Effect of SME’s E-readiness and Online Food Delivery Apps Adoption toward Business Performance.

Abstract

SMEs played an essential role in facilitating ASEAN growth because SMEs contributed to economic growth, total employment, export, and GDP. The role of SMEs was not only for ASEAN but also for individual countries such as Indonesia and Malaysia. However, in recent years the growth of SME contributions in Indonesia and Malaysia has been fluctuating. The growth rate of SME’s contribution to GDP did not show a significant growth rate, indicating that SME’s performance has not optimum. The fluctuating of SME contribution growth to GDP as an indicator of SME performance that is not yet optimum can be caused by several problems, one of them is the low of technology adoption. The number of SMEs in Indonesia and Malaysia has increased from 2014 until 2019. But, the increase of SME’s numbers has not been able to increase the growth of SMEs' contribution to DGP. On the other hand, higher number of SMEs indicates the higher competition in the SME industry. That way, SMEs need to develop strategies to improve their performance and survive in the competition. E-commerce is an opportunity for SMEs to improve their performance. The large penetration's number on e-commerce's market indicated the potential opportunities that SMEs can access to increase their performance. One of the fast-growing e-commerce was ride-hailing. Ride-hailing is a transportation service provider using a platform or apps to connect drivers with consumers and is supported by GPS systems. The fastgrowing ride hailing type is online food delivery. Previous study stated that the adoption of online food delivery services by SMEs can increase the transaction volume of the food retailing sector. In order to increase SME’s performance through online food delivery adoption as expected, this studies are needed to examine the effect of e-readiness to e-adoption and e-adoption on business performance. However, it was still difficult to find literature specifically discussing e-readiness in online food delivery apps adoption from the SME's perspective. Therefore, it is necessary to discuss more deeply e readiness from the perspective of SMEs and the use of PERM theory in adopting e-commerce type online food-delivery apps. A comparative study was conducted to understand the causal processes involved in the case. The purpose of this study was to understand and compare e-readiness factors that influence online food delivery apps adoption and to understand the effects of online food delivery apps adoption on SME's performance between Malaysia and Indonesia. The number of samples used in this study amounted to 70 respondents. Research using SEM PLS as a data processing tool. The findings showed that Indonesia has more respondents aged 20-30 years old. Otherwise, Malaysia has more respondents aged 30 years old and over. Male respondents dominated both Indonesian and Malaysian respondents. Most Indonesian and Malaysian respondents have business experience from one until ten years. Indonesian respondent excels in business experiences for less than one year, while Malaysia in business experience for more than ten years. The number of short-lived SMEs in Indonesia is higher than in Malaysia, the longer age in Malaysia is higher than in Indonesia. Meanwhile, if viewed from the average sales, the number of buyers and turnover, SME in Malaysia is higher than in Indonesia. The factors that influence the level of e-commerce-adoption in Indonesia are commitment, market forces, supporting industries e-readiness, and online food delivery apps adoption while in Malaysia only market forces has a significant effect on online food delivery apps adoption. In both countries, online food delivery apps adoption is positively and significantly influential to SME’s performance with a relatively equal significance value.