Risk Management, Digitalization, and the Sustainability of Indonesian MSMEs

Akhlis Priya Pambudy; Ike Susanti; Indriana Kristiawati; Nurus Safaatillah

doi:10.70716/ecoma.v4i3.544

Authors

Akhlis Priya Pambudy Faculty of Economics and Business, Universitas Islam Lamongan, Indonesia
Ike Susanti Faculty of Economics and Business, Universitas Islam Lamongan, Indonesia
Indriana Kristiawati STIA Dan Manajemen Kepelabuhan Barunawati Surabaya, Indonesia
Nurus Safaatillah Faculty of Economics and Business, Universitas Islam Lamongan, Indonesia

DOI:

https://doi.org/10.70716/ecoma.v4i3.544

Keywords:

Risk Management Strategy, Digitalization, Business Sustainability, MSMEs

Abstract

This study examines whether MSME digitalization transmits the effect of risk-management strategy to business sustainability. A cross-sectional survey collected responses from 300 Indonesian MSME decision makers who used digital technologies in their operations, and the proposed relationships were tested using partial least squares structural equation modeling (PLS-SEM). The model integrates the resource-based view (RBV), which treats risk management as an internal organizational capability, with the technology–organization–environment (TOE) framework, which explains the conditions through which that capability supports digital readiness and use. Risk-management strategy was positively associated with sustainability (β = 0.256, p = 0.001) and digitalization (β = 0.645, p < 0.001), while digitalization was positively associated with sustainability (β = 0.568, p < 0.001). The indirect effect was also significant (β = 0.367, p < 0.001). Because the direct and indirect effects were significant and pointed in the same direction, the result indicates complementary partial mediation. The study’s main contribution is to specify digitalization as a conversion mechanism through which risk-management capability becomes operational efficiency, adaptability, market access, and resilience. Practically, capability-building programs should connect risk identification and mitigation with concrete digital investment and adoption decisions rather than treating both agendas separately.

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