Impact of Digital Business Transformation and Business Development Strategy on MSMEs' Performance in Champasack Province, Lao PDR

This study aims to examine the influence of Digital Business Transformation (DBT) and Business Development Strategy (BDS) on the performance of Micro, Small, and Medium-sized Enterprises (MSMEs) in Pakse City, Champasak Province, Lao PDR. The study sample consisted of 400 MSME entrepreneurs in Pakse City, with data collected through a questionnaire. Data analysis used descriptive statistics and Multiple Linear Regression (MLR) to test the hypotheses. Additionally, multicollinearity was assessed by examining the tolerance and VIF values. The study findings revealed that the regression model had an R² value of 0.289, indicating that DBT and BDS together could explain 28.9% of the variance in MSMEs performance. The F-statistic was 80.587, with a statistical significance (Sig.) of 0.000 (P < 0.01), confirming that the model was a good fit and that both independent variables jointly had a significant influence on the dependent variable. For the individual hypothesis tests, the results showed that Digital Business Transformation (DBT) had a positive and statistically significant impact on MSMEs performance (β = 0.339, Sig. = 0.000, P < 0.01). This suggests that an increase in DBT leads to an improvement in MSMEs performance. Business Development Strategy (BDS) had a positive and statistically significant impact on MSMEs performance (β = 0.279, Sig. = 0.000, P < 0.01). This indicates that developing a strong business strategy contributes to enhancing MSMEs effectiveness. Furthermore, the collinearity statistics check showed that the tolerance value for both DBT and BDS was 0.738 and the VIF value was 1.355, which indicates that there was no serious multicollinearity problem between the independent variables. Overall, the findings of this study support the hypothesis that both digital business transformation and business development strategy play a crucial role in driving the performance of MSMEs.