Digital Transformation in Mses: A Story from Indonesia

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