Digital Transformation in MSMEs: A PRISMA 2020 Based Systematic Literature Review of Adoption Drivers, Barriers, and Business Performance Implications in Emerging Economies

Authors

  • Loso Judijanto IPOSS Jakarta, Indonesia
  • IGP Ratih Andaningsih Universitas Borobudur Jakarta
  • Nashirotun Nisa Nurharjanti Universitas Muhammadiyah Surakarta
  • Ahmad Eko Saputro Institut Teknologi dan Bisnis Ahmad Dahlan

DOI:

https://doi.org/10.58812/wsbm.v4i01.2758

Keywords:

Digital Transformation, MSMEs, Developing Countries, Technology Adoption, Business Performance

Abstract

Digital transformation has become a crucial strategy for improving the competitiveness and sustainability of Micro, Small, and Medium Enterprises (MSMEs), particularly in developing countries where small businesses play a dominant role in economic growth and employment generation. This study aims to systematically review the existing literature on digital transformation in MSMEs, with a focus on identifying the key drivers, barriers, and business performance implications associated with digital adoption. The study employs a Systematic Literature Review (SLR) approach based on the PRISMA 2020 framework to ensure a transparent and rigorous process in selecting and analyzing relevant studies. A total of 18 academic articles obtained from the Google Scholar database were analyzed to synthesize current research trends and findings related to digital transformation in MSMEs in developing countries. The results reveal that the primary drivers of digital transformation include technological advancement, increasing market competition, government support programs, and organizational readiness. At the same time, several barriers hinder the digitalization process among MSMEs, including limited financial resources, lack of digital skills, inadequate technological infrastructure, and resistance to organizational change. Despite these challenges, the reviewed studies consistently indicate that digital transformation contributes positively to MSME performance by improving operational efficiency, expanding market access, enhancing customer engagement, and strengthening business resilience in uncertain economic environments. The findings of this study highlight the importance of supportive policies, digital literacy development, and improved technological infrastructure to accelerate digital adoption among MSMEs in developing countries. This study contributes to the existing literature by providing a comprehensive synthesis of research findings and offering insights for policymakers, researchers, and practitioners seeking to promote sustainable digital transformation in small business sectors.

References

[1] M. Eling and M. Lehmann, “The impact of digitalization on the insurance value chain and the insurability of risks,” Geneva Pap. risk Insur. …, 2018, doi: 10.1057/s41288-017-0073-0.

[2] M. Hawkins, “Cyber-physical production networks, internet of things-enabled sustainability, and smart factory performance in industry 4.0-based manufacturing systems,” Econ. Manag. Financ. Mark., 2021.

[3] A. R. Cangara, B. A. Putra, P. Lumumba, C. S. Alarsah, and A. F. A. Lestari, “Indonesia’s Presidency On G20 2022: Unpacking Its Digital Economic Diplomacy In Advancing Indonesian MSMES Digital Economic Transformation,” Mandala J. Ilmu Hub. Int., vol. 5, no. 2, pp. 244–277, 2022, doi: https://doi.org/10.33822/mjihi.v5i2.5116.

[4] F. Syah and S. Noviaristanti, “Analysis of the effect of digital transformation strategy on business sustainability of micro, small, and medium enterprises (MSMEs) in Indonesia,” in Acceleration of Digital Innovation & Technology towards Society 5.0, Routledge, 2022, pp. 253–258.

[5] R. Wiliandri, “A conceptual approach to identify factors affecting the digital transformation of micro, small and medium-sized enterprises (MSMEs) during COVID-19 pandemic in Indonesia,” Ekon. Bisnis, vol. 25, no. 2, pp. 66–85, 2020.

[6] D. P. Rakhmadani and M. P. Arum, “Digital Marketing Transformation by Implementing SEO Concepts in MSMEs. Case Study: CV Asa Nusantara Resources Malang,” Manaj. Bisnis, vol. 12, no. 01, pp. 85–93, 2022, doi: https://doi.org/10.22219/mb.v12i01.15875.

[7] S. Suwanto, D. Sunarsi, and W. Achmad, “Effect of Transformational Leadership, Servant Leadershi, and Digital Transformation on MSMEs Performance and Work Innovation Capabilities,” Cent. Eur. Manag. J., vol. 30, no. 4, pp. 751–762, 2022.

[8] J. A. Putritamara, B. Hartono, H. Toiba, H. N. Utami, M. S. Rahman, and D. Masyithoh, “Do Dynamic Capabilities and Digital Transformation Improve Business Resilience during the COVID-19 Pandemic? Insights from Beekeeping MSMEs in Indonesia,” Sustainability, vol. 15, no. 3, p. 1760, 2023.

[9] W. Fitrayanto Nugraha, H. Hardjomidjojo, and M. Sarma, “Risk Assessment of MSME Credit Process Digitalization Program of PT Bank XYZ West Sumatra Region,” Int. J. Res. Rev., vol. 10, no. 6, pp. 361–371, 2023, doi: 10.52403/ijrr.20230644.

[10] J. Gao, A. B. Siddik, S. Khawar Abbas, M. Hamayun, M. Masukujjaman, and S. S. Alam, “Impact of E-Commerce and Digital Marketing Adoption on the Financial and Sustainability Performance of MSMEs during the COVID-19 Pandemic: An Empirical Study,” Sustainability, vol. 15, no. 2, p. 1594, 2023.

[11] M. Alfarizi, T. Widiastuti, and Ngatindriatun, “Exploration of Technological Challenges and Public Economic Trends Phenomenon in the Sustainable Performance of Indonesian Digital MSMEs on Industrial Era 4.0,” J. Ind. Integr. Manag., vol. 9, no. 01, pp. 65–96, 2024.

[12] F. Hasbolah, M. H. Rosli, H. Hamzah, S. A. Omar, and A. B. Bhuiyan, “The digital accounting entrepreneurship competency for sustainable performance of the rural Micro, Small and Medium Enterprises (MSMES): An empirical review,” Int. J. Small Mediu. Enterp., vol. 4, no. 1, pp. 12–25, 2021.

[13] B. D. Şeker and I. Sirkeci, “The Acculturation and Adaptation of Syrian Refugee Students: A Systematic Review of the Literature,” Transnatl. Educ. Rev., vol. 1, no. 2, pp. 95–115, 2023.

[14] H. A. Arie and A. M. Fikry, “Development of synergistic between digitalization MSMEs and digital society in Indonesia,” Ho Chi Minh City Open Univ. J. Sci. Bus. Adm., vol. 11, no. 2, pp. 18–30, 2021, doi: 10.46223/HCMCOUJS.econ.en.11.2.1934.2021.

[15] M. Rachmawati, “THE USE OF DIGITALIZATION OF INFORMATION IN DEVELOPING DIGITAL MARKETING FOR MSMEs,” Edusight Int. J. Multidiscip. Stud., vol. 1, no. 1, 2024.

[16] M. S. W. Suliswanto and M. Rofik, “Digitalization of micro, small & medium enterprises (MSMEs) in East Java, Indonesia,” Muhammadiyah Int. J. Econ. Bus., vol. 2, no. 1, pp. 34–43, 2019.

[17] I. P. Julianto, I. G. N. H. Wiguna, and I. N. P. Yasa, “Analysis of the Digitalization of Accounting Information Systems in Supporting the Sustainability of MSMEs During the Pandemic (Study on MSMEs in Buleleng Regency),” JIMAT (Jurnal Ilm. Mhs. Akuntansi) Undiksha, vol. 13, no. 04, pp. 1277–1284, 2022.

[18] N. T. P. Sari and A. Kusumawati, “Literature Review : The Efforts To Strengthening of Micro, Small and Medium-Sized Enterprises (MSME) in Indonesia,” Asian J. Manag. Entrep. Soc. Sci., vol. 2, no. 01 SE-Articles, pp. 98–115, 2022.

[19] H. Haqqi, “The Government’s Policy in Encouraging the Global Competitiveness of Indonesian MSMEs through the Digital Ecosystem,” J. Econ. Manag. Trade, vol. 29, no. 8, pp. 66–76, 2023.

[20] D. M. K. M. Kadaba, P. S. Aithal, and S. KRS, “Government initiatives and digital innovation for Atma Nirbhar MSMEs/SMEs: To achieve sustainable and inclusive economic growth,” Int. J. Manag. Technol. Soc. Sci., vol. 8, no. 1, pp. 68–82, 2023.

[21] R. N. Rosyidiana and I. M. Narsa, “Micro, small, and medium-sized enterprises (MSMEs) during the post-pandemic economic recovery period: digitalization, literation, innovation, and its impact on financial performance,” Cogent Bus. Manag., vol. 11, no. 1, p. 2342488, 2024.

[22] M. Indriastuti and I. Kartika, “The Impact of Digitalization on MSMEs’ Financial Performance: The Mediating Role of Dynamic Capability,” J. Econ., vol. 18, no. 2, pp. 240–255, 2022, doi: 10.21831/economia.v18i2.42790.

[23] S. zahrah Buyong, “Digitalization of accounting information impact on MSMEs’ profitability and productivity,” J. Ris. Akunt. Dan Bisnis Airlangga, vol. 5, no. 2, pp. 867–884, 2020.

[24] I. Purwanti, D. R. N. Lailyningsih, and U. Y. Suyanto, “Digital Marketing Capability and MSMEs Performance: Understanding the Moderating Role of Environmental Dynamism,” 2022.

[25] R. Z. S. Qohar and B. A. Darmawan, “Digital Platforms as Enablers of MSMEs’ Business Model Innovation: Revealing the Role of Capability Reconfigurations,” Asian J. Econ. Bus. Account., vol. 24, no. 7, pp. 317–328, 2024.

Downloads

Published

2026-03-31

Issue

Vol. 4 No. 01 (2026): West Science Business and Management

Section

Articles

License

Copyright (c) 2026 Loso Judijanto, IGP Ratih Andaningsih, Nashirotun Nisa Nurharjanti, Ahmad Eko Saputro

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

How to Cite

Digital Transformation in MSMEs: A PRISMA 2020 Based Systematic Literature Review of Adoption Drivers, Barriers, and Business Performance Implications in Emerging Economies (L. Judijanto, I. R. Andaningsih, N. N. Nurharjanti, & A. E. Saputro, Trans.). (2026). West Science Business and Management, 4(01), 145~154. https://doi.org/10.58812/wsbm.v4i01.2758