From Local Business To Digital Business: Orchestrating Resources for MSMEs' Digital Transformation in Wamena, Papua Pegunungan

Vollständiger Abstract

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Purpose — This study aims to explore the implementation of digital transformation in Micro, Small, and Medium Enterprises (MSMEs) within remote 3T (Disadvantaged, Frontier, and Outermost) regions, specifically focusing on Wamena, Papua Pegunungan, and to analyze the impact of Business Information System Orchestration, Human Resource Capability, Financial Capability, and Government Policy Support on digital transformation in MSMEs. This study views digital transformation as a strategic step that emphasizes not only technology use but also MSMEs' potential. The focus is on resource integration, competency development, fund management, and the utilization of the policy ecosystem. Design/methodology/approach — This study employs a quantitative, cross-sectional survey approach. Data were collected via a structured questionnaire administered to owners or managers of MSMEs that have utilized at least one type of digital technology in their business operations. The study population includes MSMEs in the trade, services, household production, agribusiness, and creative economy sectors across Wamena, Papua Pegunungan. Using purposive sampling, the study collected 238 valid questionnaires for analysis. Data processing used partial least squares structural equation modeling (PLS-SEM), including testing the measurement model, structural model, coefficient of determination, effect sizes, and predictive relevance. Findings — The analysis shows that Business Information System Orchestration, Human Resource Capability, Financial Capability, and Government Policy Support have positive and significant effects on the digital transformation of MSMEs. Business Information System Orchestration emerges as the strongest predictor, followed by Human Resource Capability, Government Policy Support, and Financial Capability. The model explains 68.4% of the variance in MSME digital transformation. These findings indicate that successful digital transformation depends not only on acquiring technology but also on integrating systems, people, financial resources, and institutional support. Practical implications — MSME entrepreneurs must develop a digital roadmap that links business needs with information systems to improve employees’ digital literacy and skills, allocate a budget for gradual transformation, and take advantage of government training programs, funding, mentoring, and facilities. The government needs to formulate integrated, accessible, needs-based policies accompanied by ongoing mentoring, particularly for MSMEs facing infrastructure and resource constraints. Originality/value — This study presents an empirical model that integrates resource orchestration, dynamic capabilities, and the technology-organization-environment framework to explain the digital transformation of MSMEs in remote geographic areas with severe infrastructure limitations. The novelty of this study lies in simultaneously testing four key factors in the context of MSMEs in remote areas of Eastern Indonesia, which have received relatively less attention in digital transformation studies than large companies and regions with better digital infrastructure. Paper type — Research Paper