Digital Business Strategy and Financial Performance of Tourism Sector Micro-SMEs in Bali

Abstract

This study empirically examines the role of sustainability strategies in the relationship between digital business strategies and corporate financial performance in the Tourism Sector MSMEs in Bali. By classifying the two Capabilities (managerial ability and operational capability) required to realize a digital business strategy, this study suggests that sustainability strategy serves as a promoter in the relationship between managerial capability and financial performance but hinders the relationship between operational capability and financial performance. Using a structured survey questionnaire, data were collected from 100 micro, small and medium enterprises (MSMEs), operating in the tourism sector in Bali. The four hypotheses developed were tested using correlation analysis to find the relationship between digital business strategy, sustainability strategy and financial performance. The four hypotheses developed were tested using regression analysis to find the relationship between digital business strategy, sustainability strategy and financial performance. The findings suggest that the sustainability strategy serves as a promoter in the relationship between managerial ability and financial performance but inhibits the relationship between operational capability and financial performance.