Crafting Digital Pathways: The Interplay of Social Media Adoption and MSME Performance in Indonesia's Fashion Sector

Crafting Digital Pathways: The Interplay of Social Media Adoption and MSME Performance in Indonesia's Fashion Sector

Desma Mastintianto (Binus University, Indonesia), Eva Meutia (Binus University, Indonesia), Lianna Wijaya (Binus University, Indonesia), Kah Choon Ng (University of Malaya, Lumpur, Malaysia), and Hataipat Phungpumkaew (Burapha University International College, Thailand)
Copyright: © 2025 |Pages: 18
DOI: 10.4018/IJABIM.371421
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Abstract

The COVID-19 pandemic has profoundly affected various facets of society in Indonesia, with the business sector, particularly micro, small, and medium enterprises (MSMEs), facing considerable challenges. A notable transformation brought about by the pandemic is the rapid integration of social media by MSMEs. The global lockdowns and movement restrictions disrupted supply chains, impacting raw material procurement, production, and distribution processes, resulting in substantial operational delays. This study aims to investigate the impact of social media adoption on the performance of MSMEs within the fashion sector amidst the COVID-19 pandemic. Employing the technological, organizational, and environmental framework, encompassing antecedent factors for analyzing social media adoption in MSMEs, the research utilizes purposive sampling and quantitative methods involving 266 MSME owners in Jakarta. Utilizing partial least squares structural equation modeling software for data analysis, the results of hypothesis testing reveal a positive influence of organizational impact and social media adoption on MSME performance.
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Research Background

Indonesia has the largest textile and garment industry in the world, providing employment for millions of Indonesians and contributing 6.1% ($12.3 million in U.S. dollars) to Indonesia’s manufacturing sector gross domestic product in 2021 (Asian Insiders, 2023). With a total population of 275 million (World Bank, 2023), micro, small, and medium enterprises (MSMEs) in Indonesia contribute to economic growth, employment opportunities, poverty reduction, and the introduction of local products to the international market (Amin et al., 2023; Heru Marwanto et al., 2023; Yose, 2023). MSMEs are the largest business sector with a significant presence in various economic sectors in this developing country (Amelia et al., 2024). The outbreak of COVID-19 has caused MSMEs limited access to financial resources, business management skills, and government support (Nareswari et al., 2023). Efforts to empower MSMEs include providing access to financial resources, technical assistance, and business development support. Improving financial management behavior, financial knowledge, and personality traits can also support the growth and development of MSMEs (Latif et al., 2023). The creative industry is important in driving innovation, job creation, and product quality improvement (Vasić & Filipović, 2022). Overall, MSMEs are essential for the Indonesian economy and require support to overcome their challenges and maximize their potential for growth and prosperity.

However, the pandemic outbreak has caused a drastic decline in sales figures to the extent that numerous enterprises have been compelled to cease operations. The COVID-19 pandemic has had a profound impact on businesses worldwide, forcing them to adapt and find innovative ways to survive. The Indonesian government has implemented numerous measures to restore stability to MSMEs. These measures include the issuance of the National Economic Recovery Program policy, exemptions from minimum accounting requirements, electricity load, subscription fees, and others. However, the government's support will be futile if MSMEs are unable to adapt. To ensure the survival of their businesses, MSME players must actively engage both internally and externally. The COVID-19 pandemic has precipitated changes in emerging trends associated with digital transformation. Consequently, MSME players are now compelled to possess a mindset and capability to embrace technology, enabling them to overcome challenging circumstances and attain enhanced competitiveness (Wulandari & Darma, 2020). One of the key strategies for MSMEs to navigate through this crisis is the adoption of social media as a powerful tool for marketing and expanding their reach to a wider audience.

Previous theoretical and observational evidence has indicated that the framework known as technology, organization, and environment (TOE) has gained significant popularity as a means of analyzing different issues relating to information systems. Empirical discoveries resulting from studies that employed the TOE framework have substantiated its worth as a valuable framework for comprehending the integration of innovative information technology. Previous research utilizing the TOE framework has explored numerous variables and identified these variables as precursors for different instances of information systems utilization (Awa et al., 2017; Baker, 2012; Jia et al., 2017; Low et al., 2011). However, in contrast to other technological advancements or internet-based platforms, social media is characterized by a more accessible and community-focused system, presenting both benefits and drawbacks. Consequently, there exist additional TOE variables that are particularly relevant to social media and may influence its adoption within organizational settings (Beier et al., 2020; Qalati et al., 2020; Tajudeen et al., 2018). A previous study found that the utilization of social media serves as a positive mediator in the correlation between TOE and the performance of small and medium-sized enterprises (SMEs) (Qalati et al., 2020, 2021).

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