Digital Marketing Adoption and SME Competitiveness: An Empirical Analysis Using the Toe Framework

This study analyzes the extent to which Technology-Organization-Environment (TOE) factors contribute to the adoption of electronic marketing and resulting business performance among small and medium-sized enterprises (SMEs) in Mimika, Indonesia. A quantitative, cross-sectional survey design collected data from 218 SMEs using validated tools and applying Partial Least Squares Structural Equation Modeling (PLS-SEM) and bootstrapping methods for analytical assessment. The findings suggest that technological forces have the largest positive effect on electronic marketing adoption, followed by organizational forces, and environmental forces. The adoption of electronic marketing is further seen to positively affect business performance. The structural model explains 83.6% of variance for electronic marketing adoption and 70.7% of variance for business performance. Despite limitations inherent to the cross-sectional design when it comes to causal implications and geographical limitations applied to generalizability, this research provides the first empirical validation of the TOE framework within the specific context of Indonesian SMEs adopting electronic marketing. The findings are reflective of a technology-led adoption model different from organizational-led fashion common to more developed countries. The findings indicate that SMEs would be best advised to place importance upon determining their technology-readiness and examining platform compatibility, complemented by developing organizational capacity, to ensure enhanced capability to drive digital transformation, and hence make valuable contributory inputs to context-specific literature for emerging economies where technology-focused factors have a preponderant role to play when choosing an adoption model.