DIGITAL GOVERNANCE OF MSMES: BREAKING THE CYCLE OF POVERTY AND PROMOTING THE REALIZATION OF AN INCLUSIVE ECONOMY IN PANDEGLANG REGENCY, INDONESIA

Abstract

Pandeglang District records the highest poverty incidence in Banten Province (2025), with approximately 8.5 percent of its population—around 105,000 individuals—living below the poverty line. The region is home to about 32,000 micro, small, and medium enterprises (MSMEs), of which roughly 30 percent have adopted digital technologies, particularly in micro-agriculture, small-scale trading activities, and household-based informal service sectors. Despite this adoption, the contribution of MSME digitalization to poverty reduction remains limited and has not yet produced optimal outcomes. Current digitalization initiatives are primarily oriented toward capacity-building programs and market expansion efforts. However, these interventions have not adequately resolved structural challenges, including fragmented governance arrangements, weak inter-institutional coordination, unequal access to digital resources, and the absence of a fully developed inclusive economic ecosystem. This study addresses these gaps by proposing a digital MSME governance model aimed at strengthening inclusive economic development and supporting poverty alleviation. A mixed-methods approach with an exploratory sequential design was employed, consisting of document analysis, in-depth interviews with 15 key informants, followed by focus group discussions (FGDs), and a survey of 300 respondents analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that the effectiveness of digital governance is driven by multi-stakeholder collaboration, institutional integration, supportive digital policy frameworks, and equitable access to technology and financing. These findings contribute to the refinement of digital governance theory and offer policy implications for inclusive economic development in Pandeglang District, the region with the highest poverty rate in Banten Province.