DIGITAL TRANSFORMATION OF FINANCIAL SYSTEMS IN MSMEs: ADAPTATION STRATEGIES FROM EASTERN INDONESIA

Abstract

This empirical investigation examines the integration of traditional-digital financial systems in MSMEs financial management, utilizing a case study of Kopi Dari Hati x Eden Kitchen Kefamenanu NTT. The study addresses three fundamental research questions: (1) the maintenance mechanisms of traditional financial practices, (2) the integration methodologies of traditional-digital methods in daily operations, and (3) the challenges encountered in the integration process. Through a qualitative single case study methodology, the investigation employs multiple data collection techniques, including in-depth interviews, systematic observation, and comprehensive documentation, ensuring robust data triangulation. The study instruments comprise a semi-structured interview protocol and a structured observation matrix. The findings reveal that the MSMEs implements systematic manual documentation procedures for petty cash management, inventory control, and market transactions, while concurrently utilizing an integrated Point-of-Sale (POS) system for sales documentation. Furthermore, the analysis reveals a strategic bifurcation in the documentation methodology, wherein digital systems serve as the primary recording mechanism, with manual procedures providing verification protocols. Significant challenges identified include infrastructural limitations and human resource capacity constraints. This study contributes to the development of an adaptive financial system integration framework specifically designed for MSMEs operating in regions characterized by developing infrastructure, particularly pertinent for enterprises in digital transformation transition phases.