Maintaining Sustainable Growth of Micro and Small Enterprises: Antecedents of Management Orientation and Digital Business

Abstract

This study examines the Effect of management orientation on digital business and business growth and the Effect of digital business on micro and small business growth. This research belongs to the associative/explanatory category accompanied by hypothesis testing. The unit of analysis in this study was micro and small businesses in East Java, with a population of 358. The sampling technique in this study used purposive sampling with specific criteria and obtained a sample size of 191, which is referred to as respondents. Path analysis results show that management orientation has a positive and significant effect on digital business and business growth, and digital business has a positive and significant effect on the growth of micro and small businesses in East Java. The findings of this study indicate that management orientation based on the principle of change responsively and wisely in utilizing digital platforms in business will undoubtedly encourage the strengthening of digital business operations to be more effective, thereby encouraging the growth of micro and small businesses. Therefore, management orientation and digital business must be managed optimally to maintain sustainable micro and small business growth.

1. Introduction

1.1. Background

Sales are important factors in determining the success of a business because they measure the number of units sold at a certain price level, where both units sold and the selling price contribute to each other in determining sales value. Changes in one or both elements simultaneously determine changes in the sales value, either increasing or decreasing it [1]. Sales achievements are obtained through the support of the organization’s functions, production, marketing, and other supporting activities. Therefore, sale results must be deducted from the cost elements of goods sold, marketing and administrative costs, and other costs to obtain net profit before tax [2,3]. Individual micro and small businesses in Indonesia are not subject to a final income tax of 0.5% if the total sales are less than IDR 500 million/year. However, if the sales exceed IDR 500 million/year, the procedure for imposing income tax follows the general rules. Generally, micro-businesses are not subject to income tax, but for small businesses, there is still the potential for income tax to be paid depending on their profit during the year, so profit after tax can be used to measure business performance.

Micro businesses are productive individual or corporate entities with assets of ≤IDR 50 million and annual sales of ≤IDR 300 million/year. Small businesses are enterprises with net assets of ≤IDR 500 million and annual sales of ≤IDR 25 billion/year. Change must not be avoided but must be responded to wisely so that the company is on the right track. However, past business success does not guarantee that it will happen in the future, sometimes making the company fail to sustain its business success [3,4]. Success and failure occur frequently in the business cycle, but why businesses succeed or fail is often poorly understood [5]. Implementation of management processes requires understanding, therefore the ability to adapt to change is a wise way to maintain business sustainability in the future [3]. Changes that appear quickly often have a psychological impact on management in taking action quickly and finding the right solution [6].

Change is a natural event that can occur at any time without having to signal in advance to the public and business people, but naturally, management continues to adapt to the environment [7]. Strong sensitivity in responding to change is a source of inspiration in optimizing the use of digital platforms in management and business processes. Over time, the business learning process undoubtedly affects adaptation to change so as to keep the business’s growth rate running well in line with its conditions [4]. Management orientation that focuses on applying digital platforms and social media access in public spaces also changes people’s behavior in social media and spurs business people to continue to behave creatively and innovatively in managing digital-based businesses [4]. Sales from micro and small businesses from 2020 to 2023 have not yet reached the sales of 2019, as shown in Figure 1.

Figure 1 shows micro and small business sales obtained through sample data from 191 businesses from four cities in East Java (Gresik, Sidoarjo, Surabaya, and Tuban). The average sales of micro and small businesses in 2020 was IDR 8.56 billion/city/year (30.22%) compared to the average sales in 2019 of IDR 28.33 billion (a decrease of 69.78%) or equivalent to USD 0.59 million/city/year (29.54%) compared to average sales in 2019 of USD 2.00 million (a decrease of 70.46%) using the average exchange rate of IDR 14.490/USD in 2020. The average sales in 2021 increased to IDR 16.79 billion/city/year (59.27%) compared to the average sales in 2019 of IDR 28.33 billion (a decrease of 40.73%) or equivalent to USD 1.16 million/city/year (58.17%) compared to average sales in 2019 of USD 2.00 million (a decrease of 41.83%) using the average exchange rate of IDR 14.432/USD in 2021. The average sales in 2022, which entered the new normal life era, increased to IDR 24.94 billion/city/year (88.03%) compared to the average sales in 2019 of IDR 28.33 billion (a decrease of 11.97%) or equivalent to USD 1.68 million/city/year (84.00%) compared to average sales in 2019 of USD 2.00 million (a decrease of 16.00%) using the average exchange rate of IDR 14.851/USD in 2022. Meanwhile, the average sales in 2023, which entered the endemic period, also increased to IDR 26.68 billion/city/year (94.18%) compared to the average sales in 2019 of IDR 28.33 billion (a decrease of 5.82%) or equivalent to USD 1.76 million/city/year (88.00%) compared to average sales in 2019 of USD 2.00 million (a decrease of 12.00%) using the average exchange rate of IDR 15.133/USD in 2023. The measurement of sales expressed in rupiah (IDR) and US dollars (USD) has a difference of 0.66%–6.1%, which is due to the weakening of the rupiah (IDR) to the US dollar currency.

Sales growth is an indicator that is often used to measure business performance. However, this measurement has a weakness, namely the element of units sold and selling prices, where both can compensate for each other in their sales gains when both change oppositely. Therefore, gross profit, which shows the difference between sales minus cost of goods sold, is an indicator to measure the level of efficiency in the cost component of cost of goods sold, where gross profit in 2019 amounted to 37.85%, while for 2020–2023, gross profit was 26.62%, 26.81%, 27.54%, and 27.84%. Furthermore, Operating profit is the difference between gross profit and operating costs (marketing and administrative costs), where operating profit is an indicator to measure the level of operational cost efficiency in business. Operating profit in 2019 was 11.88%, while for 2020-2023 it was 2.47%, 4.73%, 7.70% and 10.07% respectively. Because the income tax for micro and small businesses is very small, this operating profit can be expressed as earnings before tax (EBT).

Earnings after tax (EAT) is the best indicator to measure business performance from a financial perspective, whereas profit after tax is a component of increased capital. Therefore, profit after tax can be used to measure return on equity (ROE), earnings per share (EPS), and price–earning ratio (PER). The average profit after tax for micro and small businesses in 2019 was 11.56%/year. The average profit after tax in 2020–2023 is 2.11%, 4.34%, 7.29%, and 9.62%, respectively. Compared to the average profit after tax in 2019, the profit after tax in 2020–2023 equals 18.25%, 37.54%, 63.06, and 83.22%. Therefore, business performance can be measured through financial aspects, namely profit, gross profit, operating profit, profit before tax, and profit after tax. In contrast, non-financial aspects can be measured through indicators of order growth, growth in market access, and more effective and efficient business operations. Therefore, micro and small businesses must continue to grow their sales and return on equity to ensure future certainty [5,8], although several research results show that the performance values of micro and small businesses are different from one another. This is due to the use of different concepts, variables, and indicators in explaining this performance [2,6,9,10].

Management orientation is an antecedent that researchers often use to explain the relationship with organizational performance, although the concept indicators have different developments from one another [11]. Response to change is an effort by business people to quickly adapt to the environment in which the business operates. However, each owner has a different level of maturity in thinking when responding to changes [12,13]. Management practices responsive to change generally have a better chance of developing the value of change, adopting the value of change, and implementing it in business processes so that the business can achieve more effective and efficient performance achievements [10]. Conversely, a weak management orientation in responding to change generally has poor adaptability to its environment, so its performance achievements are not optimal [14].

Digital platforms can provide space for imagination, creativity, and innovation in developing ideas for change without being limited by space, time, and place; strengthening management orientation can change the perspective of business people about the importance of digital-based businesses because this has proven to be the right solution to move out of the isolation of business deadlock during the COVID-19 pandemic era [15]. The digital platform has opened up an extensive space for people and businesses to accelerate the improvement of management capabilities through digital literacy so that management and business processes can develop massively and the value of business service quality develops for the better through a fast, effective, and efficient process [9,16]. Digital business is still a big hurdle for micro and small businesses today. This is due to the ability to adapt to changes that are not optimal, thus affecting business ability to utilize digital platforms for the development of management and business processes [5].

The shift towards digital business has begun to occur even though it is still taking place slowly, but this is a breath of fresh air for changes in micro and small businesses in a better direction, especially in opening up space for imagination, creativity, and innovation in providing quality services and products which are used as keywords for how businesses can create value-added, satisfaction, and loyalty for consumers [11,12]. The digital business era requires technical and psychological readiness, which is difficult for business people who have not recognized and utilized digital platforms properly. However, the changes that come suddenly actually encourage changes in people’s behavior to become accustomed to, understand, adopt, and implement digital platforms to strengthen their management and business processes if they want to remain remembered and recognized by consumers, which was never felt before the pandemic [15]. Therefore, digital businesses must be able to optimize the value of literacy and critical information to improve management’s ability to build a creative and innovative culture and space for all business processes so that the quality of their services and products becomes a competitive value in building an advantage that can be an incentive for their consumers, beyond what their competitors can offer [3,17].

Referring to the empirical description, it shows that management orientation and digital business are relevant phenomena to explain how management orientation can accelerate the growth and development of digital businesses for micro and small businesses to build a creative and innovative culture in a structured and massive manner to maintain sustainable business performance [18]. Therefore, strengthening management orientation must increase the ability of micro and small businesses to enter the digital business by creating value added to the quality of services and products amid efforts to maintain better business performance when the business world was in an endemic situation. This research aims to experimentally prove the influence of (1) management orientation on digital business, (2) management orientation on business growth, and (3) digital business on business growth. This study reveals that management orientation with a responsive attitude towards digital platform use, structured and able to transform into digital business, will open up space for micro and small businesses to behave creatively and innovatively in managing their businesses, thereby maintaining their performance with progressive growth.

1.2. Literature Review

1.2.1. Management Orientation

Management orientation is the owner’s perspective in responding to change and turning it into a value concept that can be developed to improve management processes and immediately implemented to strengthen the strategic value of the business [4,19]. Management orientation should be performed consciously to add value to the organization’s processes, products, sales, marketing, and other social values. Management orientation should be carried out with full awareness, structured and massive, considering that change is a social and environmental event that must occur without knowing the time of its occurrence. Therefore, change must be seen as an environmental variable that must be responded to positively and not seen as an obstacle in business [20]. A responsive attitude toward change will lead management to remain optimistic that changes must provide continuous improvement value for management and business processes, adopt new concepts in management values, implement them quickly and wisely, and manage resources optimally [3,21].

Strengthening management orientation is a systematic effort from owners who want to make change a source of inspiration and new strength in creating added value in formulating the concept of change so that any challenges that have the potential to interfere with goals can be overcome effectively and efficiently [21,22]. Changes often make business conditions uncertain, caused by management practices not adapting to the new conditions. Therefore, serious efforts are needed to respond to changes and turn them into valuable values for improving management practices and business processes to increase adaptability to the new environment [23]. The management perspective in interpreting the digital platform and its utilization affect management orientation in responding to changes and building the value of these changes into new concepts within the organization [24,25].

Management orientation requires changes in the attitude and behavior of the owner in responding to digital-based business developments, where human and business activities are determined by their ability to master and utilize digital platforms to support fulfilling lifestyles and manage the business. Some activities that are often in contact with change include responsiveness, adopting changes, applying the value of change, and managing resources and digital platforms, where a responsive attitude can bring the value of change into the management and business processes to be better and adaptive to its dynamically developing environment [4,26]. Therefore, management orientation must be carried out systemically and continuously so that changes can be responded to wisely with adaptive management values and concepts so that business practices can align themselves with the new environment, build creative and innovative behavior, and improve the quality of service to consumers to be easier, faster, flexible and in turn able to encourage better performance achievements [3,27].

Several indicators used to explain the concept of management orientation variables have been revealed in the results of research conducted by Hasan, Fitria, and Hervas, which include responsiveness to change, adopting change into management values, implementing new values quickly, responding to the impact of change wisely, synchronizing organizational resources, and responding to digital platforms [3,4,24]. Research by Hervas, Fitria, Hasan, and Sawaean shows that management orientation committed to change can promote strengthening in digital business and better growth, although with different strengthening levels. However, there are some differences in the measurement of indicators. The following hypothesis can be proposed:

H1. 

Management orientation has a significant effect on the digital business of micro and small enterprises.

H2. 

Management orientation has a significant effect on the growth of small micro businesses.

1.2.2. Digital Business

Digital business is the business practice of a person or corporation in utilizing digital platforms to carry out various innovations in management, business processes, and customer service so that business activities can run effectively and efficiently [28]. Digital businesses are always in contact with the mastery of information technology, applications, the web, and other virtual media. Therefore, digital business has not yet developed optimally among micro and small businesses. However, environmental changes that have galvanized the business world have been able to change the awareness of business actors that digital platforms are conceptual assets that can be an alternative to breaking the chain of business problems during the COVID-19 pandemic [3]. Digital business has a very open, transparent, easy, fast, and flexible space for building business communication and direct interaction with business partners and customers through virtual media. It can hack communication barriers without the dimensions of space, place, and time [2]. Various past events are enough to provide significant business lessons for the business world because conventional business is often unable to provide answers to market desires that demand fast, accessible, open, flexible services without being limited by the dimensions of place and time [2]. Communication is an essential and main activity in the business community because various information needs can only be appropriately met when adequate communication media are available. Therefore, communication architecture must be built through the use of a comprehensive digital platform so that digital business implementation runs smoothly according to the expectations and needs of its stakeholders [20,29].

The implementation of digital business provides open space for businesses to carry out various business innovations that have the potential to create added value to provide quality services and products for their consumers, as well as in creating added value in business processes that are more effective and efficient and provide social value for long-term business [21]. Digital business and creative and innovative behavior are two sides of one coin, and neither can be separated from the other. Innovation is always a necessity that must be inserted in the middle of the business process, and everyone or corporate has the opportunity to take advantage of technological issues so that innovation can produce higher-quality products at lower costs, employing faster processes, and producing products with a better collection of added value, therefore displaying better business performance [28,30]. Concern for digital issues, exploring ideas, and providing funds for the development of digital platforms are policies that can support the realization of a creative culture in a business or organization so that it can generate big ideas to create effective and efficient business processes [3,11].

The digital era is a phenomenon where corporations and business people are required to proactively and thoughtfully keep up with digital technology trends that continue to change and develop dynamically in line with changes in corporate and public tastes that demand aspects of convenience, flexibility, and efficiency in the use of time, space, and costs in order to support business interests or fulfill lifestyle trends [3]. Therefore, efforts to create a creative culture and innovative behavior are a form of investment in organizational civilization in the field of digital platforms because these actions are able to provide strength as well as strategic resources to build competitive advantages for corporations [2]. The value of excellence and organizational culture must be maintained and developed continuously in order to produce a sustainable competitive advantage (SCA) for the organization. Digital businesses are always required to improve innovative services and products for their users because the availability of social media content is able to provide a diversity of information, friendship, and communication through virtual networks and content that can be accessed easily, quickly, cheaply, and flexibly without being limited by space, place, and time [3].

The wave of lifestyles and social media trends has accelerated the process of cultural transformation of people who demand practical and fast services as displayed through information and virtual content on social media [3]. Therefore, the digital business requires a person or corporation to always behave creatively and innovatively with the hope that the business is able to meet the expectations, wants, and needs of its consumers beyond what its competitors can offer [2]. Several indicators used to explain the concept of digital business variables have been revealed in the results of research conducted by Okundaye, Hasan, and Falahat, which include utilization of digital technology, applying digital technology in business, applying digital technology in management, budget availability of digital platforms, synchronization of digital operations, and digital-based sustainable change [2,3,11]. Research by Falahat, Hasan, and Okundaye shows that well-managed digital businesses can maintain better performance trends for micro and small businesses. The following hypothesis can be proposed:

H3. 

Digital business has a significant effect on the growth of micro and small businesses.

1.2.3. Business Growth

Business growth is the end result of the business and management process in utilizing its resources to create added value for the better, planned, and structured and able to maintain sustainable growth rates strategically and measurably in optimizing economic resources and conceptual resources so that the acquisition of organizational performance is better, despite having to face various changing situations and difficult business environments. Some of the phases of action that must be taken are (a) a comprehensive evaluation of why performance is poor, (b) ways to map the problems that occur, (c) ways to design effective strategies, (d) ways to implement strategies in a structured manner, and (e) ways to conduct continuous monitoring and evaluation. Many approaches are used to measure the performance of an organization, but when environmental conditions are not friendly, certainly a realistic approach to the situation that occurs is the right alternative to measure performance, because performance is relevant information to measure business sustainability in the future [21].

Business growth is a variable that deserves to be studied in depth when businesses are in an uncontrollable situation due to extreme environmental changes, such as the emergence of a pandemic. Maintaining business growth is very important because this factor ensures business sustainability in the future. Therefore, revenue generation, profit generation, sales order acquisition, and business access must be increased through adaptive business process improvements and innovative digital business applications [6,15]. The digital platform is a conceptual capital worth considering to open up deadlocked spaces when business is down, as consumers continue to demand better services and products [9,18]. A responsive attitude towards change reflects how micro and small business actors can exploit opportunities arising from changes and implement them in their management and business activities [18]. Business growth is an accumulation of the performance of the process results of a responsive attitude towards change, utilizing and implementing change opportunities. Response to social media drives the transformation towards digital business development, potentially achieving better business performance with creative and innovative behaviour [11,31].

Several indicators used to explain the concept of business growth variables have been revealed in the results of research conducted by Sawean, Wahyuni, and Trianni. This study also finds that maintaining business growth is a strategic action through optimizing the role of antecedents of business growth, which include revenue growth, sales growth, profit growth, order growth, market access growth, and more effective and efficient operations [15,18,31]. This study also reveals that maintaining business growth is a strategic action through optimizing the role of antecedents of management orientation and digital business, where a responsive attitude to the value of change and the ability to implement it in the management process certainly encourages digital-based business practices so that they can provide better services and products for their consumers.

1.3. Research Model

Management orientation reflects a responsive attitude towards change, implementation, and commitment to building better management. This drives the transformation towards digital business, opening up business space responsive to consumer preferences and thereby creating better opportunities for maintaining performance [4,8,18,20]. The conceptual framework of this study is depicted in Figure 2. Management orientation is the independent variable (MO); Digital business is the intervening variable (DB); and Business growth is the dependent variable (BG).

2. Research Methods

2.1. Population and Sample

The population in this study is micro and small business actors who are active in the East Java MSME center area (Gresik, Surabaya, and Sidoarjo), with a total of 358 business actors. The unit of analysis is the management of small micro-businesses, and the sample size is 191 (53.35%) spread across four cities. The sampling of members was performed using the purposive sampling method with certain criteria. Small micro-businesses include those offering bags and wallets, slippers, handicrafts, various headscarves, various men’s clothes, various women’s clothing, various children’s clothes, various Muslim clothing, women’s accessories, various processed foods, various cakes, and various drinks.

2.2. Sampling Technique

The sampling technique used purposive sampling. It is a sampling technique using specific criteria, including (1) small micro businesses active from the beginning of 2019 until the end of 2023, (2) the owner also being the business manager, (3) business activities present in the MSMEs centre area (Gresik, Sidoarjo, Surabaya, and Tuban cities), and (4) evidence of use of digital platforms for business activities. Based on these criteria, 191 micro and small business owners met the sample criteria and became respondents. The questionnaires were sent directly to the respondents during a two-week period (1–14 January 2024). The sampling technique and sample criteria are presented in

Table 1. Sampling technique and specific criteria. Source: Developed by the authors.

No.	Description and Specific Criteria	Non-Criteria	Criteria	Percentage (%)
*	Population	-	358	100.00%
1	Active from the beginning of 2019 until the end of 2023	112	246	68.72%
2	The owner is also the business manager	7	239	66.76%
3	Business activities are in the MSME center area	12	227	63.41%
4	Has used digital platforms for activities	36	191	53.35%

*: Total number of micro and small enterprises in East Java MSMEs centers (Gresik, Sidoarjo, Surabaya and Tuban).

.

Table 1 shows that 112 respondents did not meet the first criterion (31.28%). Criteria two and three were not met by as many as 19 people (5.31%) and criterion four was not met by as many as 36 people (10.06%). This illustrates that it was difficult for micro and small business actors to be able to survive sustainably during the period of 2020–2023 during the COVID-19 pandemic, as well as those who have not been able to utilize digital platforms in business and management processes. Thus, there were only 191 people (53.35%) who meet the criteria required in the purposive sampling technique.

2.3. Variable Measurement

Variable measurement is a step in obtaining data that is used to test hypotheses. Therefore, variable measurement must explain the definition, scale, and type of data: (1) Management Orientation is the owner’s perspective in responding to changes in their business through the process of improving management and implementing management functions in strengthening the strategic value of the business in order to create added value in processes, products, sales, marketing, and social value of the company [3,4,24]. (2) Digital business is the business practice of micro and small enterprises that utilize digital platforms to carry out various innovations in business management, business processes, and customer service in order to support business activities to run effectively and efficiently [2,3,11]. (3) Business growth is the end result of the business and management process of utilizing resources to create added value in business for the better, planned, and structured small micro business owners and maintain it on an ongoing basis [15,18,31]. The definition of variables is explained in the

Table 2. Variable Measurement. Source: Developed by the authors.

Variables	Definition	Indicator	Measurement Scale	Data
Management Orientation	Management orientation is the owner’s perspective in responding to changes in their business through the process of improving management and implementing management functions in strengthening the strategic value of the business in order to create added value in processes, products, sales, marketing, and social value of the company [3,4,24].	a. responsive to change b. adopting changes in management values c. implementing new values quickly d. responding to the impact of change wisely e. synchronizing resources optimally f. response to digital information	Likert Scale (1) strongly disagree, (2) disagree, (3) moderately, (4) agree, (5) strongly agree	Interval
Digital Business	Digital business is the business practice of micro and small enterprises that utilize digital platforms to carry out various innovations in business management, business processes, and customer service in order to support business activities to run effectively and efficiently [2,3,11].	a. making good use of digital technology b. implementing digital in the management process c. implementing digital in management functions d. budget availability for digital platforms e. synchronizing digital-based operations f. continuous change based on digital platforms	Likert Scale (1) strongly disagree, (2) disagree, (3) moderately, (4) agree, (5) strongly agree	Interval
Business Growth	Business growth is the end result of the business and management process of utilizing resources to create added value in the business for the better, planned, and structured small micro business owners and maintain it on an ongoing basis [15,18,31].	a. buyer growth b. sales growth c. profit growth d. order growth e. market access growth f. more effective and efficient operations	Likert Scale (1) strongly disagree, (2) disagree, (3) moderately, (4) agree, (5) strongly agree	Interval

below.

2.4. Data Source

This study uses primary data sources, namely data obtained directly from the source such as the answers to questionnaires filled out by the owner according to the criteria. The measurement scale uses a Likert scale with five intervals. Validity testing uses the Pearson product–moment correlation coefficient value, while the reliability test uses Cronbach’s alpha coefficient value. The instrument is declared valid if the Correlated-item-total correlation coefficient value is ≥0.30, while the instrument is declared reliable if the Cronbach’s alpha value is ≥0.60.

2.5. Data Analysis

The results of this study were analyzed through path analysis; data processing comes from primary sources to produce standardized regression data processed through Statistical Product and Service Solutions (SPSS Version 23) software tools. The model in the study can be expressed in the form of an equation to make it easier to understand with the following formulation:

Z_DB = P Z_1MO + ε₁

(1)

Z_BG = P Z_2MO + P Z_3DB + ε₂

(2)

MO: management orientation; DB: digital business; BG: business growth; P₁, P₂, P₃: coefficient of direct influence; ε₁, ε₂: standard error.

3. Results and Discussion

3.1. Description of Research Results

The questionnaire as an instrument for data collection was sent directly to the 191 respondents according to the sample size, and the questionnaire filling period was two weeks (1–14 January 2024). The number of questionnaires filled in completely by respondents came from respondents in Gresik city, comprising as many as 49 respondents (25.65%); Sidoarjo comprised 47 respondents (24.61%); Surabaya comprised 41 respondents (21.47%); and Tuban city comprised 54 respondents (28.27%). The results of the r-count validity test of all measurement items had a value ≥0.30, and Cronbach’s alpha had a value ≥0.60 (

Table 3. Validity test. Source: Results of data processing.

Variables	Correlation Coefficient	Coeffisien Value	Criteria
Management Orientation	0.342–0.731	0.30	Valid
Digital Business	0.419–0.763	0.30	Valid
Business Growth	0.446–0.781	0.30	Valid

and

Table 4. Reliability test. Source: Results of data processing.

Variable	Cronbacl Alpha	Critical Value	Criteria
Management Orientation	0.716	0.60	Reliable
Digital Business	0.762	0.60	Reliable
Business Growth	0.811	0.60	Reliable

). Therefore, all instruments used in this study are valid and reliable. Thus, the data can be analyzed further.

Table 3 shows testing the validity of the three variables with the correlation coefficient value r-count with a value between 0.342 and 0.781; thus, the three variables have a value of ≥0.30. Table 4 shows the reliability test of the Cronbach Alpha value with a value between 0.716 and 0811; thus, the three variables have a value of ≥0.60. Referring to the measurement results and these criteria, the research instruments used for data collection are valid and reliable.

Table 5. Gender group and business type. Source: Processed by the authors.

Group of Gender	Amount		Percentage (%)
Man	52		27.23%
Women	139		72.77%
Total	191		100.00%
Small micro enterprises	Man	Woman	Amount	Percentage (%)
Bags and wallets	2	4	6	3.14%
Slippers	2	6	8	4.19%
HandyCraft	3	7	10	5.24%
Various headscarves	0	15	15	7.85%
Various men’s clothes	12	2	14	7.33%
Various women’s clothing	0	12	12	6.28%
Various children’s clothes	11	8	19	9.95%
Various Muslim clothing	6	31	37	19.37%
Women’s Accessories	4	19	23	12.04%
Various processed foods	2	17	19	9.95%
Various cakes	3	9	12	6.28%
Various drinks	7	9	16	8.38%
Total	52	139	191	100.00%

shows the characteristics of respondents. There are 52 men, which is equivalent to 22.23% of the total respondents, while there are 139 women, which is equivalent to 72.77%. These data show that micro and small businesses are informal sectors that are more interested in the female gender group; this is in line with the community culture that considers the wife who does not work in the formal sector always wanting to participate in the family economy through home industry activities. This table also explains the gender groups based on their business activity, where the female gender prefers business activities in accordance with their own passions, including business bags, wallets, various headscarves, various women’s clothing, various Muslim clothing, women’s accessories, various processed foods, various cakes and various drinks. In this study, this group comprised as many as 116 people (83.45%) of the total female respondents, where their business products were very close to the fashion industry and products that are often purchased by housewives. The men who pursue small businesses continue the business of their parents, and their activities include the business of bags, wallets, sandals, various men’s clothing, various Muslim clothing, children’s clothing, and various drinks. In this study, this group comprised as many as 38 people (73.08%) of the total male respondents. Not even a few of their businesses were initiated by their wife’s business.

Table 6. Business group by age. Source: Processed by authors.

Description	Man	Woman	Amount	Percentage (%)
The age group of respondents
≤25	2	11	13	6.81%
26–35	24	57	81	42.41%
36–45	19	54	73	38.22%
46–55	4	13	17	8.90%
≥56	3	4	7	3.66%
Total	52	139	191	100.00%
Business group of age experience
≤5	3	6	9	4.71%
5–10	8	16	24	12.57%
11–15	16	29	45	23.56%
16–20	17	32	49	25.65%
≥21	8	56	64	33.51%
Total	52	139	191	100.00%

shows that respondents aged 26–35 years occupied the first rank of 81 people (42.41%); the next rank was 36–45 years old, comprising as many as 73 people (38.22%); thus, the productive age group of 26–45 dominated the micro and small business cohort, comprising as many as 154 people (80.63%). Therefore, it is quite reasonable that micro and small business actors already have a strong interest in utilizing digital platforms to support their business. This table also shows that there are 158 (82.72%) respondents with a business experience of above ten years, while the remaining 33 people (17.28%) have a maximum business experience of 10 years; this is in line with their age which is entering the productive age group, namely 26–45 years old. Therefore, it is only natural that this group of business actors has the ability to be adaptive in responding to changes in an effort to support the concept of management orientation in managing their business.

Table 7. Scale range. Source: Processed by the Outhouses.

Scale Range	Alternative Answers	Criteria
1.00–1.80	Strongly disagree	Very low
1.81–2.60	Agree/Appropriate	Low
2.61–3.40	Neutral	Enough
3.41–4.20	Agree	High
4.21–5.00	Strongly agree	Very high

shows that the data analysis uses a Likert scale with the smallest score value of one and the largest score value of five. The average respondent’s answer to the variable under study has a value range of 0.8 from the research instrument using a scale of 5. On the other hand, the scale range has five criteria, namely very low, low, sufficient, high, and very high.

Table 8. Description of study variables. Source: Results of data processing.

Variable	Average	Criteria
1. Management Orientation Responsive to change Adopting changes in management values Implementing new values quickly Responding to the impact of change wisely Synchronizing resources optimally Responding to digital information	4.060 4.012 4.102 4006 4.108 4.109 4.024	High High High High High High High
2. Digital business Make good use of digital technology Apply digital in management processes Apply digital in management functions Budget availability for digital platforms Synchronize digital-based operations Continuous change based on digital platforms	3.437 3.402 3.338 3.321 3.618 3.324 3.618	High High Enough Enough High Enough High
3. Business growth Buyer growth Sales growth Profit growth Order growth Market access growth More effective and efficient operations	4.180 4.104 4.162 4.181 4.241 4.173 4.216	High High High High Very High High Very High

shows that the average value of respondents’ answers to the management orientation indicator has a score of 4.006–4.109 with an average of all respondents’ answers of 4.060, so it is included in the high criteria. The average respondent’s answer to the digital business indicator has a score of 3.321–3.618, with an average of all respondents’ answers of 3.437, so it is included in the high criteria. Meanwhile, the average respondent’s answer to the business growth indicator has a score of 4.104–4.241, with an average of all respondents’ answers of 4.180, so it is included in the high criteria.

Model Testing

Model testing uses path analysis with standardized regression data, while data processing uses Statistical Product and Service Solutions (SPSSs) Version 23 software. The results of testing the path coefficient of direct influence and indirect influence can be presented in Table 8 and

Table 9. Coefficient results in direct influence. Source: Results of data processing.

Independent Variable	Dependent Variable	Standardize Coefisien	Sig. (0.05)
Management Orientation	Digital Business	0.372	0.040
Management Orientation	Business Growth	0.419	0.042
Digital Business	Business Growth	0.304	0.036

.

Table 9 shows the results of testing the standardized coefficient of direct influence of management orientation on digital business and business growth with a coefficient value of 0.372 (sig. 0.040) and 0.419 (sig. 0.042), while the coefficient of direct influence of digital business on business growth is 0.304 (sig. 0.036). This shows that the relationship between variables in this study has a positive and significant effect, so hypotheses H1, H2, and H3 are all accepted.

Table 10. Path coefficient of indirect influence. Source: Results of data processing.

Independent Variable	Intervening Variable	Dependent Variable	Standardize Coefficient
Management Orientation	Digital Business	Business Growth	0.113 (sig. α = 0.05)

shows the coefficient value of the indirect Effect of management orientation on business growth through digital business variables of 0.113 (0.372 × 0.304); this indicates that digital business variables become intervening variables that can strengthen the Effect of management orientation on business growth. The total Effect of the management orientation variable on business growth becomes stronger, namely 0.532 (0.419 + 0.113). Therefore, digital business variables have an important role in this research model. The direct effect coefficient can be expressed in the equation model as follows:

Z_DB = 0.372 Z_MO

(3)

Z_BG = 0.419 Z_MO + 0.304 Z_DB

(4)

3.2. Discussion

3.2.1. Effect of Management Orientation against the Digital Business

The results of this study indicate that management orientation has a positive and significant effect on digital business with a coefficient of 0.372 sig. 0.040 (Table 9). This shows that the management orientation of micro and small businesses is underway in order to adjust to changes in the business environment that occur massively [2]. Response to change, developing management values, and their application has become a serious concern for owners even though the level of management orientation is not optimal. Of course, this is in line with the perspective and motivation of the group of respondents aged under 46 years, as much as 87.43% (Table 6). This age group generally has a pro-active character towards changes that are current, although the level of response and the ability to apply must adjust to the resources owned and the perspective of the owner so that the level of absorption produces different results [32]. Change is a necessity that must occur, but changes that come too quickly certainly have more extreme adverse effects [33]. Therefore, the ability to adapt to change requires specialty thinking and proper management readiness so that the business can survive in the midst of an uncertain storm of change, as happened during the COVID-19 pandemic [34].

Management orientation provides options for owners to take selective actions in determining policies that are aligned with the resources they have to determine the direction of change that provides the best benefits for their business according to the management priority scale [2,35]. Some of the steps taken by micro and small businesses so far are responding to changes quickly through management improvements, taking the initiative to adopt changes, and immediately implementing them in business processes and management processes. The digital platform is an alternative conceptual resource that is at the center of the owner’s attention to strengthen business and management processes so that the business chain that is hampered in the middle of the road can be normalized [3]. Therefore, management orientation must be able to encourage the owner’s sensitivity in improving management capabilities at all times and provide opportunities so that the value of management is able to strengthen micro and small businesses in implementing digital platforms in their business [24]. The experience and learning process in business also encourages owners to be more responsive to change and emphasizes the importance of change in business. Therefore, the development of ideas, program preparation, and program implementation have become management needs in managing business and management in an effort to create added value and competitiveness in a competitive market [3].

Change is a social event that must be anticipated in order to meet the wants and needs of consumers in line with the changing trends in people’s lifestyles. Therefore, the use of digital platforms is expected to be able to support business efforts that are in contact with the development of creative ideas and innovations in accordance with market demands; although initially overwhelmed by anxiety and difficulties in applying digital platforms, the passage of time and the learning process certainly provide better digital knowledge [4]. The ability to adapt to change determines the speed at which micro and small business actors apply digital platforms to support their business success. The percentage of respondents who have 15 years of business experience is only 40.83% (Table 5). This signals that the ability to adapt to change is generally still low, although the response to utilizing digital platforms in business is quite positive [3]. Therefore, management orientation that is not accompanied by responsive adaptability certainly makes it difficult to spur micro businesses to enter the digital era in a big wave, but over time, dynamic market trends will certainly encourage the movement to enter digital business faster. The results of this study are in line with the results of research conducted by Hasan, Fitria, Hervas, and Tseng that management orientation accompanied by a perspective that is responsive to the value of change is able to encourage the process of knowledge transformation and a positive understanding of the importance of digital platforms in business so that it has strong potential to develop a creative and innovative culture in business in order for the quality of services and products to increase beyond what is offered by competitors.

3.2.2. Effect of Management Orientation against Business Growth

The results of this study indicate that management orientation has a positive and significant effect on business growth, with a coefficient of 0.419 sig. 0.042 (Table 9). This explains that the management orientation of small micro businesses has a positive response to change and is able to describe and implement management values in business processes when the business is at its lowest point, and there are 31.28% of respondents who were unable to maintain their business continuity during the 2020–2023 period (Table 1), although the degree of ability to implement the value of change is still not optimal so that they have different performance achievements during the pandemic and entering the endemic period [34,36]. The motivation of respondents in reacting to changes cannot be separated from their age, which is classified as productive age in as many as 87.43% of respondents (Table 6), including ages under 46 years, while the response towards implementation in the management process is a little late so that the business process experiences delays in responding to changing trends in tastes, desires, and fulfilling people’s lifestyle needs. Of course, this affects efforts to maintain consistency in performance achievements over a period of four years (Figure 1).

Management orientation as an antecedent in determining the level of performance achievement of micro and small enterprises requires a comprehensive effort in translating the value of change towards business practices that are able to provide better-quality services and products than those offered by competitors. Micro and small business revenues are still dominated by fashion products, with 75.39% of respondents owning businesses related to fashion products (Table 4), while micro and small business owners are also dominated by the female gender group at 72.77% (Table 4). The utilization of resources that are prioritized in digital technology investment and their implementation is a breath of fresh air for micro businesses that pick up changes proactively so the ability to carry out creativity and innovation is expected to provide solutions to meet the needs and desires of consumers who continue to change in accordance with the demands of community lifestyle trends [18]. The perspective of business actors in responding to changes affects how strong the management process has an impact on business processes that are more responsive in the formation of value-added products that have better benefits so as to incentivize satisfaction for consumers, which in turn contribute bonuses to their business, in the form of increased revenue, increased sales, increased orders, and wider market access [25]. Therefore, business growth is a goal that must be maintained continuously because only business growth can ensure continuity in the future.

Management orientation developed on the basis of the principle of change encourages businesses to continue to make improvements in all aspects that come into contact with management and business processes. Therefore, a strong commitment and rapid response to the development of digital technology is a long-term social investment requirement, thereby encouraging businesses to continue to carry out useful creativity and innovation to increase added value for the creation of better services and products [37]. Changes in services and products are proven to change people’s behavior to continue to love certain products, although the level of resistance to change can also threaten the success of consumers to remain loyal to their products. Therefore, wise addressing of changes and their implementation in business is an action that can contribute to efforts to maintain business growth [12,38]. The results of this study are in line with the results of research conducted by Okundaye, showing that management orientation built on the foundation of a strong commitment to the value of change is able to spur a creative culture in creating added value in business processes, thereby improving the quality of services and better products and being able to maintain sustainable growth of micro and small businesses in the future.

3.2.3. Effect of Digital Business against Business Growth

The results of this study indicate that digital business has a positive and significant effect on business growth, with a coefficient of 0.304 sig. 0.036 (Table 9). This explains that digital businesses that are based on the concept of developing creative and innovative behavior in business processes are proven to produce superior value outputs in the form of quality services and products that exceed what competitors can offer. Although their implementation does not have optimal results, changes toward creative behavior must be developed in order to build an innovative culture as desired and demanded by society [30]. Innovation is a business phenomenon that continues to be a concern for management, considering that changes in consumer behavior have a positive trend with better, flexible, and cheaper service and product values; this can only be fulfilled if management is able to build a creative and innovative culture in its business [39,40].

Micro and small businesses have a strong motivation regarding to survive amidst the storm of change of a few years ago. This is in line with the characteristics embedded in the psyche of the respondent group whose age is still under 46 years old at 87.43% (Table 6), reinforced by the business experience of more than ten years at 82.72% (Table 6). The characteristics of this group are generally attracted by challenges and changes, although not a few have failed due to lack of care and caution in decision making [41,42]. Digital business as an antecedent of business growth must be able to reveal why the achievement of micro and small business performance is still not optimal; of course, this requires a more detailed explanation as well. The success of a digital business is determined by two main factors, namely investment in digital technology and readiness for its implementation in business processes. It seems that these two factors create a gap between the availability of funds for investment needs and aspects of its comprehensive application to business processes. Therefore, the availability of investment and the application of digital platforms in business requires total synchronization so that the digital business being developed by small micro businesses makes a real contribution to business performance [40].

Digital business practices should be able to guide business processes to run effectively and efficiently, encourage creative and innovative behavior, and create positive added value to service processes and products, but the reality is still not reflected in micro and small businesses today. This is due to the availability of budget for investment, and the ability to implement digital platforms in business is still not optimal. Integrated literacy programs for micro and small businesses need to be introduced so that they are able to recognize and understand access to financing sources, digital technology, and digital era business ethics because the role of stakeholders in encouraging digital businesses for micro and small businesses needs to be a role model built through integrated partnerships between bureaucracy, business, and academia [21,43]. The digital platform is not a waste of money but a conceptual capital that has the ability to build effective and efficient business processes; therefore, the adequacy of the budget and digital technology is an investment requirement that is absolutely available so that the goal of providing services and products can run optimally [44]. The results of this study are in line with the results of research conducted by Felício, Staniec, and Ndiaye; it is important to understand that digital business must be built on the basis of ideas and idea development, where the business concept must be able to integrate budget funds with technology investment, applied to all aspects of the business so that management is able to present superior value services and products beyond what is offered by other parties, in order to leverage business performance achievements for the better and maintain sustainable business growth in the future.

4. Conclusions, Suggestions, and Limitations

It can be concluded that the management orientation of micro and small businesses has a commitment that is not optimal in implementing digital platforms in business; this undoubtedly makes it difficult to maintain business growth. Therefore, partnerships with universities, bureaucracies, and activists in the MSME sector must be suspended again since the COVID-19 pandemic. Implementing literacy programs, assistance in management aspects, and digital platforms can increase the ability of micro and small businesses to adapt to changes in people’s behavior in social media in aspects of social life so that services to consumers improve and business growth trends become sustainable. This policy direction will undoubtedly increase the role of management orientation in encouraging digital business and better business growth. This shows that management orientation has a positive and significant effect on digital business and business growth, and that digital business has a positive and significant effect on business growth. Therefore, hypotheses H1, H2, and H3 can be accepted because all variables tested have a positive and significant effect (sig. below 0.05).

The suggestion in this study is the need for micro and small businesses to pursue positive business growth through the use of digital platforms to support digital businesses in the aspects of digital marketing, digital payments, the use of courier services in product delivery, improving product processes with more contemporary designs by changing consumer tastes, and improving networking with stakeholders. This has become a trend in the lifestyle of post-pandemic COVID-19 society. Trends in social media changes in post-pandemic social life are specific changes that micro and small business actors must respond to through services to consumers in marketing aspects, quality products, and other aspects. Changes in social media trends also provide positive opportunities for micro and small businesses to accelerate the process of utilizing digital platforms in business, where changes in consumer tastes demand fast, accessible services without being limited by place, space, and time through digital business. Therefore, the creative and innovative behavior of micro and small businesses requires actual steps through product design and packaging that are more up to date, establishing cooperation programs with universities and MSME activists in making applications, training in making Tik-Tok accounts for marketing, and sending applications for financial reporting and online marketing content design. This is still not optimally performed by micro and small businesses, but the trend of changing public tastes must be responded to through creative and innovative behavior in line with the demands of change.

Research limitations include the fact that this study only examines the variables of management orientation and digital business in explaining the growth of micro and small businesses, although the contribution of the two variables is still not optimal (coefficient ≤0.419). The changing trends in society have not been responded to quickly due to limited adaptability and utilization of digital platforms. Some factors that are predicted to explain the growth of micro and small businesses include resource optimization, the role of social media in business, the role of universities, the role of MSME activists, and the role of bureaucracy. This factor is a variable that warrants future research. This research needs to be followed up by collaborating on the two variables of management orientation and digital business which are expected to contribute better to micro and small business growth and sustainability.