Digital Literacy, Financial Technology Adoption, and Sustainable Business Practices Among MSMEs: Evidence From Gorontalo

Juniaty Ismail; Herwin Mopangga; Fony Abdullah; Muhammad Ardi

doi:10.18535/ijsrm/v13i11.em01

Abstract

Digital transformation has reshaped financial management and accounting behavior among micro, small, and medium enterprises (MSMEs), particularly within the framework of Islamic finance, where technology adoption is closely linked to ethical and sharia compliance values. This study examines the influence of digital literacy on sustainable business practices, with Islamic fintech adoption as a mediating variable among MSME actors in Gorontalo Province, Indonesia. Using a mixed-methods sequential explanatory design, this research integrates quantitative data from 49 respondents with qualitative insights obtained through in-depth interviews. The quantitative findings indicate that digital literacy significantly affects sustainable business practices (β = 0.6303, p < 0.001), while the mediating role of Islamic fintech adoption is statistically insignificant (z = 1.188, p = 0.235). The qualitative analysis reveals that social trust, religious values, and accessibility shape MSME adoption behavior toward Pegadaian Digital Syariah. Theoretically, this study strengthens the integration of the Technology Acceptance Model (TAM), Diffusion of Innovation Theory (DOI), and Sustainable Business Model Innovation (SBM) in explaining digital transformation within Islamic finance. Practically, the results emphasize the importance of Islamic value-based digital literacy programs and inclusive digital financial accounting strategies that foster trust, ethics, and sustainability. Overall, digital literacy emerges as the key driver of MSME sustainability in the digital era, while the success of Islamic fintech adoption depends on ethical awareness and socio-cultural trust within local contexts.

Keywords

digital literacyIslamic fintech adoptiondigital financial accountingsustainable business practicesMSMEs

References

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[refR-2] Ahmad, K., & Yahaya, M. H. (2022). Islamic social financing and efficient zakat distribution: impact of fintech adoption among the asnaf in Malaysia. Journal of Islamic Marketing, 14(9), 2253–2284. https://doi.org/10.1108/JIMA-04-2021-0102DOI ↗Google Scholar ↗

[refR-3] Alshater, M. M., Hussain, H. I., & Haider, J. (2022). Fintech in Islamic finance literature: A review. International Journal of Islamic and Middle Eastern Finance and Management, 15(4), 665–687. https://doi.org/10.1108/IMEFM-10-2021-0394DOI ↗Google Scholar ↗

[refR-4] Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182. https://doi.org/10.1037/0022-3514.51.6.1173DOI ↗Google Scholar ↗

[refR-5] Carmagnac, L., Dubois, A., & Giard, V. (2022). Diffusion of sustainability innovation through social learning in industrial networks. Production Planning & Control, 33(11), 932–947. https://doi.org/10.1080/09537287.2022.2128693DOI ↗Google Scholar ↗

[refR-6] Ciulli, F., Kolk, A., & Bidmon, C. M. (2022). Sustainable business model innovation and scaling through collaboration. Environmental Innovation and Societal Transitions, 45, 615–630. https://doi.org/10.1016/j.eist.2022.11.003DOI ↗Google Scholar ↗

[refR-7] Cohen, J., Cohen, P., West, S. G., & Aiken, L. S. (2003). Applied Multiple Regression/Correlation Analysis for the Behavioral Sciences. Lawrence Erlbaum Associates.Google Scholar ↗

[refR-8] Creswell, J. W., & Creswell, J. D. (2023). Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. Sage Publications.Google Scholar ↗

[refR-9] Creswell, J. W., & Plano Clark, V. L. (2018). Designing and Conducting Mixed Methods Research. Sage Publications.Google Scholar ↗

[refR-10] Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3), 319–340. https://doi.org/10.2307/249008DOI ↗Google Scholar ↗

[refR-11] Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2021). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). Sage Publications. https://doi.org/10.1007/978-3-031-06097-3DOI ↗Google Scholar ↗

[refR-12] Hasan, M. (2024). Fintech and sustainable development: A systematic review. International Review of Economics & Finance, 92, 320–337. https://doi.org/10.1016/j.iref.2023.12.012DOI ↗Google Scholar ↗

[refR-13] Hassan, R. (2022). Diffusion of innovation in sustainable development projects: A proposed integrative model. International Journal of Innovation and Sustainable Development, 16(4), 425–440. https://doi.org/10.1504/IJISD.2022.122604DOI ↗Google Scholar ↗

[refR-14] Jain S., P. . G. (2021). What Drives FinTech Adoption? A Study of Financial Literacy’s Moderating Role in India. Management Decision, 59(8), 1758–1778. https://www.emerald.com/insight/content/doi/10.1108/MD-11-2019-1553/full/htmlDOI ↗Google Scholar ↗

[refR-15] Lee, I., & Shin, Y. J. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business Horizons, 61(1), 35–46. https://doi.org/10.1016/j.bushor.2017.09.003DOI ↗Google Scholar ↗

[refR-16] Lincoln, Y. S., & Guba, E. G. (1985). Naturalistic Inquiry. Sage Publications.Google Scholar ↗

[refR-17] Marhadi, M., Fathoni, A. F., Setiawan, B., Pratiwi, D., Hayati, R., Boros, A., & Sudibyo, N. A. (2024). Continuance Intention of Fintech Peer-to-Peer (P2P) financing Shariah: Moderation Role of Brand Schematicity and Digital Financial Literacy. Journal of Open Innovation: Technology, Market, and Complexity, 10(2), 100301. https://doi.org/10.1016/j.joitmc.2024.100301DOI ↗Google Scholar ↗

[refR-18] Martins, A., Sousa, M., & Brochado, A. (2022). Sustainability practices in SMEs: A systematic literature review. Sustainability, 14(5), 2827. https://doi.org/10.3390/su14052827DOI ↗Google Scholar ↗

[refR-19] Meyliana E.; Surjandy, S., M. . F. (2019). The Influence of Perceived Risk and Trust in Adoption of FinTech Services in Indonesia. CommIT: Communication & Information Technology Journal, 13(1), 31–37. https://journal.binus.ac.id/index.php/commit/article/view/5708Google Scholar ↗

[refR-20] Nugraha B.; Nathan, R. J.; Fekete‑Farkas, M., D. P. . S. (2022). Fintech Adoption Drivers for Innovation for SMEs in Indonesia. Journal of Open Innovation: Technology, Market, and Complexity, 8(4), 208. https://www.mdpi.com/2199-8531/8/4/208Google Scholar ↗

[refR-21] Nunnally, J. C., & Bernstein, I. H. (1994). Psychometric Theory. McGraw-Hill.Google Scholar ↗

[refR-22] Oliveira-Dias, D., & Martins, F. (2022). Fostering business model innovation for sustainability: The role of dynamic capabilities in emerging markets. Management Decision, 60(13), 105–120. https://doi.org/10.1108/MD-05-2022-0546DOI ↗Google Scholar ↗

[refR-23] Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40(3), 879–891. https://doi.org/10.3758/BRM.40.3.879DOI ↗Google Scholar ↗

[refR-24] Rahayu B.; Fitria, H., R. . S. (2024). Determinant factors of Islamic financial technology acceptance: Evidence from Indonesia. Journal of Telecommunications and the Digital Economy, 12(2), 29–45. https://jtde.telsoc.org/index.php/jtde/article/view/790Google Scholar ↗

[refR-25] Rahman M.; Sulaiman, N., A. . H. (2023). Examining factors influencing adoption of Islamic fintech. Journal of Social and Management Sciences, 14(5), 62–72. https://www.aasmr.org/jsms/Vol14/No.5/Vol.14.No.5.05.pdfGoogle Scholar ↗

[refR-26] Rehman, S. U., Khan, M. A., & Tariq, M. (2023). Fintech adoption in SMEs and bank credit supplies. Economies, 11(2), 55. https://doi.org/10.3390/economies11020055DOI ↗Google Scholar ↗

[refR-27] Rogers, E. M. (2003). Diffusion of Innovations (5th ed). Free Press.Google Scholar ↗

[refR-28] Sharma Y. K.; Hughes, L., P. . D. (2024). Does FinTech adoption impact on sustainability of small businesses: Mediating role of financial well-being. Global Knowledge, Memory and Communication, 73(4). https://www.researchgate.net/publication/384840994_Does_FinTech_adoption_impact_on_sustainability_of_small_businesses_mediating_role_of_financial_well-beingGoogle Scholar ↗

[refR-29] Suhartanto, D., Arya, V., Sihombing, R., & Hadi, P. (2024). Green practices in small business: Drivers and performance in Southeast Asia. Journal of Business Research, 170, 115–127. https://doi.org/10.1016/j.jbusres.2023.113384DOI ↗Google Scholar ↗

[refR-30] Tashakkori, A., & Teddlie, C. (2021). Foundations of Mixed Methods Research: Integrating Quantitative and Qualitative Approaches in the Social and Behavioral Sciences. Sage Publications.Google Scholar ↗

[refR-31] Ullah U. S.; Raza, B.; Mustafa, A., S. . K. (2022). Consumers’ Intention to Adopt m‑payment/m‑banking: The Role of Their Financial Skills and Digital Literacy. Frontiers in Psychology, 13. https://www.frontiersin.org/articles/10.3389/fpsyg.2022.873708/fullDOI ↗Google Scholar ↗

[refR-32] Venkatesh, V., Brown, S. A., & Bala, H. (2019). Bridging the qualitative–quantitative divide: Guidelines for conducting mixed methods research in information systems. MIS Quarterly, 43(4), 1097–1112. https://doi.org/10.25300/MISQ/2019/13917DOI ↗Google Scholar ↗

[refR-33] Waqar R.; Siddiqui, F., M. . K. (2025). Fintech revolution and sustainability: Unveiling the impact on SMEs through circular economy and green innovation practices. Journal of Cleaner Production, 455, 100281. https://www.sciencedirect.com/science/article/pii/S2666188825002813Google Scholar ↗

[refR-34] Yeşilyurt A.; Aydın, S., E. . Ö. (2023). Digital literacy, technological literacy, and internet literacy as predictors of attitude toward applying computer‑supported education. Education and Information Technologies. https://link.springer.com/article/10.1007/s10639-022-11311-1DOI ↗Google Scholar ↗