The Impact of Digital Technology Adoption in Food Micro, Small, and Medium Enterprises: A Case Study of Borobudur Area in Indonesia

Abstract

Aim: To investigate the awareness of using digital technology in Food MSMEs and understand its benefits. Study Design:  This research uses a quantitative approach with hypothesis testing. Place and Duration of Study: The research location is in the Borobudur area, Borobudur District, Magelang Regency, Central Java, one of Indonesia's priority tourist destinations. The duration of the research study is approximately 6 months, from June to December 2023. Methodology: This study's dependent or bound variable (Y) is Food MSME's Scaling Up in the Borobudur area. Independent or independent variables (X) are Asset Efficiency (X1), Lower Cost (X2), Quality (X3), and Safety & Sustainability (X4). Data collection was done through surveys, questionnaires, and structured observations. The number of respondents in this study was 145 respondents of local food MSMEs are in the Borobudur area, Borobudur District, Magelang Regency, Central Java. Data is tested with the Partial Least Squares Structural Equation Model (PLS-SEM) using SmartPLS version 3. Results: The results obtained in terms of quality (QT), lower cost (LC), safety, and Sustainability (SAS) were found to have a significant impact on food MSME's scaling up (FMS). However, asset efficiency (AE) was found to have no significant impact on food MSME scaling up (FMS). This research can contribute valuable insights to guide policymakers, industry stakeholders, and MSMEs toward more effective technology adoption strategies that drive growth and resilience in an increasingly digital business landscape. Conclusion: Quality (QT), Lower Cost (LC), Safety And Sustainability (SAS) were found to have a significant impact on food MSME's scaling up (FMS). However, asset efficiency (AE) was found to have no significant impact on food MSME's scaling up (FMS). Overcoming challenges associated with digital adoption is crucial for these businesses to thrive in a rapidly evolving business landscape.