IDEAS home Printed from https://ideas.repec.org/a/spr/elcore/v23y2023i4d10.1007_s10660-022-09547-7.html
   My bibliography  Save this article

How does e-commerce adoption impact micro, small, and medium enterprises’ performance and financial inclusion? Evidence from Indonesia

Author

Listed:
  • Rosnita Wirdiyanti

    (Otoritas Jasa Keuangan)

  • Inka Yusgiantoro

    (Otoritas Jasa Keuangan)

  • Agus Sugiarto

    (Otoritas Jasa Keuangan)

  • Aprillia Dwi Harjanti

    (Otoritas Jasa Keuangan)

  • Indra Yudha Mambea

    (Institut Teknologi Bandung, School of Business and Management)

  • Subiakto Soekarno

    (Institut Teknologi Bandung, School of Business and Management)

  • Sylviana Maya Damayanti

    (Institut Teknologi Bandung, School of Business and Management)

Abstract

We study the adoption of technology by micro, small, and medium enterprises (MSMEs) in Indonesia to enhance their businesses and inclusivity in financial products and services. Using a survey of 338 MSMEs that adopt e-commerce across ten provinces in the country, we use two-stage least squares regression to empirically analyze the impact of e-commerce adoption on business performance and its effect on financial inclusion. We further investigate the effects of e-commerce on marketing by performing ordered logistic regression using indicators in ordinal scale. The results show that brand recognition and customer awareness improve performance significantly. Our findings also reveal that the performance improvements caused by e-commerce adoption will encourage better inclusion of MSMEs in the financial system through access and use of more diverse financial products and services. Furthermore, collaborations between financial institutions and e-commerce platforms will accelerate MSMEs’ financial inclusion in Indonesia.

Suggested Citation

  • Rosnita Wirdiyanti & Inka Yusgiantoro & Agus Sugiarto & Aprillia Dwi Harjanti & Indra Yudha Mambea & Subiakto Soekarno & Sylviana Maya Damayanti, 2023. "How does e-commerce adoption impact micro, small, and medium enterprises’ performance and financial inclusion? Evidence from Indonesia," Electronic Commerce Research, Springer, vol. 23(4), pages 2485-2515, December.
    • Handle: RePEc:spr:elcore:v:23:y:2023:i:4:d:10.1007_s10660-022-09547-7
    DOI: 10.1007/s10660-022-09547-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10660-022-09547-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10660-022-09547-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Allen, Franklin & Demirguc-Kunt, Asli & Klapper, Leora & Martinez Peria, Maria Soledad, 2016. "The foundations of financial inclusion: Understanding ownership and use of formal accounts," Journal of Financial Intermediation, Elsevier, vol. 27(C), pages 1-30.
    2. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, June.
    3. Saeed Shobeiri & Ebrahim Mazaheri & Michel Laroche, 2014. "Improving customer website involvement through experiential marketing," The Service Industries Journal, Taylor & Francis Journals, vol. 34(11), pages 885-900, August.
    4. Larsen, Linda Sandris & Nielsson, Ulf & Rangvid, Jesper, 2022. "Gender and choice of pension product," Finance Research Letters, Elsevier, vol. 47(PB).
    5. Babbitt, Laura G. & Brown, Drusilla & Mazaheri, Nimah, 2015. "Gender, Entrepreneurship, and the Formal–Informal Dilemma: Evidence from Indonesia," World Development, Elsevier, vol. 72(C), pages 163-174.
    6. Santarelli, Enrico & D'Altri, Samuele, 2003. "The Diffusion of E-Commerce Among SMEs: Theoretical Implications and Empirical Evidence," Small Business Economics, Springer, vol. 21(3), pages 273-283, November.
    7. Chalermsak Lertwongsatien & Nitaya Wongpinunwatana, 2003. "E-Commerce Adoption in Thailand: An Empirical Study of Small and Medium Enterprises (SMEs)," Journal of Global Information Technology Management, Taylor & Francis Journals, vol. 6(3), pages 67-83, July.
    8. Powell, Melanie & Ansic, David, 1997. "Gender differences in risk behaviour in financial decision-making: An experimental analysis," Journal of Economic Psychology, Elsevier, vol. 18(6), pages 605-628, November.
    9. Anas A. Al-Bakri & Marios I. Katsioloudes, 2015. "The factors affecting e-commerce adoption by Jordanian SMEs," Management Research Review, Emerald Group Publishing Limited, vol. 38(7), pages 726-749, July.
    10. Calum G. Turvey & Xueping Xiong, 2017. "Financial inclusion, financial education, and e‐commerce in rural china," Agribusiness, John Wiley & Sons, Ltd., vol. 33(2), pages 279-285, April.
    11. Birger Wernerfelt, 1984. "A resource‐based view of the firm," Strategic Management Journal, Wiley Blackwell, vol. 5(2), pages 171-180, April.
    12. Anas A. Al-Bakri & Marios I. Katsioloudes, 2015. "The factors affecting e-commerce adoption by Jordanian SMEs," Management Research Review, Emerald Group Publishing Limited, vol. 38(7), pages 726-749, July.
    13. Dung Nguyen & Hoai Nguyen & Kien S. Nguyen, 2018. "Ownership feature and firm performance via corporate innovation performance," Journal of Asian Business and Economic Studies, Emerald Group Publishing Limited, vol. 25(2), pages 239-250, November.
    14. Korkmaz, Aslihan Gizem & Yin, Zhichao & Yue, Pengpeng & Zhou, Haigang, 2021. "Does financial literacy alleviate risk attitude and risk behavior inconsistency?," International Review of Economics & Finance, Elsevier, vol. 74(C), pages 293-310.
    15. Grandón, Elizabeth E. & Nasco, Suzanne A. & Mykytyn Jr., Peter P., 2011. "Comparing theories to explain e-commerce adoption," Journal of Business Research, Elsevier, vol. 64(3), pages 292-298, March.
    16. Rajiv Sabherwal & Anand Jeyaraj & Charles Chowa, 2006. "Information System Success: Individual and Organizational Determinants," Management Science, INFORMS, vol. 52(12), pages 1849-1864, December.
    17. Peterson K. Ozili, 2018. "Impact of digital finance on financial inclusion and stability," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 18(4), pages 329-340, December.
    18. Anas A. Al-Bakri & Marios I. Katsioloudes, 2015. "The factors affecting e-commerce adoption by Jordanian SMEs," Management Research Review, Emerald Group Publishing Limited, vol. 38(7), pages 726-749, July.
    19. Borges, Mauro & Hoppen, Norberto & Luce, Fernando Bins, 2009. "Information technology impact on market orientation in e-business," Journal of Business Research, Elsevier, vol. 62(9), pages 883-890, September.
    20. Rana, Nripendra P. & Barnard, Daniel J. & Baabdullah, Abdullah M.A. & Rees, Daniel & Roderick, Sian, 2019. "Exploring barriers of m-commerce adoption in SMEs in the UK: Developing a framework using ISM," International Journal of Information Management, Elsevier, vol. 44(C), pages 141-153.
    21. Hyunsuk Lee & Donna Kelley & Jangwoo Lee & Sunghun Lee, 2012. "SME Survival: The Impact of Internationalization, Technology Resources, and Alliances," Journal of Small Business Management, Taylor & Francis Journals, vol. 50(1), pages 1-19, January.
    22. Stacie Petter & William DeLone & Ephraim McLean, 2008. "Measuring information systems success: models, dimensions, measures, and interrelationships," European Journal of Information Systems, Taylor & Francis Journals, vol. 17(3), pages 236-263, June.
    23. Hillesland, Marya, 2019. "Gender differences in risk behavior: An analysis of asset allocation decisions in Ghana," World Development, Elsevier, vol. 117(C), pages 127-137.
    24. Beck, Thorsten & Demirguc-Kunt, Asli, 2006. "Small and medium-size enterprises: Access to finance as a growth constraint," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2931-2943, November.
    25. Susan Coleman & Carmen Cotei & Joseph Farhat, 2013. "A Resource-Based View Of New Firm Survival: New Perspectives On The Role Of Industry And Exit Route," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 18(01), pages 1-25.
    26. Li Liao & Jing Jian Xiao & Weiqiang Zhang & Congyi Zhou, 2017. "Financial literacy and risky asset holdings: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(5), pages 1383-1415, December.
    27. Halko, Marja-Liisa & Kaustia, Markku & Alanko, Elias, 2012. "The gender effect in risky asset holdings," Journal of Economic Behavior & Organization, Elsevier, vol. 83(1), pages 66-81.
    28. Ozili, Peterson Kitakogelu, 2018. "Impact of Digital Finance on Financial Inclusion and Stability," MPRA Paper 84771, University Library of Munich, Germany.
    29. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    30. Sridhar Balasubramanian, 1998. "Mail versus Mall: A Strategic Analysis of Competition between Direct Marketers and Conventional Retailers," Marketing Science, INFORMS, vol. 17(3), pages 181-195.
    31. Margaret A. Peteraf & Jay B. Barney, 2003. "Unraveling the resource-based tangle," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(4), pages 309-323.
    32. Ram Mudambi & Shaker A Zahra, 2007. "The survival of international new ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(2), pages 333-352, March.
    33. David A. Johnston & Michael Wade & Ron Mcclean, 2007. "Does e‐Business Matter to SMEs? A Comparison of the Financial Impacts of Internet Business Solutions on European and North American SMEs," Journal of Small Business Management, Taylor & Francis Journals, vol. 45(3), pages 354-361, July.
    34. Ramanathan, Ramakrishnan & Ramanathan, Usha & Hsiao, Hsieh-Ling, 2012. "The impact of e-commerce on Taiwanese SMEs: Marketing and operations effects," International Journal of Production Economics, Elsevier, vol. 140(2), pages 934-943.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guo‐Hua Cao & Jing Zhang, 2022. "The entrepreneurial ecosystem of inclusive finance and entrepreneurship: A theoretical and empirical test in China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 1547-1568, January.
    2. Guillermo Boitano & Deybi Franco Abanto, 2020. "Challenges of financial inclusion policies in Peru," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 12(1), pages 89-117, June.
    3. Mao, Fengfu & Wang, Yuanfan & Zhu, Mengsi, 2023. "Digital financial inclusion, traditional finance system and household entrepreneurship," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    4. Baozhen Chen & Jinzheng Ren, 2022. "Does the Adoption of Digital Payment Improve the Financial Availability of Farmer Households? Evidence from China," Agriculture, MDPI, vol. 12(9), pages 1-20, September.
    5. Juan Carlos Urueña-Mejía & Luis H. Gutierrez & Paul Rodríguez-Lesmes, 2023. "Financial inclusion and business practices of microbusiness in Colombia," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(2), pages 465-494, June.
    6. Ozili, Peterson K, 2020. "Financial inclusion: a strong critique," MPRA Paper 101813, University Library of Munich, Germany.
    7. Rahmanda Muhammad Thaariq & Arif Anindita & Hafizha Dea Iftina, 2021. "The Internet Miracle: The Impact Of Internet Access On Household Saving In Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(2), pages 255-282, June.
    8. Ozili, Peterson Kitakogelu, 2021. "Financial inclusion and legal system quality: are they correlated?," MPRA Paper 110518, University Library of Munich, Germany.
    9. P. K. Priyan & Wakara Ibrahimu Nyabakora & Geofrey Rwezimula, 2023. "A bibliometric review of the knowledge base on financial inclusion," SN Business & Economics, Springer, vol. 3(2), pages 1-21, February.
    10. Abdelaziz Hakimi & Rim Boussaada & Majdi Karmani, 2022. "Is the relationship between corruption, government stability and non‐performing loans non‐linear? A threshold analysis for the MENA region," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 4383-4398, October.
    11. Adriana Dima & Elena Radu & Ecaterina Milica Dobrota & Adrian Otoiu & Alina Florentina Saracu, 2023. "Sustainable Development of E-commerce in the Post-COVID Times: A Mixed-Methods Analysis of Pestle Factors," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(S17), pages 1095-1095, November.
    12. Nicola Del Sarto & Alberto Di Minin & Giulio Ferrigno & Andrea Piccaluga, 2021. "Born global and well educated: start-up survival through fuzzy set analysis," Small Business Economics, Springer, vol. 56(4), pages 1405-1423, April.
    13. Julie Birkenmaier & Jin Huang, 2024. "A systematic conceptual review of financial access," Journal of Consumer Affairs, Wiley Blackwell, vol. 58(2), pages 367-396, June.
    14. Agyekum, Francis K. & Reddy, Krishna & Wallace, Damien & Wellalage, Nirosha H., 2022. "Does technological inclusion promote financial inclusion among SMEs? Evidence from South-East Asian (SEA) countries," Global Finance Journal, Elsevier, vol. 53(C).
    15. Ozili, Peterson K, 2020. "Contesting digital finance for the poor," MPRA Paper 101812, University Library of Munich, Germany.
    16. Shah, Shahid Manzoor & Ali, Amjad, 2022. "A Survey on Financial Inclusion: Theoretical and Empirical Literature Review," MPRA Paper 116327, University Library of Munich, Germany.
    17. Ozili, Peterson K, 2021. "Measuring financial inclusion and financial exclusion," MPRA Paper 107866, University Library of Munich, Germany.
    18. Peng, Zihao & Huang, Yiqi & Liu, Luanhong & Xu, Wanli & Qian, Xihong, 2024. "How government digital attention alleviates enterprise financing constraints: An enterprise digitalization perspective," Finance Research Letters, Elsevier, vol. 67(PB).
    19. Kouladoum, Jean-Claude & Wirajing, Muhamadu Awal Kindzeka & Nchofoung, Tii N., 2022. "Digital technologies and financial inclusion in Sub-Saharan Africa," Telecommunications Policy, Elsevier, vol. 46(9).
    20. Zheng Cai & Shengsheng Li & Di Cheng, 2023. "Has Digital Village Construction Improved Rural Family Resilience in China? Evidence Based on China Household Finance Survey," Sustainability, MDPI, vol. 15(11), pages 1-20, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:elcore:v:23:y:2023:i:4:d:10.1007_s10660-022-09547-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.