Adoption Factors of E-Marketplace and Instagram for Micro, Small, and Medium Enterprises (MSMEs) in Indonesia

Abstract

E-commerce has proliferated globally, as well as nationally in Indonesia. Unfortunately, Indonesian commodities, including Micro, Small, and Medium Enterprises (MSMEs) products, have been negatively affected by the increase of imported goods traded on the country's e-marketplace and social commerce. It is a huge challenge as the MSMEs contributed to more than half of the national Gross Domestic Product (GDP). On the other hand, previous studies indicated that most Indonesian MSMEs have not fully harnessed the potential of e-commerce and social commerce. To address this problem, a research was conducted to understand factors influencing MSMEs in Indonesia adopting e-marketplace and Instagram. E-marketplace was a traditional media for e-commerce, whilst Instagram was identified as a promising social media for business. The research model was constructed based on the Technology, Organization, Environment (TOE) framework. For this context, a questionnaire was designed and distributed to MSMEs in Indonesia. There were 110 valid responses, which were analyzed with Partial Least Square-Structural Equation Modeling (PLS-SEM). The statistical findings were followed up by interviews with selected MSMEs as inputs to develop recommendation. The results show that Competitive Pressure, Financial Resources, Perceived Risk, and Top Management Support affect Indonesian MSMEs to adopt e-marketplace. Besides, factors influencing their Instagram adoption are Competitive Pressure, Perceived Benefit, Top Management Support, and Vendor Support.