The dynamics of digitalisation of ultra-micro, micro, small, and medium enterprises during COVID-19 pandemic and recovery periods: evidence from Indonesia

Masagus M Ridhwan, Asep Suryahadi, Affandi Ismail and Amelia Azjahra Hidayat

Oxford Development Studies, 2024, vol. 52, issue 3, 325-345

Abstract: This study investigates the causal impact of the COVID-19 pandemic on digitalisation adoption among Indonesia’s ultra-micro, micro, small and medium enterprises (UMSMEs) during the pandemic and recovery periods. Using data from Bank Indonesia’s UMSMEs Development Survey 2019–2022, we employ the Callaway and Sant’Anna difference-in-differences (CSDID) method. The findings indicate that, in general, there was an increase in digitalisation adoption by enterprises during both pandemic and recovery periods. Furthermore, we uncover the significant impact of COVID-19 on increasing the overall digitalisation adoption by enterprises during both periods. However, there are variations across different digitalisation channels and enterprise scales. The findings suggest that enterprises are rational in their digitalisation adoption. The implications of this study point to the importance of fostering a digitalisation ecosystem that offers a diverse array of affordable options for digital channels, allowing enterprises to select options that best suit their needs.

Date: 2024
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DOI: 10.1080/13600818.2024.2420322

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