Digital Economy and MSME Growth in Eastern Indonesia: Empirical Evidence and Strategic Insights

Abstract

Purpose – This study aims to systematically investigate the impact of the digital economy on the performance and scalability of Micro, Small, and Medium Enterprises (MSMEs) in Eastern Indonesia. The objective is to identify key drivers, opportunities, and persistent obstacles MSMEs encounter in adapting digital technologies within this unique regional context.

Design/methodology/approach – The research adopts a mixed-method approach combining quantitative survey analysis of MSME actors with qualitative in-depth interviews involving stakeholders and local authorities. Data were analyzed using descriptive statistics, regression modeling to measure the relationship between digital adoption and MSME growth, and thematic analysis to capture contextually specific factors affecting digital transformation.

Findings – Results demonstrate that the adoption of digital economy platforms has made a significant positive contribution to MSMEs, leading to increased revenue, expanded market access, and enhanced operational efficiency. However, the study identifies notable challenges in the form of limited technological infrastructure, insufficient digital literacy, and restricted access to finance. Cross-sectoral collaboration and supportive government policies are deemed crucial for accelerating digital integration among MSMEs.

Research limitations/implications – The generalizability of the findings is constrained by geographical focus and sample representativeness, as the study is limited to certain areas within Eastern Indonesia. Practical implications underscore the necessity for integrated policy interventions that actively foster digital competency and bridge infrastructural gaps facing MSMEs in underserved regions.

Originality/value – This research fills a knowledge gap about digital economic transformation in geographically and infrastructurally challenged localities, providing evidence-based recommendations to inform digitalization strategies for MSME development in East Indonesian contexts.