The Clustering of Micro and Small Enterprises (MSEs) Based on The Level of Digitalization in West Java

Abstract

Background: Digital infrastructure and penetration in Indonesia continue to develop, and digital marketing trends continue to emerge, bringing new opportunities. In addition, development has also targeted business operations; thus, digital tools have emerged in the form of web-based applications and portable devices to encourage the creation of an integrated business ecosystem and facilitate access to control in the business.
Purpose: This study aims to identify parameters that have been digitized, measure the digitalization index of micro and small enterprises (MSEs), and identify problems in using digital technology.
Design/methodology/approach: This research uses descriptive analysis, index calculation, and the interval formula to divide MSEs into five levels according to the index value.
Finding/result: The results showed that 15 out of 17 parameters were digitized. Most MSEs are at level 4, namely experienced, meaning that they already understand digitalization well and the main processes in their business operations have tactically implemented digitalization. The results also show that MSEs still need help adopting digitalization in business operations.
Conclusion: MSE actors face challenges in digitalization, such as mastering digital tools, cost constraints, and signal interference. Government support is crucial, including socialization programs and workshops, providing free software, and improving internet infrastructure.
Originality/value (state of the art): The increasing digitization of business operations requires an in-depth examination of its impact, particularly within the micro and small business sectors. Consequently, this study seeks to ascertain the prevalence of website and application utilization among MSEs.

Keywords: business process digitalization, digital adoption, digitalization index, MSE clustering, MSE