A PSYCHOSOCIAL-FINANCIAL MODEL OF MSMEs' STRATEGIC DECISIONS IN DIGITAL TRANSFORMATION: EVIDENCE FROM MEDAN
DOI:
https://doi.org/10.70248/jmie.v4i1.4604Abstract
Current technology adoption models, such as the Technology Acceptance Model (TAM) and the Unified Theory of Acceptance and Use of Technology (UTAUT), frequently neglect the psychological and emotional dimensions influencing financial decisions, particularly among informal micro, small, and medium enterprises (MSMEs). Addressing this critical theoretical gap, this study constructs and empirically validates a novel psychosocial-financial model. This model uniquely integrates digital trust, social influence, and financial anxiety to evaluate how digital financial transformation and these underlying psychosocial factors dictate financial behavior and the effectiveness of strategic decisions. Employing an explanatory quantitative research design, empirical data were collected from a sample of 391 MSME owners operating in Medan, Indonesia. The respondents, predominantly informal businesses within the food and beverage sector, were selected through purposive sampling based on their active utilization of financial technology. Data were analyzed using PLS-SEM via SmartPLS 4.0. The findings reveal that digital transformation has no direct impact on financial behavior ( = 0.011, = 0.862). Instead, financial behavior is heavily driven by social influence as the strongest predictor ( = 0.436, = 0.000, large f2), followed by digital trust ( = 0.263, = 0.000, medium f2), and negatively affected by financial anxiety ( = -0.100, = 0.040, small f2). Furthermore, financial behavior significantly mediates the relationship between psychosocial factors and effective strategic decisions. In conclusion, the mere integration of financial technology infrastructure is insufficient to optimize MSMEs' strategic business decisions without concurrently addressing the underlying psychosocial dynamics that govern disciplined financial behavior
References
Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50(2), 179–211. https://doi.org/10.1016/0749-5978(91)90020-T
Aleksieienko, I., Baranova, V., Trokhymets, O., Bukreieva, D., & Viunyk, O. (2025). Substantiating the use of automated platforms for cash flow management at small and medium-sized businesses. Eastern-European Journal of Enterprise Technologies, 5(13 (137)), 17–28. https://doi.org/10.15587/1729-4061.2025.340562
Alqam, H. S., Razzak, M. R., & Bachkirov, A. A. (2025). Driving SME success through digital readiness and dynamic capabilities in propelling business process digitalization and performance. Journal of Entrepreneurship in Emerging Economies, 17(6), 1699–1722. https://doi.org/10.1108/JEEE-02-2025-0057
Andarwati, M., Swalaganata, G., Yuniarti, S., Pamuji, F. Y., Sitompul, E. R., Yudhistiro, K., & Adi, P. D. P. (2025). Adoption of Generative AI-Enhanced Profit Sharing Digital Systems in MSMEs: A Comprehensive Model Analysis. International Journal of Advanced Computer Science and Applications, 16(1). https://doi.org/10.14569/IJACSA.2025.0160141
Anggraeni, R. N., Amir, A. M., Jurnana, J., & Rajindra, R. (2025). Strategic decision-making as a behavioral bridge: Mediating the impact of contingency factors on management accounting practices in digital start-ups. Multidisciplinary Science Journal, 8(6), 2026417. https://doi.org/10.31893/multiscience.2026417
Åslund, C., Larm, P., Starrin, B., & Nilsson, K. W. (2014). The buffering effect of tangible social support on financial stress: Influence on psychological well-being and psychosomatic symptoms in a large sample of the adult general population. International Journal for Equity in Health, 13(1). https://doi.org/10.1186/s12939-014-0085-3
Capolupo, N., Virglerova, Z., Rosa, A., & Palmucci, D. N. (2024). The relationship between biases and entrepreneurial Decision-Making. Evidence from Italian and Czech SMEs. International Entrepreneurship and Management Journal, 20(4), 3323–3348. https://doi.org/10.1007/s11365-024-00983-5
Cohen, J. (2013). Statistical Power Analysis for the Behavioral Sciences. Routledge. https://doi.org/10.4324/9780203771587
Cunningham, J. A., Damij, N., Modic, D., & Olan, F. (2023). MSME technology adoption, entrepreneurial mindset and value creation: a configurational approach. The Journal of Technology Transfer, 48(5), 1574–1598. https://doi.org/10.1007/s10961-023-10022-0
Davis, F. D. (1989). Perceived Usefulness, Perceived Ease of Use, and User Acceptance of Information Technology. MIS Quarterly, 13(3), 319. https://doi.org/10.2307/249008
Firk, S., Gehrke, Y., & Wolff, M. (2024). Digital Anxiety in the Finance Function: Consequences and Mitigating Factors. Journal of Management Accounting Research, 36(1), 95–118. https://doi.org/10.2308/JMAR-2021-056
Gio, P. U. (2022). PLS SEM dengan SmartPLS (Vol. 1).
Gunawan, A., Jufrizen, & Pulungan, D. R. (2023). Improving MSME performance through financial literacy, financial technology, and financial inclusion. International Journal of Applied Economics, Finance and Accounting, 15(1), 39–52. https://doi.org/10.33094/ijaefa.v15i1.761
Gunawan, H., Sinaga, B. L., & WP, S. P. (2019). Assessment of the Readiness of Micro, Small and Medium Enterprises in Using E-Money Using the Unified Theory of Acceptance and Use of Technology (UTAUT) Method. Procedia Computer Science, 161, 316–323. https://doi.org/10.1016/j.procs.2019.11.129
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2022). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) (3rd ed.). SAGE Publications.
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. Journal of Marketing Theory and Practice, 19(2), 139–152. https://doi.org/10.2753/MTP1069-6679190202
Haji Abdullah, S., Zainal Abidin, A. H., Mohd Syahrir, S. N., & Yusoff, M. F. (2025). Promoting Digital Community Development Through Cashless: The Moderating Role of Social Influence in the Context of TPB and UTAUT (pp. 456–464). https://doi.org/10.1007/978-3-032-00447-5_44
Harahap, Z. I., Lubis, S. N., . E., & Aritonang, E. Y. (2024). The Impact of Financial Literacy, Inclusion, and Access on MSME Growth and Welfare in North Sumatra: A Mediating Role of Business Growth. Journal of Ecohumanism, 3(7), 3271–3283. https://doi.org/10.62754/joe.v3i7.4456
Hon, T.-Y., Moslehpour, M., & Woo, K.-Y. (2021). Review on Behavioral Finance with Empirical Evidence. Advances in Decision Sciences, 25(4), 15–41. https://doi.org/10.47654/v25y2021i4p15-41
Hussain, S., Gupta, S., & Bhardwaj, S. (2025). Unraveling the dynamics of digital financial services adoption and digital divide: A systematic literature review and future research agenda. Journal of Global Information Technology Management, 28(2), 77–110. https://doi.org/10.1080/1097198X.2025.2480970
Kamal, S. A., Shafiq, M., & Kakria, P. (2020). Investigating acceptance of telemedicine services through an extended technology acceptance model (TAM). Technology in Society, 60, 101212. https://doi.org/10.1016/j.techsoc.2019.101212
Kurniawan, Y., Kelly, K., & Vionita, V. (2024). Examining the Factors Driving Digital Banking Adoption in Indonesia: A Modified Technology Acceptance Model Approach. Journal of Logistics, Informatics and Service Science, 11(6), 442–459. https://doi.org/10.33168/JLISS.2024.0626
Likert, R. (1932). A technique for the measurement of attitudes. In Archives of Psychology (Vol. 22, pp. 5–55). https://psycnet.apa.org/record/1933-01885-001
Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the Entrepreneurial Orientation Construct and Linking It To Performance. Academy of Management Review, 21(1), 135–172. https://doi.org/10.5465/amr.1996.9602161568
Mahmood, A., Arshad Ali, A., Nazam, M., & Nazim, M. (2021). Developing an interplay among the psychological barriers for the adoption of industry 4.0 phenomenon. PLOS ONE, 16(8), e0255115. https://doi.org/10.1371/journal.pone.0255115
Maksum, M., Muflih, M., Rohman, M. M., Injaz, F., & Sanrego, Y. D. (2025). Why do women micro-entrepreneurs adopt Islamic digital financing? Perspectives from UTAUT, trust and Sharia compliance. Journal of Islamic Marketing, 16(12), 3509–3539. https://doi.org/10.1108/JIMA-03-2023-0087
Mohammed Horani, O., Khatibi, A., RATIB ALSoud, A., Tham, J., Samed Al-Adwan, A., & M. Ferdous Azam, S. (2023). Antecedents of Business Analytics Adoption and Impacts on Banks’ Performance: The Perspective of the TOE Framework and Resource-Based View. Interdisciplinary Journal of Information, Knowledge, and Management, 18, 609–643. https://doi.org/10.28945/5188
Nugraheni, P., Darma, E. S., & Muhammad, R. (2025). Adoption of Digital Technology and Financial Knowledge: Strategies for Achieving Sustainable Performance of MSMEs. Journal of Risk and Financial Management, 18(11), 646. https://doi.org/10.3390/jrfm18110646
Ojiaku, O. C., Ezenwafor, E. C., & Osarenkhoe, A. (2024). Integrating TTF and UTAUT models to illuminate factors that influence consumers’ intentions to adopt financial technologies in an emerging country context. International Journal of Technology Marketing, 18(1), 113–135. https://doi.org/10.1504/IJTMKT.2024.135674
Primadasa, Y., Saputra, A. Y., & Juliansa, H. (2021). Penerapan Metode Technology Acceptance Model Terhadap Faktor Kepercayaan dan Risiko Dalam Penggunan Aplikasi Fintech. CogITo Smart Journal, 7(2), 290–304. https://doi.org/10.31154/cogito.v7i2.327.290-304
Purnamasari, P., Pramono, I. P., Haryatiningsih, R., Ismail, S. A., & Shafie, R. (2020). Technology Acceptance Model of Financial Technology in Micro, Small, and Medium Enterprises (MSME) in Indonesia. The Journal of Asian Finance, Economics and Business, 7(10), 981–988. https://doi.org/10.13106/jafeb.2020.vol7.no10.981
Putri, R. M., & Utomo, R. G. (2025). The Effect of Awareness, Trust, Privacy, and Security on Students Adoption of Digital Banking. 2025 International Conference on Advancement in Data Science, E-Learning and Information System (ICADEIS), 1–6. https://doi.org/10.1109/ICADEIS65852.2025.10933127
Rahayu, R., Ali, S., Aulia, A., & Hidayah, R. (2022). The Current Digital Financial Literacy and Financial Behavior in Indonesian Millennial Generation. Journal of Accounting and Investment, 23(1), 78–94. https://doi.org/10.18196/jai.v23i1.13205
Raihani, R., Iskandar, M., Prihatin, L., & Hendra, R. (2024). Determinant Factor Analysis of Financial Performance of Micro, Small and Medium Enterprises with Social Capital as a Moderating Variable During COVID-19 in Aceh, Indonesia. Studies in Business and Economics, 19(2), 176–198. https://doi.org/10.2478/sbe-2024-0032
Ratnawati, K., Rokhim, R., Wati, C. R., & Dewanta, P. P. (2025). The impact of enhancing digital financial literacy on firm performance: evidence from digitalisation in Indonesia. International Journal of Technology Intelligence and Planning, 14(1), 78–106. https://doi.org/10.1504/IJTIP.2025.150737
Risman, A., Ali, A. J., Soelton, M., & Siswanti, I. (2023). The behavioral finance of MSMEs in the advancement of financial inclusion and financial technology (Fintech). The Indonesian Accounting Review, 13(1), 91–101. https://doi.org/10.14414/tiar.v13i1.3213
Saadah, K., & Setiawan, D. (2024). Determinants of fintech adoption: evidence from SMEs in Indonesia. LBS Journal of Management & Research, 22(1), 55–65. https://doi.org/10.1108/LBSJMR-11-2022-0076
Sakti Perdana, B., Muh Hafidz Ma’shum, A., & Susminingsih, S. (2024). Evaluation of the effectiveness of the ‘3-in-1’ financial reporting model in supporting the sustainability of MSMEs. Accounting and Financial Control, 5(1), 16–28. https://doi.org/10.21511/afc.05(1).2024.02
Sansovini, E., & Magida, A. (2025). Effect of digital technologies on employee wellbeing and mental health. Behaviour & Information Technology, 44(18), 4538–4550. https://doi.org/10.1080/0144929X.2025.2483795
Savellano, J. N. (2025). Technology-driven business management: The impact of digitalization on operational strategies. International Journal of ADVANCED AND APPLIED SCIENCES, 12(8), 53–62. https://doi.org/10.21833/ijaas.2025.08.005
Sharma, S. K., Ilavarasan, P. V., & Karanasios, S. (2024). Small businesses and FinTech: a systematic review and future directions. Electronic Commerce Research, 24(1), 535–575. https://doi.org/10.1007/s10660-023-09705-5
Sharma, V., Gupta, M., & Taneja, S. (2024). Does FinTech adoption impact on sustainability of small businesses: mediating role of financial well-being. Global Knowledge, Memory and Communication. https://doi.org/10.1108/GKMC-04-2024-0225
Solteo, V. Q., Jr. (2025). Psychological conditioning upon discovering potential business concepts: Lens from small and medium entrepreneurs. Environment and Social Psychology, 10(3). https://doi.org/10.59429/esp.v10i3.3467
Tandilino, C., Pontoh, G. T., Darmawati, D., & Indrijawati, A. (2025). Digital Financial Inclusion as a Mediator of Digital Financial Literacy and Government Support in MSME Performance. International Journal of Financial Studies, 13(4), 199. https://doi.org/10.3390/ijfs13040199
Theresia Sinaga, A., Fachrudin, K. A., & Irawati, N. (2023). The Impact of Income and Financial Knowledge on Personal Financial Management Behavior in Millennials Shipping Companies in Medan with Locus of Control as an Intervening Variable. International Journal of Research and Review, 10(1), 144–159. https://doi.org/10.52403/ijrr.20230115
Ulupui, I. G. K. A., Zairin, G. M., Sutanti, F. D., Khairunnisa, H., Zakaria, A., & Nurmalita, S. (2025). Enhancing MSME performance: the role of FinTech literacy, financial literacy and competitive pressure. World Review of Entrepreneurship, Management and Sustainable Development, 21(4), 1–26. https://doi.org/10.1504/WREMSD.2025.149096
Widagdo, B., & Sa’diyah, C. (2023). Business sustainability: Functions of financial behavior, technology, and knowledge. Problems and Perspectives in Management, 21(1), 120–130. https://doi.org/10.21511/ppm.21(1).2023.11
Widyastuti, M., Ferdinand, D. Y. Y., & Hermanto, Y. B. (2023). Strengthening Formal Credit Access and Performance through Financial Literacy and Credit Terms in Micro, Small and Medium Businesses. Journal of Risk and Financial Management, 16(1), 52. https://doi.org/10.3390/jrfm16010052
Wirdiyanti, R., Yusgiantoro, I., Sugiarto, A., Harjanti, A. D., Mambea, I. Y., Soekarno, S., & Damayanti, S. M. (2023). How does e-commerce adoption impact micro, small, and medium enterprises’ performance and financial inclusion? Evidence from Indonesia. Electronic Commerce Research, 23(4), 2485–2515. https://doi.org/10.1007/s10660-022-09547-7
Xanthopoulou, P., & Sahinidis, A. (2025). Mapping the Intersection of Entrepreneurship, Digitalization, and the SDGs: A Scopus-Based Literature Review. Sustainability, 17(18), 8420. https://doi.org/10.3390/su17188420
Yusrizal, Rizal, M., & Rahmadana, M. F. (2025). Digital Payment User Satisfaction: Evidence from Halal Micro, Small, and Medium Enterprises (MSMEs) in Medan City, Indonesia. International Journal of Accounting and Economics Studies, 12(5), 672–677. https://doi.org/10.14419/yrrgrg78
Zarifis, A., & Cheng, X. (2022). A model of trust in Fintech and trust in Insurtech: How Artificial Intelligence and the context influence it. Journal of Behavioral and Experimental Finance, 36. https://doi.org/10.1016/j.jbef.2022.100739
