Digital Transformation, Strategy, and Capital Readiness: Impact on MSME Financial Performance

Abstract

This study aims to examine the influence of digital transformation, business strategy, and structural capital readiness on the financial performance of Micro, Small, and Medium Enterprises (MSMEs) in North Sumatra. Specifically, it explores the mediating role of accounting information system (AIS) adoption in this relationship. Using a quantitative approach, the study employs Structural Equation Modeling–Partial Least Squares (SEM-PLS) and cluster analysis to analyze data collected from MSME actors in the region. The results indicate that digital transformation, business strategy, and structural capital readiness have a significant and positive impact on MSMEs’ financial performance. Moreover, the adoption of AIS significantly mediates these relationships by enhancing efficiency, financial transparency, and decision-making quality. The study concludes that digital and strategic readiness, supported by AIS implementation, is crucial for improving financial outcomes. It recommends that MSMEs invest in digital capabilities, strengthen organizational infrastructure, and develop integrated strategies to remain competitive in a digital economy. These findings offer practical implications for business owners, policymakers, and technology providers to jointly support MSME growth through targeted digital and strategic interventions.