Artificial Intelligence and Digital Entrepreneurship in Indonesia: Opportunities and Challenges for MSME Development

Authors

  • Subur Gunawan Universitas Putra Bangsa, Kebumen, Indonesia
  • Nur Kamilah Universitas Sarjanawiyata Tamansiswa, Yogyakarta, Indonesia
  • Artadhea Aurelia Candra Chairina Universitas Sarjanawiyata Tamansiswa, Yogyakarta, Indonesia
  • Desinta Hafina Sari Universitas Terbuka, Yogyakarta, Indonesia

DOI:

https://doi.org/10.63208/210113-723

Keywords:

Artificial Intelligence, Digital Entrepreneurship, Innovation, MSMEs, Organizational Readiness

Abstract

Artificial Intelligence (AI) has become increasingly relevant to digital entrepreneurship and the development of Micro, Small, and Medium Enterprises (MSMEs). This study aims to examine the opportunities and challenges of AI in supporting digital entrepreneurship and MSME development in Indonesia. This study uses a literature review approach by analyzing relevant scientific publications concerning AI adoption, organizational readiness, digital marketing, digital branding, innovation, business value, firm performance, and implementation challenges. The findings indicate that AI provides opportunities for MSMEs to improve marketing, digital branding, operational efficiency, innovation, competitiveness, and business growth. However, AI adoption is influenced by organizational readiness, financial resources, digital literacy, technical skills, training, and external support. Ethical considerations and responsible AI use are also important in the implementation of AI in business activities. The study concludes that maximizing the contribution of AI to MSME development requires the integration of technological adoption with organizational capabilities, human resources, external support, and responsible implementation.

References

Budiraharjo, M. H., & Muhammad, A. H. (2024). MSME AI Readiness Analysis Using The AIRI Framework. Jurnal Teknologi Informasi Universitas Lambung Mangkurat (JTIULM), 9(2), 33-44.

Dwivedi, Y. K., Hughes, L., Ismagilova, E., Aarts, G., Coombs, C., Crick, T., ... & Williams, M. D. (2021). Artificial Intelligence (AI): Multidisciplinary perspectives on emerging challenges, opportunities, and agenda for research, practice and policy. International journal of information management, 57, 101994.

Enholm, I. M., Papagiannidis, E., Mikalef, P., & Krogstie, J. (2022). Artificial intelligence and business value: A literature review. Information systems frontiers, 24(5), 1709-1734.

Fitriyani, F. (2024, December). Artificial Intelligence: Micro Small and Medium Enterprises Shortcut Going Next Level. In Proceeding of International E-Conference On Management & Small Medium Enterprise (pp. 27-42).

Grashof, N., & Kopka, A. (2023). Artificial intelligence and radical innovation: an opportunity for all companies?. Small business economics, 61(2), 771-797.

Haefner, N., Wincent, J., Parida, V., & Gassmann, O. (2021). Artificial intelligence and innovation management: A review, framework, and research agenda✰. Technological forecasting and social change, 162, 120392.

Hamid, E. S., & Artha, B. (2025). Artificial Intelligence adoption in micro, small, and medium enterprises: Evidence, barriers, and Islamic ethical reflections for Muslim entrepreneurs in Yogyakarta. Journal of Islamic Economics Lariba, 11(2), 1967-1998.

Hardinata, S., Utami, C. W., & Sumaji, Y. M. (2024). The factors analysis shaping SMEs: Adoption intention of artificial intelligence technology. Review of Management and Entrepreneurship, 8(2), 114-127.

Kasih, E. W., Permana, N., & Chaidir, M. (2024). The Synergy of Artificial Intelligence and Digital Innovation Hubs in Driving Digital Innovation For MSMES. Indonesian Economic Review, 4(1), 14-28.

Kopka, A., & Fornahl, D. (2024). Artificial intelligence and firm growth—catch-up processes of SMEs through integrating AI into their knowledge bases: Kopka abd Fornahl. Small Business Economics, 62(1), 63-85.

Lupiyoadi, R., Pramesti, M., Ikhsan, R. B., Usman, L. H., Games, D., & Fakhrorazi, A. (2025). Extending UTAUT with perceived intelligence for the adoption of artificial intelligence in MSMEs and startups in Indonesia: A multi-group analysis. Journal of Open Innovation: Technology, Market, and Complexity, 100673.

Maharani, R. (2023). Organizational Readiness for AI Adoption in Indonesian Manufacturing SMEs. Journal Of Sustainability Industrial Engineering And Management System, 2(1), 120-129.

Mikalef, P., & Gupta, M. (2021). Artificial intelligence capability: Conceptualization, measurement calibration, and empirical study on its impact on organizational creativity and firm performance. Information & management, 58(3), 103434.

Oldemeyer, L., Jede, A., & Teuteberg, F. (2025). Investigation of artificial intelligence in SMEs: a systematic review of the state of the art and the main implementation challenges. Management Review Quarterly, 75(2), 1185-1227.

Prasetyo, R. J., & Andrilla, R. (2025). Balikpapan Micro, Small, and Medium Enterprises (Msmes) And Artificial Intelligence Adoption: TOE Framework. Jurnal GeoEkonomi, 16(1), 11-20.

Purnomo, M., Maulina, E., Wicaksono, A. R., & Rizal, M. (2021). Implementasi Technology Acceptance Model terhadap adopsi teknologi artificial intelligence pada startup digital. Jurnal Manajemen Dan Kewirausahaan, 9(2), 173-181.

Santosa, A. D., & Surgawati, I. (2024). Artificial intelligence (AI) adoption as marketing tools among micro, small, and medium enterprises (MSMEs) in Indonesia. Jurnal Sosial Humaniora (JSH), 17(1), 91-102.

Sari, N. R. (2024). Peningkatan Kemampuan Digital Branding Usaha Mikro Kecil Dan Menengah (UMKM) Melalui Literasi Digital Berbasis Artificial Intelligence (AI). TERANG, 6(2), 101-108.

Wirtz, J. (2023). " So What if ChatGPT Wrote It?" Multidisciplinary Perspectives on Opportunities, Challenges, and Implications of Generative Conversational AI for Research, Practice and Policy. International Journal of Information Management, 71, 102642.

Downloads

Published

2026-06-30

How to Cite

Gunawan, S., Kamilah, N. ., Chairina, A. A. C. ., & Sari, D. H. . (2026). Artificial Intelligence and Digital Entrepreneurship in Indonesia: Opportunities and Challenges for MSME Development. Entrepreneurship and Innovation Review, 4(1), 116-128. https://doi.org/10.63208/210113-723

About this article

Check for updates
Submitted: Jan 27, 2026
Final Revised: May 28, 2026
Accepted: Jun 09, 2026
Published: Jun 30, 2026
Volumes:
Vol. 4 No. 1 (2026) Pages 116-128
DOI:
10.63208/210113-723
Abstract view: 15
Download: 8

Similar Articles

11-20 of 38

You may also start an advanced similarity search for this article.