Bridging the Digital Gap: Factors Influencing Digital Economy Adoption in Small Enterprises
DOI:
https://doi.org/10.24191/jibe.v11i1.8520Keywords:
Adoption Factors, Digital Economy, TOE Framework, Small BusinessesAbstract
The digital economy has emerged as an important driver of enterprise growth, productivity, and innovation across various industries in recent years. Nonetheless, the implementation of a digital economy presents numerous challenges for small and medium-sized enterprises, particularly in states such as Kelantan with low gross domestic product (GDP) growth. Additionally, the presence of web technology is among the lowest in Kelantan compared with other states in Peninsular Malaysia, especially in the small- and medium-sized enterprise sector. This paper examines the key determinants affecting the adoption of the digital economy by small enterprises in Kelantan. As digital technologies persist in transforming economic activities, comprehending the factors that facilitate or impede their adoption is crucial for maintaining small business competitiveness. A quantitative approach was utilized, and structured questionnaires were administered to small business proprietors across diverse industries in Kelantan. Data analysis was performed utilizing SPSS (version 29.0.2.0) and SmartPLS4 (version 4.1.1.4). This research, led by the Technology-Organization-Environment (TOE) framework, identified and studied the technological, organizational, and environmental aspects influencing adoption decisions. The findings indicate that organizational and environmental factors, including innovation culture, employee skills and knowledge, market competition pressures, government restrictions, and financial support from the government, greatly affect adoption levels. These findings provide important insights for policymakers, technology providers, and support agencies to formulate policies that might effectively advance digital transformation among small enterprises across the nation.
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