ANALYSIS OF DIGITALIZATION AND INNOVATION READINESS AND ITS IMPACT ON UMKM BUSINESS SUSTAINABILITY(STUDY ON UMKM FOOD AND BEVERAGE SECTOR)

Abstract

This research is motivated by theMSMEs importance role of in the economy, but they are faced with business sustainability issues. This is indicated by a decrease in the level of profit, product safety and health, employment issues, inefficiency in the use of clean water fuels and pollution issues. This problem can be overcome by digitizing and innovating MSMEs, but to implement this, MSMEs are constrained by high costs, small business scales and readiness to implement digitalization and innovation. So this study aims to analyze the effect of digitalization and innovation readiness on business sustainability. This research was conducted with a quantitative approach with an explanatory survey method which is a causal study. The population in this study were MSME entrepreneurs in West Java which were divided into 5 MSME work areas. With proportional sampling techniques in 4 work areas, a sample of 298 MSMEs was obtained. Data collection was carried out by distributing questionnaires and interviews. The data that has been obtained is processed with descriptive statistics and verification using SEM PLS. The results of this study state that micro and medium MSMEs have lower business sustainability than medium-scale ones. Micro and small MSMEs are not ready to implement digitalization and innovation. On a medium scale, MSMEs are ready to implement digitalization and innovation at the incremental stage. The results of this study state that readiness for digitalization and innovation has an impact on business sustainability.