Enhancing Information Technology Adoption Potential in MSMEs: a Conceptual Model Based on TOE Framework

Abstract

The adoption of Information Technology (IT) by Micro, Small, and Medium Enterprises (MSMEs) has become essential in the digital era. Nevertheless, challenges persist, such as enhancing IT adoption in the MSMEs sector and optimizing its benefits. This research aims to create a comprehensive model based on the Technology- Organization-Environment (TOE) framework by analyzing technological, organizational, and environmental factors influencing IT adoption among MSMEs in Pangandaran, Indonesia. Employing a quantitative approach, an online questionnaire was distributed to MSMEs, and data were analyzed using Partial Least Square-Structural Equation Modeling (PLS- SEM) through SmartPLS. The study significantly contributes to understanding IT adoption, emphasizing organizational context as the primary predictor, followed by technological and environmental contexts. Positive relationships were found between four contextual constructs: complexity, top management support, organizational readiness, and competitive pressure towards IT adoption in MSMEs. Conversely, compatibility and government support exhibited negative impacts. These findings have practical implications for Indonesian MSMEs by enhancing understanding of factors influencing IT adoption to support business operations. Furthermore, these findings hold the potential to assist MSMEs and the Indonesian government in optimizing IT adoption success. The generated data can be employed by MSMEs management authorities to devise strategies for enhancing IT adoption among MSMEs.