ADAPTATION STRATEGIES OF SMEs IN IMPROVING COMPETITIVENESS IN THE DIGITAL ECONOMY ERA INDENPASAR CITY

Abstract

This study aims to analyze the adaptation strategies of Small and Medium Enterprises (SMEs) in improving competitiveness in the digital economy era in Denpasar City. The rapid development of digital technology has changed business competition patterns, consumer behavior, marketing systems, transaction models, and internal business management practices. SMEs are required to adapt not only by using digital platforms, but also by improving managerial capacity, product innovation, service quality, digital marketing, collaboration networks, human resource capability, and employee loyalty. In Denpasar City, SMEs have an important role in supporting the local economy, especially in sectors related to trade, culinary businesses, services, creative products, and tourism-supporting activities. However, many SMEs still face challenges such as limited digital literacy, lack of access to technology, limited capital, weak branding, low ability to utilize data-based marketing, and limited employee readiness in responding to digital transformation. This study uses a qualitative descriptive approach based on secondary data analysis. Data were collected through journal articles, government reports, statistical data, previous research findings, and relevant supporting documents related to SME digital adaptation, competitiveness, and employee loyalty. The research focuses on SMEs in Denpasar City that have implemented digital adaptation strategies in their business activities. The results of this study indicate that SME adaptation strategies include the use of social media for promotion, participation in digital marketplaces, digital payment adoption, product innovation, improvement of customer service, strengthening of business networks, and development of employee capability and loyalty. Employee loyalty becomes an important internal factor because loyal employees can support service consistency, customer relationship management, operational stability, and the implementation of digital business practices. These strategies can help SMEs expand market reach, improve operational efficiency, build stronger customer relationships, strengthen internal resources, and increase competitiveness. This study is expected to provide practical recommendations for SME actors and local government in strengthening SME competitiveness in the digital economy era.