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Determinants of Digital Innovation in Micro and Small Industries

Author

Listed:
  • Martini Martini

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

  • Doddy Setiawan

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

  • Retno Tanding Suryandari

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

  • Rayenda Khresna Brahmana

    (School of Economics, Finance, and Accounting, Coventry University, Coventry CV1 5FB, UK)

  • Andi Asrihapsari

    (School of Vocational, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

Abstract

Micro and small industries (MSIs) must utilize digital technology if they hope to meet obstacles and endure in a market that is always evolving owing to technological advancements. This study aims to examine the capacity of business factors, marketing factors, constraint factors, credit factors, entrepreneur factors, and firm factors as determinants of digital innovation proxied by internet adoption and internet usage levels (for communication and information, for promotion, for buying and selling, and for fintech). This study uses a sample size of 90,295 MSIs and secondary data from the MSIs survey in 2019. As analytical tools, logit and ordinary least square (OLS) were employed. The findings demonstrate that business factors, marketing factors, constraint factors, credit factors, entrepreneur factors, and MSIs’ firm factors are substantial and continuously affect digital innovation, and primarily its influence is as a motivator. These results will hopefully offer insights for the government as consideration regarding policies on how to encourage MSIs’ digital innovation, and for MSIs themselves as references when they are about to make digital innovation decisions.

Suggested Citation

  • Martini Martini & Doddy Setiawan & Retno Tanding Suryandari & Rayenda Khresna Brahmana & Andi Asrihapsari, 2023. "Determinants of Digital Innovation in Micro and Small Industries," Economies, MDPI, vol. 11(6), pages 1-17, June.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:6:p:172-:d:1175479
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    References listed on IDEAS

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    1. Tiwary, Nishant Kumar & Kumar, Rishi Kant & Sarraf, Shagun & Kumar, Prashant & Rana, Nripendra P., 2021. "Impact assessment of social media usage in B2B marketing: A review of the literature and a way forward," Journal of Business Research, Elsevier, vol. 131(C), pages 121-139.
    2. Shane W. Mathews & Masahiro Maruyama & Yuka Sakurai & Ralf Bebenroth & Edwina Luck & Hsiu-Li Chen & Edward Franco, 2018. "Internet resources and capabilities: Japanese SME risk-taking, industry and performance," Asia Pacific Business Review, Taylor & Francis Journals, vol. 24(5), pages 675-692, October.
    3. Jeremiah O. Ejemeyovwi & Evans S. Osabuohien & Olawale D. Johnson & Ebenezer I. K. Bowale, 2019. "Internet usage, innovation and human development nexus in Africa: the case of ECOWAS," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-16, December.
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    Cited by:

    1. Yoga Affandi & Masagus M. Ridhwan & Irwan Trinugroho & Danny Hermawan, 2023. "Digital Adoption, Business Performance, And Financial Literacy In Ultra-Micro, Micro, And Small Enterprises In Indonesia," Working Papers WP/13/2023, Bank Indonesia.
    2. Affandi, Yoga & Ridhwan, Masagus M. & Trinugroho, Irwan & Hermawan Adiwibowo, Danny, 2024. "Digital adoption, business performance, and financial literacy in ultra-micro, micro, and small enterprises in Indonesia," Research in International Business and Finance, Elsevier, vol. 70(PB).

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