The Role of Digital Platforms In the Growth Performance of Small and Medium Enterprises (SMEs) In Indonesia

The development of information and communication technology put forward by Castells has brought about changes in society, society has changed from an industrialized society to a new paradigm, namely informationalism which is towards the development of a network society. Not only changing human work systems to become more efficient due to technological developments, but also changing the paradigm of human work, the exponential speed of technological development, shifts in capital, and the main focus of technology from physical products to information, to the concept of space and time which becomes the living environment for humans in interact with one another.

The development of network society cannot be separated from the revolution in information and communication technology which enables them to interact with other individuals without the limitations of space and time through the inventions that have been discovered by computer experts which allow us to feel what the internet is, interact via e-mail, and so on. With the condition that people are starting to get to know technology it indirectly becomes part of society, giving birth to a network society. The network society is a social structure formed due to the development of information and communication technology as a necessity of life. Thus, the invention of increasingly sophisticated technology certainly has an impact on changing people’s behavior as well as influencing communication, media, and public spaces.

Social networks provide entrepreneurial capabilities because they increase learning and relationships with other companies so social networks in social media are important for innovation in business, moreover entrepreneurs need information, knowledge, community acceptance (interest), and sustainable relationships². Personal networks in the context of social media are the main assets for aspiring entrepreneurs to develop individual characteristics that entrepreneurs try to apply to their businesses².

The Development of MSMEs in Using Digital Technology

The development of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia from year to year has different quality and growth values. The presence of digital transformation has had a significant impact on the development of MSMEs in Indonesia, the presence of an e-commerce platform provides the potential to develop local MSME products to develop both domestically and abroad. The e-commerce platform, namely BliBli in 2020, is also trying to help Indonesian MSMEs trade using an online marketplace with a target of 80% considering that only 40% of MSMEs are on the platform⁴. The reason is that in 2020 according to data from the BKPM Ministry, MSMEs make a large contribution of around 62% or the same as around Rp. 8,500 trillion to the National GDP. This made a sizable contribution to the Indonesian economy, in the midst of the Covid-19 pandemic in 2020, MSMEs tried to survive by switching offline stores to online stores, around 8% experienced an increase in turnover and were able to survive because they developed their business through platforms⁹.

During the Covid-19 period, the government socialized MSMEs to switch to the go digital, this effort was made to restore the economy of the Indonesian people, especially MSMEs. The government through the Proud Made in Indonesia National Movement program provides training on using e-commerce platforms, however, the Indonesian Coordinating Ministry for Economic Affairs through a 2021 Bank Indonesia survey revealed data on the progress of MSMEs around 87.5% of their businesses still having a negative impact in the midst of a pandemic meaning that the go digital MSMEhas not been implemented properly so this is a challenge for the government to help advance Indonesian MSMEs by going digital. Ministry of Cooperatives and Small and Medium Enterprises; Ministry of Communication and Informatics; Ministry of Trade; The Ministry of Tourism and Creative Economy synergizes with all marketplace platforms in Indonesia to help MSMEs be on digital platforms, the Ministry of Trade said that e-commerce must involve local products on the platform and this will be monitored by the Ministry of Trade. This is also a target step. by President Jokowi in targeting 30 million MSMEs to go digital in 2023 (Kemenkopukm, 2022). In 2018 Bukalapak, Blibli.com, Tokopedia, Shopee, Blanja, and Grab Food were involved by the government to bring MSMEs into the marketplace, and around 4,914,41³³⁰ joined.

This is also the choice of consumers for the convenience of shopping because consumers shop on e-commerce platforms because of the convenience and discount offers and ease of transactions³.

The Ministry of Communication and Information Technology (Kominfo) in May 2022 launched the MSME Adoption of Digital Technology 4.0 program. BPS April 2020 data revealed that around 48% had increased online amid Covid-19 by utilizing e-commerce in business transactions¹². Kominfo assists the program by providing opportunities for program registration and receiving assistance in learning to use digital platforms for 6 months¹². Shopeeuse of e-commerce by MSMEs uses 5 platforms, Lazada, and Blibli, this is due to the ease of using the application, the level of customer satisfaction, and product variants that are relevant to Indonesian people³⁰.

Castell associates the network society with the information age, namely the time when society made information and communication technology networks a valuable tool for forming social networks for materiality and non-materiality¹⁰. The role of social media in the entrepreneurial world provides extensive business marketing opportunities in developed countries⁶. In digital information technology, society is challenged to process and distribute information effectively and efficiently because information products on the internet are very diverse and almost similar in the pattern so information and communication products need to be received in real-time. This is important as a source of capital for innovation that can become the root of social, and economic productivity, cultural creativity, and power¹⁰. In the end, information becomes human capital and the capacity to act in social networks according to the needs and benefits to be achieved.

The role of the digital economy in increasing the welfare of MSMEs in Indonesia is a challenge for MSMEs to enter the digital world, this is in line with advances in communication and digital technology throughout the world along with the era of globalization as well as the economy needs to adapt to science and technology. The development of the digital economy is accompanied by the presence of gadgets and software growingThe President, through the Nawacita program, has the goal of increasing people’s welfare through productivity and competitiveness in the international market through the economic independence of the Indonesian people, which is expected to grow the domestic economic sector in the international space. Through this, digital technology adaptation is needed to reach international markets. Not only that, Indonesia has a target of becoming the largest digital economy in the Southeast Asian region by 202⁰¹⁹.

The Challenges of MSMEs in Digitizing

However, the presence of a platform does not necessarily bring much good luck, this is because there are still many challenges for MSMEs and digital society in Indonesia. The inhibiting factors for MSMEs in Indonesia are the weak ability of business management, and the quality of human resources³¹. Then, the understanding of digital literacy is still not perfect so it hinders the ability of MSMEs to operate digitally, OJK institutions reveal that MSMEs have not been able to experience class transfer and digital transformation because the use of digital technology has not been evenly distributed in line with data from the Indonesian Coordinator for Economic Affairs through a 2021 Bank Indonesia survey that there were 87 .5% are still minimal in utilizing platforms digital Kemenkopukm¹⁵ displays data on the distribution of MSMEs from 2010–2022 from 34 provinces in Indonesia. 3,124) and 60% of MSMEs are in conventional markets, 16% use platforms digital e-commerce), 8% use intermediaries, and 16% others.

Gadjah Mada University (UGM) together with the Indonesia Fintech Society (IFSoc) with the Grab and Ovo companies 2022 discussed digitizing MSMEs. That the Grab Indonesia and Ovo features have provided many conveniences through features that can provide many benefits to MSMEs. Although, the problem lies with MSMEs that have not been able to operationalize the Grab business by providing learning classes for merchants to access materials, such as digital literacy in terms of finance, marketing, etc. Educational institutions also provide assistance by providing students with an understanding of digital literacy. to SMEs¹⁶.

Opportunities for MSMEs in Utilizing Digitalization

The presence of platforms can be a phase of innovation in developing the business of MSME players, for example through the presence of digital finance. Data by Boku Inc regarding the Mobile Wallets Report in 2021 for Indonesian people, as many as 73% require online payments, this is because digital wallets provide many attractive offers³. Then BCA Bank data in 2020, as many as 8.1 quadrillions use Internet banking²⁵. Digital wallet application company, Dana, recorded data that in 2020 more than 500% of the Indonesian people experienced digital transaction growth, and around 500,000 merchants, not only Bank Indonesia in 2021 recorded an increase in digital money transactions of around 50%³². Increasing transactions and the use of digital money are related to the growth in the performance of MSMEs in Indonesia, if MSMEs are able to adapt to digital society patterns, then MSMEs can have a broad target market and be able to reach all groups, especially when seen from the data that digital people prefer digital money transactions and e-commerce. With limited time and money, building a business through online social networks provides easy access to target markets and production, every entrepreneur has different motivations according to the size and type of social network they are in and uses it to increase their skills and knowledge².

Revealing that MSMEs use platforms, such as Instagram, Facebook, and Youtube to make sales and advertising, the impact is also effective in providing catalog offers to consumers, respondents stated that 30% of the use of digital marketing helps increase sales¹³. The majority of MSME users in the study stated that the use of digital media helps in interacting with consumers, expanding sales, reducing production costs, and facilitating sales systematics. In previous studies, a lot of research has been described regarding the use of social media to provide opportunities for business productivity and providing opportunities for individuals to work and make it a new workspace to generate income⁶. The use of social media in a social network society provides human space for innovation and entrepreneurship by utilizing information as an asset for prospective entrepreneurs in starting their businesses².

Business interactions in the digital space make it easy to do marketing, the American Marketing Association (AMA) states that digital marketing makes it easy for business development and has consumers³³. The presence platform business online, such as Google My Business, can be a way of facilitating the product marketing strategy for MSME sales. This device can provide opportunities and innovative ideas for business marketing¹⁴. Bukalapak as e-commerce helps MSMEs to take advantage of the platform as a place for sales transactions, Bukalapak carries out a target market and product positioning to provide segmentation and target markets in accordance with the MSME sales field so pelapak will have a target market that is in accordance with business products and consumer interests⁷. Digital marketing strategies can increase the advantages of MSMEs by around 78% if they are able to carry out product marketing¹⁸. Digital marketing is able to provide an increase in MSME profits, this is due to the target market, namely, consumers who are able to be in the digitalization space so the marketing model carried out by MSMEs is right on target²⁶.

Closing

In the business world, social networks are used as a commercialization of business expansion of entrepreneurial culture, in Silicon Valley, it is used as a technology-based money-making business center. Castell (2001) provides the concept of entrepreneurial culture in the digital world as the utilization of technological creativity with the hope of getting monetary rewards, with this the entrepreneur is present to create a new form of economic work. Digital transformation is now an obligation for all people who have a great desire to adapt and take advantage of this era. The change in the industrialization and digital 4.0 era is a challenge as well as an opportunity for all Indonesian people, because if we are not able to adapt then the industrial and economic sectors will stagnate without innovation and be left behind among other countries with much higher technological civilization, for example Japan and America. Thus, the development of MSMEs that contribute to National GDP needs to adapt to the era of technology and information so that they are able to capture a broad target market not only in the local area, but internationally.

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