The Impact of Digitalization on the Growth of MSMEs in Developing Countries

Abstract

Digitalization has become a key catalyst in the global economic transformation, including in the Micro, Small, and Medium Enterprises (MSMEs) sector, particularly in developing countries. This study aims to identify the positive and negative impacts of digitalization on MSME growth, analyze the factors influencing successful digital adoption, and explore the challenges and possible solutions. The method used is a literature review with a descriptive qualitative approach, relying on secondary sources such as scholarly journals, reports from international institutions, and policy documents. The findings reveal that digitalization significantly contributes to expanding market access, improving operational efficiency, and promoting innovation and competitiveness among MSMEs. However, this process also presents challenges such as limited access to technology, lack of digital literacy, and data security issues. The success of MSME digitalization is influenced by infrastructure readiness, human resource skills, government policies, and financial capacity. Therefore, collaborative strategies and inclusive policy support are essential to maximize the potential of digitalization in the development of MSMEs in developing countries.