Digital literacy and survival mechanism of micro-small enterprises in practicing sharing economy

Amidst the COVID-19 pandemic, Micro-Small Enterprises (MSEs) have faced severe challenges and many are on the brink of collapse. To address this issue, this study investigates the survival mechanisms of MSEs in the digital economy platform, including the barriers they encounter when adapting to sharing economy practices. Additionally, the study examines the digital literacy capabilities of MSE actors and the extent to which these capabilities impact the continuity of businesses involved in the sharing economy. Using a descriptive research approach with 300 MSE actors in East Java Province as respondents, this study reveals that, aside from receiving financial assistance, digitization is essential for MSEs to avoid failure. MSE actors, who previously relied solely on traditional channels for product marketing, are now compelled to use digital platforms and encouraged to participate in sharing economy practices. The study indicates that, despite the perceived benefits of MSE actors’ engagement in the sharing economy practice, the profit earned must be shared with the application owner, without any guarantee of proportionality to the risks they bear. Digital transformation, however, presents a unique opportunity for both new and established MSE actors to upgrade their businesses. Notably, online promotion is much more accessible and cost-effective, with options such as Instagram, Facebook, and Google Business. Nevertheless, the readiness of MSE actors to adopt digital transformation is uneven, as some possess outdated gadgets and inadequate digital literacy. Therefore, digital literacy training for MSE actors is a crucial need.