Digitalization and rural entrepreneurial attitude in Indonesia: a capability approach

Abstract

Purpose This paper aims to identify how digitalization affects entrepreneurial attitudes in rural areas in Indonesia, a country in the Global South. The development of digital technology can help entrepreneurs, in that faster and easier information acquisition helps rural communities to identify new opportunities and innovate. Yet, digital development generates higher disparity, and thus, not all people can benefit from digitalization. Although digital technology can facilitate the development of entrepreneurship, its benefits depend on individual preferences. In this regard, the capability approach is used so as to reflect how different valuations of digital technology in rural entrepreneurs influence their attitude with regard to recognizing business opportunities and taking risks. Design/methodology/approach A double case study approach is used in which this study examines two cases of rural entrepreneurs in Indonesia that represent different uses of digital technologies and socio-economic rural contexts: coffee entrepreneurs in Kintamani and craft producers in Kamasan village. In so doing, semi-structured interviews were conducted with local entrepreneurs and communities according to purposive and snowball sampling techniques. The qualitative data were then analysed using a constant comparative technique which allows us to develop a conceptual argument by observing patterns within and between the cases. Findings The findings show that digitalization shapes the attitude of rural entrepreneurs differently, although the same opportunity from using digital technology is present in the village. Social and environmental factors facilitate the rural entrepreneurs to consider using digital technology to develop their businesses. However, as each individual entrepreneur has a different valuation of digital technology, the benefits it offers – such as broader market opportunities and new business ideas – vary. Entrepreneurs who consider digital technology to be a valuable resource for developing their businesses are more curious to explore its benefits. Originality/value The capability approach provides a new perspective in understanding rural entrepreneurship. First, the authors demonstrate that the success of rural entrepreneurship is influenced not only by concrete things (e.g. resources) but also the individual perspective on these resources which may vary across entrepreneurs. Second, the authors show not only the potential differences in socio-cultural contexts in which the capability approach is applied but also how socio-cultural values and collectivism influence the individual valuation of resources that could benefit entrepreneurs.