The Influence of Digital Transformation Based on Religious Ethics on MSME Performance in the Era of Industry 4.0

This research investigates the influence of digital transformation based on religious ethics on the performance of Micro, Small, and Medium Enterprises (MSMEs) in the era of Industry 4.0. The variables used in this study include digital transformation as the independent variable, MSME performance as the dependent variable, and religious ethics as a moderating variable. This research aims to analyze the extent to which digital transformation affects MSME performance in Pekalongan City, explore the role of religious ethics as a moderating variable that influences the relationship between digital transformation and MSME performance, and identify the challenges faced by MSMEs in Pekalongan in adopting digital transformation without neglecting the religious, ethical values they adhere to. The population in this study consisted of 180 MSMEs, which met the criteria of implementing digital transformation initiatives and having a clear orientation towards religious ethics in their business practices. This research used a census approach, where the entire population was considered the sample. The analysis tool used was Structural Equation Modeling - Partial Least Squares (SEM-PLS) with WarpPLS 8.0 software. The findings indicate that digital transformation has a positive and significant effect on MSME performance, religious ethics has a positive and significant effect on MSME performance, and religious ethics moderates the relationship between digital transformation and MSME performance. The supporting factors for digital transformation among MSMEs include government support, access to technology, and partnerships with technology companies. Meanwhile, the inhibiting factors are low digital literacy, limited financial access, and inadequate digital infrastructure.