JEFMS Journal

ABSTRACT:

The purpose of this study is to develop a digital transformation model for MSMEs by analyzing absorptive capacity and digital entrepreneurial strategy in encouraging digital transformation in MSMEs. The research was conducted by taking a sample of 100 SMEs in Depok Sleman District. Sampling was done using simple random sampling method. The influence between variables was analyzed using a quantitative approach with WarpPLS as the chosen analysis tool. The results of the analysis show that the absorptive ability as the ability to absorb external knowledge to be processed into knowledge that is suitable for the organization, has an insignificant effect on digital transformation. Absorptive ability has a significant influence if it is through a digital entrepreneurship strategy. This finding shows that the knowledge developed by the organization is not able to encourage digital transformation in MSMEs. This knowledge becomes meaningful to encourage digital transformation if it is accompanied by ownership of a digital entrepreneurship strategy. This is because the digital entrepreneurship strategy is a strategy to achieve business goals by changing business activities and processes through the application of innovation, creativity and the use of digital technology. This means that the combination of knowledge that is built is adapted to the technological innovation capabilities of MSMEs as a strategy to adapt to the changes in the environment they are facing. This adaptability can drive the success of digital transformation in MSMEs

KEYWORDS:

absorptive capacity; digital entrepreneurial strategy, digital transformation, MSMEs, Covid-19 pandemic

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