Digitalization and the performance of micro and small enterprises in Yogyakarta, Indonesia

Anna T. Falentina, Budy Resosudarmo, Danang Darmawan and Eny Sulistyaningrum

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: The world is going digital. Little is known about how this digitalization affects the performance of micro and small enterprises, one of the major foundations of the economy in developing countries but with relatively low productivity. This paper examines the causal impact of internet utilization, as a part of digitalization, on enterprise performance. We conducted a field survey among micro and small enterprises in Yogyakarta, the densest micro and small enterprise population province in Indonesia. The identification strategy exploits the fact that the differences in geographic topography produce conceivably exogenous variations in the strength of cellular signal that micro and small enterprises in various areas can receive to connect to the internet. We find that internet utilization has enabled micro and small enterprises to engage in the digital economy and has improved labor productivity and exports.

Keywords: digital technology; internet; micro and small enterprises; productivity; exports (search for similar items in EconPapers)
JEL-codes: H54 L53 L96 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2019
New Economics Papers: this item is included in nep-eff, nep-ict, nep-pay and nep-sea
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pas:papers:2019-08

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