Digital Intensity, Global Value Chains, and Resilience: Evidence on the MSME digital divide in Southeast Asia

Keita Oikawa, Fusanori Iwasaki and Yasushi Ueki

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper examines the determinants and consequences of digitalization among micro, small, and medium-sized enterprises (MSMEs) in Southeast Asia. Using firm-level survey data from Indonesia, Malaysia, and Viet Nam covering 23 digital tools, we distinguish between digital adoption breadth (extensive margin) and depth (intensive margin). Drawing on technology diffusion theory, both margins are positively associated with managerial human capital and global value chain participation, while external support is more strongly associated with adoption depth. During COVID-19, firms with higher digitalization were more likely to maintain pre-crisis sales, with stronger associations for depth than breadth. These findings suggest that economic benefits depend less on the range of tools adopted than on their effective integration into operations. Policies targeting the MSME digital divide may therefore be more effective when focused on strengthening digital use capabilities rather than expanding adoption alone.

Pages: 43 pages
Date: 2026-07
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:26058

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