Government Support Mediates Digital Marketing and Literacy Effects on SME Performance in Indonesia

Atary Rizki Haryadi ()
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Atary Rizki Haryadi: Hasanuddin University

A chapter in Proceedings of the 10th International Conference on Accounting, Management, and Economics (10th ICAME 2025), 2026, pp 1898-1912 from Springer

Abstract: Abstract The accelerated shift toward digitalization means Micro, Small and Medium Enterprises (MSMEs) in developing countries need to possess digital skills. Nevertheless, the process of transforming digital initiatives into improved business performance is uneven and varies with the degree of institutional support. This research investigates the effect of government support as a mediator between digital marketing strategy, digital literacy and business performance in MSME companies in South Sulawesi Indonesia. Drawing on Institutional Theory, Resource-Based View (RBV), and Dynamic Capabilities Theory, the research employs Partial Least Squares Structural Equation Modeling (PLS-SEM) to examine the survey data collected from 200 MSME owners/managers. Results indicate that digital marketing strategy and digital literacy have a positive impact on perceived government support. In addition, government support positively impacts business performance and completely mediates the indirect effects of digital capabilities through business performance. This research demonstrates that offering organizational support is essential to the development of internal digital readiness and in gaining significant performance increases. By theorizing government support as a constraining intervening stimuli, this study extends current theoretical models and articulates a co-evolutionary approach towards MSME digital transformation. The results provide policy action items for stakeholders to develop such digital support programmes that are friendly and accessible and invite the MSME practitioners to align their internal plans with institutional arrangements in order to ensuring sustainability. The findings of this study contribute to the growing literature on digital transformation in developing countries by providing empirical evidence and insight into the role of digital capabilities and institutional factors for achieving business outcomes in resource-constrained contexts.

Keywords: Digital Marketing Strategy; Digital Literacy; Government Support; Business Performance; MSMEs (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6239-709-5_132

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DOI: 10.2991/978-94-6239-709-5_132

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