IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i16p12668-d1221948.html
   My bibliography  Save this article

Pursuing Long-Term Business Performance: Investigating the Effects of Financial and Technological Factors on Digital Adoption to Leverage SME Performance and Business Sustainability—Evidence from Indonesian SMEs in the Traditional Market

Author

Listed:
  • Florentina Kurniasari

    (Faculty of Business, Multimedia Nusantara University, Banten 15810, Indonesia)

  • Elissa Dwi Lestari

    (Faculty of Business, Multimedia Nusantara University, Banten 15810, Indonesia)

  • Hendy Tannady

    (Faculty of Business, Multimedia Nusantara University, Banten 15810, Indonesia)

Abstract

The traditional market holds a pivotal role in Indonesia’s economy because it is the main contributor to national retail grocery transactions. Nevertheless, competition with modern markets and retailers makes their competitiveness lessened. From the financial side, traditional market SMEs are vulnerable to financial risks and still face obstacles in accessing financial resources due to a lack of financial literacy. In addition, the level of digitalization of traditional market SMEs technology is also still low, so digital adoption is still a challenge that must be faced. Therefore, this study was conducted to identify the influence of financial and technological factors on the level of adoption of SME technology in traditional markets and its impact on the performance and sustainability of the SME business. This research will be conducted in a quantitative cross-sectional study of 225 SMEs in the traditional market. The sampling technique that will be used is judgmental sampling. This study’s research data will be analyzed using SEM-PLS. The study result shows that financial literacy positively affects SME financial accessibility and financial risk. The study also confirms that financial accessibility, performance expectancy, effort expectancy, and social influence are variables that significantly affect SMEs digital adoption, while the effect of financial risk on digital adoption is found to be insignificant. The study result also shows that SMEs digital adoption is positively affecting their performance, which eventually affects their business sustainability.

Suggested Citation

  • Florentina Kurniasari & Elissa Dwi Lestari & Hendy Tannady, 2023. "Pursuing Long-Term Business Performance: Investigating the Effects of Financial and Technological Factors on Digital Adoption to Leverage SME Performance and Business Sustainability—Evidence from Indo," Sustainability, MDPI, vol. 15(16), pages 1-20, August.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:16:p:12668-:d:1221948
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/16/12668/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/16/12668/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Claude Bernard Lontchi & Baochen Yang & Kabir Musa Shuaib, 2023. "Effect of Financial Technology on SMEs Performance in Cameroon amid COVID-19 Recovery: The Mediating Effect of Financial Literacy," Sustainability, MDPI, vol. 15(3), pages 1-15, January.
    2. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    3. Emanuele Brancati, 2015. "Innovation financing and the role of relationship lending for SMEs," Small Business Economics, Springer, vol. 44(2), pages 449-473, February.
    4. Matteo Trabucco & Pietro De Giovanni, 2021. "Achieving Resilience and Business Sustainability during COVID-19: The Role of Lean Supply Chain Practices and Digitalization," Sustainability, MDPI, vol. 13(22), pages 1-19, November.
    5. Vinit Parida & David Sjödin & Wiebke Reim, 2019. "Reviewing Literature on Digitalization, Business Model Innovation, and Sustainable Industry: Past Achievements and Future Promises," Sustainability, MDPI, vol. 11(2), pages 1-18, January.
    6. Ali Saleh Alshebami, 2022. "Crowdfunding Platforms as a Substitute Financing Source for Young Saudi Entrepreneurs: Empirical Evidence," SAGE Open, , vol. 12(3), pages 21582440221, September.
    7. Gopinath, C., 1995. "Bank strategies toward firms in decline," Journal of Business Venturing, Elsevier, vol. 10(1), pages 75-92, January.
    8. Berger, Allen N. & Udell, Gregory F., 2006. "A more complete conceptual framework for SME finance," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2945-2966, November.
    9. Jianmu Ye & KMMCB Kulathunga, 2019. "How Does Financial Literacy Promote Sustainability in SMEs? A Developing Country Perspective," Sustainability, MDPI, vol. 11(10), pages 1-21, May.
    10. Jappelli, Tullio & Padula, Mario, 2013. "Investment in financial literacy and saving decisions," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 2779-2792.
    11. Jan Dvorsky & Jaroslav Belas & Beata Gavurova & Tomas Brabenec, 2021. "Business risk management in the context of small and medium-sized enterprises," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 34(1), pages 1690-1708, January.
    12. Mukhamad Najib & Abdul Aziz Abdul Rahman & Farah Fahma, 2021. "Business Survival of Small and Medium-Sized Restaurants through a Crisis: The Role of Government Support and Innovation," Sustainability, MDPI, vol. 13(19), pages 1-16, September.
    13. Jon Frost, 2020. "The economic forces driving FinTech adoption across countries," Working Papers 663, DNB.
    14. Reinartz, Werner & Haenlein, Michael & Henseler, Jörg, 2009. "An empirical comparison of the efficacy of covariance-based and variance-based SEM," International Journal of Research in Marketing, Elsevier, vol. 26(4), pages 332-344.
    15. Najib Ullah Khan & Shuangjie Li & Muhammad Nabeel Safdar & Zia Ullah Khan, 2019. "The Role of Entrepreneurial Strategy, Network Ties, Human and Financial Capital in New Venture Performance," JRFM, MDPI, vol. 12(1), pages 1-16, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jianmu Ye & KMMCB Kulathunga, 2019. "How Does Financial Literacy Promote Sustainability in SMEs? A Developing Country Perspective," Sustainability, MDPI, vol. 11(10), pages 1-21, May.
    2. García-Pérez-de-Lema, Domingo & Ruiz-Palomo, Daniel & Diéguez-Soto, Julio, 2021. "Analysing the roles of CEO's financial literacy and financial constraints on Spanish SMEs technological innovation," Technology in Society, Elsevier, vol. 64(C).
    3. AHMAD Idris & ALNI Rahmawati & ARNI Surwanti & MAMDUH M. Hanafi, 2023. "Financial Literacy To Improve Sustainability: A Bibliometric Analysis," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 18(3), pages 24-43, December.
    4. Antonio Molina-García & Julio Diéguez-Soto & M. Teresa Galache-Laza & Marta Campos-Valenzuela, 2023. "Financial literacy in SMEs: a bibliometric analysis and a systematic literature review of an emerging research field," Review of Managerial Science, Springer, vol. 17(3), pages 787-826, April.
    5. Basha, Shabeen Afsar & Bennasr, Hamdi & Goaied, Mohamed, 2023. "Financial literacy, financial development, and leverage of small firms," International Review of Financial Analysis, Elsevier, vol. 86(C).
    6. Noviarini, Jelita & Coleman, Andrew & Roberts, Helen & Whiting, Rosalind H., 2023. "Financial literacy and retirees' resource allocation decisions in New Zealand," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    7. repec:aer:wpaper:323 is not listed on IDEAS
    8. Elsa Fornero, 2015. "Economic-financial Literacy and (Sustainable) Pension Reforms: Why the Former is a Key Ingredient for the Latter," Bankers, Markets & Investors, ESKA Publishing, issue 134, pages 6-16, January-F.
    9. Grohmann, Antonia, 2018. "Financial literacy and financial behavior: Evidence from the emerging Asian middle class," Pacific-Basin Finance Journal, Elsevier, vol. 48(C), pages 129-143.
    10. Bellocchi, Alessandro & Travaglini, Giuseppe, 2024. "Financial literacy, uncertainty and costs of education," Economics Letters, Elsevier, vol. 238(C).
    11. Alberto Burchi & Bogdan Włodarczyk & Marek Szturo & Duccio Martelli, 2021. "The Effects of Financial Literacy on Sustainable Entrepreneurship," Sustainability, MDPI, vol. 13(9), pages 1-21, April.
    12. Marco Nieddu & Lorenzo Pandolfi, 2018. "Cutting Through the Fog: Financial Literacy and the Subjective Value of Financial Assets," CSEF Working Papers 497, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    13. Andrej Cupák & Pirmin Fessler & Maria Silgoner & Elisabeth Ulbrich, 2021. "Exploring Differences in Financial Literacy Across Countries: The Role of Individual Characteristics and Institutions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 158(2), pages 409-438, December.
    14. Meta Brown & John Grigsby & Wilbert van der Klaauw & Jaya Wen & Basit Zafar, 2016. "Financial Education and the Debt Behavior of the Young," The Review of Financial Studies, Society for Financial Studies, vol. 29(9), pages 2490-2522.
    15. Andrej Cupak & Pirmin Fessler & Maria Antoinette Silgoner & Elisabeth Ulbrich, 2018. "Financial literacy in Austria: a survey of recent research results," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1/18, pages 14-26.
    16. Francisco Gomes & Michael Haliassos & Tarun Ramadorai, 2021. "Household Finance," Journal of Economic Literature, American Economic Association, vol. 59(3), pages 919-1000, September.
    17. Djordjevic, Ljubica, 2015. "Essays in household finance," Other publications TiSEM ad3edc86-915e-4ce8-ba38-b, Tilburg University, School of Economics and Management.
    18. Samuele Murtinu & Giulio Piccirilli & Agnese Sacchi, 2016. "Fiscal Policy, Government Polarization, and the Economic Literacy of Voters," Working papers 50, Società Italiana di Economia Pubblica.
    19. Kramer, Marc M., 2016. "Financial literacy, confidence and financial advice seeking," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 198-217.
    20. Hiroshi Fujiki, 2019. "Who needs guidance from a financial adviser? Evidence from Japan," Working Papers on Central Bank Communication 011, University of Tokyo, Graduate School of Economics.
    21. Bose, Udichibarna & MacDonald, Ronald & Tsoukas, Serafeim, 2014. "The role of education in equity portfolios during the recent financial crisis," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-26, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:16:p:12668-:d:1221948. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.