Adaptive Policy Model for Sustainable Digital Transformationof MSMEs: A Case Study from Lhokseumawe City (Indonesia)
DOI:
https://doi.org/10.5755/j01.ppaa.25.3.44648Keywords:
digital adoption, MSMEs, adaptive policy, sustainability, digital transformationAbstract
Digital transformation has become a strategic priority for enhancing the competitiveness and sustainability of Micro, Small, and Medium Enterprises (MSMEs). However, the implementation of digital transformation policies across various regions still shows a partial and uneven level of adoption. Previous research has generally examined structural barriers such as infrastructure limitations, regulations, and institutional capacity or cultural barriers such as low digital literacy, motivation, and resistance to change separately. As a result, the resulting policy recommendations have not been able to explain how these two dimensions interact with one another in policy implementation. This study aims to analyze the interaction of structural and cultural factors in the implementation of digital transformation policies for MSMEs and to develop an Adaptive Policy Model to support the digital transformation of MSMEs in Lhokseumawe City. The study employed a qualitative approach using the case study method, involving 47 purposively selected informants, including MSME operators, local government officials, academics, financial institutions, legislators, community members, consumers, and the media. Data were collected through in-depth interviews, observations, and document analysis, and were subsequently analyzed using NVivo 12. The research findings indicate that the implementation of digital transformation policies is influenced by a mutually reinforcing interaction between structural barriers including policy fragmentation, unequal access to digital infrastructure, weak institutional capacity, and poor interagency coordination and cultural barriers, such as low digital literacy, resistance to change, and weak motivation among MSME actors. These interactions have resulted in a digital adoption process that is partial, uneven, and unsustainable Based on these findings, this study developed an Adaptive Policy Model consisting of three mutually integrated stages policy set-up, policy design, and policy implementation, as well as monitoring and evaluation which emphasizes strengthening institutional coordination, long-term planning, interventions tailored to the capacity of MSMEs, inclusive implementation, and data-driven evaluation as a policy learning mechanism. These findings expand the study of public policy implementation through the development of an adaptive policy model that can serve as a reference for local governments in designing a more effective and sustainable digital transformation for MSMEs.
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