The Role of Government Support on Readiness Batik SMEs’in Digital Transformation

Abstract

Small and medium-sized enterprises (SMEs) are crucial for economic development and sustainability. However, they have challenges regarding sustainability and their ability to adopt digital transformation as part of the industrial revolution effectively. The emphasis on conversations surrounding digital transformation has transitioned from debating its importance to addressing the challenges of evaluating a company's readiness for digital transformation. Hence, it is imperative to establish a systematic procedure to identify sustainability aspects that can enhance the readiness of SMEs to embrace digital transformation. The progress of SMEs in adopting digital technology has a role for the government. The form of government presence supports SMEs in becoming more advanced in using technology. The government plays a pivotal role in fostering SMEs' growth and efficient operation. Government support is crucial and means for the improvement of SMEs. This study investigates the extent of government assistance in facilitating the digital transformation of Batik SMEs. The study used convenience sampling, utilizing both online and paper-based surveys to gather 180 responses from Batik SMEs. There was conducted for this study. This sample facilitated the evaluation of the connections between the proposed variables using the structural model of data analysis. Structural Equal Modeling-Partial Least Square (SEM-PLS) version 3 technique was used to examine the data. Primary data was obtained from questionnaires distributed to respondents. To achieve the research purpose, this study put up three hypotheses. Results indicate that financial support has no significant moderating effect on the relationship between readiness to digital transformational. The strongest dimension of firm readiness is technology readiness. Furthermore, the strongest support of the government is non-financial support. Meanwhile, the study's findings indicate that all the readiness dimensions have a significant and direct impact on firm readiness.