature by providing an integrated model that explains how digital capabilities influence MSME performance through technology adoption in a developing country context. Practically, the findings suggest that enhancing digital literacy and promoting digital entrepreneurial orientation are essential strategies for improving MSME competitiveness and sustainability in the digital economy.

Review

This study presents a timely and highly relevant investigation into the critical factors influencing Micro, Small, and Medium Enterprises (MSME) performance in the context of Indonesia's digital economy. The clear objective to examine the interplay between digital entrepreneurship, digital literacy, digital technology adoption, and MSME performance is commendably addressed through a robust quantitative approach. The choice of Structural Equation Modeling–Partial Least Squares (SEM-PLS 3) is appropriate for analyzing complex relationships and mediation effects, lending credibility to the findings derived from the 155 MSME actors surveyed. The study effectively establishes the direct positive influence of both digital entrepreneurship and digital literacy on MSME performance, setting a strong foundation for its core contribution. The findings offer significant insights, particularly in confirming the crucial mediating role of digital technology adoption. It is particularly noteworthy that both digital entrepreneurship and digital literacy positively influence the embrace of digital technologies, which in turn strongly propels business performance. The nuanced discovery that digital literacy exerts a stronger influence on technology adoption compared to digital entrepreneurship highlights the fundamental importance of foundational digital skills in driving digital transformation among MSMEs. This differentiation adds considerable value, underscoring that while an entrepreneurial mindset is vital, the practical ability to engage with digital tools is a more immediate accelerator for technology integration. These results contribute meaningfully to the literature by providing an integrated model tailored to a developing country context. The practical implications derived from this research are substantial, offering actionable strategies for policymakers and MSME support organizations. The emphasis on enhancing digital literacy and fostering a digital entrepreneurial orientation directly translates into tangible recommendations for improving the competitiveness and long-term sustainability of MSMEs in the rapidly evolving digital landscape. While the abstract provides a strong overview, a full review of the methodology and discussion would further elucidate potential limitations, such as the generalizability across different MSME sectors or regions within Indonesia, and potential avenues for future research exploring moderating factors. Nevertheless, this study makes a valuable contribution to understanding the dynamics of digital capabilities and their impact on MSME success.

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