Sustainable Economic Transformation Through Digital Technology 5.0 in Pekalongan City: Perspective of Msme Actors

Abstract

The rapid development of digital technology, particularly Digital Technology 5.0, has driven economic transformation in various sectors, including Micro, Small, and Medium Enterprises (MSMEs). This study aims to analyze the impact of Digital Technology 5.0 on sustainable economic transformation in MSMEs in Pekalongan City, and how business innovation acts as an intervening variable in this relationship. MSMEs in Pekalongan City, which predominantly operate in the batik and handicraft industries, face challenges in adopting digital technology despite the significant opportunities it offers. This study employs a quantitative approach using data from 100 MSMEs in Pekalongan City. The research findings show that Digital Technology 5.0 has a significant impact on sustainable economic transformation, both directly and through business innovation. Supporting and inhibiting factors in digital technology adoption were also identified. This research provides an important contribution to the literature on sustainable economic transformation and offers practical recommendations for MSMEs and local governments to optimize digital technology adoption.