What Makes SMEs Entrepreneurs in Central Java Adopt E-

Commerce?: A Factor Analysis on TAM, TPB, and TOE

Frameworks
Tusyanah Tusyanah (Universitas Negeri Semarang, Indonesia), Wijang Sakitri (Universitas Negeri Semarang,
Indonesia), Fentya Dyah Rahmawati (Universitas Negeri Semarang, Indonesia), Lita Citra Dewi (Universitas
Negeri Semarang, Indonesia) and Fransisca Rahcmawati Indira (Universitas Negeri Semarang, Indonesia)

Abstract
The adoption of e-commerce by SMEs is inevitable given the changing
disruptive era where marketplaces innovation opens opportunities for SMEs to
become partners if they want to promote their products through marketplaces. This
study uses an integrated framework of TAM, TPB, and TOE on food processing
MSMEs in Semarang. There are 10 variables that affect the adoption of e-
commerce; the largest to smallest influencing variables are competitive pressure,
current situation, social influence, perceived trust, perceived ease for use, perceived
usefulness, individual difference factors, trading partner readiness, perceived service
quality, and consumer readiness. Competitive pressure is the variable with the
biggest effect (26.1%) on the adoption of e-commerce. Furthermore, based on three
major factors, technology, organization, and environment, the influencing factors
are environment and organization; they give an effect of 56.2% on the adoption of
e-commerce. Thus, the adoption of mobile-applications (GOJEK, Shopee, Grab,
Tokopedia, Bukalapak) is needed to increase sales.

INTRODUCTION

1
 Bank Indonesia in 2019 experienced the slowest economic growth in the last
five years at 5.02%, but the growth of the e-commerce industry is getting faster
(Akhlas, 2020). It can be seen with the emergence of application platforms and e-
Commerce applications that can be an option for entrepreneurs to develop their
marketing performance.
According to research results in August 2018 by the management of McKinsey
& Company e-Commerce, it is estimated that it will grow to $ 65 billion (Rp910
trillion). It is good news for e-Commerce users, especially entrepreneurs of Small
and Medium Enterprises (MSMEs) who need an effective and efficient marketing
channel. It is stated by Dwi Afrilina who is the Founder and CEO of SunChilla that
MSME is one of the main partners of the e-Commerce platform (Narida, 2020).
MSMEs need to get the attention of various stakeholders because MSMEs are
a reliable business for employment, as well as suppliers of goods and services that
are resilient even in times of economic crisis. Through the e-Commerce industry, it
is expected that MSMEs will be able to develop and be able to support the
Indonesian economy which is predicted to become a new world economic power in
the future.
The adoption of e-Commerce by MSMEs is inevitable given the changing
disruptive era where innovations that help create new markets, disrupt or destroy
existing markets, and ultimately replace technology. As stated earlier by Bower and
Christensen (1995) that entrepreneurs should adopt e-Commerce for business
continuity in the future.
The e-Commerce industry does not only involve e-Commerce platform
providers and their users (Partners and Buyers) in buying and selling goods and
services via the Internet, but there are also other industries connected to it, such as;
inter-service or logistics services providers, telecommunications providers, smart
device manufacturers, and others. It is the reason that the e-Commerce industry
needs to be encouraged and given attention to be able to drive the national economic
growth rate.
Furthermore, the development of e-Commerce is inseparable from the
development of digital technology. There are various e-Commerce provider
platforms such as; Tokopedia, Bukalapak, and Shopee have broadly opened up the
involvement of MSMEs to do marketing on the respective platforms. It is expected

2
that the synergy among stakeholders with the involvement of digital technology will
be the key to Indonesia's economic growth.
Equity and economic growth in Indonesia through the development of e-
Commerce is possible. It is as stated by Nuraini, one of the leaders of Tokopedia as
reported by Chandra and Adega (2019) who stated that:
“In the last 10 years, we have focused on encouraging digital economic
equity. Tokopedia has more than 6.4 million sellers starting businesses on
the platform. There are around 70% known to be new business actors,
furthermore, in May 2019, Tokopedia recorded a gross merchandise value of
IDR 18.5 trillion. "

Tokopedia claims that around 1% of Indonesia's economy operates on

Tokopedia. It is a significant number, especially when Tokopedia can reach 97% of
districts in Indonesia, which has more than 17 thousand islands. It is not only on
Tokopedia but also on other e-commerce platforms such as Bukalapak, Shopee, and
others that have also recorded a lot of transactions. Wahyudi and Tri (2019) stated
that Bank Indonesia recorded that in 2019, the online trade transactions per month
reached IDR 13 trillion.

It is not much different from McKinsey's prediction, which states that e-

commerce growth in Indonesia has increased eightfold in the 2017 to 2018
period. The total online spending was US$ 8 billion in 2017; then it
increased to US$ 65 billion in 2020.

Furthermore, it is also stated that online shopping is one of the factors

supporting Indonesia's economic growth in 2020. The development of the younger
generation population is believed to increase online shopping transactions. Online
shopping is an activity that is usually carried out by most Indonesians. Indonesia's
population of 250 million is a huge market.
Sirclo (2020) reports that one of the biggest factors is the rapid growth of the
middle class in Indonesia, which is 21% of the total population of as many as 57.3
million people in 2019. This can also be seen from the increase in the amount of
public expenditure on goods 23% of consumers online in 2018 compared to 2017.
Apart from the increasing middle class, another factor that also supports the
development of e-Commerce is the increasing level of internet penetration and
mobile device users, enabling more people to access various online shopping
platforms, ranging from online store websites, marketplace applications, social
media, and much more.

3
 Another factor that is also contributing is the increasing number of financial
technology companies, allowing a variety of payment methods. According to
Google data in July 2018, around 66% of Indonesians do not have bank accounts.
With the emergence of various applications and payment features as well as online
wallets via smartphones, it has become easier for people to make online
transactions.
Sirclo (2020) also stated that when viewed from its sales platform, the 5 largest
marketplaces in Indonesia based on the number of monthly visitors in the second
quarter of 2020 were Shopee (93.4 million), Tokopedia (86.1 million), Bukalapak
(35.2 million). ), Lazada (22 million), and Blibli (18.3 million). However, each of
these marketplaces also has its market.
Then, for marketing the food products, it is usual for the sellers or MSMEs
entrepreneurs to market their products on Grab and GOJEK. Those two e-
Commerce has strong competition since they provide almost similar services
(Setyowati, 2019). As we know in Indonesia that Grab has GrabFood and GOJEK
has GOFOOD which allows MSMEs entrepreneurs to promote their products.
Thus; the e-Commerce platforms referred to in this study are Tokopedia,
Shopee, Bukalapak, GOJEK, and Grab. We identified MSMEs from Semarang as
partners in one or more of those five (5) marketplaces.
Meanwhile, the Indonesian government wants to position Indonesia as the
largest digital economy country in Southeast Asia by 2020. With the rapid growth
of online businesses, the Indonesian people will get positive benefits in the economy
such as welfare growth, new job growth, and others. Thus, Indonesia is no longer
just a target for the international business market, but on the contrary, can become a
capable e-Commerce entrepreneur reaching out to foreign markets.
Marketplaces open opportunities for MSMEs to become partners when they
want to promote their products through users of these marketplaces. It is certainly a
symbiotic mutualism for online platform providers and related MSMEs. MSMEs are
considered to be able to move Indonesia's economic sector significantly. MSMEs
are potential economic drivers as stated by Febriantoro (2018) that Small and
medium-scale enterprises (SMEs) are potential economic drivers as well as
important sources of flexibility, innovations, and employment creation.
According to the latest data accessed on December 12, 2019,
AyoSemarang.com reported that there were 17,445 registered MSMEs clustered

4
into several categories can be seen in figure 1.
Bandeng Batik
Handycrfat
Bag Jamu Others
Steel
Tourism Spring rolls
Mebellaire
Processed Processed food
Processed Food
Food 31% Tourism
Others Bag
Bandeng Presto
Batik
Mebel
Spring Handycraft
rolls
Metal Herbal drinks

Figure 1. The Clustering of MSMEs in Semarang

The number of Small Micro and Medium Enterprises (MSMEs) in Semarang

until mid-October 2019 reached 17,010 MSMEs. This number grew rapidly from a
month earlier which only reached 16,500 MSMEs. Food Processed MSMEs are the
highest cluster with a percentage of 31% or around 5,407 MSMEs
AyoSemarang.com (2020) also reported that the Head of Semarang
Cooperatives and MSMES Service, FX Bambang Suranggono, in his remarks
appreciated GrabExpress for contributing to the development and growth of
MSMEs in Semarang. According to him, it is in line with the vision of the
Semarang Government to make Semarang the MSME city by 2020.
Katadata.co.id (2019) stated that the number of MSMEs utilizing e-
Commerce has only reached 17.1%. The Ministry of Communication and
Informatics (Kominfo) noted that only 9.6 million or 17.1% of the total 56 million
Micro, Small and Medium Enterprises (MSMEs) in Indonesia are selling online or
go-online. It means that out of 5,407 Food Processed MSMEs in Semarang, only
925 MSMEs have gone online. Therefore, it is necessary to analyze the factors that
influence MSMEs' willingness to adopt MSMEs as an effort to increase e-
Commerce adoption in MSMEs.
This study uses a research construct conducted by Awa, et.al. (2015) with
three (3) driving factors; Technology, Organization, and Environment to influence
the adoption of e-Commerce in Food Processed MSMEs in Semarang. The goal of
this study was to analyze 15 variables, i.e. a) perceived usefulness; b) perceived ease
of use; c) perceived behavior control; d) scope of business operations; e) firm's size;
f) organization mission; g) facilitating condition; h) individual difference factors; i)

5
social influence; j) consumer readiness; k) competitive pressure; l) trading partner
readiness; m) current situation; n) perceived service quality, and o) perceived trust
in e-Commerce adoption among Food Processed MSME entrepreneurs in
Semarang.

LIMITATION OF THE STUDY

Researchers examine several variables influencing the adoption of e-
Commerce in Food Processed MSMEs in Semarang. The e-Commerce platform
referred to in this study is Tokopedia, Shopee, Bukalapak, GOJEK, and Grab. We
identify MSMEs from Semarang who are partners in one or more of the five (5)
marketplaces.
LITERATURE REVIEW
The process of writing this thesis is based on the theory developed by Awa,
HO, Ojiabo, OU, & Emecheta, BC (2015) with the title Integrating TAM, TPB, and
TOE frameworks and expanding their characteristic constructs for e-Commerce
adoption by SMEs. Awa, et.al. (2003) synthesized the elements in three (3) existing
technology acceptance models, namely Theory of Planned Behavior (TPB), Theory
Acceptance Model (TAM), and The Technology-Organization-Environment (TOE)
to obtain a harmonious view of acceptance of the technology.
Theory of Planned Behavior
Theory of Planned Behavior is a further development of the Theory of Reason
Action (TRA). Ajzen and Fishbein (1988) added a construct that does not exist in
TRA, namely behavior control. Theory of Planned Behavior (TPB) is a theory of
attitude model that estimates the interest or intention of consumers to perform a
behavior or action. The Theory of Planned Behavior model explains that the main
factor that influences a person's behavior is his intention or 19 tendencies to perform
such actions (Cheung and To, 2019). In other words, whether or not a behavior is
done is determined not only by subjective attitudes and norms but also by individual
perceptions of the controls it can do. This behavior control is formed based on the
individual's beliefs about control. Theory of Reason Action (TRA) is one of the
theories incorporated in UTAUT. TRA was first coined by Ajzen in 1980. This
theory is structured using the basic assumption that humans behave consciously and
consider all available information. In this TRA, Ajzen (1980) states that a person's
intention to perform a behavior determines whether or not the behavior will be

6
carried out.
Furthermore, Ajzen argues that the intention to do or not do certain behaviors
is influenced by two basic determinants, the first is related to attitudes towards
behavior and the other is related to social influences, namely subjective norms. To
reveal the influence of subjective attitudes and norms on the intention to do or not to
do the behavior, Ajzen complements this TRA with confidence. He stated that
attitudes are formed from several individual beliefs about behavior, while subjective
norms are formed from normative beliefs that come from people who affect
individual life.

Technology Acceptance Model

The technology acceptance model is the first and foremost traditional adoption
theory in the IT field (Awa et al., 2011). The TAM model is based on the theory of
reasoned action (TRA) (Ajzen and Fisbein, 1988). TRA has been used to predict
behavior in many ways. TRA can also be described as a model that studies widely
social psychology related to the behavior of a person who is done consciously
(Yousafzai, et.al, 2010). This provides a basis for unraveling the impact of external
variables on adoption decisions, with the postulate essentially rests firmly on
economic, utilitarian, and attitudinal reasons. TAM proposes perceived usability
(PU) and perceived ease of use (PEOU) as basic determinants of IT adoption. The
individual’s intention to use the application is explained and predicted by his
perception of the usefulness of the technology and its simplicity. This model
provides insignificant information about user opinion about adopting a specific
system by narrowing the construction to only PU and PEOU. Hence, the need to
expand the factor or integrate with other IT acceptance models to increase the utility
of TAM is clear and predictive.

Technology-Organization-Environment

Tornatzky and Fleischer (1990) assume that the TOE is a generic set of factors
to predict the likelihood of e-Commerce adoption. This theory states that adoption is
influenced by technology development; organizational conditions, business, and
organizational reconfiguration, and the industrial environment. The technology
context explains that adoption depends on the pool of technology inside and outside
the company as well as the relative advantages of the application (advantages),

7
compatibility (both technical and organizational), complexity (learning curve),
experiment ability, and observability (visibility/imagination). The organizational
context captures the scope of the company's business; top management support;
Organizational culture; the complexity of managerial structures as measured in
terms of centralization, formalization, and vertical differentiation; quality of human
resources; and size issues and size-related problems such as internal slack resources
and specialization (Jeyaraj et al., 2006)
Environmental context relates to facilitation and inhibiting factors in the
field of operations. Among them are competitive pressure (CP), trade partner
readiness (TPR), socio-cultural issues, government encouragement, and technology
support infrastructure such as access to quality ICT consulting services (Jeyaraj et
al., 2006).

Electronic Commerce
E-Commerce is a business innovation that involves non-physical and electronic
interactions, and the maintenance of business relationships through the sharing of
information and knowledge. e-Commerce is an Internet and worldwide application
with new methods of communication, business transactions, market structures,
education, and employment. E-Commerce is a system of buying and selling several
products by electronic means by customers as well as from companies to companies
with computers as a liaison to business transactions. (Laudon and Traver, 2016).

The Internet helps MSMEs to formulate e-Commerce strategies. Saridakis et

al. (2018) stated that business performance appears to improve as entrepreneurial
organizations adopt information technology to facilitate greater market
communication and increased exposure to online shoppers. It means that e-
Commerce technologies increase SME performance since it can attract more
consumers easily.

THE METHOD
The type of research used is quantitative research with a hypothesis-testing
study design that aims to analyze, describe, and obtain empirical evidence of the
influence pattern between variables (Wahyudin, 2015: 110). The population in this
study was 925 Food Processed MSMEs in Semarang that utilized e-Commerce as
much as businesses.

8
 According to the Semarang Cooperatives and MSMES Office, the number of
Small Micro and Medium Enterprises (MSMEs) in Semarang is up to 17,445 actors.
Food Processed MSMEs are the highest cluster with a percentage of 31% or around
5,407 MSMEs and only 7.1 percent who have used e-Commerce or about 925
MSMEs with the Slovin formula 5%, it got 279 MSMEs as the samples. Here the
definition and indicators of each variable.
Table 1. Variables, Definitions, and Indicators

No. Variables Operational Definitions Indicators

1 E- E-Commerce is the use of a) Duration

Commerce the Internet and the web to
Adoption transact business, enabling
commercial transactions
between organizations and
individuals
2 Technology Technology related to the IT
platform, Skills Internet /
technical knowledge, and e-
Commerce knowledge
(business and managerial
skills) to implement e-
Commerce facilities effectively
(Zhu et al., 2002; Zhu and
Kraemer, 2002).
Organization The organization is closely
3 related to e-Commerce
especially the descriptive
factor.
4 Environment The tendency for
organizations to innovate is
shaped by opportunity and
environmental threats. There
is a strong correlation
between a firm's decision to
use e-Commerce and factors
industry
b) Frequency
(Berry, 2017)
a) Perceived Usefulness
b) Perceived Ease of Use
c) Perceived Behavioral
Control
d) Perceived Service Quality
(Davis, 1989)
a) Scope of Business
Operations
b) Firm's Size
c) Organization Mission
d) Facilitating Conditions
e) Individual Difference
Factors
f) Social Influence /
Subjective Norm
(Pan and Jang, 2008)
a) Consumer readiness
b) Competitive pressure
c) Trading Partner
readiness
d) Perceived trust
(Zhu et al., 2003)

RESULTS AND DISCUSSION

9
 This study is divided into two models to test 18 hypotheses. Model 1 is
to test 15 hypotheses; to test the effect of those 15 X variables on Y; adoption
of e-Commerce. Meanwhile, Model 2 is used to analyze 3 hypotheses. In
total 18 hypotheses will be tested in this study.

Model 1 (Per Variable)

The following is a schematic of the Smart PLS 3.0 program model tested:

Figure 2. Final Schematic Model 1

Result of Outer Model Test (Measurement Model)

The Outer Model test (measurement model) uses convergent validity and
reliability. To test the convergent validity, the outer loading value and the average
variance extracted (AVE) value were used. An indicator in the construct is
considered to meet the convergent validity which is categorized as good if the outer
value is> 0.7 and the AVE value is> 0.5 (Abdillah & Hartono, 2015: 196).
The research variable indicator shows the outer loading value above 0.7 so
that it fulfills the convergent validity assumption that can measure the research
variables. Furthermore, to assess convergent validity, it can also be seen in the

10
average variance extracted (AVE) value for each research variable.
Furthermore, the reliability test in Smart PLS uses two methods, namely
Cronbach's alpha and composite reliability. Cronbach's alpha measures the lower
limit of the reliability value of a construct. While composite reliability measures the
real value of the reliability of a construct. Rule of thumb of Cronbach's alpha value
and composite reliability> 0.7 (Abdillah & Hartono, 2015: 196). The results showed
that the composite reliability value on the research variable was> 0.7, so it was
stated that the research variable was considered reliable and had a consistent
construct.
Inner Model Test (Structural Model) Model 1
The inner model test or structural model is used to determine the effect of the
construct. The inner model test was analyzed using the R Square value and the t-test
for significance value.
1. R Square (R2) Test Model 1
R Square describes the relationship between latent variables based on the
theory evaluated by the dependent construct. R2 value indicates the goodness of fit.
The higher the R2 value, the better the construct (Abdillah & Hartono, 2015: 197).
R Square with a value> 0.67 is considered good and R Square with a value> 0.33 is
considered moderate or sufficient. Meanwhile, R Square with a value <0.19 is
considered weak (Ghozali, 2014: 41).
Table 2. R Square (R2) Model 1 Test Results
Variable R Square
E-Commerce Adoption 0.721
Source: processed research data, 2020

Based on the table above, it shows that the R2 of the e-Commerce adoption
construct in model 1 is 0.721, which means that the percentage of e-Commerce
adoption described by other constructs is 0.279 explained by the variable

others outside the research model. This shows that the R2 value is considered good
because it has a value> 0.67.

It means that the research model with 15 variables is good at predicting e-

11
 Commerce adoption behavior.
2. The t-test (t-statistic) Model 1
The path coefficient score on the inner model aimed at the t-statistic value
should be above 1.96 for the 2-tailed hypothesis and above 1.64 for the one-tailed
hypothesis, valid for hypothesis testing at 5% alpha and 80 power. % (Abdillah &
Hartono, 2015: 197). The structural influence between variables is considered
significant if the coefficient value of the t-statistic test> t-Table or p-value <0.05
(Ghozali, 2014: 67).
Hypothesis Test Model 1
Hypothesis testing in this study was carried out based on the p-value on the
total effect to determine the effect between research variables.
Table 3. Total Effect Model 1
Original Sample Standard
T P
Variable Sample Mean Deviation Hip Notes
Statistics Values
(O) (M) (STDEV)
Perceived
Usefulness -> 0.205 0.177 0.066 2,864 0.011 H1 Accepted
adoption of e-
Commerce
Perceived Ease
for Use -> 0.224 0.172 0.064 2,784 0.008 H2 Accepted
Adoption of
e-Commerce
Perceived
Behavior Control
-> Adoption of e- 0.121 0.115 0.091 1,325 0.186 H3 Rejected
Commerce

Perceived Service
Quality ->
Adoption of e- 0.191 0.190 0.069 2,748 0.006 H4 Accepted
Commerce

Scope of
Business
Operation -> 0.000 -0.012 0.083 0.006 0.995 H5 Rejected
Adoption of e-
commerce
Firm Size ->
-0.072 -0.063 0.108 0.672 0.502 H6 Rejected
Adoption of e-

12
 Origin Samp Standa Notes
T P
Variable al le rd Hi
Statisti Valu
Sampl Mean Deviati p
cs es
e (O) (M) on
(STDE
V)
Organization
Mission -> 0.052 0.071 0.121 0.429 0.668 H7 Rejected
Adoption of e-
Commerce
Facilitating
Conditions -> -0.079 -0.082 0.115 0.692 0.489 H8 Rejected
Adoption of
e-Commerce
Individual
Difference
Factors -> 0.199 0.168 0.071 2,735 0.018 H9 Accepted
Adoption of e-
Commerce

Social Influence
-> Adoption 0.246 0.177 0.075 2,940 0.007 H1 Accepted
of e-Commerce 0

Consumer
Readiness -> 0.174 0.161 0.065 1,989 0.041 H1 Accepted
Adoption of e- 1
Commerce
Competitive
Pressure -> 0.261 0.172 0.074 2,954 0.001 H1 Accepted
Adoption of e- 2
Commerce
Trading Partner
Readiness ->
Adopt 0.198 0.169 0.070 2004 0.016 H1 Accepted
ion of e- 3
Commerce
Perceived
Trust - 0.244 0.229 0.092 2,644 0.008 H14 Accept
>Adoption ed
of e-Commerce
Current
Situations -> 0.258 0.193 0.088 2,883 0.003 H15 Accept
Adoption ed
of e-Commerce
Source: processed research data, 2020

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 There are 15 variables studied; i.e. a) perceived usefulness; b) perceived ease
of use; c) perceived behavior control; d) scope of business operations; e) firm's
size; f) organization mission; g) facilitating condition; h) individual difference
factors; i) social influence; j) consumer readiness; k) competitive pressure; l)
trading partner readiness; m) current situation; n) perceived service quality, and o)
perceived trust; then there are 10 variables that have a positive and significant
effect. 10 variables have a positive and significant effect on the behavior of
MSME entrepreneurs to adopt e-Commerce. The details can be seen in Table 4
which shows the largest to the smallest influence of those 15 variables;

Table 4. The Magnitude of Each Variable on Adoption e-Commerce

The Effects of Variables The Magnitude

of the Effect
Competitive Pressure -> Adoption of E-Commerce 0.261
Current Situation -> Adoption of E-Commerce 0.258
Social Influence -> Adoption of E-Commerce 0.246
Perceived Trust -> Adoption of E-Commerce 0.244
Perceived Ease For Use -> Adoption of E-
0.224
Commerce
Perceived Usefulness -> Adoption of E-Commerce 0.205
Individual Difference Factors -> Adoption of E-
0.199
Commerce
Trading Partner Readiness -> Adoption of E-
0.198
Commerce
Perceived Service Quality -> Adoption of E-
0.191
Commerce
Consumer Readiness-> Adoption of E-Commerce 0.174
Perceived Behavior Control -> Adoption of E-
0.121
Commerce
Organization Mission -> Adoption of E-Commerce 0.052
Scope Of Business Operation -> Adoption of E-
0
Commerce
Firm Size -> Adoption of E-Commerce -0.072
Facilitating Conditions -> Adoption of E- -0.079

14
Commerce

Meanwhile, the next variables include perceived behavior control; the scope
of business operations; firm size; organization mission; facilitating condition; they
give insignificant effects on the adoption of e-Commerce. It means that the higher
the variable, the lower the e-Commerce adoption by MSMEs, but the effect is not
real or significant.
The reason is that the five (5) variables that do not affect e-Commerce
adoption are the inadequate condition of MSMEs in Indonesia and only a small
proportion of MSMEs have been able to utilize the Internet or e-Commerce.
Based on the results of the Report from (Irawan, 2018) in the
ekonomi.bisnis.com stated that the Ministry of Communication and Informatics
noted that only 8% of the 60 million MSMEs in Indonesia have used online
platforms to market their products. Based on the results of a survey by
Finixorgle Indonesia (Republika, 2013) stated that only about 75,000 out of
55,200,000, or equivalent to 0.0013% of MSMEs in Indonesia have used the
Internet to accompany their business. It is a very unequal comparison when
viewed from the total number of MSMEs in Indonesia. The low penetration of
e-Commerce for MSMEs in Indonesia is a matter of concern. The role of the
government and all MSME stakeholders is needed. The government as the
strongest role should know the low penetration of e-Commerce to MSME
business actors, provide training and development opportunities for MSMEs
through e-Commerce (Febriantoro, 2018: 186).
Furthermore, to analyze three (3) hypotheses with variable technology (T),
Organization (O), and Environment (E), then tested using Model 2 with the
results as shown in Figure 2.

Research Model 2 (Per Factor)

The following is a schematic of the Smart PLS 3.0 program model tested:

15
 Figure 3. Final Schematic of Model 2

The Results of Outer Model Test (Measurement

Model)

1. Convergent Validity
To test the convergent validity, the outer loading value and the average
variance extracted (AVE) value were used. An indicator in the construct is
considered to meet the convergent validity which is categorized as good if the
outer value is> 0.7 and the AVE value is> 0.5 (Abdillah & Hartono, 2015:
196). The following is the outer loading value of each indicator in the research
variable:
The research variable indicator shows the outer loading value above 0.7
so that it fulfills the convergent validity assumption that can measure the
research variables. Furthermore, to assess convergent validity, it can also be
seen in the average variance extracted (AVE) value of each research variable
and the results show that the AVE value of each research factor is> 0.5 so that
the research variable can be a good research construct.

16
 2. Discriminant Validity
The discriminant validity test can be seen from the cross-loading value. An
indicator is declared to meet discriminant validity if the cross-loading value of
the indicator in one variable is> 0.7 (Abdillah & Hartono, 2015: 196). And the
research results show that the value of the cross-loading indicator for each
variable is> 0.7 so that the research variable can be used as a good research
construct.
3. Reliability Test

The reliability test in Smart PLS uses two methods, namely Cronbach's
alpha and composite reliability. Cronbach's alpha measures the lower limit of
the reliability value of a construct. While composite reliability measures the
real value of the reliability of a construct. Rule of thumb of Cronbach's alpha
value and composite reliability> 0.7 (Abdillah & Hartono, 2015: 196).
The table above shows that the Cronbach's alpha value for each factor>
0.7 so that the factor The Table above shows that the composite reliability
value on the research factor> 0.7 so that it is stated that the research factor is
considered reliable and has a consistent construct.
Inner Model Test (Structural Model) Model 2
The inner model test or structural model is used to determine the
effect of the construct. The inner model test was analyzed using the R
Square value and the t-test for significance value.
1. R Square (R2) Test Model 2
R Square describes the relationship between latent variables based on the
theory evaluated by the dependent construct. R2 value indicates the goodness
of fit. The higher the R2 value, the better the construct (Abdillah & Hartono,
2015: 197). R Square with a value> 0.67 is considered good and R Square with
a value> 0.33 is considered moderate or sufficient. Meanwhile, R Square with
a value <0.19 is considered weak (Ghozali, 2014: 41).
Table 5. R Square (R2) Model 2 Test Results
Variable R Square
E-Commerce Adoption 0.56
2

17
 Source: processed research data, 2020

Table 5 shows that the R2 of the e-Commerce adoption construct in model

2 is 0.562, which means that the percentage of e-Commerce adoption described
by other constructs is 0.438 explained by other variables outside the research
model. This shows that the R2 value is considered moderate because it is> 0.33
and <0.67.
2. T (t-statistic) Model 2 test

The path coefficient score on the inner model aimed at the t-statistic value
should be above 1.96 for the 2-tailed hypothesis and above 1.64 for the one-
tailed hypothesis, valid for hypothesis testing at 5% alpha and 80 power. %
(Abdillah & Hartono, 2015: 197). The structural influence between variables is
considered significant if the coefficient value of the t-statistic test> t-Table or p-
value <0.05 (Ghozali, 2014: 67).
Hypothesis Test Model 2
Hypothesis testing in this study was carried out based on the p-value
on the total effect to determine the effect between research variables.
Table 6. Total Effect Model 2
Origin Sampl Standar
T P
Variable al e d Hip Notes
Statisti Value
Sample Mean Deviatio
cs s
(O) (M) n
(STDEV
)
Technology
(Factor 1) -> 0.104 0.112 0.11 0.941 0.347 H16 Rejected
E- Commerce 0
Adoption
Organization
(Factor 2) -> 0.198 0.178 0.07 2,040 0.010 H17 Accepted
E- Commerce 5
Adoption
Environment
(Factor 3) -> 0.193 0.199 0.07 2,454 0.014 H18 Accepted
E- Commerce 8
Adoption
Source: processed research data, 2020

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 Based on three major factors; Technology, Organization, and
Environment, the largest to smallest influencing factors are Organization,
Environment, and Technology.
Based on the total effect table, the Organization covers the Scope of
Business Operations (SBOs) variable, Firm's Size, Organization Mission. Based
on the total effect table, it shows that the p-value is 0.014 <0.05 with a
significance level of 5%. The original sample value (estimate) of 0.198 indicates
that there is a positive environmental influence (factor 3) of 19.8% on e-
Commerce adoption. Organizational factors make MSME entrepreneurs use e-
Commerce. E-Commerce is expected to be able to improve product marketing
performance and maintain the condition of MSMEs in today's online business.
Then, the environment includes environmental variables consisting of five
indicators used to measure environmental variables, namely a) consumer
readiness (consumer readiness); b) competitive pressure; c) trading partner
readiness (readiness of trading partners); d) perceived trust (perceived trust); and
e) current situation (current situation). It means that environmental factors most
influence MSME entrepreneurs to adopt e-Commerce. it shows that the p-value is
0.014 <0.05 with a significance level of 5%. The original sample value (estimate)
is 0, 193 shows that there is a positive environmental influence (factor 3) 19.3%
on e-Commerce adoption. Environmental factors such as competitors, buyers, e-
Commerce application provider partners, perceived trust, and also the current
pandemic conditions have made MSME entrepreneurs use e-Commerce.
Micro, Small, and Medium Enterprises (MSMEs) currently have a major
role in supporting the economy. MSMEs in Semarang are very diverse, but what
dominates is MSME with food processing (Sigi, 2019). Various processed foods
ranging from traditional cakes, traditional dishes to modern snacks can be found
in Semarang. These various food preparations can be easily searched for by
consumers through a variety of available applications ranging from GOJEK,
GRAB, and many other applications that support us to be able to order various

19
 kinds of processed food around us.
As an illustration, when we have installed GOJEK, we can search or find a
variety of processed foods and their prices by entering the food menu, then we
can immediately see the sharing of offers to order food from our closest location,
or offers to order food that is currently giving a purchase discount. This e-
Commerce application is very useful for consumers because there are food
delivery services, and there are many attractive promos offered every day.
Besides, the adoption of e-Commerce is also very beneficial for MSMEs to
increase their sales, because when MSMEs, especially food-processed MSMEs
adopt e-Commerce, it will support the brand, promoting, and marketing the
products.
There are many MSMEs in the city of Semarang, but according to news
quoted from the ayoSemarang.com (2020), it states that there were 17,526
licensed MSMEs. However, from that number, only about 20 percent have
adopted e-Commerce, and use online technology in their marketing. It is because
there are MSME players who find it difficult to adopt e-Commerce, one of the
difficulties experienced is that most MSME players do not understand the
procedure for joining as e-Commerce partners, and these MSME players are
elderly so they do not follow technological developments.
Then, MSME players who have adopted e-Commerce, are mostly young
entrepreneurs who are technology literate, and already understand the procedures
for adopting available applications. Some applications provide almost the same
procedure. The following is an example of how to register to become a GOJEK
business partner (GOJEK, 2020); especially in the culinary business, namely
GOFOOD:
1) The first step is that we can download the Go Biz application, select the GoFood
list, click open a new restaurant that is privately owned, select the city where you
open the restaurant. Then continue with,
2) Enter the name of the business owner in the user field, then email and mobile
number that are still active, click create an account. An account confirmation
code will be sent to the registered mobile number.

20
3) Enter a restaurant name, then proceed to select restaurant information such as
street name. Set the restaurant location point accurately, use google maps to help
to find the closest location point. Select the owner's identity, enter the phone
number of the business owner, click upload, and a photo of the ID-CARD.
4) Enter the ID-CARD number in the column provided. Click the tick in the NPWP
column, click upload photo of your NPWP card. Enter the number and name on
the NPWP. Click Save.
5) Then, select your bank account information. Click the arrow in the bank name
column and select the bank you are using. Enter the account number as well as
the name of the account owner. Click verify if the account owner is different
from the restaurant owner.
6) Enter the owner's name according to the ID-CARD and the name of the bank
account holder. Click tick and upload power of attorney, click save. Select tax
and other information,
7) Enter the PB1 tax rate info, service rate with a maximum of 10%. Click Save. If
all data is complete, click continue. Click send business data. Registration is
complete. You only need to wait for the data to be processed by GOJEK.
8) Then, after the initial registration process is complete and approved, GOJEK will
confirm that your registration has been received via the email you registered
with. If the registration is approved, GOJEK will also inform you via email.
As can be seen, there are indeed various steps. It is certainly not easy for
MSME entrepreneurs who do not have the support of skillful Human Resources
(HR) and lack of technology to understand and adopt e-Commerce. Those complex
steps and requirements are the major obstacles to be the partners of the applications
of e-Commerce.
Some food-processed MSMEs in Semarang get more buyers or consumers
after adopting e-Commerce. RadarSemarang.com (2019) reported that Legendary
culinary delights from Semarang, Lekker Paimo, located at Jalan Karanganyar
No.37, Brumbungan, Central Semarang District, experienced a 25 percent increase
in sales after becoming a partner of GoFood, one of the services of Gojek Indonesia.
Paimo, the business owner, added a special outlet for GoFood orders which opens

21
job vacancies for those in need.
The Gojek platform currently also supports MSME players like him. The
Gojek provides services for its partners; such as GoBiz. The cashless service from
GoBiz, Paimo admitted that it was no longer complicated to provide change to
Gojek drivers who got GoFood orders and orders.
Thus; mobile-applications for marketing the processed-food for MSMEs
gives a positive effect on the marketing since it increases sales. More people know
the food easier and order them easily via the apps. However; it needs guidance for
the entrepreneurs to adopt it since the steps to be the partner are not simple. But it is
doable and the stakeholders should encourage the entrepreneurs to adopt it by
increasing those 10 variables.

CONCLUSION AND SUGGESTION

Conclusion
There are 10 (ten) variables that affect the adoption of e-Commerce; the
largest to smallest influencing variables are competitive pressure, current
situation, social influence, perceived trust, perceived ease for use, perceived
usefulness, individual difference factors, trading partner readiness, perceived
service quality, and consumer readiness. And here are five (5) variables that give
insignificant effects; i.e. Perceived Behavior Control, organization mission, Scope
of Business Operation, Firm Size, and facilitating conditions.
Competitive pressure is the variable with the biggest effect on the adoption
of e-Commerce. Then, based on the total effect of the competitive pressure, the p-
value is 0.001 <0.05 with a significance level of 5%. The original sample value
(estimate) of 0.261 indicates that there is a positive effect of competitive pressure
of 26.1% on e-Commerce adoption.
Furthermore, based on three major factors; Technology, Organization, and
Environment, the influencing factors are Environment and Organization. It means
that the environmental and organizational factors give the most influence on SME
entrepreneurs adopting e-Commerce; they give an effect of 56.2% on the adoption

22
of e-Commerce.
Adoption of e-Commerce can improve product marketing performance and
maintain the condition of MSMEs in today's online business as stated by SMEs
owners. Mobile-applications (GOJEK, Shopee, Grab, Tokopedia, Bukalapak) for
marketing the processed-food for MSMEs give a positive effect on marketing
since it increases sales. More people know the food easier and order them easily
via the apps. However; it needs guidance for the entrepreneurs to adopt it since
the steps to be the partner are not simple. But it is doable and the stakeholders
should encourage the entrepreneurs to adopt it by increasing those 10 variables.
Suggestion
Based on the above conclusions, the suggestions are:
1) For the government to encourage MSMEs to go online, it is necessary to
increase the influence of the environment including policies and ease of
Internet access; to mobile-application providers to provide quality application
services that make it easier and help MSMEs.
2) For MSMEs entrepreneurs to be able to encourage their businesses to adopt
e-Commerce it requires expertise in the use of technology. They need to
improve this expertise are by participating in e-Commerce training held by
official institutions, and learn to improve the skills needed, because the key
to change and innovation lies in the human resources of the organization/
business itself.
3) For future researchers, to be able to use other variables in the research model.
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Ini zam

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