JEFMS Journal

ABSTRACT:

The emergence of digital technology (DT) or information and communication technology (ICT) has created a drastic change in business practices which presents a serious challenge to the success of the implementation of the inclusive development strategy in Indonesia. This chapter discusses how the digitalization process occurs in micro and small enterprises (MSEs) in Indonesia and what are the main challenges faced by this business group. The study that underlies this chapter focuses on MSEs in the manufacturing industry in Indonesia. It shows that only a very small number of MSEs utilize digital technology, especially e-commerce for marketing, although the percentage varies by industry group. There are some causes, including a lack of insight or knowledge about the importance of digital technology especially in facing competition, limited capital, lack of ICT infrastructure in their area, and entrepreneurs think no need to use the Internet or e-commerce because they only sell their goods in the local market in small amounts.

KEYWORDS:

MSEs, MSMEs, MIEs, ICT, manufacturing, digital economy, internet

REFERENCES:

1) Ahmada, Syed Zamberi, Abdul Rahim Abu Bakarb, Tengku Mohamed Faziharudeanc And Khairul Anwar Mohamad Zakic (2015). An Empirical Study Of Factors Affecting E-Commerce Adoption Among Small- And Medium-Sized Enterprises In A Developing Country:Evidence From Malaysia, Information Technology For Development, 21(4):555–572. Https://Ur.Booksc.Eu/Book/36044620/D2b657.

2) Azam, M.S. And Quadddus, M. (2009a). Adoption Of B2b E-Commerce By The Smes In Bangladesh: An Empirical Analysis. Paper Presented At The Asian Business Research Conference,11-12 April, Dhaka. Https://Citeseerx.Ist.Psu.Edu/Viewdoc/Download?Doi=10.1.1.528.264&Rep=Rep1&Type=Pdf.

3) Azam, M.S. And Quaddus, M. (2009b). Adoption of E-Commerce By The Smes In Bangladesh: The Effects Of Innovation Characteristics And Perceived Risk. Paper Presented At The Australian And New Zealand Marketing Academy Conference, 30 November - 2 December 2009, Melbourne, Victoria. Http://Citeseerx.Ist.Psu.Edu/Viewdoc/Download?Doi=10.1.1.465.5902&Rep=Rep1&Type=Pdf.

4) Arendt, L. (2008). Barriers to ICT Adoption In Smes: How To Bridge The Digital Divide? Journal Of Systems And Information Technology, 10(2). 93-108. Https://Www.Emerald.Com/Insight/Content/Doi/10.1108/13287260810897738/Full/Html.

5) Bach, M. P., Zoroja, J., And Vukši?, V. B. (2013). Review Of Corporate Digital Divide Research: A Decadal Analysis (2003-2012). International Journal of Information Systems And Project Management, 1(4): 41-55. Https://Www.Bib.Irb.Hr/673992?Rad=673992.

6) Barry, H. And Milner, B. (2002). SME’s And Electronic Commerce: A Departure From The Traditional Prioritisation Of Training? Journal Of European Industrial Training, 25(7). 316–326. Https://Eric.Ed.Gov/?Id=EJ655027.

7) Blackburn, R. And Athayde, R. (2000). Making The Connection: The Effectiveness Of Internet Training In Small Businesses, Education And Training, 42(4/5). 289-299. Https://Www.Researchgate.Net/Publication/ 38175409_Making_The_Connection_The_Effectiveness_Of_Internet_Training_In_Small_Businesses

8) BPS (2017), Analisa Ketenagakerjaan Usaha Mikro Kecil, Sensus Ekonomi 2016. Analisa Hasil Listing, November, Jakarta: Badan Pusat Statistik Nasional. Https://Www.Bps.Go.Id/Publication/2017/12/26/ 3d1e106a193f44a29983778e/Analisis-Hasil-Listing-Sensus-Ekonomi-2016----Analisis-Ketenagakerjaan-Usaha-Mikro-Kecil.Html

9) BPS (2019), Indeks Pembangunan Teknologi, Iinformasi, Dan Komunikasi/ICT Development Index 2018, November, Jakarta: Badan Pusat Statistik. Https://Www.Bps.Go.Id/Publication/2019/11/29/0328ba9a85b461816e917291/Indeks-Pembangunan-Teknologi-Informasi-Dan-Komunikasi-2018.Html

10) BPS (2020a), Statistik Telekomunikasi Indonesia 2019, October, Jakarta: Badan Pusat Statistik. Https://Www.Bps.Go.Id/Publication/2021/10/11/E03aca1e6ae93396ee660328/Statistik-Telekomunikasi-Indonesia-2020.Html.

11) BPS (2021a), Statistik Telekomunikasi Indonesia, Jakarta: Badan Pusat Statistik. Https://Www.Bps.Go.Id/ Publication/2021/10/11/E03aca1e6ae93396ee660328/Statistik-Telekomunikasi-Indonesia-2020.Html

12) BPS (2021b), Statistik E-Commerce 2021, Jakarta: Badan Pusat Statistik. Https://Www.Bps.Go.Id/Publication/2021/12/17/667821e67421afd2c81c574b/Statistik-E-Commerce-2021.Html

13) Chong, S. And Pervan, G. (2007). Factors Influencing The Extent Of Deployment Of Journal Of Electronic Electronic Commerce For Small And Medium Sized Enterprises. Commerce In Organizations, 5(1).1-29. Https://Www.Igi-Global.Com/Article/Factors-Influencing-Extent-Deployment-Electronic/3485.

14) Daniel, E., Wilson, H., and Myers, A. (2002). Adoption of E-Commerce By SME's In The UK: Towards A Stage Model. International Small Business Journal, 20(3). 253-268. Https://Www.Researchgate.Net/ Publication/245216381_Adoption_Of_E-Commerce_By_Smes_In_The_UK.

15) Fallon, M. And Moran, P. (2000). Information Communications Technology (ICT) And Manufacturing SME, Paper Presented At The 2000 Small Business And Enterprise Development Conference, 10-11 April, University Of Manchester, Manchester.

16) Farhad, Nejadirani, Masoud Behravesh and Reza Rasouli (2011). Developing Countries and Electronic Commerce The Case Of Smes. World Applied Sciences Journal. 15(5).756-764. Https://Citeseerx.Ist.Psu.Edu/Viewdoc/Download?Doi=10.1.1.389.6741&Rep=Rep1&Type=Pdf

17) Fong, M. W. L. (2009). Digital Divide: The Case Of Developing Countries. Issues In Informing Science And Information Technology. 6(2). 471-478. Http://Iisit.Org/Vol6/Iisitv6p471-478Fong597.Pdf

18) Hunaiti, Z., Masa’deh R., Mansour, M. And Al-Nawafleh, A. (2009). Electronic Commerce Adoption Barriers In Small And Medium-Sized Enterprises (Smes) In Developing Countries: The Case Of Libya. IBIMA Business Review, 2: 37-45. Https://Www.Researchgate.Net/Publication/264905313_Electronic_Commerce_Adoption_Barriers_In_Small_And_Medium-Sized_ Enterprises_ Smes_In_ Developing_Countries.

19) Jones, P., Packham, G., Beynon-Davies, P., and Pickernell, D. (2011). False Promises: E-Business Deployment In Wales’ SME Community. Journal Of Systems And Information Technology.13 (2). 163–178. Https://Www.Researchgate.Net/Publication/220419402_False_Promises_E-Business_Deployment_In_ Wales%27_SME_Community

20) Julianto, P.A. (2016), “Government Targets 44 Million Msmes To Market Products Through The Internet”, Kompas Newspaper, 18 June (Http:// Ekonomi.Kompas.Com/Read/2016/06/18/ 111218426/Government.Target. 44.Juta. Umkm.Pasarkan.Product.Via.Internet.

21) Compass (2021a). Fix E-Commerce, Economics & Business Commerce, Tuesday, 9 March, Page 9.

22) Compass (2021b). The Hidden Blessings Of The Pandemic, Opinion, Saturday, 27 March, Page 6.

23) Compass (2021c). The Impact Of The Digital Economy Will Be Measured. Saturday, 27 March, Page 5.

24) Lai, I. K. W. (2007). The Strategic Changes By Adopting Internet-Based Interorganizational Systems. Management Research News. 30(7). 495–509.

25) Matlay, H. (2000). Training In The Small Business Sector Of The British Economy. In Carter S. And Jones D. (Eds.), Enterprise And Small Business: Principles, Policy And Practice, Addison Wesley Longman, London. Https://Www.Econbiz.De/Record/Enterprise-And-Small-Business-Principles-Practice-And-Policy-Carter-Sara/10003399200

26) Migiro, S.O. (2006). Diffusion Of Icts And E-Commerce Adoption In Manufacturing Smes In Kenya. South African Journal Of Library And Information Science, 72(1), 35-44. Https://Pdfs.Semanticscholar.Org/1058/33840d410a5c96e4ad1a7e9232659a46f33d.Pdf

27) Neale, J., Murphy, J. And Scharl, A. (2006). Comparing The Diffusion Of Online Service Recovery In Small And Large Organizations. Journal Of Marketing Communications, 12(3). 165-181. File:///C:/Users/WINDOWS%2010/Downloads/Comparing_The_Diffusion_Of_Online_Service_Recovery.Pdf

28) Ocha, Matilda Luoise (2011). Factors That Influence Adoption And Frequency Of Use Of E=Commerce By Micro And Small Enterprises (Mses) In Kisumu. A Management Research Project, The Degree Of Master Of Business Administration, Department Of Business Administration, School Of Business, University Of Nairobi. Http://Erepository.Uonbi.Ac.Ke/Bitstream/Handle/11295/13001/Ocha%2C%20Matilda%20L_Factors%20that%20influence%20adoption%20and%20frequency%20of%20use%20of%20e-%20commerce%20by %20micro%20and%20small%20enterprises%20%28mses %29%20in%20kisumu%2C%20kenya.Pdf?Sequence=1.

29) Oliveira, T., And Martins, M. F. (2010). Firms Patterns Of E-Business Adoption: Evidence For The European Union. The Electronic Journal Information Systems Evaluation, 13(1), 47-56. Http://Www.Ejise.Com/Issue/Download.Html?Idarticle=656.

30) Poon, Simpson And Paula Swatman (2005). Small Business Use Of The Internet: Findings From Australian Case Studies. International Marketing Review, 14(5). 1-15. File:///C:/Users/WINDOWS%2010/Downloads/Small_Business_Use_Of_The_Internet_Findings_From_A.Pdf

31) Poorangi, Mehdi M And Edward W.S. Khin (2013). Strategic Alliance On Malaysia Smes To Compete Globally. Endogenous And Exogenous Prospective. Actual Problems Of Economics, 3(141). 407-415.

32) Poorangi, Mehdi M., Edward W.S. Khin, Shohreh Nikoonejad And Arash Kardevani (2013). E-Commerce Adoption In Malaysian Small And Medium Enterprises Practitioner Firms: A Revisit On Rogers' Model. Anais Da Academia Brasileira De Ciências, 85(4). 1593-1604. Https://Www.Researchgate.Net/Publication/259352790_Ecommerce_Adoption_In_Malaysian_Small_And_Medium_Enterprises_Practitioner_Firms _A_Revisit_On_Rogers%27_Model.

33) Rahahua, Rita And John Daya (2015). Determinant Factors Of E-Commerce Adoption By Smes In Developing Country: Evidence From Indonesia. Procedia - Social And Behavioral Sciences, 195,142 – 150. Https://Core.Ac.Uk/Download/Pdf/82351741.Pdf

34) Riquelme, H. (2002). Commercial Internet Adoption In China: Comparing The Experience Of Small, Medium And Large Business Internet Research. Electronic Networking Applications And Policy,12(3). 276–286. Https://Www.Emerald.Com/Insight/Content/Doi/10.1108/10662240210430946/Full/Html

35) Saffu, K., Walker, J. H., And Hinson, R. (2008). Strategic Value And Electronic Commerce Adoption Among Small And Medium-Sized Enterprises In A Transitional Economy. Journal Of Business & Industrial Marketing, 23(6). 395–404. Https://Www.Researchgate.Net/Profile/Robert-Hinson-2/Publication/247619157_Strategic_Value_And_Electronic_Commerce_Adoption_Among_Small_And_Medium-Sized_Enterprises_In_A_Transitional_Economy/Links/55a26cca-And- Ea815dff-Adlectron-Valueic-And-Stratedlectronic-Sized Enterprises-In-A-Transitional-Economy.Pdf

36) Savrula, Mesut, Ahmet Incekarab, And Sefer Senerb (2014). The Potential Of E-Commerce For Smes In A Globalizing Business Environment. Procedia - Social And Behavioral Sciences, 150.35 – 45. Https://Cyberleninka.Org/Article/N/298756/Viewer

37) Shih, H. (2008). Contagion Effects Of Electronic Commerce Diffusion: Perspective From Network Analysis Of Industrial Structure. Technological Forecasting & Social Change, 75(1).78–90. Https://Www.Researchgate.Net/Publication/248497634_Contagion_Effects_Of_Electronic_Commerce_Diffusion_Perspective_From_Network_Analysis_Of_Industrial_Structure

38) Srinuan, C., And Bohlin, E. (2011). Understanding The Digital Divide: A Literature Survey And Ways Forward. Proceedings Of The 22nd European Regional Conference Of The International Telecommunications. Conference Paper. Budapest. Http://Econstor.Eu/Bitstream/10419/52191/1/672623358.Pdf

39) Standing, S., Standing, C., And Love, P. (2010). A Review Of Research On E-Marketplaces 1997–2008. Decision Support Systems, 49(1). 41–51. Https://Dl.Acm.Org/Doi/Abs/10.1016/J.Dss.2009.12.008

40) Stiakakis, E., Kariotellis, P., And Vlachopoulou, M. (2009). From The Digital Divide To Digital Inequality: A Secondary Research In The European Union. In Sideridis, A. B., & Patrikakis, C. Z. (Eds.), Next Generation Society Technological And Legal Issues, Heidelberg: Springer. Https://Link.Springer.Com/Chapter/10.1007/978-3- 642-11631-5_4

41) Viswanathan, Nanda K. & James B. Pick (2005). Comparison Of E-Commerce In India And Mexico: An Example Of Technology Diffusion In Developing Nations. International Journal Of Technology Management, 31(1/2), 2–19. Http://Www.Inderscience.Com/Offer.Php?Id=6619

42) Zaied, Abdel Nasser H. (2012). Barriers To E-Commerce Adoption In Egyptian Smes. Information Engineering And Electronic Business, 3.9-18. Https://Www.Mecs-Press.Org/Ijieeb/Ijieeb-V4-N3/IJIEEB-V4-N3-2.Pdf