Mediating Role of Digital Transformation and Innovation in the Relationship Between External Factors and SME Performance in Central Java After the Covid-19 Pandemic

Advancements in technology have led to substantial changes in the structure and dynamics of business operations, from e-commerce and online marketplaces to social media as sales platforms. Payment technologies like debit cards, e-money, and QR codes have also reached SMEs, enabling cashless transactions even in small retail. In an era of fast-paced technological changes, SMEs must adopt a broad vision to anticipate opportunities and remain competitive. The Indonesian government has proactively supported digitalization through initiatives like the 2017–2019 e-commerce roadmap and the 2021–2024 Digital Indonesia Roadmap. This research explores how external factors—such as regulations, digital experience, technology, and budget—affect SMEs' digital transformation, innovation, and performance. Using a quantitative approach, data will be collected through questionnaires targeting SME managers undergoing digital transformation. Using SEM in SMART-PLS, this study seeks to generate empirical insights into how external pressures shape SMEs' strategies for digital transformation.