MODEL DEVELOPMENT OF THE INFLUENCE OF DIGITAL TRANSFORMATION, INNOVATION CAPABILITY, AND ORGANIZATIONAL AGILITY ON ORGANIZATIONAL RESILIENCE IN MSMES

• Main Author: Maitsa Zulfatri, Muthi
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/77643
• Institution: Institut Teknologi Bandung

MSMEs (Micro, Small and Medium-sized Enterprises) are drivers of the Indonesian economy. However, SMEs are the most vulnerable businesses when affected by a crisis because they are limited in resources and finances. MSMEs heavily depend on cash flow. A sudden drop in demand disrupts the company's cash inflow, and MSMEs tend not to have long-term cash reserves. This research discusses the resilience of MSMEs when facing a crisis. MSME resilience is a building block of local, regional, and national economic resilience. Based on the dynamic capability theory, there are three organizational capabilities that can support organizations in responding to rapid changes: digital transformation, innovation capability, and organizational agility. These three constructs are considered capable of driving MSME resilience. The survey was conducted among 92 fashion industry MSMEs in Jabodetabek. Data processing was carried out using the PLS-SEM. The results show that organizational resilience is positively and significantly impacted by digital transformation, innovation capabilities, and organizational agility. Furthermore, digital transformation has a positive and significant effect on innovation capability and innovation capability has a positive and significant effect on organizational agility. Meanwhile, there is no positive and significant relationship between digital transformation and organizational agility. However, there is an indirect relationship between digital transformation and organizational agility when mediated by innovation capability. This study also offers practical recommendations for MSMEs in alignment with the research's outcomes.