DIGITALIZATION BUSINESS AND ALLEVIATING FINANCIAL CONSTRAINTS AFFECTING THE PERFORMANCE OF MSME MEDIATED BY OPERATIONAL EFFICIENCY
Abstrak
This research aims to analyze the impact of business digitalization, operational efficiency, and easing financial constraints in improving the performance of MSMEs. Background Problems: Digitalization is a driving force of the world economy, but many MSME players in Indonesia have not implemented it. Novelty: This research introduces a new approach by integrating operational efficiency in establishing the relationship between business digitalization and the performance of SMEs. Research Methods: This research is an explanatory study that examines the relationship between variables through a quantitative approach. The population in this research consists of all MSME actors in Kendal Regency totaling 16,508 units. In sampling, this research employs purposive sampling technique. Finding/Results: In the direct effect test, operational efficiency was shown to have a significant positive effect with a significance value of 0.035, while other direct relationship hypotheses were rejected. In the mediation effect test, operational efficiency was proven to be able to mediate the relationship between business digitization and the performance of MSMEs with a significance value of 0.036. Conclusion: This research shows the role of operational efficiency in mediating the relationship between business digitization and the performance of MSMEs, where in the previous direct test, business digitization did not have an effect on the performance of MSMEs. With this finding, it can be concluded that MSMEs that implement business digitization effectively will be able to achieve operational efficiency, which in turn will enhance their business performance.
Referensi
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Agrawal, R., Wankhede, V. A., Kumar, A., Upadhyay, A., & Garza-Reyes, J. A. (2022). Nexus of circular economy and sustainable business performance in the era of digitalization. International Journal of Productivity and Performance Management, 71(3), 748–774. https://doi.org/10.1108/IJPPM-12-2020-0676
Al Omoush, K., Lassala, C., & Ribeiro-Navarrete, S. (2025). The role of digital business transformation in frugal innovation and SMEs’ resilience in emerging markets. International Journal of Emerging Markets, 20(1), 366–386. https://doi.org/10.1108/IJOEM-12-2022-1937
Anwuli Nkemchor Obiki-Osafiele, Christianah Pelumi Efunniyi, Angela Omozele Abhulimen, Olajide Soji Osundare, Edith Ebele Agu, & Ibrahim Adedeji Adeniran. (2024). Theoretical models for enhancing operational efficiency through technology in Nigerian businesses. International Journal of Applied Research in Social Sciences, 6(8), 1969–1989. https://doi.org/10.51594/ijarss.v6i8.1478
Bisnis, D. E. dan, Vokasi, S., & Mada, U. G. (2024). Digital Marketing untuk Meningkatkan Daya Saing UMKM di Era Digital. Departemen Ekonomika Dan Bisnis Sekolah Vokasi Universitas Gadjah Mada. https://deb.sv.ugm.ac.id/digital-marketing-untuk-meningkatkan-daya-saing-umkm-di-era-digital/#:~:text=Keterbatasan Pengetahuan Digital: Banyak pelaku UMKM yang,kesulitan dalam mengakses internet atau perangkat digital.
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Caputo, A., Pizzi, S., Pellegrini, M. M., & Dabić, M. (2021). Digitalization and business models: Where are we going? A science map of the field. Journal of Business Research, 123, 489–501. https://doi.org/https://doi.org/10.1016/j.jbusres.2020.09.053
Chen, X., You, X., & Chang, V. (2021). FinTech and commercial banks’ performance in China: A leap forward or survival of the fittest? Technological Forecasting and Social Change, 166, 120645. https://doi.org/https://doi.org/10.1016/j.techfore.2021.120645
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Creswell, J. W., & Creswell, J. D. (2018). Mixed Methods Procedures. In Research Defign: Qualitative, Quantitative, and Mixed M ethods Approaches.
Erhan, T., Uzunbacak, H. H., & Aydin, E. (2022). From conventional to digital leadership: exploring digitalization of leadership and innovative work behavior. Management Research Review, 45(11), 1524–1543. https://doi.org/10.1108/MRR-05-2021-0338
García-Lopera, F., Santos-Jaén, J. M., Palacios-Manzano, M., & Ruiz-Palomo, D. (2022). Exploring the effect of professionalization, risk-taking and technological innovation on business performance. PLOS ONE, 17(2), e0263694. https://doi.org/10.1371/journal.pone.0263694
García-Pérez-de-Lema, D., Ruiz-Palomo, D., & Diéguez-Soto, J. (2021). Analysing the roles of CEO’s financial literacy and financial constraints on Spanish SMEs technological innovation. Technology in Society, 64, 101519. https://doi.org/https://doi.org/10.1016/j.techsoc.2020.101519
Hautala-Kankaanpää, T. (2022). The impact of digitalization on firm performance: examining the role of digital culture and the effect of supply chain capability. Business Process Management Journal, 28(8), 90–109. https://doi.org/10.1108/BPMJ-03-2022-0122
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Khan, S., Mazhar, T., Shahzad, T., Khan, M. A., Rehman, A. U., Saeed, M. M., & Hamam, H. (2025). Harnessing AI for sustainable higher education: ethical considerations, operational efficiency, and future directions. Discover Sustainability, 6(1), 23. https://doi.org/10.1007/s43621-025-00809-6
Li, F., Zhang, N., & Ren, G. (n.d.). Pr rin t n ot pe er r ev Pr ep rin t n ed.
Lisnawati. (2023). Tantangan UMKM Di Tahun 2024. Isu Sepekan Bidang Ekkuinbang, Komisi VI DPR RI, 1–2. https://berkas.dpr.go.id/pusaka/files/isu_sepekan/Isu Sepekan---V-PUSLIT-November-2023-246.pdf
Liu, J., Jiang, Y., Gan, S., He, L., & Zhang, Q. (2022). Can digital finance promote corporate green innovation? Environmental Science and Pollution Research, 29(24), 35828–35840. https://doi.org/10.1007/s11356-022-18667-4
Malik, M., Raziq, M. M., Sarwar, N., & Tariq, A. (2025). Digital leadership, business model innovation and organizational change: role of leader in steering digital transformation. Benchmarking: An International Journal, 32(5), 1632–1662. https://doi.org/10.1108/BIJ-04-2023-0283
Pérez-Rave, J. I., Guerrero, R. F., Vallina, A. S., & Echavarría, F. G. (2023). A measurement model of dynamic capabilities of the continuous improvement project and its role in the renewal of the company’s products/services. Operations Management Research, 16(1), 126–140. https://doi.org/10.1007/s12063-022-00281-9
Petroc Taylor. (2023). Nominal GDP driven by digitally transformed and other enterprises worldwide from 2018 to 2023. Statista. https://www.statista.com/statistics/1134766/nominal-gdp-driven-by-digitally-transformed-enterprises/
Raeesi Vanani, I., Taghavifard, M. T., & Yalpanian, M. A. (2025). Predictive Analytics Solution for Digital Capabilities Identification Towards Business Performance Improvement. SN Computer Science, 6(1), 85. https://doi.org/10.1007/s42979-024-03630-6
Ribeiro-Navarrete, S., Botella-Carrubi, D., Palacios-Marqués, D., & Orero-Blat, M. (2021). The effect of digitalization on business performance: An applied study of KIBS. Journal of Business Research, 126, 319–326. https://doi.org/https://doi.org/10.1016/j.jbusres.2020.12.065
Riipa, M. B., Begum, N., Hriday, S. H., & Haque, S. A. (2025). Role of Data Analytics in Enhancing Business Decision- Making and Operational Efficiency. 17(2).
Ritter, T., & Pedersen, C. L. (2020). Digitization capability and the digitalization of business models in business-to-business firms: Past, present, and future. Industrial Marketing Management, 86, 180–190. https://doi.org/https://doi.org/10.1016/j.indmarman.2019.11.019
Roscoe, J. (1975). Fundamental research statistics for the behavioral science (R. and W. Holt (Ed.)).
Santos-Jaén, J. M., Gimeno-Arias, F., León-Gómez, A., & Palacios-Manzano, M. (2023). The Business Digitalization Process in SMEs from the Implementation of e-Commerce: An Empirical Analysis. Journal of Theoretical and Applied Electronic Commerce Research, 18(4), 1700–1720. https://doi.org/10.3390/jtaer18040086
Sekaran, & Bougie. (2011). Research Methods for Business: A Skill-Building Approach (6th ed.). Wiley.
Sestino, A., Kahlawi, A., & De Mauro, A. (2025). Decoding the data economy: a literature review of its impact on business, society and digital transformation. European Journal of Innovation Management, 28(2), 298–323. https://doi.org/10.1108/EJIM-01-2023-0078
Tan, Y., & Zhu, Z. (2022). The effect of ESG rating events on corporate green innovation in China: The mediating role of financial constraints and managers’ environmental awareness. Technology in Society, 68, 101906. https://doi.org/https://doi.org/10.1016/j.techsoc.2022.101906
Wang, Z., Lin, S., Chen, Y., Lyulyov, O., & Pimonenko, T. (2023). Digitalization Effect on Business Performance: Role of Business Model Innovation. Sustainability (Switzerland), 15(11), 1–19. https://doi.org/10.3390/su15119020
Wibisono, Y. (2015). Metode Statistik. Gadjah Mada University Press.
Wu, Y., & Huang, S. (2022). The effects of digital finance and financial constraint on financial performance: Firm-level evidence from China’s new energy enterprises. Energy Economics, 112, 106158. https://doi.org/https://doi.org/10.1016/j.eneco.2022.106158
Yu, C.-H., Wu, X., Zhang, D., Chen, S., & Zhao, J. (2021). Demand for green finance: Resolving financing constraints on green innovation in China. Energy Policy, 153, 112255. https://doi.org/https://doi.org/10.1016/j.enpol.2021.112255
Zhang, D., & Lucey, B. M. (2022). Sustainable behaviors and firm performance: The role of financial constraints’ alleviation. Economic Analysis and Policy, 74, 220–233. https://doi.org/https://doi.org/10.1016/j.eap.2022.02.003
Agrawal, R., Wankhede, V. A., Kumar, A., Upadhyay, A., & Garza-Reyes, J. A. (2022). Nexus of circular economy and sustainable business performance in the era of digitalization. International Journal of Productivity and Performance Management, 71(3), 748–774. https://doi.org/10.1108/IJPPM-12-2020-0676
Al Omoush, K., Lassala, C., & Ribeiro-Navarrete, S. (2025). The role of digital business transformation in frugal innovation and SMEs’ resilience in emerging markets. International Journal of Emerging Markets, 20(1), 366–386. https://doi.org/10.1108/IJOEM-12-2022-1937
Anwuli Nkemchor Obiki-Osafiele, Christianah Pelumi Efunniyi, Angela Omozele Abhulimen, Olajide Soji Osundare, Edith Ebele Agu, & Ibrahim Adedeji Adeniran. (2024). Theoretical models for enhancing operational efficiency through technology in Nigerian businesses. International Journal of Applied Research in Social Sciences, 6(8), 1969–1989. https://doi.org/10.51594/ijarss.v6i8.1478
Bisnis, D. E. dan, Vokasi, S., & Mada, U. G. (2024). Digital Marketing untuk Meningkatkan Daya Saing UMKM di Era Digital. Departemen Ekonomika Dan Bisnis Sekolah Vokasi Universitas Gadjah Mada. https://deb.sv.ugm.ac.id/digital-marketing-untuk-meningkatkan-daya-saing-umkm-di-era-digital/#:~:text=Keterbatasan Pengetahuan Digital: Banyak pelaku UMKM yang,kesulitan dalam mengakses internet atau perangkat digital.
Calderon-Monge, E., & Ribeiro-Soriano, D. (2024). The role of digitalization in business and management: a systematic literature review. In Review of Managerial Science (Vol. 18, Issue 2). Springer Berlin Heidelberg. https://doi.org/10.1007/s11846-023-00647-8
Caputo, A., Pizzi, S., Pellegrini, M. M., & Dabić, M. (2021). Digitalization and business models: Where are we going? A science map of the field. Journal of Business Research, 123, 489–501. https://doi.org/https://doi.org/10.1016/j.jbusres.2020.09.053
Chen, X., You, X., & Chang, V. (2021). FinTech and commercial banks’ performance in China: A leap forward or survival of the fittest? Technological Forecasting and Social Change, 166, 120645. https://doi.org/https://doi.org/10.1016/j.techfore.2021.120645
Chin, W. W. (2010). The partial least squares approach to structural equation modeling. Modern methods for business research. Modern Methods for Business Research, April, 295-336. http://books.google.com.sg/books?hl=en&lr=&id=EDZ5AgAAQBAJ&oi=fnd&pg=PA295&dq=chin+1998+PLS&ots=47qB7ro0np&sig=rihQBibvT6S-Lsj1H9txe9dX6Zk#v=onepage&q&f=false
Creswell, J. W., & Creswell, J. D. (2018). Mixed Methods Procedures. In Research Defign: Qualitative, Quantitative, and Mixed M ethods Approaches.
Erhan, T., Uzunbacak, H. H., & Aydin, E. (2022). From conventional to digital leadership: exploring digitalization of leadership and innovative work behavior. Management Research Review, 45(11), 1524–1543. https://doi.org/10.1108/MRR-05-2021-0338
García-Lopera, F., Santos-Jaén, J. M., Palacios-Manzano, M., & Ruiz-Palomo, D. (2022). Exploring the effect of professionalization, risk-taking and technological innovation on business performance. PLOS ONE, 17(2), e0263694. https://doi.org/10.1371/journal.pone.0263694
García-Pérez-de-Lema, D., Ruiz-Palomo, D., & Diéguez-Soto, J. (2021). Analysing the roles of CEO’s financial literacy and financial constraints on Spanish SMEs technological innovation. Technology in Society, 64, 101519. https://doi.org/https://doi.org/10.1016/j.techsoc.2020.101519
Hautala-Kankaanpää, T. (2022). The impact of digitalization on firm performance: examining the role of digital culture and the effect of supply chain capability. Business Process Management Journal, 28(8), 90–109. https://doi.org/10.1108/BPMJ-03-2022-0122
Jumlah Perusahaan Pada Industri Mikro Kecil Menurut Kabupaten/Kota di Provinsi Jawa Tengah , 2021-2022. (2024). https://jateng.bps.go.id/id/statistics-table/2/MjE4MCMy/jumlah-perusahaan-pada-industri-mikro-kecil-menurut-kabupaten-kota-di-provinsi-jawa-tengah-.html
Khan, S., Mazhar, T., Shahzad, T., Khan, M. A., Rehman, A. U., Saeed, M. M., & Hamam, H. (2025). Harnessing AI for sustainable higher education: ethical considerations, operational efficiency, and future directions. Discover Sustainability, 6(1), 23. https://doi.org/10.1007/s43621-025-00809-6
Li, F., Zhang, N., & Ren, G. (n.d.). Pr rin t n ot pe er r ev Pr ep rin t n ed.
Lisnawati. (2023). Tantangan UMKM Di Tahun 2024. Isu Sepekan Bidang Ekkuinbang, Komisi VI DPR RI, 1–2. https://berkas.dpr.go.id/pusaka/files/isu_sepekan/Isu Sepekan---V-PUSLIT-November-2023-246.pdf
Liu, J., Jiang, Y., Gan, S., He, L., & Zhang, Q. (2022). Can digital finance promote corporate green innovation? Environmental Science and Pollution Research, 29(24), 35828–35840. https://doi.org/10.1007/s11356-022-18667-4
Malik, M., Raziq, M. M., Sarwar, N., & Tariq, A. (2025). Digital leadership, business model innovation and organizational change: role of leader in steering digital transformation. Benchmarking: An International Journal, 32(5), 1632–1662. https://doi.org/10.1108/BIJ-04-2023-0283
Pérez-Rave, J. I., Guerrero, R. F., Vallina, A. S., & Echavarría, F. G. (2023). A measurement model of dynamic capabilities of the continuous improvement project and its role in the renewal of the company’s products/services. Operations Management Research, 16(1), 126–140. https://doi.org/10.1007/s12063-022-00281-9
Petroc Taylor. (2023). Nominal GDP driven by digitally transformed and other enterprises worldwide from 2018 to 2023. Statista. https://www.statista.com/statistics/1134766/nominal-gdp-driven-by-digitally-transformed-enterprises/
Raeesi Vanani, I., Taghavifard, M. T., & Yalpanian, M. A. (2025). Predictive Analytics Solution for Digital Capabilities Identification Towards Business Performance Improvement. SN Computer Science, 6(1), 85. https://doi.org/10.1007/s42979-024-03630-6
Ribeiro-Navarrete, S., Botella-Carrubi, D., Palacios-Marqués, D., & Orero-Blat, M. (2021). The effect of digitalization on business performance: An applied study of KIBS. Journal of Business Research, 126, 319–326. https://doi.org/https://doi.org/10.1016/j.jbusres.2020.12.065
Riipa, M. B., Begum, N., Hriday, S. H., & Haque, S. A. (2025). Role of Data Analytics in Enhancing Business Decision- Making and Operational Efficiency. 17(2).
Ritter, T., & Pedersen, C. L. (2020). Digitization capability and the digitalization of business models in business-to-business firms: Past, present, and future. Industrial Marketing Management, 86, 180–190. https://doi.org/https://doi.org/10.1016/j.indmarman.2019.11.019
Roscoe, J. (1975). Fundamental research statistics for the behavioral science (R. and W. Holt (Ed.)).
Santos-Jaén, J. M., Gimeno-Arias, F., León-Gómez, A., & Palacios-Manzano, M. (2023). The Business Digitalization Process in SMEs from the Implementation of e-Commerce: An Empirical Analysis. Journal of Theoretical and Applied Electronic Commerce Research, 18(4), 1700–1720. https://doi.org/10.3390/jtaer18040086
Sekaran, & Bougie. (2011). Research Methods for Business: A Skill-Building Approach (6th ed.). Wiley.
Sestino, A., Kahlawi, A., & De Mauro, A. (2025). Decoding the data economy: a literature review of its impact on business, society and digital transformation. European Journal of Innovation Management, 28(2), 298–323. https://doi.org/10.1108/EJIM-01-2023-0078
Tan, Y., & Zhu, Z. (2022). The effect of ESG rating events on corporate green innovation in China: The mediating role of financial constraints and managers’ environmental awareness. Technology in Society, 68, 101906. https://doi.org/https://doi.org/10.1016/j.techsoc.2022.101906
Wang, Z., Lin, S., Chen, Y., Lyulyov, O., & Pimonenko, T. (2023). Digitalization Effect on Business Performance: Role of Business Model Innovation. Sustainability (Switzerland), 15(11), 1–19. https://doi.org/10.3390/su15119020
Wibisono, Y. (2015). Metode Statistik. Gadjah Mada University Press.
Wu, Y., & Huang, S. (2022). The effects of digital finance and financial constraint on financial performance: Firm-level evidence from China’s new energy enterprises. Energy Economics, 112, 106158. https://doi.org/https://doi.org/10.1016/j.eneco.2022.106158
Yu, C.-H., Wu, X., Zhang, D., Chen, S., & Zhao, J. (2021). Demand for green finance: Resolving financing constraints on green innovation in China. Energy Policy, 153, 112255. https://doi.org/https://doi.org/10.1016/j.enpol.2021.112255
Zhang, D., & Lucey, B. M. (2022). Sustainable behaviors and firm performance: The role of financial constraints’ alleviation. Economic Analysis and Policy, 74, 220–233. https://doi.org/https://doi.org/10.1016/j.eap.2022.02.003
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