Leveraging Artificial Intelligence for Competitive Advantage in Indonesian SMEs

Aswadi Jaya; Dwi Cahyono; Lily Maria

doi:10.33050/atm.v9i3.2524

Authors

Aswadi Jaya Universitas PGRI Palembang Author
Dwi Cahyono University of Muhammadiyah Jember Author
Lily Maria Pandawan Incorporation Author

DOI:

https://doi.org/10.33050/atm.v9i3.2524

Keywords:

Artificial Intelligence, Competitive Advantage, SMEs, Digital Transformation

Abstract

Artificial Intelligence (AI) has emerged as a transformative force in modern business, offering significant opportunities to enhance operational efficiency, improve customer engagement, and foster innovation. In Indonesia, Small and Medium Enterprises (SMEs) play a crucial role in driving economic growth and employment, yet their adoption of AI technologies remains limited due to resource constraints, lack of expertise, and uncertainty about return on investment. This study aims to investigate how AI adoption can be leveraged to achieve competitive advantage in Indonesian SMEs. Using a mixed-methods approach, data were collected through surveys and in-depth interviews with SME owners across various sectors. The findings indicate that AI applications such as predictive analytics, chatbot-based customer service, and demand forecasting have contributed to increased productivity, cost efficiency, and market competitiveness. The study provides a practical framework for AI implementation tailored to the needs and capacities of Indonesian SMEs, offering insights for business practitioners, policymakers, and researchers seeking to advance digital transformation in the SME sector.

Downloads

Download data is not yet available.

References

[1] K. J. Sinha, S. Sinha, and B. J. Sinha, “Micro, small, and medium-sized enterprises (msmes): The signif- icant role and challenges in indonesia’s economy,” International Journal For Multidisciplinary Research, vol. 6, no. 3, p. 20824, 2024.

[2] B. M. Omowole, A. Q. Olufemi-Phillips, O. C. Ofodile, N. L. Eyo-Udo, and S. E. Ewim, “The role of smes in promoting urban economic development: A review of emerging economy strategies,” Journal Name Unspecified, 2024.

[3] T. K. Andiani and O. Jayanagara, “Effect of workload, work stress, technical skills, self-efficacy, and social competence on medical personnel performance,” Aptisi Transactions on Technopreneurship (ATT), vol. 5, no. 2, pp. 118–127, 2023.

[4] M. A. Mollik and A. K. Ananna, “The impact of globalization on technology-oriented small and medium- sized enterprises (smes) in the bangladeshi market,” 2024.

[5] K. Abrokwah-Larbi and Y. Awuku-Larbi, “The impact of artificial intelligence in marketing on the perfor- mance of business organizations: evidence from smes in an emerging economy,” Journal of Entrepreneur- ship in Emerging Economies, vol. 16, no. 4, pp. 1090–1117, 2024.

[6] A. Ruangkanjanases, A. Khan, O. Sivarak, U. Rahardja, and S.-C. Chen, “Modeling the consumers’ flow experience in e-commerce: The integration of ecm and tam with the antecedents of flow experience,” SAGE Open, vol. 14, no. 2, p. 21582440241258595, 2024.

[7] A. N. Khan, A. A. Salar Khan, M. A. J. Mansoor, A. Jameel, R. Rustam, R. Aslam, and J. Shah, “Artificial intelligence in computer science: Evolution, techniques, challenges, and multidisciplinary applications,” Sch J Eng Tech, vol. 4, pp. 246–263, 2025.

[8] P. Mathur and A. Kumar, “Exploring the impact of ai on management and healthcare for streamlining operations and decision-making,” Artificial Intelligence-Enabled Businesses: How to Develop Strategies for Innovation, pp. 275–288, 2025.

[9] D. E. Rose, J. Van Der Merwe, and J. Jones, “Digital marketing strategy in enhancing brand awareness and profitability of e-commerce companies,” APTISI Transactions on Management, vol. 8, no. 2, pp. 160–166, 2024.

[10] F. Avezov, “The economic impact of ai adoption: Measuring productivity and competitive advantage in international enterprises,” The American Journal of Management and Economics Innovations, vol. 7, no. 06, pp. 22–29, 2025.

[11] K. A. Maspul and N. K. Putri, “Will big data and ai redefine indonesia’s financial future?” Jurnal Bisnis dan Komunikasi Digital, vol. 2, no. 2, pp. 21–21, 2025.

[12] S. T. S. Alfian, F. Ichsanudin, N. Ndruru et al., “Bitcoin and digital currency: Difficulties, open doors and future works,” Blockchain Frontier Technology, vol. 2, no. 1, pp. 50–57, 2022.

[13] V. Markevicˇius, “Small and medium enterprises (smes) growth: the role of digital transformation and open innovation,” Ph.D. dissertation, Vilniaus universitetas., 2025.

[14] A. A. Ebuka, N. K. Chike, U. S. Chigozie, and I. A. Muhammed, “Artificial intelligence adoption and business performance: Evidence from small and medium enterprises in emerging markets,” International Journal of Public Administration and Management Research, vol. 11, no. 2, pp. 69–86, 2025.

[15] A. Nuche, O. Sy, and J. C. Rodriguez, “Optimizing efficiency through sustainable strategies: The role of management and monitoring in achieving goals,” APTISI Transactions on Management, vol. 8, no. 2, pp. 167–174, 2024.

[16] N. J. Isibor, C. P.-M. Ewim, E. M. Adaga, N. J. Sam-Bulya, A. I. Ibeh, and G. O. Achumie, “A strategic agility and market intelligence framework for entrepreneurs: Enhancing financial planning and competi- tive advantage,” Multidisciplinary Journal Of Management And Social Sciences, vol. 2, no. 1, 2025.

[17] M. Z. Ikbal, “A meta-analysis of ai-driven business analytics: Enhancing strategic decision-making in smes,” Review of Applied Science and Technology, vol. 4, no. 02, pp. 33–58, 2025.

[18] R. Ahli, M. F. Hilmi, and A. Abudaqa, “Moderating effect of perceived organizational support on the relationship between employee performance and its determinants: A case of entrepreneurial firms in uae,” Aptisi Transactions on Technopreneurship (ATT), vol. 6, no. 2, pp. 199–212, 2024.

[19] D. Barros, “Ai-driven engagement in public services: enhancing customer journey with a chatbot,” 2025.

[20] O. A. Shonubi, “Adoption of an innovation ecosystem of emerging digital technologies-(artificial in- telligence, internet of things and industry 4.0) and the impact on firm innovation performance.” Ph.D. dissertation, University of Brighton, 2025.

[21] V. Agarwal, M. Lohani, A. S. Bist, L. Rahardja, M. Hardini, and G. Mustika, “Deep cnn–real esrgan: An innovative framework for lung disease prediction,” in 2022 IEEE Creative Communication and Innovative Technology (ICCIT). IEEE, 2022, pp. 1–6.

[22] F. Fajri, K. A. Perdana, D. U. Manurung, P. K. N. Dharmawan, and N. G. Dewi, “The role of early adop- tion of artificial intelligence in supporting the growth of micro and ultra-micro enterprises in indonesia: Challenges and opportunities,” Jurnal Akuntansi dan Bisnis, vol. 10, no. 02, pp. 133–143, 2025.

[23] K. Rathnasekara, K. Yatigammana, and N. Suraweera, “Innovative pedagogical framework in k12 education: enhancing productivity and engagement of digital natives within resource-constrained environ- ments,” Quality Education for All, vol. 2, no. 1, pp. 413–438, 2025.

[24] Q. Aini, D. Manongga, U. Rahardja, I. Sembiring, and Y.-M. Li, “Understanding behavioral intention to use of air quality monitoring solutions with emphasis on technology readiness,” International Journal of Human–Computer Interaction, pp. 1–21, 2024.

[25] J. Hermawan, L. I. Wijaya, and A. Rianawati, “Digital transformation for economic growth and sdg 8 alignment in southeast asia: A bibliometric analysis and systematic literature review with ado-tcm framework,” Journal of Lifestyle and SDGs Review, vol. 5, no. 2, p. e04052, 2025.

[26] A. Mardiah, E. Fikriando, O. Syafriani et al., “Technological innovation: Adoption of artificial intel- ligence in micro, small, and medium enterprises (msmes),” JMBI UNSRAT (Jurnal Ilmiah Manajemen Bisnis dan Inovasi Universitas Sam Ratulangi)., vol. 12, no. 1, pp. 162–176, 2025.

[27] Laili. (2025, May) Dwp kemendikdasmen gelar bazar hardiknas 2025: Dorong ke- mandirian ekonomi melalui umkm. Kementerian Pendidikan Dasar dan Menengah (Kemendik- dasmen). Accessed: 2025-09-28. [Online]. Available: https://www.kemendikdasmen.go.id/berita/ 12797-dwp-kemendikdasmen-gelar-bazar-hardiknas-2025-dorong-kemandi

[28] D. Van Hoang, N. Thi Hien, H. Van Thang, P. Nguyen Truc Phuong, and T. Thi-Thuy Duong, “Digital capabilities and sustainable competitive advantages: the case of emerging market manufacturing smes,” Sage Open, vol. 15, no. 2, p. 21582440251329967, 2025.

[29] H. Hariyanto, E. Susanto, B. Aji, A. D. L. Goeltom, S. U. Widyastuti et al., “Strategic roadmap for ai- driven sustainable tourism development in indonesia: An expert-based mcdm approach,” Jurnal Kepari- wisataan Indonesia: Jurnal Penelitian dan Pengembangan Kepariwisataan Indonesia, vol. 19, no. 1, pp. 1–14, 2025.

[30] Kementerian Pendidikan Dasar dan Menengah. (2023, Aug.) Dukung transformasi umkm masa depan, kemendikbudristek berpartisipasi dalam umkm nasional expo 2023. Accessed: 2025-09-28. [Online]. Available: https://www.kemendikdasmen.go.id/berita/ 4325-dukung-transformasi-umkm-masa-depan-kemendikbudristek-berpar

[31] M. Kermansaravi, A. Kermansaravi, M. Kroh, S. A. Shikora, and R. V. Cohen, “Collaborative intelli- gence in metabolic and bariatric surgery: Integrating human expertise and artificial intelligence for better outcomes,” Obesity Surgery, pp. 1–3, 2025.

[32] N. Iman, “The hidden costs of intelligence: Artificial intelligence and machine learning adoption and the paradox of exponential digital growth,” Sustainability and Climate Change, vol. 18, no. 3, pp. 225–241, 2025.

[33] Kementerian Pendidikan Dasar dan Menengah. (2023, Aug.) Peringati hut ke-

78 ri, dwp kemendikbudristek selenggarakan bazar “umkm maju, indonesia melaju”. Accessed: 2025-09-28. [Online]. Available: https://www.kemendikdasmen.go.id/berita/ 4306-peringati-hut-ke-78-ri-dwp-kemendikbudristek-selenggarakan-b

[34] I. W. E. Arsawan, V. Koval, I. Rajiani, N. W. Rustiarini, W. G. Supartha, and N. P. S. Suryantini, “Leverag- ing knowledge sharing and innovation culture into smes sustainable competitive advantage,” International journal of productivity and performance management, vol. 71, no. 2, pp. 405–428, 2022.

[35] B. Chinnaiyan, S. Balasubaramanian, M. Jeyabalu, and G. S. Warrier, “Ai applications–computer vision and natural language processing,” Model Optimization Methods for Efficient and Edge AI: Federated Learning Architectures, Frameworks and Applications, pp. 25–41, 2025.

[36] A. Rejeb, K. Rejeb, I. Zrelli, and E. Su¨le, “Tracing knowledge diffusion trajectories in the research field of cyberbullying,” Heliyon, vol. 11, no. 1, 2025.

[37] M. Heriyanto, A. F. Febrian, O. Karneli, M. Sugiarto, and D. Suryana, “Indonesian smes’ competitive advantage through organizational agility: The role of information and communication technologies (ict) to small business,” Journal of Ecohumanism, vol. 3, no. 6, pp. 319–330, 2024.

[38] Q. K. ALZAGHAL, O. H. SALAH, M. M. AYYASH, Q. Kamal Alzaghal, and O. Hasan Salah, “Lever- aging artificial intelligence for smes’sustainable competitive advantage: The moderating role of managers digital literacy,” Journal of Theoretical and Applied Information Technology, vol. 102, no. 21, 2024.

[39] M. A. Khan, “Understanding the impact of artificial intelligence (ai) on traditional businesses in indone- sia,” Journal of Management Studies and Development, vol. 3, no. 02, pp. 146–158, 2024.

[40] F. Fajri, K. A. Perdana, D. U. Manurung, P. K. N. Dharmawan, and N. G. Dewi, “The role of early adop- tion of artificial intelligence in supporting the growth of micro and ultra-micro enterprises in indonesia: Challenges and opportunities,” Jurnal Akuntansi dan Bisnis, vol. 10, no. 02, pp. 133–143, 2024.

[41] H. Hendrayati, M. Achyarsyah, F. Marimon, U. Hartono, and L. Putit, “The impact of artificial intelli- gence on digital marketing: Leveraging potential in a competitive business landscape,” Emerging Science Journal, 2024.

[42] A. L. D. Mariyana, A. I. Annaufal, and R. Roostika, “The impact of artificial intelligence on small and medium enterprises in yogyakarta,” in Digital technology and changing roles in managerial and financial accounting: Theoretical knowledge and practical application. Emerald Publishing Limited, 2024, pp. 347–354.

[43] E. Halim, Y. Lieandi, P. A. Allyssa, A. B. L. Mailangkay, and Y. E. Kurniawati, “Empowering smes with ai: From data to dynamic efficiency in information system,” in 2024 7th International Seminar on Research of Information Technology and Intelligent Systems (ISRITI). IEEE, 2024, pp. 653–658.

[44] M. Indrasari, N. Syamsudin, and L. R. R. U. Tampubolon, “Enhancing sme product brand equity in the digital age as strategic approaches in the era of artificial intelligence,” International Journal of Business, Law, and Education, vol. 5, no. 1, pp. 1139–1152, 2024.

[45] P. Maghfirah and Y. Eni, “The impact of artificial intelligence (ai) adoption on the productivity of small and medium enterprises (smes) industries in indonesia: High cost, lack of knowledge, and inadequate infrastructure as mediation variables,” International Journal of Business Management and Economic Re- view, vol. 7, no. 03, pp. 128–145, 2024.

[46] M. A. K. Harahap, A. M. A. Ausat, and M. S. Kurniawan, “Toward competitive advantage: Harnessing artificial intelligence for business innovation and entrepreneurial success,” Jurnal Minfo Polgan, vol. 13, no. 1, pp. 254–261, 2024.

[47] W. D. Anjaningrum, N. Azizah, and N. Suryadi, “Spurring smes’ performance through business intelli- gence, organizational and network learning, customer value anticipation, and innovation-empirical evi- dence of the creative economy sector in east java, indonesia,” Heliyon, vol. 10, no. 7, 2024.

[48] E. Ardiansyah, “Integrating green product innovation and ai in business strategies for competitive advan- tage: A study of indonesian’s future,” J-AKSI: JURNAL AKUNTANSI DAN SISTEM INFORMASI, vol. 6, no. 1, pp. 74–81, 2025.

[49] H. Hrr, “The future of digital transformation: Leveraging artificial intelligence for competitive advantage,”

Available at SSRN 5123723, 2025.

[50] N. Sudirman et al., “Digital entrepreneurship and business innovation: Strategies for indonesian smes in the era of industry 4.0,” Journal of Indonesian Scholars for Social Research, vol. 5, no. 1, pp. 24–34, 2025.