Entrepreneurial Development in the Indonesian Economy

Abstract

Information and Communication Technology (ICT) cannot be separated from society during the current COVID-19 pandemic. Whole activities are forced to distance themselves, so they have to rely on the existence of the internet, including economic activities through e-commerce. In Indonesia, many internet users become an opportunity for small entrepreneurs, namely Micro, Small, and Medium Enterprises (MSME), to implement e-commerce. ICT development in Indonesia also still shows inequality, especially between Indonesia's West and East Region. This condition indicates the diversity of characteristics in each region to the level of e-commerce application. This study aims to identify local spatial effects and factors that influence the percentage of MSMEs implementing e-commerce in each province in Indonesia in 2020 using Geographically Weighted Regression (GWR). The result shows spatial heterogeneity in the model of MSMEs implementing e-commerce percentage. Six regional groups have similar characteristics based on independent variables that significantly affect the MSMEs implementing e-commerce percentage. In most WRI and ERI areas, the MSMEs implementing e-commerce percentage is significantly influenced by the percentage of households that make purchases via the internet. GER of tertiary education growth has a significant effect on whole of the WRI areas. In contrast, the number of confirmed cases of COVID-19 has a significant effect on most of the ERI areas. Hence, the government needs to pay attention to characteristics of each region for encouraging the development of e-commerce for MSME players in Indonesia, especially after the COVID-19 pandemic.