The findings are particularly relevant as Indonesian MSMEs continue to adopt digital tools while facing challenges in productivity, market expansion, business management, and long-term sustainability. The researchers found that businesses gain greater benefits from technology when digital adoption is supported by practical skills, continuous mentoring, and stronger collaboration between businesses, government institutions, academics, and business development partners.
MSMEs Face Both Digital Opportunities and Structural Challenges
MSMEs play a major role in Indonesia's economy by creating jobs, supporting local production, and distributing income across communities. The article notes that MSMEs contribute more than 60 percent to Indonesia's Gross Domestic Product, although their contribution to national exports remains comparatively limited.
Digital transformation has created new opportunities for small businesses. The widespread use of QRIS, social media, online marketplaces, and digital communication platforms has made it easier for MSMEs to reach customers and manage transactions. However, the researchers argue that simply introducing digital applications does not guarantee better business performance.
Industry 5.0 provides a broader framework for understanding this transformation. Unlike approaches that focus mainly on automation and efficiency, Industry 5.0 emphasizes the relationship between technology, human creativity, sustainability, resilience, and social value. In the context of MSMEs, this means that digital tools should support people rather than simply replace traditional business processes.
How the Research Was Conducted
The research team used a qualitative exploratory case-study approach to examine how an Industry 5.0-based MSME development model could connect technology adoption, human resource capabilities, stakeholder collaboration, sustainability, and business performance.
The study involved 15 informants, including eight MSME owners, three local government representatives, two academics, and two business assistants. The participants were selected because of their direct involvement in MSME development and regional business activities.
Information was collected through in-depth interviews, observations, and relevant business and institutional documents. The researchers then examined recurring patterns and grouped the information into major themes related to technology use, human capabilities, collaboration, sustainability, and business performance.
Five Major Findings from the MSME Development Model
The analysis identified five major themes shaping the development of MSMEs within an Industry 5.0 framework.
1. Technology Adoption Happens Gradually
Most MSMEs had already adopted some form of digital technology, particularly QRIS, WhatsApp Business, social media, and online marketplaces. However, more advanced tools such as financial analytics, integrated customer management systems, and artificial intelligence were mainly used by business owners with stronger digital skills.
The researchers found that MSMEs generally adopted technology based on immediate practical needs rather than through a long-term digital transformation strategy.
2. Human Skills Determine the Value of Technology
The strongest message from the study was that owning digital devices or applications does not automatically improve business performance.
Business owners who could interpret sales data, manage finances, understand customers, and connect technology with operational decisions gained more value from digital tools. Meanwhile, MSMEs with limited digital literacy often used technology only for basic communication or transactions.
According to the findings reported by Novelma Lastri and her research team at STIA Lancang Kuning Dumai, technology becomes more valuable when business owners have the knowledge and managerial ability to turn digital information into practical decisions.
3. Stakeholder Collaboration Still Needs Better Integration
The study found that governments, academics, business assistants, and other institutions had already introduced programs such as digital marketing training, product certification support, financing access, and packaging assistance.
However, these programs were not always well connected. Some activities focused on the number of participants rather than long-term improvements in business productivity or market performance.
The researchers found that more intensive collaboration could create better results when different stakeholders worked together to support legal requirements, business models, technology adoption, pricing, and market development.
4. Technology and Skills Can Improve Productivity
Several MSMEs reported faster administrative work and promotional activities after combining digital tools with improved business skills.
The study documented examples in which digital financial records reduced weekly transaction recap time from approximately three to four hours to around one to two hours. Digital catalogs also helped businesses provide customers with product information more efficiently.
However, the benefits were not evenly distributed. Businesses that increased online promotion without improving inventory management, production capacity, labor availability, and quality control sometimes struggled to handle higher demand.
5. Digital Tools Can Expand Local Market Opportunities
Six of the eight MSME owners involved in the study reported that digital platforms helped them reach customers outside their immediate local areas. Social media and online marketplaces created opportunities to attract new buyers, while digital payments simplified transactions.
Business growth also appeared to support local economic activity through additional work opportunities and increased purchases from nearby suppliers.
However, the researchers carefully emphasized that these findings should not be interpreted as direct evidence of regional economic growth at the macroeconomic level. The study identified local indications such as increased transactions, market expansion, employment opportunities, and demand for local materials, but it did not measure regional GDP or other broad economic indicators.
What the Findings Mean for MSME Development
The proposed Industry 5.0 model places four elements at the center of MSME development: smart technology adoption, human resource capabilities, stakeholder collaboration, and sustainability orientation.
For policymakers, the findings suggest that MSME programs should move beyond one-time technology training. Business owners may benefit more from gradual mentoring, follow-up support, needs assessments, and performance evaluations.
For MSMEs, the study suggests that technology should be integrated into financial recording, inventory management, production, marketing, customer service, and decision-making rather than being used only for promotion.
The researchers also recommend tailoring digital transformation programs to the readiness of each business. Less digitally mature MSMEs may benefit from simple and practical technologies, while more advanced businesses could explore data analytics, automation, artificial intelligence, and business model innovation.
Important Limitation: Results Are Marked as Simulation Data
The article includes an important limitation that should be considered when interpreting its findings. The study involved only 15 informants from one regional ecosystem, meaning that the findings are contextual and cannot be statistically generalized to all MSMEs.
The authors also state that the result data in the working manuscript were still marked as simulation data and therefore could not yet be treated as empirical evidence for publication. They recommend future research using verified original field data, broader regional samples, multiple MSME sectors, mixed research methods, and long-term observations.
Author Profile
The article was written by Novelma Lastri, together with Variza Aditiya, Dwi Hartutik, Said Mustafa, and Refdi. The article metadata identifies STIA Lancang Kuning Dumai as the authors' listed institutional affiliation.
The journal article does not provide complete academic degrees or individual fields of expertise for each author. Therefore, these details cannot be accurately added without additional verified information.
Source
Article Title: Industry 5.0-Based MSMEs Development Model to Increase Regional Economic Growth
Authors: Novelma Lastri, Variza Aditiya, Dwi Hartutik, Said Mustafa, and Refdi
Journal: Formosa Journal of Science and Technology (FJST)
Publication Year: 2026
Volume and Issue: Vol. 5, No. 8
Pages: 2097–2114
DOI: https://doi.org/10.55927/fjst.v5i8.128
Official Journal Website: https://journalfjst.my.id/index.php/fjst
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