Leveraging Digital Platforms for Small Business Growth in Indonesia

In Indonesia, Small and Medium Enterprises (SMEs) are called as UMKM (Usaha Mikro, Kecil, dan Menengah) and they single handedly run the economy chains. In terms of businesses, they are the most significant portion and serve invaluable importance in employment creation. SMEs also help in entrepreneurial development and area development. These businesses play a very important role in economy of a country. However, despite such crucial importance many UMKM are still struck at older problems, such as lack of funds, inability to reach larger markets, and many more. One of the most efficient ways to solve these issues is by employing the use of ICT (Information and Communication Technology). ICT, when strategically applied, can stretch far beyond productivity. For small firms, it can help enhance productivity, ease flows of communication, reveal additional market regions, and provide access to networks that are wider than their own, while taking their business globally. Digital technologies are now seen as essential means of sustaining competition. If it’s websites or e-commerce, mobile applications or FinTech (Financial Technology) services, the technologies are geared towards tackling issues head on. Most importantly, they provide value for money at the same time which is a win-win situation for all businesses. In the modern competitive market, digitalization is not optional any more, but essential for growth and in some cases survival. Fortunately, Indonesia’s digital infrastructure has significantly improved. The growing trust of the public in online transactions, coupled with enhanced internet and telecommunication services, is providing more opportunities for technology adoption by UMKM. However, the situation on the ground is more complex. The available literature suggests that many entrepreneurs understand the potential benefits of using digital means of production for their business process; for some, however, this remains a step too far. High cost, data privacy issues, and lack of adequate skills and knowledge are more important barriers to technology adoption. Most notably, rural areas tend to have insufficient supportive institutive and infrastructural resources which make the process more challenging. To address these challenges, this research analyzes how digital technology can assist in developing UMKM. This research analyzes existing levels of technology adoption, presents case studies on digital entrepreneurship, and identifies critical barriers preventing entrepreneurs from adopting available technologies. Meeting the barriers requires multi-stakeholders approaches from the public to private sectors to guarantee sustainable access, adequate training, and ongoing support. If used in a complete and thoughtful way, digital technology can strongly support the growth of small businesses in Indonesia, especially when there are good strategies in place to help them use technology in ways that help them grow and stay strong during challenges.