MEDIATING DIGITAL BEHAVIOR TO IMPROVE BUSINESS PERFORMANCE IN IKN BUFFER ZONE

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JAM

J u r n a l A p l i k a s i M a n a j e m e n J o u r n a l o f A p p l i e d M a n a g e m e n t

V o l u m e 2 1 I s s u e 4 D e c e m b e r 2 0 2 3

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R e c e i v e d S e p t e m b e r ‘ 2 3 R e v i s e d S e p t e m b e r ‘ 2 3 A u g u s t ‘ 2 3 N o v e m b e r ‘ 2 3 A c c e p t e d N o v e m b e r ‘ 2 3

MEDIATING DIGITAL BEHAVIOR TO IMPROVE BUSINESS PERFORMANCE IN IKN

BUFFER ZONE

Prasis Damai N. H.

Khairunnisa Rahmah Luh Made Wisnu Satyaninggrat

Department of Mathematics and Information Technology, Kalimantan Institute of Technology, Indonesia

Abstract: The existence of the Ibu Kota Nusantara (IKN) is a momentum for businesses in East Kalimantan as a buffer zone to encourage economic growth.

However, there are several issues related to the quality of human resources and technical and non-technical skills, weaknesses in capturing opportunities, and lack of innovation. Businesses need to be continuously developed in terms of both quality and skills, especially in digital behavior as a contributor to business performance. Therefore, this study examines factors that are directly and indirectly related to business performance. This research empirically predicts that digital experience and digital literacy can influence digital behavior. Fur- thermore, this study proposes the relationship between digital experience, digital literacy, and digital behavior to business performance. This study was conducted by taking samples in the IKN buffer zone. Subject was conducted on 80 business owners in Somber Small Industry Center. Data analysis in this study used Warp-PLS. Results of hypothesis testing show that digital literacy has a positive and significant effect on digital behavior. Digital experience has a significant effect on digital behavior. Furthermore, digital behavior has a significant effect on business performance. Partially, digital behavior signifi- cantly mediates the relationship between digital literacy and digital experience on business performance. The implications of this study indicate that digital information literacy, service availability, visual quality and access stability are needed to encourage operational performance, management and support performance. Future research recommendations are to examine digital literacy and digital experience variables that have a direct effect on business performance.

Keywords: Digital Experience, Digital Literacy, Digital Behaviour, Business Performance, Buffer Zone

CITATION

Damai N. H., P., Rahmah, K., and Satyaninggrat, L. M. W. 2023. Mediating Digital Behavior to Improve Business Performance in IKN Buffer Zone. Jurnal Aplikasi Manajemen, Volume 21, Issue 4, Pages 943-955. Malang: Universitas Brawijaya. DOI: http://dx.doi.org/10.21776/ub.jam.2023.

021.04.07.

I N D E X E D I N

D O A J - D i r e c t o r y o f O p e n A c c e s s J o u r n a l s

S I N T A - S c i e n c e a n d T e c h n o l o g y I n d e x

D i m e n s i o n s G o o g l e S c h o l a r R e s e a c h G a t e G a r u d a

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C O R R E S P O ND I N G A U T H O R

P r a s i s D a m a i N . H .

D e p a r t e m e n t o f M a t h e m a t i c s a n d I n f o r m a t i o n T e c h n o l o g y , K a l i m a n t a n I n s t i t u t e o f T e c h n o l o g y ,

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INTRODUCTION

The Micro and Small Industry (MSE) sector is vital to the Indonesian economy, especially in terms of creating jobs and reducing poverty and unemployment. MSEs are still one of the main sectors that have the potential to drive Indonesia's economic growth. Its contribution to Gross Dom- estic Product (GDP), employment, and exports is substantial.Currently,thereare65.46millionMSE that have absorbed 114.7 million workers or about 56% of Indonesia's workforce (Qadarian-Bahagia et al., 2022). The contribution of MSE to GDP de- creased to 37.3% during the pandemic. MSE development through a cluster approach is one alterna- tive to improve the regional economy. Communi- ty-based cluster development encourages economic stability because each part is a dynamic business unit. Cluster development involving business actors from upstream to downstream can minimize the weaknesses of MSE, especially in the areas of production and marketing. In a digital economy, encouraging businesses to accelerate digitalization is essential to support business operations in or- der to survive in the midst of fierce competition, especially after the pandemic. Digitalization opens up opportunities to shift from conventional trade to new trends that use technology. When transforming to digitalization, 70.2% of businesses are constrained when marketing products, 51.2% access to capital, 46.3% fulfillment of raw materials, and 30.9% digital adoption (MSME Empowerm- ent Report, 2023). Therefore, this study is important to identify factors that can improve MSE business performance.

There are several obstacles in the MSE cluster in the terms of understanding and technical and non-technical skills in the utilization of digital devices, the ability to access online training information to develop creative and innovative ideas, the utilization of online platforms as a medium for promoting products and services, increasing efficiency and productivity in various aspects of business. Other challenges, such as the digital divide, security and privacy, and inequity in data access and control, require serious attention. Digital competencies of business actors need to be continuously developed, especially in digital behavior as a contributor to business performance. Digital literacy in this study refers to Vuorikari et al. (2016) digital competency framework designed to under-

stand the level of individual digital capabilities.

The main components of DigComp 2.0 include digital technology usage skills, information compre- hension, digital communication, problem-solving, collaborative work and security skills. These competencies help individuals develop and improve digital skills, which are valuable assets in today's digital age. Digital literacy promotes responsible use of social media (Trninić et al., 2023), online safety (Hargittai, 2022) and behavior in the online shopping (Liu et al., 2023). Media literacy education can slow the spread of misinformation (Ford et al., 2023) and improve accuracy in predicting fake news (Sirlin et al., 2021). Digital literacy is critical in reducing the digital divide, creating equal opportunities for previously marginalized individuals and driving inclusive economic empowerment. Another critical factor is the individual's digital experience. Digital experience in this study refers to Silalahi and Rufaidah (2018) in the tele- communications industry, which builds a definition of digital experience based on digital service experience, digital image experience, digital cont- act point experience and digital broadband experience. For employees, digital experiences can also support their productivity (Tamara et al., 2022).

Greater digital experience can affect individuals in consuming and interacting with the digital content (Brownlie and Shaw, 2019). Social media marketing with a focus on producing engaging, interac- tive and educational content can build brand relationships with customers to improve business performance (Hannan et al., 2023). Ensuring customer experience, e-service quality, and customer satisfaction on digital platforms can strengthen customer confidence in purchasing digital products (Halim et al., 2023), which in turn can affect business performance. Customer service in the digital channels can be optimized as the digital experience of businesses increases. Therefore, the authors propose several variables that can improve MSE business performance based on previous investigations. These factors include digital literacy, digital experience and digital behavior.

The existence of Ibu Kota Nusantara (IKN) is a momentum for businesses in East Kalimantan as a buffer zone to encourage economic growth.

Interestingly, 63.11% of the number of MSE businesses in 2020 are in Java. Meanwhile, Kaliman- tan only reached 3.5% (Qadarian-Bahagia et al.,

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945 2022). Balikpapan City is one of the buffer zones.

The 2008-2028 National Spatial Plan is a National Activity Center as a national sea and air transpor- tation node. Balikpapan is also part of the Reliable Area and Integrated Economic Development Area (KAPET) which acts as a primary city, namely a center that serves the East Kalimantan Province area, one of which is the function of the processing industry center (Mahmud and Qonnan, 2019). Ba- likpapan, as the main logistics shipping route in East Kalimantan, also plays a role in meeting the needs of IKN development. Therefore, Balikpa- pan, as a buffer zone of IKN, has a vital role on a national scale and needs to be supported by skilled human resources.

Recently, a number of empirical studies have investigated how digital literacy and digital experience affect people's digital behavior (Trninić et al., 2023; Liu et al., 2023; Hannan et al., 2023).

Earlier investigations focused on customers, few of which discussed the perspective of business actors (Tamara et al., 2022). Therefore, this research focuses on digital literacy, digital experience and the digital behavior of businesses. For the gap focus, this study highlights the relationship between the digital literacy and the digital experience that affects the digital behavior of businesses, as well as its impact on business performance. The contribution of this research is to develop a conceptual framework for the relationship between digital literacy and digital experience that drives digital behavior and business performance in the MSE sector.

This study is to fill the research gap on digital literacy and digital experience that affect the digital behavior of business actors and its impact on business performance. The novelty of this study is to create a conceptual framework regarding digital literacy and digital experience through the digital behavior that affects the business performance. Based on the phenomenon and research gap, the research team is interested in directly testing the role of digital literacy and digital experience on digital behavior. Then test the role of digital literacy, digital experience and digital behavior on business performance. In addition, the study also examines the mediating role of digital behavior in influencing the relationship between the digital literacy and digital experience on the business performance.

LITERATURE REVIEW Digital Literacy

Digital literacy involves an individual's ability to use digital technology effectively, as well as the ability to analyze digital information, underst- and online risks, and participate in online activities wisely (Pangrazio and Sefton-Green, 2021). The digital literacy index of Indonesian society, which has reached 77%, is an opportunity to be seen in terms of market share and opportunities for businesses to contribute to the digital economy (MSME Empowerment Report, 2023). The impact of digital literacy and social media use on household financial health in the United States has been examined in terms of access to and use of digital technology, proficiency in using mobile phones, proficiency in using digital money, access to and use of social media (Lyons and Kass‐Hanna, 2021). Mi- cro factors such as employee digital capabilities and managerial attributes in terms of gender, education, and age also influence acceleration in digital transformation (Zahoor et al., 2023). Regional factors make additional contributions to the digital gap (Baskakova and Soboleva, 2019). Digital literacy is important in business sector selection. In- dividuals who have strong digital skills are more likely to be involved in sectors that utilize technology effectively, such as e-commerce or information technology (Fauzi et al., 2021). The measure- ments of digital literacy in this study were adopted from the research of Vuorikari et al. (2016). Dime- nsions of digital literacy are measured from information literacy, interaction and collaboration, digital content creation, security, and problem-solving.

Digital Experience

Digital experience is simply about how businesses can provide exceptional customer experiences to fulfill their needs. Digital technology can transform the customer journey from an ordinary experience to a digital experience. Companies need to optimize the entire customer experience on digital and physical channels (Weber and Chatzo- poulos,2019).Providingaseamlessexperienceac- ross all channels is known as an omnichannel approach. Creating an easy, simple, and hassle-free digital experience can be a strategy to serve customers on the digital channels. Paramita et al. (2021) measured the experience of using digital wallets in

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H5 terms of usability, utility, aesthetics, and motivati-

on. Usability refers to the level of ease of using the application, utility refers to the suitability of application functionality to user needs, aesthetic refers to user satisfaction with the appearance of the application, and motivational refers to something that makes users interested in always using the application. Digital experience measurement is adopted from research (Silalahi and Rufaidah, 2017). Di- mension of digital experience includes digital service, digital imaging and digital touch point. Dig- ital service indicators are measured by access speed, service availability and security. Digital imaging indicators are measured by visual quality and compatibility.Thedigitaltouchpointindicatorsare measured by responsiveness, suitability, personalization, social interaction and user control.

Digital Behaviour

Skills, knowledge and attitudes are integral to digital competence, so it is essential to add an attitudinalcomponent.Ninedimensionsinthedig- ital competence framework are performing operations with digital tools, communicating in the digital world, creating digital materials, programming digital content, assessment of coping with digital environments, comparative assessment of digital competence, legal behavior in the digital world, protecting oneself and others in the digital world,

and attitudes towards technology (Vuorikari et al., 2022). Accessibility of technology and dangers related to the use of digital technology encourages a person's motivation to utilize digital technology, which ultimately affects user behavior (Putu et al., 2023). The behavioral and accepting ways of technology differ by region and country (MSME Em- powerment Report, 2023; Baskakova and Sobole- va, 2019). Social capital supported by creative ca- pacity plays a role in improving business performance (Purwati et al., 2021). Customer experience, e-service quality, and customer satisfaction on the digital platforms can strengthen customer trust in purchasing products on digital platforms (Halim et al., 2023). Dimensions of digital behavior and business performance in this study are adopted from the TAM (Technology Acceptance Model) theory which is oriented towards the perceived usefulness and perceived ease (Putu et al., 2023). Perceived ease indicators to measure digital behavior, measured by ease of use, access stability and user-frien- dliness. Perceived usefulness indicators to measure business performance, measured from operational performance, management performance and support performance. The stability of digital service access will have an impact on business performance. Stable internet usage can facilitate services to customers, such as ordering, payment, or delivery.

Figure 1. Conceptual Model Digital Experience

Digital Behaviour Business Performance

Digital Literacy H1

H2 H3

H6 H4

H7

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947 HYPOTHESIS DEVELOPMENT

Digital Literacy and Digital Behaviour

Increased the digital literacy encourages responsible use of technology. Higher digital literacy helps individuals identify and evaluate information encountered on social media (Trninić et al., 2023). It prevents the spread of fake news or un- true content (Ford et al., 2023). People with good levels of digital literacy are more likely to take the necessary actions to protect their data in the digital world (Hargittai, 2022). Digital literacy affects the consumer behaviour in the online shopping. Indi- viduals with higher digital literacy tend to be more comfortable and knowledgeable in accessing and purchasing products online (Liu et al., 2023). In this case, we consider digital literacy as an underlying dimension of organizational behaviour and propose to test the hypothesis:

H1 : Digital literacy has a positive effect on digital behaviour.

Digital Literacy and Business Performance Lack of digital skills and knowledge of business owners and employees can make it difficult for them to utilize technology efficiently. Digitiza- tion brings opportunities for businesses to improve their efficiency and productivity (MSME Empow- erment Report, 2023). People with high levels of digital literacy tend to be more productive in using digital tools in their work, which can improve overall business performance (van Laar et al., 2017).

A sound understanding of digital literacy enables businesses to design more effective online marketing strategies (Stephen, 2016). It assists businesses in better managing data security to protect customer information and maintain customer trust (Har- gittai, 2022), which in turn can improve business performance in reaching customers. Therefore, we conclude that:

H2 : Digital literacy has a positive effect on business performance.

Digital Experience and Digital Behaviour People with more experience and longer internet usage show higher levels of online and offline participation. High penetration of information and communication technology among the young- er generation provides opportunities for active in- volvement in digital economy activities (Rahim, 2018). A positive and differentiated experience of

using digital technologies will consistently increase customer loyalty. The whole sales and purchase process, from information search, communication, selection, transaction, delivery, and after-sales service, can now be done through digital channels.

Creating an easy, simple, and hassle-free digital experience can be a strategy to serve customers on digital channels (Weber and Chatzopoulos, 2019).

Recreating customer journey from ordinary experience to digital experience needs an omnichannel approach. Digital experience has an impact on the total customer experience. Therefore, we conclude that:

H3 : Digital experience has a positive effect on digital behaviour.

Digital Experience and Business Performance E-commerce companies can develop if the total customer experience can be managed optimally. Customer satisfaction, total customer experience (ordinary experience and digital experience), and fulfilled e-service quality can strengthen customer confidence in buying digital products in each marketplace (Halim et al., 2023). As the number of digitally enlightened customers increases and technology adoption rates rise, traditional companies and startups shouldn't see each other as rivals but as collaborative partners on the basis of relevance and interdependence (Ramesh, 2019). Organi- zational performance increases as satisfaction increases (Damai et al., 2023), both employee satisfaction and customer satisfaction. Thus, the fourth hypothesis underlying this study is formula-ted as follows:

H4 : Digital experience has a positive effect on business performance.

Digital Behaviour and Business Performance Consumer behaviour when writing and reading online reviews can directly impact their purchasing decisions. Reviews can affect a business's reputation and sales (Halim et al., 2023). Custo- mer behaviour when interacting with brands using social media can impact positively on customer satisfaction and loyalty. A repeat purchasing customer, in turn, can improve business performance (Weber and Chatzopoulos, 2019). Employees who have digital competence are able to interact with digital tools, communicate in the digital world, produce digital materials, programme digital con-

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tent, and secure themselves and others in the digital space (Vuorikari et al., 2022). If before it could only attract the local consumers, it can now attract consumers in various regions and abroad. There- fore, we conclude that:

H5 : Digital behaviour has a positive effect on business performance.

The Mediating Role of Digital Behaviour Digital literacy affects individual behaviour in accessing and purchasing products online (Liu et al., 2023). The whole sales and purchase process, from information search, communication, selection, transaction, delivery, and after-sales service, can now be done through digital channels. Cre- ating an easier, simpler, and hassle-free digital experience can be a strategy to serve customers on

digital channels (Weber and Chatzopoulos, 2019).

Consumer behaviour in reviewing and reading online reviews can have a direct impact on their purchasing decisions. Online reviews can impact a business's reputation and sales (Halim et al., 2023).

Therefore,ownersandemployeesshouldhavedig- ital competencies to operate digital tools, communicate in the digital world, produce digital materials, programme digital content, and protect themselves and others in the digital space (Vuorikari et al., 2022).

H6 : Digital behaviour positively mediates the relationship between digital literacy and business performance.

H7 : Digital behaviour positively mediates the relationship between digital experience and business performance.

Table 1. Operational Definition of Variable

Variable Indicator Reference

Business Performance (BP) Operational Performance (BP1) (Purwati et al., 2021) Management Performance (BP2)

Supporting Performance (BP3)

Digital Behavior (DB) Ease of Use (DB1) (Putu et al., 2023) Access Stability (DB2)

User Friendly (DB3)

Digital Experience (DE) Access Speed (DE1) (Silalahi and Rufaidah, 2017) Availability (DE2)

Security (DE3) Visual Quality (DE4) Compatibility (DE5) Responsiveness (DE6) Conformance (DE7) Personalization (DE8) Social Interaction (DE9) User Control (DE10)

Digital Literacy (DL) Information Literacy (DL1) (Vuorikari et al., 2016) Interaction and Collaboration (DL2)

Digital Content Creation (DL3) Security (DL4)

Problem Solving (DL5)

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949 METHOD

Digital literacy is the knowledge and technical and non-technical skills of business actors in utilizing information and communication technology. Digital experience is the subjective response of business actors when interacting with information systems either directly or indirectly. Digital behavior is the activity of business actor acceptance of digital technology. Business performance is a measure of how well all resources are used to achieve a set of results effectively and efficiently.

The indicators used to measure each variable are presented in Table 1.

Quantitative analysis using structural-parti- al least square (SEM-PLS) modelling with Warp- PLS 8.0 analysis tool. Outer model analysis using PLS regression, inner model analysis using Warp- 3, and resampling method approach using Stable3 method. The study used primary data from respondents by answering questions in the research instrument. Data sources are 80 entrepreneurs in Som- ber Small Industry Centre (SIKS) Balikpapan. A micro and small industry cluster is included in the Reliable Area and Integrated Economic Develop- ment Area (KAPET), which acts as a processing industry center to meet the logistical needs of the East Kalimantan Province region and plays a role in supporting the IKN development. The saturated sampling technique is used in this study, where the

population is used as a sample (Sugiyono, 2019).

A Five-point Likert scale, strongly disagree to strongly agree, was used to measure the research constructs. Validity and reliability were tested using factor loading, Average Variance Extract (AVE), discriminant validity of the Fornell-Larcker approach and cross-loading, and composite reliability (CR). This study uses two independent variables and two dependent variables with 21 parameters.

The instruments are digital literacy, digital experience, digital behavior and business performance.

RESULTS

Respondent Characteristics

Based on the respondent data results, a sum- mary of characteristics, descriptive analysis, and analysis of relationships between variables using SEM-PLS modelling was obtained. Table 1 pre- sents the characteristics of respondents based on gender, age, length of time in business and number of employees. The majority of respondents were male (63.75%), aged 41-50 years (51.25%), length of business more than ten years (47.50%), and number of employees less than five people (48.75%).

Respondents in this study are small and medium industry businesses in the Somber Small Industry Center (SIKS) area in Balikpapan City. The detail- ed profile of the respondents is described in Table 2.

Table 2. Characteristics of Respondents

Characteristics of respondents Frequency Percentage

Gender Male 51 63.75%

Female 29 36.25%

Age of Respondents 20-30 years 8 10.00%

31-40 years 21 26.25%

41-50 years 41 51.25%

51-60 years 10 12.50%

Duration of business 1-2 years 0 0.00%

3-5 years 7 8.75%

6-10 years 35 43.75%

>10 years 38 47.50%

Number of employees <5 people 39 48.75%

5-10 people 31 38.75%

>10 people 10 12.50%

Source: Primary Data (2022)

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Validity testing based on the outer loading size is said to be valid if the outer loading value is> 0.7. Based on the results of testing the variables of digital literacy, digital experience, digital behavior and business performance, it is known that the outer loading value of all the indicators is> 0.7.

The higher the outer loading, it means the closer the relationship between an indicator and its latent variable.ValiditytestingbasedontheAverageVa- riance Extracted measure is valid if the AVE value is> 0.5. Based on the test results, it is known that the AVE value of all indicators is> 0.5. The higher the AVE, it means the better a latent variable or construct is in explaining the variance of its indicators. Reliability testing based on Composite Re- liability is said to be reliable if the CR value is>

0.7. According to test results, it is known that the CR value of all indicators is> 0.7. The higher the CR, the better the composite reliability of a ques- tionnaire. Discriminant validity tests the extent to which a construct is truly different from other con-

structs. Discriminant validity testing based on the Fornell-Lacker approach is said to be valid if the AVE square root value for each latent variable is greater than the correlation value between the latent variable and other latent variables. Discriminant validity testing based on the Cross-Loading approach is said to be valid if the loading value of each indicator on the variable concerned is greater than the cross-loading on other latent variables. The result of discriminant validity testing shows that the instrument that has been designed has good discriminant validity based on the Fornell-Lacker and Cross-Loading approaches.

Testing the inner model or structural model by testing the hypothesis and coefficient of deter- mination (R-square). Testing is performed with a t-test. If a P-value <0.10 (α = 10%) is obtained, then weakly significant. If the P-value <0.05 (α = 5%), then it is significant and if the P-value <0.01 (α = 1%) then highly significant. The results of the test can be seen in Table 3 below.

Table 3. Inner Model Test Results (Direct Effect)

Hypotheses Path Coefficient P-value R-square

H1: DL → DB 0.198 0.032 sig* 0.486

H3: DE → DB 0.545 <0.001 sig**

H2: DL → BP 0.128 0.119 not sig 0.908

H4: DE → BP 0.102 0.176 not sig

H5: DB → BP 0.798 <0.001 sig**

Note: **P-value <0.01, *P-value <0.05, n=80 Source: Processed data on WarpPLS 8.0 (2023)

Figure 2. Structural Model Test Results Digital Experience (DE)

Digital Behaviour (DB) Business Performance

(BP) β=0.10

(P=0.18) β=0.54

(P<.01)

β=0.80 (P<.01) β=0.20

(P=0.03)

R²=0.49

R²=0.91 β=0.13

(P=0.12) Digital Literacy (DL)

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951 Based on the results of testing the inner mo-

del of direct effect, it was found that digital literacy has a positive impact on digital behaviour with a path coefficient of 0.198 and significant with a P-value <0.05 (α = 5%). This study supports hypotheses 1. The digital experience has a positive effect on the digital behaviour with a path coefficient of 0.545 and is highly significant with a P-value

<0.01 (α=1%). This study supports hypothesis 3.

Digital behaviour has a positive effect on business performance with a path coefficient of 0.798 and is highly significant with a P-value <0.01 (α=1%).

This study supports hypothesis 5. Separately, digital literacy and digital experience influence business performance with path coefficients 0.128 and 0.102, respectively, with P-value >0.10, so hypotheses 2 and 4 are not supported.

Based on the R-square value, digital literacy and digital experience are able to explain the variance of independent variables from digital behaviour by 48.6%. On the other hand, digital literacy, digital experience and digital behaviour together are able to explain the variance of independent variables of business performance by 90.8%. Struct- ural equation model testing results describe the correlation between constructs using Bootstrap. Re- sults show an empirical research model of digital literacy, digital experience, digital behaviour and business performance (Figure 2).

Based on the structural model testing of indirect effects, digital behaviour partially has a positive and significant effect on mediating the relationship between digital literacy (P-value <0.05) and digital experience (P-value <0.01) on the business performance with path coefficients 0.158 and 0.434 for each. Therefore, this finding supports hypotheses 6 and 7. The result of structural model testing of indirect effects in Table 4 below.

Table 4. Structural Model Testing (Indirect Effect)

Hypotheses Path

Coefficient P-value Ket H6: DL → DB → BP 0.158 0.020 sig*

H7: DE → DB → BP 0.434 <0.001 sig**

Note: **P-value <0.01, *P-value <0.05, n=80 Source: Processed data on WarpPLS 8.0 (2023)

DISCUSSION

Digital Literacy and Digital Behaviour

This study finds that digital literacy has a positive effect on digital behaviour. This result is supported by Trninić et al. (2023), who examined parents' knowledge of internet safety and its application and showed that high digital literacy helps individuals identify and evaluate information encountered on social media. These results also reve- al that the digital competence that businesses need to have is the ability to select, select, and rearrange reliable and quality information sources in the digital world to be used according to business needs.

Research by Ford et al. (2023) in assessing digital competencies for primary and secondary student learning in Estonia explained that individuals with high digital literacy are able to prevent the behaviour of spreading fake news or incorrect content. In this study, the ability of business owners or employees to design visual content (images, photos, vid- eos) is needed to improve the promotion of business products or services. They can also create quality content to support online marketing. The ability to develop content tailored to the right target customers is an expected digital behaviour to increase product marketing effectiveness. Hargittai's (2022) research on digital inequality (internet usage and skills) in the United States, Italy and Swit- zerland suggests that individuals with good levels of digital literacy are more likely to take the necessary actions to protect their data in the digital world. Designing good passwords and understanding data privacy policies are important to protect customer data and business-critical information in the digital world.

Digital Literacy and Business Performance Digital literacy relationship shows a positive and insignificant influence on business performance. This finding contributes to explaining the gap caused by inconsistent results from previous studies. Van Laar et al. (2017) research investigated the effect of managers' digital literacy on the digital transformation of MSE in the United Arab Emirates. The findings show that managers' digital literacy has an impact on the digital transformation through the use of digital technology. Similar- ly, another study by Tamara et al. (2022) of bank employees in Jambi Province looked at the effect of digital transformation on productivity, showing

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that employees who have high digital capabilities tend to be more productive in using digital tools in their work, which can improve overall business performance. For businesses, the ability and skills to develop digital content tailored to the right target customers can increase the effectiveness of the product marketing, in turn improving the business performance.

Digital Experience and Digital Behaviour This study shows that digital experience has a positive effect on digital behaviour. However, this result is supported by Rahim's (2018) research ontheuseofinformationandcommunicationtech- nology in respondents aged 21-40 years in Malay- sia, which shows that individuals who use the internet more frequently and for longer periods tend to have higher levels of participation in online and offline activities. Active participation needs to be supported by the wide availability of services that can be accessed anywhere when required. Putu et al. (2023), who studied technology adoption by 200 MSE in Denpasar City, showed that the digital experience (technology accessibility and perceived risk) encourages individual intentions to take advantage of digital technology, which ultimately affects user behaviour. Paramita et al. (2021) stat- ed that the long-term user experience of using digital wallet applications conveyed that creating an easy,simple,andhassle-freedigitalexperiencecan be a strategy for serving customers on the digital channels. Attractive display design of the product or service content on display can give a positive impression to customers. The use of visual aspects (such as logos, icons, colours and graphics) can increase the appeal and understanding of the information conveyed. Companies need to optimize the entire customer experience on digital and physical channels (Weber and Chatzopoulos, 2019).

Digital Experience and Business Performance Digital experience relationship shows a positive and insignificant influence on business performance.Itcontributestoexplainingthevoidcau- sed by inconsistent results from previous research.

Research conducted by Halim et al. (2023) on the impact of experience on the e-commerce services.

The findings indicate that experience has a significant positive effect on trust in buying digital products in the marketplace. E-commerce companies

can develop if the total customer experience (ordi- naryexperienceanddigitalexperience)canbema- naged optimally. Ramesh (2019) saw banks' inter- actions with fintech startups as collaborative partners on the basis of relevance and interdependence. Likewise, in the digital economy, businesses need to collaborate with digital channels to interact with their customers. Digital channels enable businesses to offer differentiated products and so- lutions to consumers efficiently and conveniently at a lower cost. Increasing numbers of digitally enlightened customers and rising technology adoption rates can support better business performance.

Digital Behaviour and Business Performance Putu et al. (2023), who examine technology adoption, look at the direct relationship of perceived usefulness to usage behaviour and intention to use, showing that perceived usefulness does not affect business people's intention to use technology.Incontrast,theresultsofthisstudyindicatethat digital behaviour has a positive effect on perceived usefulness in terms of operational performance and business management performance. Research by Halim et al. (2023) supports the results of research that analyses the factors that influence customer behaviour in buying digital products in the marketplace. This study explains that the customer experience, electronic service quality, and customer satisfaction on digital platforms can strengthen customer trust in purchasing products on digital platforms. Businesses need to open digital channels for the business transactions, such as ordering, payment or delivery on digital platforms to facilitate service to customers.

Mediating Role of Digital Behaviour

This study found that digital behaviour has a positive effect on mediating digital literacy and digital experience on business performance. Simi- lar results are supported by Liu et al. (2023), who examined the consumer impulse buying intentions on a live broadcast shopping platform. Research shows that digital literacy affects consumer behaviour in accessing and buying products online. On- line reviews from the customers can influence their purchasing decisions. Weber and Chatzopoulos (2019), in their case study reviewing the digital customer experience of companies operating online, showed that an easy, simple and hassle-free

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953 digital experience can be a strategy to increase the

customer loyalty in digital channels. Business owners and employees need to have digital skills that enable them to communicate effectively online, operate the digital devices, create digital content, programme digital content, and protect themselves and the others in the digital world (Vuorikari et al., 2022).

IMPLICATIONS

Businesses can take practical implications from this research. First, businesses that want to improve their management performance and business operational performance need to develop digital behaviour by opening digital channels for business transactions, such as ordering, payment or delivery on digital platforms to expedite services to customers. Second, businesses need to improve digital literacy in terms of information literacy and digital security to develop the digital behaviour.

Third, businesses also need to consider the availability of services with a wide range, services that can be accessed anywhere, and the visual quality of digital content when using digital channels to improve the digital experience. Another thing that needs to be done in developing micro and small industry cluster is developing human resources, in this case, businesses. Inclusive economic empowerment by providing equal opportunities for businesses to improve their knowledge and skills to develop their businesses through digital channels.

RECOMMENDATIONS

This paper only investigates the micro and small industries in one city with a homogeneous commodity. Future research can look at more di- verse medium-sector industries. Future research can also expand research areas in other cities in the IKN buffer zone to increase the generalizability of the study. Other variables are suggested to be add- ed, such as the efficiency of technology use.

This study has several limitations which may encourage future research. First, sectoral data selection comes from the micro and small industry (MSE) clusters with low levels of the technological innovation. Second, this study is limited to the area of Balikpapan City. Recommendation for future research may be to generalize to a larger population and medium to high industry sector with a higher level of technological innovation. This stu-

dy recommends identifying factors of digital literacy and digital experience that have a direct effect on business performance.

CONCLUSIONS

This study shows that the direct effect of digital literacy on digital behaviour, digital experience on digital behaviour, and digital behaviour on the business performance has a positive and significant impact. Digital behaviour has a mediating role in the relationship between digital literacy and digital experience on business performance. Hav- ing the ability to select, select, and rearrange reliable and quality digital content in the digital world contributes to the digital behavior of business actors. Businesses can develop content that is tailored to the right target customers. The experiences of ease, simplicity and hassle-free use of technology can encourage business behavior to take advantage of digital channels to reach a wider range of customers. Technology adoption arising from perceived usefulness and perceived ease can improve operational performance and management performance. Digital channels can be optimally managed by businesses to increase their productivity.

Other results regarding digital literacy on business performance and digital experience on business performance show different results from the other findings.

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