An Empirical Study on the Barriers to Digital Financial Reporting Adoption Among Non-Adopting SMEs in Indonesia

Small and medium enterprises (SMEs) play a vital economic role globally, yet many struggle to adopt digital financial systems.This study explores SME barriers to adopting digital financial reporting standards in Indonesia through interviews with 12 SMEs.Innovation resistance theory framed the investigation of usage, tradition, value, risk, and image barriers.Most SMEs record manually using notebooks or Microsoft Excel.This is due to the concerns of SMEs, especially on the personal capabilities of SMEs, implementation costs.SMEs also worry about data security and information inaccuracies, complicating their business.Key findings indicate concerns regarding digital skills, security risks, switching costs, and provider image impede SME adoption, though most recognize potential benefits.SME prioritizes ease of use and practicality in recording and reporting.The findings of this study can be helpful for digital financial system service providers, especially the provision of a system that suits the needs of SMEs and ease of use.Service providers also provide structured tutorials if there are problems.Integration with third-party providers is needed to integrate the recording process.Meanwhile, for the government and associations, the results of this research can develop standards and rules that support the adoption of financial technology for SMEs.