Digital Technology-Based Business Innovation Strategies to Increase the Competitiveness of SMEs in Indonesia

This study examines the role of digital technology-based business innovation strategies in enhancing the competitiveness of small and medium-sized enterprises (SMEs) in Indonesia. As the digital economy continues to grow rapidly, SMEs face both opportunities and challenges in adapting to technological change. The research aims to analyze how digital transformation, including the adoption of e-commerce, digital marketing, and financial technology, influences business performance and market competitiveness. Using a quantitative approach, data were collected from 250 SMEs across various sectors through structured questionnaires and analyzed using multiple regression analysis. The results indicate that digital innovation significantly improves operational efficiency, customer engagement, and market expansion, which in turn enhance the overall competitiveness of SMEs. Moreover, managerial capability and digital literacy are found to moderate the relationship between technology adoption and competitiveness. The findings suggest that to sustain competitive advantage, SMEs should integrate digital innovation into their strategic management processes and continuously invest in technology and human resource development. This study contributes to the understanding of how digitalization can drive business resilience and sustainable growth within the SME sector in Indonesia.