Main Content
Lembaga Kita Journal Portal
Open Access Articles

Digital Technology-Based Green Innovation Adoption Model in MSME Development to Promote Performance and Sustainable Business Competitiveness

  • Agusman1*
  • Victor2
  • Silvia Sofyan3
1,2,3 Sekolah Tinggi Manajemen Bisnis Multi Sarana Manajemen Administrasi dan Rekayasa Teknologi image/svg+xml
* Corresponding Author: Agusman

Abstract

This study empirically examines the direct effects of green innovation adoption and digital technology utilization on MSME performance and sustainable business competitiveness, as well as the effect of MSME performance on sustainable business competitiveness, in the context of MSMEs in Medan, Indonesia. Method. A quantitative, cross-sectional survey design was employed. Primary data were collected from 100 MSMEs, selected by purposive sampling from a population of 18,000 active units using the Slovin formula, through a structured questionnaire. Data were analyzed using Structural Equation Modeling with Partial Least Squares (SEM-PLS) in SmartPLS 4, including outer model evaluation (loading factor, AVE, composite reliability, Cronbach's alpha, discriminant validity) and inner model evaluation (R², f²). Main Findings. All measurement constructs met the required thresholds, confirming convergent validity, discriminant validity, and reliability. The structural model shows that Sustainable Business Competitiveness is explained by the exogenous variables with R² = 0.385, while MSME Performance is explained with R² = 0.295. Green Innovation and Digital Technology exert a moderate effect on Sustainable Business Competitiveness (f² = 0.218 and f² = 0.192, respectively), while their direct effect on MSME Performance is very small (f² = 0.002 and f² = 0.006). MSME Performance, in turn, shows a moderate effect on Sustainable Business Competitiveness (f² = 0.194). Practical Implications. The findings inform MSME owners, business incubators, MSME facilitators, and digital platform providers that green innovation initiatives yield stronger competitiveness gains when embedded within a broader digital transformation strategy. For policy makers, particularly the Ministry of Cooperatives and SMEs, the results support targeted programs on digital literacy, eco-innovation subsidies, and integrated capacity-building schemes for second-tier city MSMEs. Originality. This study contributes an integrated, empirically validated model that combines digital technology utilization and green innovation adoption as joint predictors of MSME performance and sustainable competitiveness, tested through SEM-PLS on Indonesian MSMEs a setting under-represented in the existing Q1/Q2 literature.

Keywords

Green Innovation Digital Technology MSMEs Sustainable Competitiveness SEM-PLS

How to Cite

Citation Format
Agusman, A., Victor, V., & Sofyan, S. (2026). Digital Technology-Based Green Innovation Adoption Model in MSME Development to Promote Performance and Sustainable Business Competitiveness. International Journal of Management Science and Information Technology, 6(2), 1775-1786. https://doi.org/10.35870/ijmsit.v6i2.7705

References

56 References
  • Agusman, A., & Victor. (2024). Digitalization as a strategy to increase the competitiveness of MSMEs in the era of an inclusive economy. Journal of English Language and Education, 11(1), 355–362. https://doi.org/10.31004/jele.v11i1.1903
  • Akhtar, S., Tian, H., Iqbal, S., & Hussain, R. Y. (2024). Environmental regulations and government support drive green innovation performance: Role of competitive pressure and digital transformation. Clean Technologies and Environmental Policy, 26, 4433–4453. https://doi.org/10.1007/s10098-024-02857-4
  • Al-Shammari, M. A. (2024). The role of digital transformation in boosting CSR-driven green innovation among Yemeni manufacturing SMEs. Discover Sustainability, 5, Article 316. https://doi.org/10.1007/s43621-024-00506-w
  • Bank Indonesia. (2023). Laporan perkembangan UMKM dan digitalisasi di Indonesia. Bank Indonesia.
  • Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
  • Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. (2013). Digital business strategy: Toward a next generation of insights. MIS Quarterly, 37(2), 471–482. https://doi.org/10.25300/MISQ/2013/37:2.3
  • Chen, Y.-S. (2011). The drivers of green product innovation performance. Journal of Business Ethics, 104(3), 361–370. https://doi.org/10.1007/s10551-011-0914-x
  • Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3), 319–340. https://doi.org/10.2307/249008
  • Dinas Koperasi dan UMKM Kota Medan. (2023). Laporan perkembangan UMKM di Kota Medan dan tantangan digitalisasi. Pemerintah Kota Medan.
  • Dwivedi, Y. K., Rana, N. P., Jeyaraj, A., Clement, M., & Williams, M. D. (2019). Re-examining the unified theory of acceptance and use of technology (UTAUT): Towards a revised theoretical model. Information Systems Frontiers, 21(3), 719–734. https://doi.org/10.1007/s10796-017-9774-y
  • Evangeulista, G., Agustin, A., Putra, G. P. E., Pramesti, D. T., & Madiistriyatno, H. (2023). Strategi UMKM dalam menghadapi digitalisasi. Oikos-Nomos: Jurnal Kajian Ekonomi dan Bisnis, 16(1). https://doi.org/10.37479/jkeb.v16i1.20799
  • Featherman, M. S., & Pavlou, P. A. (2003). Predicting e-services adoption: A perceived risk facets perspective. International Journal of Human-Computer Studies, 59(4), 451–474. https://doi.org/10.1016/S1071-5819(03)00111-3
  • Google, Temasek, & Bain & Company. (2022). e-Conomy SEA 2022: Digital growth map in Southeast Asia. Google Indonesia.
  • Harianto, A., Chandra, K., Fakhrul Hirzi, M., Arahman, H., Rivai, A., & Budiman, I. (2024). Socialization and Creation of Entrepreneurial Products for Class XII Tritech Informatics Accounting Vocational School Medan. GANDRUNG: Jurnal Pengabdian Kepada Masyarakat, 5(2), 1780–1790. https://doi.org/10.36526/gandrung.v5i2.4090
  • INDEF. (2023). Transformasi digital UMKM dan dampaknya terhadap perekonomian nasional. INDEF.
  • INDEF. (2024). Peran platform digital terhadap pengembangan UMKM di Indonesia. INDEF.
  • Kementerian Koordinator Bidang Perekonomian. (2023). Laporan implementasi Gerakan Nasional Bangga Buatan Indonesia (Gernas BBI) dalam mendukung digitalisasi UMKM. Kemenko Perekonomian.
  • Kementerian Koperasi dan UKM. (2023). Kontribusi UMKM terhadap PDB dan tantangan digitalisasi. Kementerian Koperasi dan UKM.
  • Khan, F., Din, A. U., Jehangir, M., Farooq, S. H., & Riviezzo, A. (2024). The nexus of technology orientation and green innovation performance: The potential mediating role of innovation capability. Journal of High Technology Management Research, 35, Article 100509. https://doi.org/10.1016/j.hitech.2024.100509
  • Kohli, R., & Grover, V. (2008). Business value of IT: An essay on expanding research directions to keep up with the times. Journal of the Association for Information Systems, 9(1), 23–39. https://doi.org/10.17705/1jais.00147
  • Kurnianingrum, D., Aligarh, F., Andraeny, D., Meilani, S. E. R., Walyoto, S., Narulitasari, D., & Rahmawati, A. I. E. (2025). Driving sustainable performance: Digital transformation, technological capability, and innovation in MSMEs. (2025). BIS Economics and Business, 2, V225005. https://doi.org/10.31603/biseb.218
  • Lubis, Z., Junaidi, Effendi, I., Nasib, & Fadli, A. (2023). The model for determining the success of the partnership program in improving the performance of SMEs fostered partners PT. Perkebunan Nusantara III. Quality - Access to Success, 24(192), 35–43. https://doi.org/10.47750/QAS/24.192.05
  • McKinsey & Company. (2023). The future of digital SMEs in Southeast Asia: Opportunities and challenges. McKinsey & Company.
  • Molina-García, P., Aguado-Correa, F., & Padilla-Garrido, N. (2024). Digital transformation, innovation, and dynamic capabilities to strengthen the financial performance of SMEs: A sustainable approach. Cogent Business & Management, 11(1), Article 2318635. https://doi.org/10.1080/23311975.2024.2318635
  • Nambisan, S. (2017a). Digital entrepreneurship: Toward a digital technology perspective of entrepreneurship. Entrepreneurship Theory and Practice, 41(6), 1029–1055. https://doi.org/10.1111/etap.12254
  • Nambisan, S., Lyytinen, K., Majchrzak, A., & Song, M. (2017). Digital innovation management: Reinventing innovation management research in a digital world. MIS Quarterly, 41(1), 223–238. https://doi.org/10.25300/MISQ/2017/41:1.03
  • OECD. (2021). The digital transformation of SMEs. OECD Publishing. https://doi.org/10.1787/bdb9256a-en
  • OECD. (2022). SME and entrepreneurship outlook 2022: Digitalisation and green innovation. OECD Publishing. https://doi.org/10.1787/e9073a0f-en
  • Oliveira, T., & Martins, M. F. (2010). Understanding e-business adoption across industries in European countries. Industrial Management & Data Systems, 110(9), 1337–1354. https://doi.org/10.1108/02635571011087428
  • Oliveira, T., Thomas, M., & Espadanal, M. (2014). Assessing the determinants of cloud computing adoption: An analysis of the manufacturing and services sectors. Information & Management, 51(5), 497–510. https://doi.org/10.1016/j.im.2014.03.006
  • Pavlou, P. A. (2003). Consumer acceptance of electronic commerce: Integrating trust and risk with the technology acceptance model. International Journal of Electronic Commerce, 7(3), 101–134. https://doi.org/10.1080/10864415.2003.11044275
  • Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89(1–2), 62–77.
  • Rachman, A. B., Efani, A., & Atikawati, D. (2025). The impact of green innovation on corporate sustainability performance: A case study of MSMEs in Malang City, Indonesia. Jurnal Penelitian Pendidikan IPA, 11(12), 620–630. https://doi.org/10.29303/jppipa.v11i12.13267
  • Raut, R. K., Priyadarshinee, R., Jha, B., & Balo, B. K. (2017). Enabling technology adoption for sustainable practices in SMEs. Journal of Cleaner Production, 168, 525–538. https://doi.org/10.1016/j.jclepro.2017.09.036
  • Reniati, R., & Faisal, F. (2024). Development of green SMEs: Integrating green entrepreneurship and innovation for environmental sustainability. IOP Conference Series: Earth and Environmental Science, 1419, Article 012055. https://doi.org/10.1088/1755-1315/1419/1/012055
  • Rennings, K. (2000). Redefining innovation—Eco-innovation research and the contribution from ecological economics. Ecological Economics, 32(2), 319–332. https://doi.org/10.1016/S0921-8009(99)00112-3
  • Sari, R. M., & Nugroho, A. (2023). Pemanfaatan teknologi digital untuk meningkatkan daya saing UMKM di era Industri 4.0. Jurnal Ekonomi Pembangunan, 20(1), 74–85.
  • Schrank, J., & Kijkasiwat, P. (2024). Impacts of green innovation on small and medium enterprises' performance: The role of sustainability readiness and firm size. Business Strategy & Development, 7(3), Article e407. https://doi.org/10.1002/bsd2.407
  • Scupola, A. (2009). SMEs' e-commerce adoption: Perspectives from Denmark and Australia. Journal of Enterprise Information Management, 22(1/2), 152–166. https://doi.org/10.1108/17410390910932803
  • Setiawan, A., & Arief, M. (2022). Pengaruh digitalisasi terhadap pemberdayaan UMKM di Indonesia. Jurnal Ekonomi dan Bisnis, 15(2), 45–59.
  • Statista. (2023). Digital economy growth and SME adaptation in Indonesia. https://www.statista.com
  • Sudaryana, I. G. A. K., et al. (2025). Harnessing green dynamic capabilities for sustainable tourism performance: The mediating role of green service innovation in Bali's tour and travel SMEs. Tourism and Hospitality, 6(3), Article 156. https://doi.org/10.3390/tourhosp6030156
  • Sugiyono. (2021). Metode penelitian kuantitatif, kualitatif, dan R&D. Alfabeta.
  • Thong, J. Y. L. (1999). An integrated model of information systems adoption in small businesses. Journal of Management Information Systems, 15(4), 187–214. https://doi.org/10.1080/07421222.1999.11518227
  • Triguero, A., Moreno-Mondéjar, L., & Davia, M. A. (2013). Drivers of different types of eco-innovation in European SMEs. Ecological Economics, 92, 25–33. https://doi.org/10.1016/j.ecolecon.2013.04.009
  • UNIDO. (2022). Industrial digitalization and green growth. United Nations Industrial Development Organization.
  • Van Hoang, D., Hien, N. T., Van Thang, H., Phuong, P. N. T., & Duong, T. T. T. (2025). Digital capabilities and sustainable competitive advantages: The case of emerging market manufacturing SMEs. SAGE Open, 15(2). https://doi.org/10.1177/21582440251329967
  • Venkatesh, V., Thong, J. Y. L., & Xu, X. (2012). Consumer acceptance and use of information technology: Extending the unified theory of acceptance and use of technology. MIS Quarterly, 36(1), 157–178. https://doi.org/10.2307/41410412
  • Victor, Handayani, F., Gurusinga, L. B., & Sherly. (2025). Mendorong keberlanjutan bisnis UMKM pariwisata di Kota Medan: Pendekatan inovatif teknologi dan praktik berkelanjutan. Jurnal Administrasi dan Manajemen, 15(1), 114–123. https://doi.org/10.52643/jam.v15i1.6061
  • Wade, M., & Hulland, J. (2004). The resource-based view and information systems research: Review, extension, and suggestions for future research. MIS Quarterly, 28(1), 107–142. https://doi.org/10.2307/25148626
  • World Bank. (2021). Digital development for SMEs. World Bank.
  • World Bank. (2022). Digitalization and SME competitiveness in emerging markets. World Bank.
  • Wu, S., Cheng, P., & Yang, F. (2024). Study on the impact of digital transformation on green competitive advantage: The role of green innovation and government regulation. PLOS ONE, 19(7), Article e0306603. https://doi.org/10.1371/journal.pone.0306603
  • Xie, J., Abbass, K., & Li, D. (2024). Advancing eco-excellence: Integrating stakeholders' pressures, environmental awareness, and ethics for green innovation and performance. Journal of Environmental Management, 352, Article 120027. https://doi.org/10.1016/j.jenvman.2024.120027
  • Zaini, R. (2024). Efektivitas digitalisasi UMKM dalam meningkatkan daya saing ekonomi di era Industri 4.0. Pro Ekonomi, 1(1).
  • Zhang, L., & Chen, Y. (2025). Enhancing SMEs' sustainable innovation and performance through digital transformation: Insights from strategic technology, organizational dynamics, and environmental adaptation. Socio-Economic Planning Sciences, 98, Article 102152. https://doi.org/10.1016/j.seps.2024.102152

Author Biographies

Agusman, Sekolah Tinggi Manajemen Bisnis Multi Sarana Manajemen Administrasi dan Rekayasa Teknologi

Business Administration Study Program, Sekolah Tinggi Manajemen Bisnis Multi Sarana Manajemen Administrasi dan Rekayasa Teknologi, Medan City, North Sumatra Province, Indonesia

Victor, Sekolah Tinggi Manajemen Bisnis Multi Sarana Manajemen Administrasi dan Rekayasa Teknologi

Business Administration Study Program, Sekolah Tinggi Manajemen Bisnis Multi Sarana Manajemen Administrasi dan Rekayasa Teknologi, Medan City, North Sumatra Province, Indonesia

Silvia Sofyan, Sekolah Tinggi Manajemen Bisnis Multi Sarana Manajemen Administrasi dan Rekayasa Teknologi

Business Administration Study Program, Sekolah Tinggi Manajemen Bisnis Multi Sarana Manajemen Administrasi dan Rekayasa Teknologi, Medan City, North Sumatra Province, Indonesia

License

Copyright (c) 2026 Agusman, Victor, Silvia Sofyan

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

This is an open-access journal distributed under the Creative Commons Attribution 4.0 International License (CC BY 4.0), which permits unrestricted use, distribution, reproduction, and adaptation in any medium (even commercially), provided appropriate credit is given to the original author(s), a link to the license is provided, and any changes made are indicated. Authors retain copyright without restrictions and grant the journal the right of first publication as well as non-exclusive publishing rights for archiving, indexing, and scholarly dissemination.

Downloads

OJS UsageStats Plugin
Download data is not yet available.

Similar Articles

You may also start an advanced similarity search for this article.

Most read articles by the same author(s)

Contrimetric

Recommended Articles

Journal Transparency

Additional Information

Learn more about how this journal ensures quality, ethics, and transparency.