Unpacking the Digital Edge: How Digital Transformation Drives Business Model Innovation and Performance in Jakarta’s Digital Food SMEs
Keywords:
Digital Transformation, Business Model Innovation, SME Performance, Food Industry, Digital SMEAbstract
This study investigates the role of digital transformation in enhancing the performance of digital food SMEs in Jakarta, Indonesia, by integrating the mediating influence of business model innovation (BMI). Employing a quantitative research design, the study utilizes Partial Least Squares (PLS) to examine data from 150 purposively selected digital-based food SME owners aged 45 and above. The research instrument comprises reflective constructs measured via five-point Likert scales, and data analysis is conducted using SmartPLS software. Findings indicate that digital transformation significantly improves SME performance both directly and indirectly through BMI. Furthermore, BMI emerges as a strategic conduit through which digital tools are transformed into operational and market advantages. These findings highlight the importance of aligning digital investments with innovative business models to achieve sustainable performance improvements. The study provides practical implications for SME managers and policymakers, urging the integration of digital capability development with strategic business model transformation. This study contributes theoretically by validating a structural mediation model and empirically by contextualizing digital transformation in Southeast Asian SME ecosystems.
References
Anatan, L., & Nur. (2023). Micro, small, and medium enterprises’ readiness for digital transformation in Indonesia. Economies, 11(6), 156.
Ancillai, C., Sabatini, A., Gatti, M., & Perna, A. (2023). Digital technology and business model innovation: A systematic literature review and future research agenda. Technological Forecasting and Social Change, 188, 122307.
Badan Pusat Statistik Provinsi DKI Jakarta. (2023). Profil industri mikro dan kecil Provinsi DKI Jakarta 2023 (Katalog No. 6104006.31). BPS-Statistics DKI Jakarta Province.
Boonlua, S., Longfeng, L., Udchachone, S., Sukprasert, A., & Pombejra, D. N. (2023). Digital Transformation Maturity and Digital Strategy Formulation Leads to Business Model Innovation. International Journal of Operations and Quantitative Management 29(2), 115-134.
Carmo, J. E. S., Lacerda, D. P., Klingenberg, C. O., & Piran, F. A. S. (2025). Digital transformation in the management of higher education institutions. Sustainable Futures, 9, 100692.
Dung, L. T., & Dung, T. T. H. (2024). Businesses model innovation: a key role in the internationalisation of SMEs in the era of digitalisation. Journal of Innovation and Entrepreneurship, 13(1), 48.
Elia, G., Solazzo, G., Lerro, A., Pigni, F., & Tucci, C. L. (2024). The digital transformation canvas: A conceptual framework for leading the digital transformation process. Business Horizons, 67(4), 381-398.
Escoz Barragan, K., Hassan, S. S., Meisner, K., & Bzhalava, L. (2023). Dynamics of digital change–measuring the digital transformation and its impacts on the innovation activities of SMEs. European Journal of Innovation Management, 28(4), 1625-1648.
Fang, T. M., Ahmad, N. H., Halim, H. A., Iqbal, Q., & Ramayah, T. (2024). Pathway towards SME competitiveness: Digital capability and digital business model innovation. Technology in Society, 79, 102728.
Gonzalez Varona, J. M., Lopez Paredes, A., Poza, D., & Acebes, F. (2024). Building and development of an organizational competence for digital transformation in SMEs. Journal of Industrial Engineering and Management, 14(1), 15-24.
Hair, J. ., Hult, G. T. ., Ringle, C. M., & Sarstedt, M. (2022). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). Los Angeles: Sage Publishing.
Keiningham, T., Aksoy, L., Bruce, H. L., Cadet, F., Clennell, N., Hodgkinson, I. R., & Kearney, T. (2020). Customer experience driven business model innovation. Journal of Business Research, 116, 431-440.
Latifi, M. A., Nikou, S., & Bouwman, H. (2021). Business model innovation and firm performance: Exploring causal mechanisms in SMEs. Technovation, 107, 102274.
Liu, K. P., Chung, K. W., Chiu, W., & Chen, G. (2024). Digital Transformation Driving SME Business Model Innovation: A Dynamic Capabilities Perspective. Journal of Global Information Management (JGIM), 32(1), 1-23.
Menter, M., Göcke, L., Zeeb, C., & Clauss, T. (2023). Disentangling the complex longitudinal relationships between business model innovation and firm performance. Journal of Business Research, 168, 114229.
Merín Rodrigáñez, J., Dasí, À., & Alegre, J. (2024). Digital transformation and firm performance in innovative SMEs: The mediating role of business model innovation. Technovation, 134, Article 103027.
Nugroho, G., Tedjakusuma, F., Lo, D., Romulo, A., Pamungkas, D. H., & Kinardi, S. A. (2023). Review of the application of digital transformation in food industry. Journal of Current Science and Technology, 13(3), 774-790.
O'Higgins, D. (2023). Impacts of Business Architecture in the Context of Digital Transformation: An Empirical Study Using PLS-SEM Approach. Journal of Business and Management Studies, 5(4), 72-84.
Ojukwu, P. U., Omokhoa, H. E., Odionu, C. S., Azubuike, C., & Sule, A. K. (2024). Digital Transformation and Optimization Framework for Advancing SME Growth and Operational Effectiveness. International Journal of Research and Innovation in Social Science, 8(12), 4607-4628.
Prihandono, D., Wijaya, A. P., Wiratama, B., Prananta, W., & Widia, S. (2024). Digital transformation to enhance Indonesian SME performance: Exploring the impact of market competition and digital strategy. Problems and Perspectives in Management, 22(2), 103-113.
Ramadan, M., Bou Zakhem, N., Baydoun, H., Daouk, A., Youssef, S., El Fawal, A., ... & Ashaal, A. (2023). Toward digital transformation and business model innovation: The nexus between leadership, organizational agility, and knowledge transfer. Administrative Sciences, 13(8), 185.
Salfore, N., Ensermu, M., & Kinde, Z. (2023). Business model innovation and firm performance: Evidence from manufacturing SMEs. Heliyon, 9(6).
Supramono, S., Damayanti, T. W., Rita, M. R., & Nastiti, P. K. Y. (2024). Explaining digital transformation in the food and beverage sector using a behavioral approach. Journal of Infrastructure, Policy and Development, 8(8), 1-14.
Surahman, S., Shee, H., Fitrian, Z., Adi, A. S., & Yudaruddin, R. (2023). The effect of digital transformation and innovation on SMEs’ performance in times of COVID‑19. Problems and Perspectives in Management, 21(4), 84-100.
Tetteh, F. K., Gyamerah, K. K., Nyamekye, B., Atiki, G., & Ashia, R. (2025). Digital transformation and business model innovation: the relevance of strategic orientations under varying conditions of competitive intensity. Journal of Manufacturing Technology Management, 36(3), 621–650.
Tian, M., Chen, Y., Tian, G., Huang, W., & Hu, C. (2023). The role of digital transformation practices in the operations improvement in manufacturing firms: a practice-based view. International Journal of Production Economics, 262, 108929.
Wang, S., & Zhang, H. (2025). Digital Transformation and Innovation Performance in Small-and Medium-Sized Enterprises: A Systems Perspective on the Interplay of Digital Adoption, Digital Drive, and Digital Culture. Systems, 13(1), 43.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Muhammad Awaluddin
This work is licensed under a Creative Commons Attribution 4.0 International License.
