Abstract

Entering the digital era, SMEs must prepare for the digital economy, including the ability and willingness to understand customer needs, provide consistent service with standard procedures, give a good impression, and pay attention to customer feedback. In this case, SME performance is measured by sales performance. In this digital era, SME performance is still not optimal. Therefore, it is very important to research factors that can improve SME performance in the digital era. SMEs are the ones who face the biggest challenges in the current digital era, such as how to increase the accessibility of SMEs by being go-digital and increasing the ability of SMEs to produce products that can compete with foreign products. The population in this study was all SMEs in Indonesia (totalling 62.9 million), and the sampling technique used was non-random sampling with a purposive sampling method. The data analysis technique used was the smart partial least squares (PLS) model. The results show that to improve SME performance by emphasizing sales performance, SMEs need E-readiness to improve Internet Marketing Capabilities. Apart from that, SMEs also need to introduce their products through Internet services and prepare their global marketing tools to reach world markets (known as Mapping on Internet Marketing). Besides, SMEs must also build Social Media Engagement. Increasing Social Media Engagement will further increase Internet Marketing Capabilities. SMEs with high Internet marketing capabilities will improve their sales performance further. However, the ability of SMEs to apply and integrate their resources and knowledge through Knowledge Management Capability is still low.