The Effect of Digital Technology on Micro Small Medium Enterprises’ Business Performance

Abstract

Micro, Small, and Medium Enterprises (MSMEs) play a vital role in economic development, and digital technology has emerged as a critical factor in enhancing their business performance. This study explored how digital technology, particularly online transactions and technology acceptance and use, predicts MSME business performance. Using a quantitative approach, data were collected from 322 MSMEs through a structured survey. Statistical analyses, including correlation and multiple regression, were conducted to determine the relationships between the independent variables and business performance. Findings indicated that MSMEs perceive online transactions as significant, particularly in technology, people, product and process. The study also revealed that MSMEs rated online transactions as significant. Technology acceptance and use as partially accepted, and business performance is good. Correlation analysis shows strong positive relationships between online transactions and technology acceptance with business performance. Multiple regression results confirm that both factors significantly predict business performance, with technology acceptance and use showing a stronger effect. These findings highlight the importance of digital transformation in improving revenue and the growth of employees. The finding of the study suggests that MSMEs may invest in digital infrastructure, enhance digital literacy, and adopt strategic policies for sustainable growth in the digital economy. Future research may explore additional external factors influencing MSME performance in an evolving technological landscape.