The Evaluation of Technology Startup Role on Indonesian SMEs Industry 4.0 Adoption Using CLD-ABM Integrated Model

Abstract

The role of the Association of Southeast Asia Nations (ASEAN) small and medium enterprises (SMEs) as the regional socioeconomic stabilizer is inseparable from endogenous multisector collaboration. Indonesian SMEs struggled with Industry 4.0 adoption due to the lower digital infrastructure (DI) and digital literacy (DL) index. This study aims to develop a provisional model to explore the role of technology startups (TS) in covering the DI and DL of SMEs. The evaluation was through a simulation model of Indonesian SMEs’ collaboration with the government and TS. The developed model is a concurrent real-time integration of an agent-based model (ABM) with a causal loop diagram (CLD). The simulation results imply that SMEs’ collaboration with TS leads to the early adoption of Industry 4.0 that balances the business competition environment. The model also shows that exponentially rising government aid can help the SMEs into late adoption of Industry 4.0. However, SMEs are still unable to sustain the business competition. Thus, the integrative simulation model is a state-action planning model with each state result bounded to the previous state result. The initial input parameters determine the model behavior. Thus, the model is a good resiliency planner for SMEs’ Industry 4.0 adoption.