Digital Transformation of MSMEs: Inclusion, Readiness, and Innovation Toward a Sustainable Economic Ecosystem
Abstract
This study investigates the correlation between digital readiness, digital inclusion, and digital transformation with business model innovation and local economic sustainability among culinary MSMEs in Medan City. Using a quantitative approach grounded in the TOE Framework and DEIM model, data was collected from 250 respondents via structured questionnaires and analyzed using SEM-PLS. The findings reveal that digital readiness and digital inclusion significantly influence innovation in business models. Furthermore, the digital business ecosystem acts as a mediating variable impacting sustainable economic development. Practical implications include formulating community-based digital empowerment strategies and inclusive policy interventions.
References
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Berliandaldo, A., Mahardhika, C., Achmad, C., and Fryantoni, D. (2021). Collaboration and synergy among stakeholders in sustainable tourism sector development at the Cibinong Botanical Garden. INOBIS: Jurnal Inovasi Bisnis dan Manajemen Indonesia, 4(2), 221–234.
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Díaz-Arancibia, L. A., et al. (2024). Digital infrastructure as an enabler for SME competitiveness: Evidence from Latin America. Journal of Technology Management and Innovation, 19(1), 33–49.
Dwivedi, Y. K., et al. (2021). Setting the future of digital and social media marketing research: Perspectives and research propositions. International Journal of Information Management, 59, 102168. https://doi.org/10.1016/j.ijinfomgt.2020.102168
Elia, G., Margherita, A., and Passiante, G. (2020). Digital business models and maturity levels in SMEs: A case study analysis. Journal of Business Research, 113, 245–256.
Gallego, M. D., and Gutiérrez, Á. (2020). Digital transformation and sustainable development: Two sides of the same coin. Sustainability, 12(3), 1015.
Gao, S. (2024). Digital innovation ecosystem and innovation of SMEs: A case study of Anker. SHS Web of Conferences, 181, 04034.
Gao, Y. (2024). Understanding community-based digital enablement: Case studies in ASEAN micro-enterprises. Asia Pacific Journal of Innovation and Entrepreneurship, 18(2), 210–225.
Gfrerer, N., et al. (2023). Building digital capabilities in SMEs: A multilevel model of training effects. Journal of Business Research, 156, 113451.
Gurzhii, A., et al. (2022). Blockchain readiness in SMEs: A multidimensional approach. Technological Forecasting and Social Change, 180, 121721.
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Jorzik, M., Hess, T., and Legner, C. (2024). Servitization of digital platforms: Business model innovation in SMEs. Electronic Markets, 34(1), 1–20.
Khasawneh, M. A. S. (2024). Digital inclusion: Analyzing social media accessibility features for students with visual impairments. Studies in Media and Communication, 12, 71–78.
Khasawneh, R. (2024). Bridging the digital divide in developing economies: Challenges and strategic pathways. Information Systems Frontiers. https://doi.org/10.1007/s10796-023-10329-5
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Lamperti, F., et al. (2024). Digital ecosystems for inclusive innovation in SMEs. Small Business Economics, 63(2), 225–245.
Lamperti, S., Cavallo, A., and Sassanelli, C. (2024). Digital servitization and business model innovation in SMEs: A model to escape from market disruption. IEEE Transactions on Engineering Management, 71, 4619–4633.
Lutfi, A., Almomani, A., Alshira’h, A. F., and Shishan, F. A. (2022). Antecedents of digital transformation in Jordanian SMEs: The mediating role of environmental uncertainty. Technological Forecasting and Social Change, 173, 121094.
Nair, S. R., et al. (2023). Government policy and digital adoption in emerging markets. Government Information Quarterly, 40(1), 101782.
Nambisan, S., Lyytinen, K., Majchrzak, A., and Song, M. (2021). Digital innovation management: Reinventing innovation governance in the digital age. MIS Quarterly, 45(1), 223–239.
North Sumatra Provincial Government (SUMUTPROV). (2023). Sectoral Statistics of North Sumatra Province.
https://sumutprov.go.id/content/userfiles/statistiksektorial/Buku_Statistik_Sektoral_2023.pdf
Omrani, N., Rejeb, N., Maalaoui, A., Dabic, M., and Kraus, S. (2024). Drivers of digital transformation in SMEs. IEEE Transactions on Engineering Management, 71, 5030–5043.
Omrani, N., et al. (2024). Revisiting the TOE framework in digital context: A meta-review and research agenda. Information Systems Journal, 34(2), 191–210.
Rachinger, M., Rauter, R., Müller, C., Vorraber, W., and Schirgi, E. (2021). Digitalization and its influence on business model innovation. Journal of Manufacturing Technology Management, 32(3), 579–602.
Sitorus, E. A. S. (2022). E-commerce: Strategies and digital-based business innovation. Penerbit Media Sains Indonesia.
Sitorus, S. A., Ida, S., Simanjuntak, R., Sipayung, L. D., and Simarmata, C. A. (2024). Digital transformation of small businesses in Medan: A quantitative exploration of the mediating role of partnerships in enhancing e-commerce effectiveness. Journal, 12(6), 2121–2130.
Sitorus, T., et al. (2022). Digital business model innovation of MSMEs after the pandemic: A study in the urban culinary sector. Jurnal Manajemen Teknologi, 21(1), 33–45.
Spigel, B., and Harrison, R. (2020). Toward a process theory of entrepreneurial ecosystems. Strategic Entrepreneurship Journal, 14(1), 1–21.
Tenenhaus, M., et al. (2005). PLS path modeling. Computational Statistics and Data Analysis, 48(1), 159–205.
Torres, F., et al. (2023). Sustainable entrepreneurship and the digital economy: Evidence from Latin America. Sustainability, 15(1), 514.
Turki, S., et al. (2023). Digital marketing capabilities and SME performance in the post-COVID-19 era. Journal of Business Research, 159, 113686.
UNDP Indonesia. (2012). Annual report UNDP Indonesia: Urban sustainable development strategy.
UNDP Indonesia. (2012). Fostering inclusive digital society in Indonesia: A strategy paper. United Nations Development Programme.
Vial, G. (2021). Understanding digital transformation: A review and a research agenda. The Journal of Strategic Information Systems, 30(2), 101135.
Weill, P., and Woerner, S. L. (2021). What’s your digital business model? Harvard Business Review Press.
Wijaya, A., and Eviyanti, F. (2024). Analysis of the digital literacy level of MSMEs in North Sumatra. Jurnal Ekonomi dan Kebijakan Publik, 18(2), 101–115.
Wijaya, N. A., and Eviyanti, A. (2024). Optimization of digital platforms as part of an SEO-based digital marketing strategy to appear on Google. Procedia Engineering and Life Sciences, 7, 380–390.
Yanti, N. P. Y. P., Telagawathi, N. L. W. S., and Widiastini, N. M. A. (2024). The mediating role of digital marketing in the influence of digital literacy and product innovation on MSME performance. E-Jurnal Ekonomi dan Bisnis Universitas Udayana, 13(2), 282.
Yanti, R., et al. (2024). MSME strategies in facing the digital economy. Jurnal Pemberdayaan Masyarakat, 5(1), 45–59.
Autio, E., Nambisan, S., Thomas, L. D. W., and Wright, M. (2022). Digital affordances, spatial affordances, and the genesis of entrepreneurial ecosystems. Strategic Entrepreneurship Journal, 16(1), 10–38. https://doi.org/10.1002/sej.1403
Baihaqy, A., and Subriadi, A. P. (2023). Digital readiness assessment framework for MSMEs in Indonesia. Indonesian Journal of Information Systems, 6(1), 15–28.
Berliandaldo, A., Harahap, R., and Yusuf, M. (2021). The role of local communities in digitalizing SMEs in Indonesia. Jurnal Ekonomi dan Pembangunan Indonesia, 22(2), 67–79.
Berliandaldo, A., Mahardhika, C., Achmad, C., and Fryantoni, D. (2021). Collaboration and synergy among stakeholders in sustainable tourism sector development at the Cibinong Botanical Garden. INOBIS: Jurnal Inovasi Bisnis dan Manajemen Indonesia, 4(2), 221–234.
Bughin, J., et al. (2018). Skill shift: Automation and the future of the workforce. McKinsey Global Institute.
Bughin, J., Manyika, J., and Woetzel, J. (2018). Unlocking success in digital transformation. McKinsey Global Institute.
Central Bureau of Statistics of Medan City. (2025). Medan City in figures 2025.
Central Bureau of Statistics of Medan City. (2025). MSME statistics of Medan City.
Chesbrough, H. (2006). Open innovation: A new paradigm for understanding industrial innovation. In H. Chesbrough, W. Vanhaverbeke, and J. West (Eds.), Open innovation: Researching a new paradigm. Oxford University Press.
Chesbrough, H. (2006). Open business models: How to thrive in the new innovation landscape. Harvard Business Press.
Department of Cooperatives, SMEs, Industry, and Trade of Medan City. (2025). LKJIP DISKOP 2025.
Díaz-Arancibia, L. A., et al. (2024). Digital infrastructure as an enabler for SME competitiveness: Evidence from Latin America. Journal of Technology Management and Innovation, 19(1), 33–49.
Dwivedi, Y. K., et al. (2021). Setting the future of digital and social media marketing research: Perspectives and research propositions. International Journal of Information Management, 59, 102168. https://doi.org/10.1016/j.ijinfomgt.2020.102168
Elia, G., Margherita, A., and Passiante, G. (2020). Digital business models and maturity levels in SMEs: A case study analysis. Journal of Business Research, 113, 245–256.
Gallego, M. D., and Gutiérrez, Á. (2020). Digital transformation and sustainable development: Two sides of the same coin. Sustainability, 12(3), 1015.
Gao, S. (2024). Digital innovation ecosystem and innovation of SMEs: A case study of Anker. SHS Web of Conferences, 181, 04034.
Gao, Y. (2024). Understanding community-based digital enablement: Case studies in ASEAN micro-enterprises. Asia Pacific Journal of Innovation and Entrepreneurship, 18(2), 210–225.
Gfrerer, N., et al. (2023). Building digital capabilities in SMEs: A multilevel model of training effects. Journal of Business Research, 156, 113451.
Gurzhii, A., et al. (2022). Blockchain readiness in SMEs: A multidimensional approach. Technological Forecasting and Social Change, 180, 121721.
Hair, J. F., et al. (2021). A primer on partial least squares structural equation modeling (PLS-SEM) (3rd ed.). SAGE Publications.
Hanelt, A., Bohnsack, R., Marz, D., and Antunes Marante, C. (2021). A systematic review of the literature on digital transformation: Insights and implications for strategy and organizational change. Journal of Management Studies, 58(5), 1159–1197.
INDEF. (2024). Indonesia’s MSME digital economy report. Institute for Development of Economics and Finance.
Jorzik, P., Yigit, A., Kanbach, D. K., Kraus, S., and Dabic, M. (2024). Artificial intelligence-enabled business model innovation: Competencies and roles of top management. IEEE Transactions on Engineering Management, 71, 7044–7056.
Jorzik, M., Hess, T., and Legner, C. (2024). Servitization of digital platforms: Business model innovation in SMEs. Electronic Markets, 34(1), 1–20.
Khasawneh, M. A. S. (2024). Digital inclusion: Analyzing social media accessibility features for students with visual impairments. Studies in Media and Communication, 12, 71–78.
Khasawneh, R. (2024). Bridging the digital divide in developing economies: Challenges and strategic pathways. Information Systems Frontiers. https://doi.org/10.1007/s10796-023-10329-5
Kraus, S., et al. (2022). Digital transformation and environmental sustainability: A review and research agenda. Technovation, 107, 102348.
Lamperti, F., et al. (2024). Digital ecosystems for inclusive innovation in SMEs. Small Business Economics, 63(2), 225–245.
Lamperti, S., Cavallo, A., and Sassanelli, C. (2024). Digital servitization and business model innovation in SMEs: A model to escape from market disruption. IEEE Transactions on Engineering Management, 71, 4619–4633.
Lutfi, A., Almomani, A., Alshira’h, A. F., and Shishan, F. A. (2022). Antecedents of digital transformation in Jordanian SMEs: The mediating role of environmental uncertainty. Technological Forecasting and Social Change, 173, 121094.
Nair, S. R., et al. (2023). Government policy and digital adoption in emerging markets. Government Information Quarterly, 40(1), 101782.
Nambisan, S., Lyytinen, K., Majchrzak, A., and Song, M. (2021). Digital innovation management: Reinventing innovation governance in the digital age. MIS Quarterly, 45(1), 223–239.
North Sumatra Provincial Government (SUMUTPROV). (2023). Sectoral Statistics of North Sumatra Province.
https://sumutprov.go.id/content/userfiles/statistiksektorial/Buku_Statistik_Sektoral_2023.pdf
Omrani, N., Rejeb, N., Maalaoui, A., Dabic, M., and Kraus, S. (2024). Drivers of digital transformation in SMEs. IEEE Transactions on Engineering Management, 71, 5030–5043.
Omrani, N., et al. (2024). Revisiting the TOE framework in digital context: A meta-review and research agenda. Information Systems Journal, 34(2), 191–210.
Rachinger, M., Rauter, R., Müller, C., Vorraber, W., and Schirgi, E. (2021). Digitalization and its influence on business model innovation. Journal of Manufacturing Technology Management, 32(3), 579–602.
Sitorus, E. A. S. (2022). E-commerce: Strategies and digital-based business innovation. Penerbit Media Sains Indonesia.
Sitorus, S. A., Ida, S., Simanjuntak, R., Sipayung, L. D., and Simarmata, C. A. (2024). Digital transformation of small businesses in Medan: A quantitative exploration of the mediating role of partnerships in enhancing e-commerce effectiveness. Journal, 12(6), 2121–2130.
Sitorus, T., et al. (2022). Digital business model innovation of MSMEs after the pandemic: A study in the urban culinary sector. Jurnal Manajemen Teknologi, 21(1), 33–45.
Spigel, B., and Harrison, R. (2020). Toward a process theory of entrepreneurial ecosystems. Strategic Entrepreneurship Journal, 14(1), 1–21.
Tenenhaus, M., et al. (2005). PLS path modeling. Computational Statistics and Data Analysis, 48(1), 159–205.
Torres, F., et al. (2023). Sustainable entrepreneurship and the digital economy: Evidence from Latin America. Sustainability, 15(1), 514.
Turki, S., et al. (2023). Digital marketing capabilities and SME performance in the post-COVID-19 era. Journal of Business Research, 159, 113686.
UNDP Indonesia. (2012). Annual report UNDP Indonesia: Urban sustainable development strategy.
UNDP Indonesia. (2012). Fostering inclusive digital society in Indonesia: A strategy paper. United Nations Development Programme.
Vial, G. (2021). Understanding digital transformation: A review and a research agenda. The Journal of Strategic Information Systems, 30(2), 101135.
Weill, P., and Woerner, S. L. (2021). What’s your digital business model? Harvard Business Review Press.
Wijaya, A., and Eviyanti, F. (2024). Analysis of the digital literacy level of MSMEs in North Sumatra. Jurnal Ekonomi dan Kebijakan Publik, 18(2), 101–115.
Wijaya, N. A., and Eviyanti, A. (2024). Optimization of digital platforms as part of an SEO-based digital marketing strategy to appear on Google. Procedia Engineering and Life Sciences, 7, 380–390.
Yanti, N. P. Y. P., Telagawathi, N. L. W. S., and Widiastini, N. M. A. (2024). The mediating role of digital marketing in the influence of digital literacy and product innovation on MSME performance. E-Jurnal Ekonomi dan Bisnis Universitas Udayana, 13(2), 282.
Yanti, R., et al. (2024). MSME strategies in facing the digital economy. Jurnal Pemberdayaan Masyarakat, 5(1), 45–59.
Published
2026-03-30
How to Cite
SITORUS, Sunday Ade; SIAGIAN, Nalom; STEVEN, Orlando.
Digital Transformation of MSMEs: Inclusion, Readiness, and Innovation Toward a Sustainable Economic Ecosystem.
Theoretical and Practical Research in Economic Fields, [S.l.], v. 17, n. 1, p. 48 - 57, mar. 2026.
ISSN 2068-7710.
Available at: <https://journals.aserspublishing.eu/tpref/article/view/9369>. Date accessed: 05 apr. 2026.
doi: https://doi.org/10.14505/tpref.v17.1(37).04.
Section
Articles
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