The Impact of Digitalization and E-Commerce on the Development of MSMEs in Indonesia

Abstract

Ongoing digital transformation has reshaped the way Micro, Small, and Medium Enterprises (MSMEs) operate, requiring business actors to adjust their strategies in order to sustain competitiveness in a rapidly evolving market. This research explores how digitalization and e-commerce adoption contribute to the development of MSMEs in Indonesia, particularly in terms of business effectiveness, operational improvement, and market expansion. A qualitative research design was applied through a literature-based approach by examining and synthesizing findings from prior studies and academic sources. The analysis reveals that digital technology adoption supports MSME growth by expanding market opportunities, streamlining transaction processes, and enhancing marketing activities. However, several obstacles remain, including limited digital capabilities, uneven internet infrastructure, financial constraints related to technology investment, and concerns over data security. Accordingly, collaborative efforts involving government institutions, private sectors, and educational organizations are necessary to establish an inclusive digital environment that strengthens MSME competitiveness in the digital economy.