The Role of Economic Feasibility in Advancing Technology Adoption among UMKM
Abstract
Technology hilirization in micro, small, and medium enterprises (UMKM) often encounters barriers not primarily rooted in technical limitations, but in economic uncertainty and decision-making constraints. Many technologies with proven technical performance fail to be adopted due to unclear value propositions, ambiguous cost structures, and limited financial comprehension among UMKM actors. This study aims to examine the role of economic feasibility as a critical bridge between technical readiness and technology adoption in resource-constrained UMKM contexts. Using a qualitative explanatory approach combined with techno-economic analysis, this study investigates how feasibility indicators such as production cost, break-even point, investment recovery, and perceived financial risk influence adoption decisions. Empirical insights are drawn from UMKM cases involved in food and agro-processing technology hilirization. The findings reveal that economic feasibility does not merely function as a financial evaluation tool, but also as a cognitive framing mechanism that shapes risk perception, confidence, and managerial commitment toward innovation adoption. Technologies accompanied by clear, transparent, and context-relevant feasibility information demonstrate significantly higher acceptance and readiness for adoption. This study contributes to the literature by positioning economic feasibility as an adoption readiness instrument rather than a post-implementation assessment. Practically, the results suggest that successful hilirization strategies for UMKM should integrate economic feasibility analysis alongside technical validation to ensure sustainable and scalable technology adoption.
References
Rogers, E. M. (2003). Diffusion of innovations (5th ed.). Free Press.
Tornatzky, L. G., & Fleischer, M. (1990). The processes of technological innovation. Lexington Books.
Hall, B. H., & Khan, B. (2003). Adoption of new technology. NBER Working Paper, No. 9730.
Baldwin, J., & Lin, Z. (2002). Impediments to advanced technology adoption for Canadian manufacturers. Research Policy, 31(1), 1–18.
Thong, J. Y. L. (1999). An integrated model of information systems adoption in small businesses. Journal of Management Information Systems, 15(4), 187–214.
Meijer, I. S. M., Hekkert, M. P., & Koppenjan, J. (2007). The influence of perceived uncertainty on entrepreneurial action in emerging renewable energy technologies. Technological Forecasting and Social Change, 74(6), 911–928.
North, D. (1990). Institutions, institutional change and economic performance. Cambridge University Press.
Prihanto, A. A., Nurdiani, R., & Bagus, A. D. (2019). Production and characteristics of fish protein hydrolysate from parrotfish head. PeerJ, 7, e8297.
Prihanto, A. A., Jaziri, A. A., Pratomo, M. D., et al. (2022). Characteristics of collagen from marine fish skin under different extraction conditions. Online Journal of Biological Sciences, 22(1), 26–35.
Prihanto, A. A., et al. (2023). Characterization of collagen from Java barb skin and its effect on selected properties of yogurt. Canrea Journal of Food Technology, 6(1), 17–30.
Rajabimashhadi, Z., Gallo, N., Salvatore, L., & Lionetto, F. (2023). Collagen derived from fish industry waste: progresses and challenges. Polymers, 15(3), 544.
Kresnowati, M. T. A. P., Affandi, C. R., & Pratiwi, C. (2021). Preliminary evaluation of halal protein hydrolysate production in Indonesia. IOP Conference Series: Materials Science and Engineering, 1143, 012040.
Nirwandar, S. (2020). Halal gelatin and its business opportunity in Indonesia. International Journal of Halal Research, 2(1), 50–57.
Ramli, S., & Zain, N. M. (2023). Halal perspectives on collagen-based biomaterials in tissue engineering applications. Journal of Human-Centered Technology, 2(2), 41–49.
Reza, M., & Annissa, D. (2023). Fish-based gelatin: exploring a sustainable and halal alternative. Journal of Halal Science Research, 4(2), 55–67.
Nguyen, T., Sperou, N., Su, P., & Zhang, W. (2022). Marine biorefinery as an environmentally sustainable solution for value-added products. Biochemical Society Transactions, 44(2), 22–27.
OECD. (2017). Enhancing the contributions of SMEs in a global and digitalised economy. OECD Publishing.
World Bank. (2020). Small and medium enterprises (SMEs) finance. World Bank Group.
Copyright (c) 2026 Bulletin of Management and Business
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
