Strategy for Improving Business Performance in Micro and Small Enterprises through Innovation and Digitalization

This study aims to examine strategies for enhancing business performance in micro and small enterprises (MSEs) through the integration of innovation and digitalization. In an era where digital transformation has become critical for competitiveness, MSEs face unique challenges due to limited resources, constrained access to technology, and often limited technical expertise. Using a qualitative approach through library research and literature review, this study synthesizes current research on the role of innovation and digital adoption in boosting productivity, expanding market reach, and improving operational efficiencies in MSEs. Findings reveal that innovation and digitalization not only facilitate access to broader customer bases but also enable cost-effective marketing and streamlined operations. Additionally, the analysis indicates that overcoming barriers such as technology adoption costs and skill gaps is essential for successful digital transformation in MSEs. Supportive policies, digital literacy training, and partnerships with technology providers emerge as critical components to foster a conducive environment for these enterprises. The study contributes to the ongoing discourse by identifying key success factors for MSEs embarking on digital and innovative transformations. Furthermore, it provides recommendations for policy makers, business owners, and stakeholders to enhance MSE resilience and competitiveness in a digitalized economy. This research underscores the importance of aligning digital strategies with business goals to ensure sustainable growth and adaptation in a rapidly evolving market landscape.