Porter's Five Forces Strategy and Digital Transformation in Increasing the Competitiveness of MSMEs

Abstract

The digital era has fundamentally changed the business competition landscape, including for Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. This study aims to analyze the influence of Porter's Five Forces and digital transformation on the competitiveness of MSMEs, as well as assess the role of digital transformation moderation in the relationship between the two. A quantitative approach was used by a survey method of 210 respondents of MSME actors in various sectors, who have applied digital technology in business processes. Data analysis was carried out using Structural Equation Modeling-Partial Least Squares (SEM-PLS) to test the relationships between variables in the conceptual model. The results of the study show that Porter's Five Forces have a positive and significant effect on the competitiveness of MSMEs. Digital transformation also has a positive effect on competitiveness. Digital transformation acts as a moderator that strengthens the influence of Porter's strategy on competitiveness. This means that the higher the level of digital adoption, the greater the influence of industrial power on the competitive ability of MSMEs. This study confirms that the combination of industry structure analysis and digital capabilities is an effective strategy in creating sustainable competitive advantage. These findings have implications for the development of MSME digitalization policies, as well as provide a theoretical contribution to the enrichment of Porter's Five Forces model in the digital economy era.