The Digitalization of Indonesian Small and Medium Enterprises: Human Capital, Inclusivity and Platform Capitalism (Engaging Indonesia)

This book examines the digitalization of Small and Medium Enterprises (SMEs) in Indonesia and its challenges in the context of an emerging economy and the Covid-19 crisis. During the Covid-19 pandemic, business digitalization became a must for a business to avoid collapse and people saw that digital transformation is a panacea for SMEs to help them survive and revive from the crises. Governments and other stakeholders in many countries including Indonesia have launched policies and programs to support SMEs. Transforming SMEs' conventional businesses into digitalized versions, however, is a complex issue influenced by various factors. These factors encompass both internal changes within the organization and external dynamics in the ecosystem in which they operate. This book, therefore, is a new approach towards understanding the digitalization of SMEs in Indonesia and includes contributions from scholars with different, multi-disciplinary perspectives and demonstrates that digital transformation of SMEs is not all about technology adoption but also involves other aspects such as social, economic, and public governance factors. It discusses opportunities and challenges of digital transformation of SMEs in Indonesia, such as digital talent, financial inclusion, platform capitalism, automation, government’s role, governance, open competition, and inclusive digital economy. The book is of interest to researchers and students of social economics, SMEs and entrepreneurship, human capital research, and economy and governance.​ Preface Contents Editors and Contributors Abbreviations 1 Introduction 1.1 Background 1.2 MSMEs Digitalization, Human Capital, Inclusivity, and Platform Capitalism 1.3 Objectives, Approach, and Methods of the Book 1.4 Structure of This Book References 2 Digitalization of Indonesian MSMEs: Innovation Challenges and Opportunities 2.1 Introduction 2.2 Digital Economy and Inclusivity 2.3 Digital Economy and Sustainable Development 2.4 Digital Startups in Indonesia 2.5 Indonesia MSMEs and the Digital Economy 2.6 Impact of the COVID-19 Pandemic on the Performance of MSMEs 2.7 Digital Technology and Innovation 2.8 Conclusion References 3 Unlocking Digital Talent in Indonesia’s Micro, Small, and Medium Enterprises: Issues and Challenges 3.1 Introduction 3.2 Digital Talent and Its Significance for MSMEs 3.3 Challenges of Digital Talent Development 3.3.1 Level of MSMEs Digitalization 3.3.2 Level of Digital Literacy 3.3.3 Level of Structural Capital 3.4 Implementing Digital Talent Programs 3.5 Conclusion References 4 Digital Finance for MSMEs: Issues, Challenges, and Keys to Promote Inclusive Growth 4.1 Introduction 4.2 Policy and Regulation Regarding MSME Financing 4.3 Issues and Challenges for MSMEs in Accessing Digital Finance 4.3.1 MSME Funding Sources 4.3.2 MSMEs Access to Digital Finance 4.4 MSMEs Digital Finance Toward COVID-19 Pandemic 4.4.1 Digital Payment 4.4.2 Online Lending 4.5 Learning from Other Countries’ Experiences 4.6 Policy Recommendations References 5 The Position of MSME in the Discourse of Platform Capitalism 5.1 Introduction 5.2 The Nature of Platform Capitalism 5.3 Platform Capitalism and Small Businesses 5.4 Understanding MSMEs in the Discourse of Platform Capitalism 5.5 Data and Discussion 5.5.1 Discourses Surrounding “Marketplace” 5.5.2 Discourses Surrounding “Platform” 5.5.3 Discourse Surrounding “Digitalization of MSMEs” 5.5.4 The Position of MSMEs in the Discourse 5.6 Conclusions References 6 The Dynamics of Economy in the Regional MSMEs’ Digital Ecosystem 6.1 Introduction: The Transitioning of Economic Situation in Indonesia 6.1.1 Overview of Pre-COVID-19 Digital Ecosystem in Indonesia 6.1.2 Digital Economy During the Pandemic in Indonesia 2020–2021 6.1.3 The Digital Transformation of Indonesia’s MSMEs in 2020–2021 6.2 Existing Relevant Views of Ecosystems 6.2.1 Business Ecosystem 6.2.2 Entrepreneurial Ecosystem 6.2.3 Digital Ecosystem 6.3 Depiction of Indonesia’s MSMEs Digital Ecosystem 6.3.1 Peculiar Actors and Interactions 6.3.2 The Dynamism of the Ecosystem 6.3.3 Challenges to Sustain the Digital Ecosystem Growth 6.4 Conclusions References 7 The Role of Government in Facilitating Digital Economy for Micro, Small, and Medium Enterprises 7.1 Introduction 7.2 State Policies and Programs on MSMEs Digitalization in Indonesia 7.2.1 State Policies on MSMEs Digitalization 7.2.2 Government Programs on MSMEs Digitalization 7.2.3 Partnerships of Local Governments-Digital Business for MSMEs Digitalization 7.2.4 MSME’s Views on the Government Policies in West Java, West Sumatra, and Yogyakarta 7.2.5 Governance Problems in the Digitalization of MSMEs in Indonesia 7.3 Conclusion References 8 Epilogue: Lessons Learned and Future Directions 8.1 What Drives the Growth of the Platform Economy? 8.1.1 Harnessing Global Technology to Seize Local Opportunities 8.1.2 Indonesia is Part of Global Capitalism 8.1.3 Political Legitimation of Platform Economy 8.1.4 Culture, Infrastructure, and Ecosystem 8.2 Challenges 8.2.1 From Local Competition to Global Competition 8.2.2 The Issue of Productivity 8.2.3 The Loss of Tangibility on Digital Platforms 8.2.4 Human Resource Development 8.2.5 Technological Development 8.2.6 Financing Digital Transformation 8.3 Future Directions References