The Impact of Digitalization and Innovation on the Sustainability of MSMEs in Malang City: The Role of Employee Adaptability as a Mediating Variable

Abstract

This study aims to analyze the impact of digitalization and innovation on the sustainability of MSMEs in Malang City, with employee adaptability as a mediating variable. A total of 100 MSME actors in Malang City were selected as respondents, with data collected through questionnaires and analyzed using the SmartPLS 3 application and purposive sampling method. The results show that digitalization positively affects the sustainability of MSMEs, where the implementation of digital technologies enhances efficiency and competitiveness. Furthermore, innovation in products and business processes also has a positive impact on the sustainability of MSMEs by increasing market appeal and operational efficiency. Employee adaptability was found to play a significant mediating role, influencing how successfully digitalization and innovation can be implemented in MSMEs. This study provides insights for MSME actors in Malang City to better optimize digitalization and innovation by involving the role of employee adaptability to enhance the longterm sustainability of their businesses.