The Dynamics of Economy in the Regional MSMEs’ Digital Ecosystem

During the two years of the COVID-19 pandemic, the regional economy of Indonesia has been fluctuating, filled up with sharp fluxes of drop and spike. This situation has been largely influenced by the continuous change of mobility and travel restriction level policies adjusting to the infection rate. Eventually, it has created a new dynamic in the MSMEs ecosystem. This chapter provides a detailed snapshot of the current dynamics in the MSMEs ecosystem. The depiction was developed based on the analysis of several MSME case studies and focus group discussions with multiple actors of the ecosystem within three Indonesian provinces: West Sumatra, West Java, and Yogyakarta. Prior to the pandemic, the development of the digital ecosystem was still in its infancy phase with very limited dominant actors. As the pandemic hit, the digital ecosystem was rapidly expanding and became crowded. In the later phase, several MSMEs were returning to offline mode due to the failure to sustain their digital business mode. Hence, the physical ecosystem started to recover gradually. Meanwhile, the surviving businesses in the digital ecosystem have been growing exponentially as the customers continue to grow. Accordingly, we also categorized three types of MSMEs role, namely dominant, supporting, and passive actors, within the ecosystem according to their network establishment, and how the digital ecosystem has influenced them to survive the pandemic. Furthermore, we identified several influential actors and their roles regarding MSMEs in the regional digital ecosystem.