DIGITALIZATION AND GLOBALIZATION: TRANSFORMATION OF UMKM IN THE DIGITAL ERA

Abstract

Digitalization and globalization have become the main forces driving change in the business world, including in the Micro, Small and Medium Enterprises (UMKM) sector. As the backbone of the economy in many developing countries, UMKM face significant challenges and opportunities in the digital era. with this article reporting the results of a study which aims to analyze the process of adopting new technology by UMKM and the process of adapting to the global business environment. The theories used are the diffusion of innovation theory and media ecology. The theoretical approach used includes innovation diffusion theory and media ecology theory to understand how UMKM adopt new technologies and adapt to changes in the global business environment. The study was carried out by reviewing various academic sources, industry reports and secondary data related to the digitalization of UMKM. The analysis results show that digitalization provides competitive advantages in the form of access to global markets, increased operational efficiency and product innovation. However, challenges such as the digital divide, lack of technological literacy, and infrastructure constraints remain major obstacles for UMKM. These findings emphasize that the transformation of UMKM through digitalization requires support from various parties, including the government, the private sector and the community. Strategic recommendations include increasing digital literacy, developing technological infrastructure, and creating inclusive policies to support the growth of UMKM in the global era.