Digital transformation of MSMEs in Indonesia during the pandemic

Abstract

Digital transformation is a new trend in Industrial Era 4.0, leading to a new business pattern called the digital economy exacerbated by the crisis due to the Covid-19 pandemic. However, Indonesian Micro, Small, and Medium Enterprises (MSMEs) actors face obstacles in carrying out the business transformation process, as 90% of Indonesian MSMEs are still run conventionally. Therefore, the problem regarding resource unreadiness became the background of this research. This research aimed to find out the following aspects of MSME actors: (1) innovation priority during the Covid-19 pandemic, (2) acceptance of e-commerce, (3) levels of technology adoption, (4) difficulty levels in changing and adapting to technology, and (5) digital transformation in developing businesses due to the Covid-19 pandemic. This research employed a descriptive-quantitative approach in which the data were collected by distributing questionnaires to MSME actors in several cities in Indonesia. The results showed that (1) marketing innovation is the priority of MSMEs, (2) the majority of MSME actors are very receptive to the e-commerce, (3) the digital technology of e-commerce is major needed in MSMEs, (4) MSME actors find difficulties and obstacles in adaptation process, and (5) the combination of offline and online marketing methods became MSME actors’ choice as a survival strategy during the Covid-19 pandemic.