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THE INFLUENCE OF PRODUCT QUALITY, FINANCIAL LITERACY,

DIGITAL LITERACY, FINANCIAL MANAGEMENT, AND DIGITAL

MARKETING ON THE PROFITABILITY OF MSME BUSINESSES

Yohanes Demu

Universitas Nusa Cendana, Indonesia

Email: [email protected]

Abstract

This study aims to determine of product quality, financial literacy, digital literacy, financial

manajemen, and digital marketing on the profitability of MSME businesses in Kupang city.

The number of research samples was 50 MSME actors in Kupang City who were obtained

using a purposive sampling method. The analysis techniqueused in this study is multiple linear

regression analysis. The result of yhe analysis show that financial literacy with a significance

value of 0.095> 0.05, digital literacy with a significance value of 0.092 > 0.05, financial

manajement with a significance value 0.181 > 0.05, and digita marketing with a significance

value of 0.260 > 0.05 has no effects on profitability MSME businesses while product quality

which has a significance value of 0.027 < 0.05 affect the profitability of MSME businesses.

The results of tests carried out simultaneo usly or simultaneo usly show that product quality,

financial literacy, digital literacy, financial manajemen, and digital marketing have an effect

on the profitability of MSME businesses in Kupang City with an R Square value in the

regression analysis of 41.7%. Based on these results it can be concluded that it is necessary

to increase understanding of financial literacy and use of digital literacy in financial

development and manajement so that businesses can develop and adapt to technological

developments so that they can take advantage of digital marketing facilities in the current era

and MSMEs can develop and have competitiveness while product quality influence on the

profitability of MSME businesses in Kupang City.

Keywords

: Product quality; financial literacy; financial manajemen; digital literacy; digital marketing

INTRODUCTION

(Undang-Undang, 2008) About Micro, Small and Medium Enterprises is a business

group managed by individuals or business entities whose criteria are stipulated in the Law,

Cooperatives and MSMEs, a type of business that has a role in increasing GDP (Gross

Domestic Income) in a country, especially in facing the Industrial era 4.0. Micro, small and

medium enterprises have a fundamental and strategic role in national economic development.

MSMEs (micro, small and medium enterprises) are one of the people's economic

activities that have a maximum net worth of Rp200,000,000 where the land and buildings

where the business is operated are not counted in the net worth, and usually have an annual

sales turnover of at most Rp1,000,000,000 and belong to Indonesian citizens (Kwartono, 2022).

About Micro, Small and Medium Enterprises is a business group managed by individuals

or business entities whose criteria are stipulated in the Law, Cooperatives and MSMEs, a type

of business that has a role in increasing GDP (Gross Domestic Income) in a country, especially

in facing the Industrial era 4.0. Micro, small and medium enterprises have a fundamental and

strategic role in national economic development.

MSMEs (micro, small and medium enterprises) are one of the people's economic

activities that have a maximum net worth of Rp200,000,000 where the land and buildings

where the business is operated are not counted in the net worth, and usually have an annual

Injuruty: Interdiciplinary Journal and Humanity

Volume 2, Number 7, July 2023

e-ISSN: 2963-4113 and p-ISSN: 2963-3397

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Digital Marketing On The Profitability of MSME Businesses

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sales turnover of at most Rp1,000,000,000 and belong to Indonesian citizens

Table 1

Data on the Development of Micro and Small Enterprises in 2018-2021 Kupang City

Kota Kupang

Jumlah

Usaha Mikro

Usaha Kecil

2018

16.815

235

2019

16.940

235

2020

17.240

235

2021

17..240

235

TOTAL UMK

17.475

Sumber : Dinas Koperasi dan Usaha Mikro Kecil (UKM) Kota Kupang

The development of MSMEs in East Nusa Tenggara from the data above, according to

sources from the Cooperative and Small and Medium Enterprises Office In 2021, the

development of MSMEs in NTT, namely Micro Enterprises 17,240 and Small Enterprises 235

with a total of 17,475 businesses in East Nusa Tenggara, which in Kupang City MSMEs can

help the community's economy with a total of Micro Enterprises (UM) 17,240 and Small

Enterprises (UK) 235 with a total of 17,475 businesses that can open job opportunities for the

people of the City and reduce unemployment in 2021. BPS data on the open unemployment

rate in 2020 was 9.76% and in 2021 it decreased by 3.77%, with the presence of the pandemic,

many people were laid off, therefore many chose to open their own businesses by adjusting

developments in the 4.0 era with a digital basis so that their businesses could develop. The

development of micro, small and medium enterprises (MSMEs) in Kupang City has increased

in the last 4 years (2018-2021), increasing from year to year although it decreased in 2019, but

the development of MSMEs has increased in the last 2 years. The following is the data on the

development of MSMEs

Tabel 2

Data UMKM Tahun 2018-2021

URAIAN

2018

2019

2020

2021

Jumlah UMKM

17.050

17.175

17.475

% Kenaikan UMKM

1,69

0,73

1,74

Sumber : Dinas Koperasi dan Usaha Mikro Kecil (UKM) Kota Kupang

The increase in the number of MSMEs increased significantly in 2018 by 1.69 and in 2019

experienced an increase of 0.73 until 2021 there was an increase of 1.74 which can reduce

unemployment and create jobs so that it can help the community's economy.

The development of digital MSMEs, there are several things that must be considered,

including product quality, financial literacy and digital literacy. These three things are

important things and must be considered by MSME players so that businesses opened in the

digital realm can last a long time. The development and empowerment of digital MSMEs is a

strategic thing because it has an important role in improving the community's economy and

becoming a source of income and welfare. In the business world, income is obtained in nominal

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form of money, then the money is used to see the extent to which the business earns income

from the expected sales business results in accordance with the targets that have been set.

Money is so important for life both for the needs of life in modern society and business needs,

money is also not only a medium of exchange but is a determinant of human relations.

The greater the income received, the greater the business potential in financing business

expenses. The problem that is often faced by MSMEs in increasing their income is that product

quality is important in the progress and development of a business, MSMEs that have good

product quality with innovations that are in accordance with consumer needs and can meet

market demand, their business will develop and have high competitiveness with similar

businesses, can also place their products as the best choice of consumers in determining

purchases. High market competence that encourages MSMEs in Kupang City to innovate

products with the aim of gaining a sustainable advantage over their competitors. Innovation in

products has an impact on consumer demand for the desired product quality so that MSMEs

can develop and produce products that have competitiveness. In addition, the lack of

knowledge of financial literacy and digital literacy in improving the performance of SMEs is

an important factor in the development of the current era 4.0 with the need for good financial

management in minimizing cost errors outside the business and utilizing the digital era in the

development of MSMEs.

Financial literacy is one of the main factors in solving the problems faced by SMEs in

Kupang City, financial literacy enriches the decision-making resources of SME owners such

as cultural values, and must ensure the right source of funds and do not incur additional costs

outside the business (Kulathunga, 2020). The low level of financial literacy of MSME owners

is a serious problem faced now and in the future because it has a negative impact on financial

behavior. Households that are not literate usually borrow at high interest rates and have low

assets (Yenni Del Rosa, 2021). Low financial literacy can also lead to market mechanisms and

give rise to new financial products and increasingly complex declines can result in the risk of

losing money due to ignorance or information asymmetry that occurs.

Financial management is also an important factor in allocating business funds so that,

from allocating investment, collecting funds in efficient operational financing, in management

can work with people and determine, interpret and can achieve organizational goals or a

business by carrying out the functions of planning, directing and supervising (Bahiu, 2021).

MSMEs that still lack knowledge in utilizing digital technology are a factor faced by

MSMEs today in marketing their products. The performance of MSMEs will be good and have

competitiveness if they are able to adapt to developments where initial or conventional thinking

must be expert in digital literacy. Low understanding of digital literacy will make it difficult

for MSMEs to develop and adapt to current conditions in the digital-based 4.0 era. It needs

support from the synergy of netizens, which in fact is the millennial generation. These netizens

can be encouraged to help develop digital MSMEs with resseler techniques. In this case,

netizens who can be invited to synergize are millennials and generation Z who are classified as

buzers, influencers, and followers (Arianto, 2020)

The digital MSME development program relies on government support with a licensing

model. Therefore, strategic efforts are needed to improve the performance and sustainability of

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MSMEs in Kupang City. By enriching the knowledge of business actors about the use of

digitalization technology and financial management. The challenge for MSMEs in 2022 in

Kupang City is not only due to the occurrence of the Covid-19 waba, but also challenges

MSMEs in the 4.0 era, namely digital-based whose development requires MSME players to

understand information technology by utilizing internet services or having a website is still

minimal and familiar so that MSME products and services still do not reach markets outside

the region and remote areas and cannot compete with other businesses that first adjust With

the development and have a marketplace and easily get customers because it is known through

internet services and can be reached anywhere and anytime, it can go international. MSMEs

are the highest economic actors in East Nusa Tenggara that are able to absorb labor in 2017

MSMEs were recorded to reach 99.45% of all non-agricultural businesses (Central Bureau of

Statistics East Nusa Tenggara Province, 2019).

Grab in collaboration with Emtek and Bukalapak established Kupang City as the city of

the future, East Nusa Tenggara as the Accelerator program of the future city in order to help

micro, small and medium enterprises (MSMEs) in the area. The city of the future or abbreviated

as real collaboration for the future is an Accelerator program that extensively targets MSMEs

in small cities in Indonesia to go digital. Kupang City has a lot of potential strength and beauty

that can be utilized and developed into products that can be traded by the community

(Sahabatumkm, 2021).

Based on data from the Kupang City Cooperatives and MSMEs Office, more than 8,000

micro, small and medium enterprises (MSMEs) in Kupang City have registered for government

assistance worth Rp2.4 million per person. That way it can be researched whether MSMEs can

survive and develop in the current era with many threats.

Based on the background description above, the problem to be studied can be formulated

is: How does product quality affect the profitability of MSME businesses in Kupang City?,

1. How does financial literacy affect the profitability of MSME businesses in Kupang City?

,How does digital literacy affect the profitability of MSME businesses in Kupang City?,

2. How does financial management affect the profitability of MSME businesses in Kupang

City?

3. How does digital marketing affect the profitability of MSME businesses in Kupang City?

4. How does product quality, financial literacy, digital literacy, financial management, and

digital marketing affect the profitability of MSME businesses in Kupang City?

Based on the formulation of the problem above, the objectives of this study are:

1. Knowing the effect of product quality on the profitability of MSME businesses in Kupang

City

2. Knowing the effect of financial literacy on the profitability of MSME businesses in Kupang

City

3. Knowing the influence of digital literacy on the profitability of MSME businesses in

Kupang City

4. Knowing the effect of financial management on the profitability of MSME businesses in

Kupang City

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5. Knowing the influence of digital marketing on the profitability of MSME businesses in

Kupang City

6. Knowing the influence of product quality, financial literacy, digital literacy, financial

management, and digital marketing on the profitability of MSME businesses in Kupang City

Based on the above objectives, this research is expected to provide benefits for all parties

including:

For Science, researchers hope that this research can provide benefits in the development

of science, understanding and experience of researchers and can contribute to the development

of science, especially in the fields of finance, MSMEs in the use of digitalization to develop

businesses. For the Research Object, Adding knowledge and insight for readers empirically

about the development of digital MSMEs towards business profitability in Kupang City. For

Further Researchers, for further researchers can be used as reference material to conduct similar

and further research in the same field

The Grand Theory used in this study is structural contingency theory, which is the

proposition that organizational structures and processes must be in context (organizational

culture characteristics, technology, size and tasks) if they want to survive or be effective in the

development period in the current era of adjustment (Wardi, 2018). In this case, how an

organization or business actor pays attention to the cultural characteristics that apply in the

environment in which it operates and in adjusting to existing technological developments so

that it can maintain and adjust to developments and can survive (Idawati, 2017:55). Based on

this theory, it can explain if the organization or business cannot run with cultural

characteristics, the environment around the business and cannot adjust to developments in the

current era, the business will affect the profitability of the business and has no competitiveness

with other business actors and cannot survive in various conditions.

Undang-Undang, NO 20 (2008) Article 1 on micro, small and medium enterprises

is: Micro business is a productive business owned by an individual or individual business entity

that can meet the criteria for micro enterprises regulated in this Law. Small business is a

productive business that stands alone, operated by an individual person and does not include

subsidiaries, branches of companies, which are owned and can be controlled or can be a part

either directly or indirectly of medium enterprises or large businesses that can meet the criteria

stipulated in this Law. Medium enterprises are productive economic enterprises that stand

alone, and are carried out by individuals or business entities that are not subsidiaries or branches

of companies that can be controlled, and owned and become a part either directly or indirectly

with small businesses and large businesses with the results of net worth or sales as regulated in

this Law.

Product quality can be interpreted as a product, service, human, process and

environment that is able to meet the desires of consumers who are the target market and

customers who have met their expectations (Yamirudin, 2019). It does not emphasize on

product quality or end results i.e. products and services but includes process, environmental

and human quality.

Product quality is a factor that can be relied on in meeting the needs and desires of buyers,

selling products in running a business (Yamirudin, 2019:21). So that the quality of a product

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becomes a challenge for business actors in developing a business and competing with similar

products, innovation and product improvement are needed to have competitiveness and meet

the needs of market demand and what consumers want, good product quality will have long

competitiveness.

Financial literacy is basic knowledge that understands, manages finances effectively, in

terms of shopping, insurance, saving and investing. Good financial literacy will improve the

sustainable performance of MSMEs (Arianti, 2020:). Financial literacy is a combination of

investor or consumer knowledge about financial products and their concepts as well as the

ability and confidence in realizing financial risks in making the right decisions. The higher the

financial literacy, the lower the occurrence of fraud and failure in financial planning in the

future. Whether it concerns investment, protection and also management in finance. Decisions

in product selection, the ability to analyze a financial problem and evaluate performance results

are some of the factors that affect the high and low financial literacy of individuals or business

actors.

Digital literacy is the activity carried out similar to the original version where the actual

business is conducted, value is created and exchanged, transactions occur, and one to one

relationships mature by using internet initiatives as a medium of exchange (Ramadani, 2020:).

Digital literacy is changing the global economy, enabling small industries to become micro-

industries with their elasticity and dynamics. This gives a higher chance for beginners to be

born globally. Economic development is a special form of organization of scientific progress

that guarantees competitive advantages and technological progress. (Ramadani, 2020). refers

to entrepreneurs who have the necessary skills and knowledge to be key subjects of innovation.

It can be said that the idea of economic development is the basis of human capital, especially

human capital without the idea of innovation.

Financial management is management related to the allocation of investment funds and

fund collection efforts for financing efficiently. According to (Bahi, 2021), Management or

management is working with people to determine, interpret and achieve organizational goals

with the implementation of the functions of planning, organizing, drafting personnel, directing

and leadership and supervision. Financial management (financial management) is an activity

related to acquiring, funding, and managing assets with several overarching objectives.12 The

entire process is carried out to obtain company revenue by minimizing costs, in addition to the

efficient use and allocation of funds can maximize the value of the company.

Digital technology has changed the way humans communicate, act, and make decisions.

Marketing activities cannot be separated from the influence of digital technology. The term

digital-based marketing (digital marketing) has evolved from the beginning of goods and

services marketing activities that use digital channels to a broader understanding, namely the

process of acquiring consumers, building consumer preferences, promoting brands, nurturing

consumers, and increasing sales. The concept of digital marketing comes from the internet and

search engines on sites (Sulaksono1, 2020), Digital marketing is marketing carried out using

internet access, utilizing social media and other digital devices. Digital Marketing can help

business actors, for example, MSMEs in promoting and marketing their products and services

and being able to expand new markets that were previously closed or limited due to limited

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Digital Marketing On The Profitability of MSME Businesses

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time, distance and ways of communicating (Dimas, 2020). Internet media that are now

popularly used for product marketing include, Facebook, Youtube, Instagram, and other social

media. The benefits obtained by digital marketing in addition to being able to reach a wider

market and streamline marketing costs, also make unlimited marketing space and time. In

addition, digital marketing is real time so that entrepreneurs can immediately pay attention to

interest and feedback from the intended market, and can decide on adjustment strategies related

to advertising content for better results with more.

Profitability is a measure used by companies in generating profits. A high profit value

can show that the company or business actors use all their capital in generating high profits

(Wardani, 2021). Internet media that are now popularly used for product marketing include,

Facebook, Youtube, Instagram, and other social media. The benefits obtained by digital

marketing in addition to being able to reach a wider market and streamline marketing costs,

also make unlimited marketing space and time. In addition, digital marketing is real time so

that entrepreneurs can immediately pay attention to interest and feedback from the intended

market, and can decide on adjustment strategies related to advertising content for better results

with more. Profitability is a measure used by companies in generating profits. A high profit

value can show that the company or business actors use all their capital in generating high

profits.

METHOD RESEARCH

The approach in this study uses quantitative which is causative. Quantitative research is

the process of finding knowledge using data in the form of numbers in the form of tools in the

form of analytical tools in the form of information about what you want to know. The

quantitative approach has the purpose of testing theories, establishing facts, providing

descriptive statistics, interpreting and forecasting the results (Sugiyono, 2019). The type of

research conducted in this study is survey research, which is an approach used in obtaining data

from certain places that are natural (not artificial), data obtained by researchers through the

distribution of questionnaires or questionnaires as research instruments (Sugiyono, 2019)

The type of data used is quantitative, that is, data in the form of numbers, quantitative

data is usually used as basic material for every problem that is statistical.

The primary data used in this study is questionnaire data distributed to respondents,

namely 50 MSME actors in Kupang City, Secondary data is data obtained from various written

sources such as literature, articles from newspapers, scientific writings, information or

publications from the internet that provide relevant information for researchers obtained from

literature research that relates to the problem under study. This research was conducted in 50

MSMEs (micro, small and medium enterprises) in Kupang City and the research time was June

2022. Population is all elements that will be used as a generalization area. The population

element is the entire object to be measured, which is the unit to be studied. In this case,

population is an area consisting of objects / subjects that have certain quantities and

characteristics that will be determined by the researcher studied and conclusions drawn

(Sugiyono, 2019). The subjects of this study are micro, small and medium enterprises

(MSMEs) in Kupang City. According to data from the Kupang City Cooperatives and SMEs

Office, the number of SMEs that have Criteria is 17,475.

The sample is part of the number and characteristics that the population has. In

determining the sample of this study, a type of purposive sampling method is used, because the

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sample is determined based on certain criteria. Researchers use data source sampling

techniques with certain considerations (Sugiyono, 2019). The sample of this study is all MSME

business owners in Kupang City who went digital as many as 50 MSMEs. Questionnaires

are data collection techniques through forms that contain questions asked to a person or group

of people in order to obtain answers or responses and information needed by researchers.

Researchers use questionnaires with a structured list of questions and the form of multiple

choice questions. Documentation is collecting indirect data on MSMEs in Kupang City such

as a brief history, the development of MSMEs, vision and mission.

RESULT AND DISCUSSION

Uji Reliabilitas

Tabel 3 Reliability Test Results

Variabel

Cronbach’s Alpha

Alpha

Tingkat Reliability

X1 (Kualitas Produk)

0,667

0,60

Reliabel

X2 (Literasi Keuangan)

0,683

0,60

Reliabel

X3 (Literasi Digital )

0,827

0,60

Reliabel

X4 (Pengelolaan Keuangan )

0,726

0,60

Reliabel

X5 (Digital Marketing)

0,777

0,60

Reliabel

Y (Profitabilitas Usaha UMKM

di Kota Kupang)

0,711

0,60

Reliabel

Sumber : Data Primer diolah oleh SPSS versi 28, 2022

Dengan demikian dapat disimpulkan bahwa keempat variabel penelitian dinyatakan

reliabel atau memenuhi persyaratan.

Uji Regresi Linear Berganda

Tabel 4 Multiple linear regression analysis

Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

Std. Error

Beta

(Constant)

23, 407

10,374

2,256

Kualitas Produk

,359

,157

,347

2,284

Literasi Keuangan

,203

,119

,189

1,709

Literasi Digital

,181

,105

,231

1,722

Pengelolaan keuangan

,13.598

10,006

,690

-1,359

Digital Marketing

,9.041

7.918

,578

1,142

a. Dependent Variable: Profitabilitas Usaha UMKM di Kota Kupang

Sumber : Olah data SPSS versi 28

Based on the table above, we can obtain the multiple linear regression equation as

follows:

Y = a + b1X1 + b

2X2 +

b3X3 + b

4X4 +

b5X5

Y = 23.407 + 0.359 + 0.203 + 0.181 + 13.598 + 9.041 + e

The value of the constant with the regression coefficient in the table can be explained, namely:

Constanta 23.407 means that if the independent variable (product quality, financial literacy

and digital literacy) then the dependent variable (MSME business profitability) is 23.407%

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The variable coefficient of product quality (x1) 0.359 shows that if every 1% increase in

product quality, the profitability of MSME businesses will increase by 0.359%

3. The variable coefficient of financial literacy (x2) 0.203 shows that if every 1% increase in

financial literacy, the profitability of MSME businesses will increase by 0.203%

4. The variable coefficient of digital literacy (x3) 0.181 shows that if every 1% increase in

digital literacy, the profitability of MSME businesses will increase by 0.181%

5. Variable coefficient of financial management (x4) 13.598 Shows that if every 1% increase

in financial management, the profitability of MSME businesses will increase by 13.598%

6. The variable coefficient digital marketing (x5) 9.041 shows that if every 1% increase in

digital marketing, the profitability of MSME businesses will increase by 9.041%

Tabel 5 Hasil Uji Normalitas

One-Sample Kolmogorov-Smirnov Test

Unstandardized

Residual

Normal Parameters

a,b

Mean

,0000000

Std. Deviation

2,18942795

Most Extreme Differences

Absolute

,095

Positive

,089

Negative

-,095

Test Statistic

,095

Asymp. Sig. (2-tailed)

,200

Monte Carlo Sig. (2-

tailed)

Sig.

,296

99% Confidence

Interval

Lower

Bound

,284

Upper

Bound

,308

a. Test distribution is Normal.

b. Calculated from data.

c. Lilliefors Significance Correction.

d. This is a lower bound of the true significance.

e. Lilliefors' method based on 10000 Monte Carlo samples with starting seed 1314643744.

Source : SPSS data processing version 28

Based on the table above, the result obtained from the regression model is 0.200 which

can be interpreted as the regression model has a normal distribution because the residual value

is greater than 5% / 0.05

Uji Multikolinearitas

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Tabel 6 Hasil Uji Multikoleniaritas

Coefficients

Model

Collinearity Statistics

Tolerance

VIF

(Constant)

Kualitas Produk

,620

1,549

Literasi Keuangan

,670

1,400

Literasi Digital

,755

1,324

Pengelolaan Keuangan

,051

1, 478

Digital Marketing

,052

1,371

a. Dependent Variable: Profitabilitas Usaha UMKM di Kota Kupang

Source : SPSS data processing version 28

Based on the table above, it can be seen that the VIF value of each variable is below 10

and the tolerance value of each variable is more than 0.1, so there is no relationship or

correlation between one independent variable and another independent variable. From the table

above, it can be stated that the research data did not experience multicollinearity so that the

existing regression model is feasible to be used in this study.

Heteroscedasticity Test

Seen from Table 7 shows that the value of tcount < ttable value = t (a/2; n-k-1) = t

(0.05/2; 50-4-1) = t (0.025; 45) = 2.01410 which is as follows X1 = 0.712 < 2.01410, X2 =

0.834<2.01410, X3 = 0.815 < 2.01410, X4 = 0.704 < 2.01410, X5 = 0.830 < 2.01410. Then it

can be concluded that heteroscedasticity does not occur.

Uji Hipotesis

Uji t

Tabel 7 Hasil Uji t

Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

Sig.

Std. Error

Beta

(Constant)

23, 407

10,374

2,256

,029

Kualitas Produk

,359

,157

,347

2,284

,027

Literasi Keuangan

,203

,119

,189

1,709

,095

Literasi Digital

,181

,105

,231

1,722

,092

Pengelolaan Keuangan

,13.598

10,006

,690

-1,359

,181

Digital Marketing

,9.041

7.918

,578

1,142

,260

a. Dependent Variable: Profitabilitas Usaha UMKM di Kota Kupang

Sumber : Olah data SPSS versi 28

Based on the table of test results above, it can be concluded as follows:

Product quality (X1) has a significance value t of 0.027 smaller than the significance

value used, which is 5% or 0.05, it is concluded that product quality has a significant effect on

the profitability of MSME businesses in Kupang City, in other words H1 is accepted Financial

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literacy (X2) has a significance value t of 0.095 greater than the significance value used, which

is 5% or 0.05, it can be concluded that financial literacy has no effect on the profitability of

MSME businesses in Kupang City, in other words, H2 is rejected. Digital literacy (X3) has a

significance value of t 0.092 greater than the significant value used, which is 5% or 0.05, so it

can be concluded that digital literacy does not affect the profitability of MSME businesses in

Kupang City, in other words H3 is rejected. Financial management (X4) has a significance

value of t 0.181 greater than the significant value used, which is 5% or 0.05, it can be concluded

that financial management does not affect the profitability of MSME businesses in Kupang

City, in other words H4 is rejected. Digital marketing (X5) has a defined value of t 0.260 greater

than the significant value used, which is 5% or 0.05, so it can be concluded that digital

marketing does not affect the profitability of MSME businesses in Kupang City, in other words

H5 is rejected

Uji F

Tabel 8 Hasil Uji F

ANOVA

Model

Sum of Squares

Mean Square

Sig.

Regression

159,222

31,844

6,296

<,000

Residual

222,558

5,058

Total

381,780

a. Dependent Variable: Profitabilitas Usaha UMKM di Kota Kupang

b. Predictors: (Constant), Digital Marketing, Pengelolaan Keuangan, Literasi Digital,

Literasi Keuangan , Kualitas Produk

Source : SPSS data processing version 28

Based on the table above, the significance value F of 0.000 is smaller than the significance

level used in this study, which is 5% 0.05, so it can be concluded that product quality, financial

literacy and digital literacy together (Simultaneously) affect the profitability of MSME

businesses in Kupang City.

Uji Koefisien Determinasi (R

)

Tabel 9 Hasil Uji Koefisien Determinasi

Model Summary

Model

R Square

Adjusted R Square

Std. Error of the

Estimate

,646

,417

,351

2,24903

a. Predictors: (Constant), Digital Marketing, Pengelolaan Keuangan, Literasi Digital,

Literasi Keuangan , Kualitas Produk

b. Dependent Variable: Profitabilitas Usaha UMKM di Kota Kupang

Source : SPSS data processing version 28

Based on table 9 above, the R Square value of 0.417 means that all independent variables

used are able to explain the dependent variable by 41.7%, while 58.3% are influenced by other

variables that are not used in this study, such as product innovation, price perception.

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The Effect of Product Quality on MSME Business Profitability in Kupang City

The results of testing the H1 hypothesis show that product quality (X1) affects the

profitability of MSME businesses, then the first hypothesis (H1) is accepted because product

quality is important and needs to be considered in a business, in entrepreneurship one of the

factors that must be considered is how the quality of the products offered, MSME business

actors in Kupang City are able to provide good quality to potential buyers and cause satisfaction

from consumers with the products offered, Business profitability can increase by innovating

products and maintaining product quality in order to attract customers and meet the needs of

the community, innovation in products is an important thing to do in order to increase profits

from business, the products offered will vary from the innovations produced so that they can

meet consumer desires and demand for products increases by itself. Product quality is one of

the reliable factors in meeting the needs and desires of buyers, selling products in running a

business.(Yamirudin, 2019). The results of this study are in line with research conducted by

(Hakim, 2019) which states that the influence of product quality on the decision of Npk Mutiara

consumer buyers at UD. Balerang Tani Jaya Batam. The same is true of research (Yamirudin,

2019) states that product quality affects business performance and competitive advantage

(Study at Pottery SME Center in Kasongan Bantul, Yogyakarta).

The Effect of Financial Literacy on MSME Business Profitability

In Kupang City The results of testing the H2 hypothesis show that financial literacy (X2)

has no effect on the profitability of MSME businesses, so the second hypothesis (H2) is

rejected, this shows that financial literacy in MSME business actors in Kupang City is not good

enough which can affect MSMEs difficult to develop. The ability to manage debt is low

resulting in business actors difficult to develop and tend not to be able enough in financial

planning and financial management in obtaining loans with relatively small interest rates, this

is due to the low educational background of business actors and lack of knowledge are factors

that cause businesses to be difficult to develop which results in business actors not being able

to estimate correctly their debt burden So it tends to borrow at an increased cost and can affect

performance even worse. In addition, there are still many business actors who do not realize

the importance of making simple financial statements, so they tend to be less effective in

financial management and financial decision making carried out. The results of this study are

the same as (Bahiu, 2021) which indicates that financial literacy has no effect on the finances

of MSMEs in Gemeh Village, Talaud Islands Regency. The same is true of research (Prabawati,

2019) stated that financial literacy has no effect on the entrepreneurial behavior of SMK Negeri

10 Surabaya students.

The Effect of Digital Literacy on MSME Business Profitability in Kupang City

The results of testing the H3 hypothesis show that digital literacy (X3) has no effect on

the ptofitability of MSME businesses in Kupang City, so the third hypothesis (H3) is rejected,

this shows that business actors who have low knowledge of digital technology can cause

businesses built in the digital era to be difficult to develop and difficult to compete with similar

businesses. The ability to utilize digital media to create new innovations, skills and critical

thinking are needed in developing digital-based businesses that have competitiveness with

other businesses, business actors are required to be able to adjust to developments in order to

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increase profitability in the business being run so that with the presence of this digital

technology business actors can develop their business to the national and even international

arena in order to be able to improve economic growth where the business operates is Kupang

City. The results of this study are in line with research conducted by (Suhendri, 2020) Insists

that digital literacy has no effect on profitability.

The Effect of Financial Management on MSME Business Profitability in Kupang City

The results of testing hypothesis H

show that financial management (X4) does not affect

the profitability of MSME businesses in Kupang City, so the third hypothesis (H4) is rejected,

this shows that business actors in terms of financial management are still minimal from their

educational background and experience so that they are still unable to think creatively and

create innovations that will increase business profits, inefficient planning and money

management, and effective and incurring excessive costs in business operations and in terms

of management business actors must be able to work together with people to determine,

interpret and achieve organizational or business goals by carrying out the functions of planning,

organizing, preparing personnel, directing and leadership as well as supervision so that future

business can develop. The results of this study are in line with research conducted by (Bahiu,

2021) ordered that financial management does not affect the profitability of MSME businesses.

The Influence of Digital Marketing on MSME Business Profitability in Kupang City

The results of testing the H5 hypothesis show that digital marketing (X5) has no effect

on the profitability of MSME businesses in Kupang City, This shows that business actors in

Kupang City are still unable to utilize digital technology such as social media, from the

observations of researchers business actors are able to operate digital technology but still lack

knowledge of the use of features in creating business ideas such as creating or building an

online market for products offered to consumers so that businesses are difficult to develop,

based on grand theory in this case how an organization or business actor pays attention to the

cultural characteristics that prevail in the environment in which it operates and in adapting to

existing technological developments so that it can maintain and adapt to developments and can

survive. if the organization or business cannot run with cultural characteristics, The

environment around the business and cannot adjust to developments in the current era, the

business will affect the profitability of the business and has no competitiveness with other

business actors and cannot survive in various conditions. Digital Marketing can help business

actors, for example, MSMEs in promoting and marketing their products and services and being

able to expand new markets that were previously closed or limited due to limited time, distance

and ways of communicating. The results of this study are in line with research conducted by

(Dimas, 2020) ordered that digital marketing does not affect the profitability of MSME

businesses.

CONCLUSION

Based on the results of research that has been conducted after going through the data

collection stage, data management, data analysis, and interpretation of analysis results

regarding the effect of product quality, financial literacy and digital literacy on the profitability

of MSME businesses in Kupang City using normally distributed data, there is no

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Digital Marketing On The Profitability of MSME Businesses

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multicollinearity, and heteroscedasticity, conclusions are produced as measured Product

quality has an influence on the profitability of MSME businesses. This means that the better

the quality of products from business actors by innovating in accordance with the needs and

desires of consumers, the business can develop and profits increase. So the first hypothesis that

proposes that product quality affects the profitability of MSME businesses is accepted.

Financial literacy does not affect the profitability of MSME businesses. This means that

low financial literacy knowledge and low educational background result in business actors

being unable to develop their business due to improper financial management and planning. So

the second hypothesis that proposes that financial literacy affects the profitability of MSME

businesses is rejected. Digital literacy does not affect the profitability of MSME businesses.

This means that the lack of knowledge of technology and education in business actors in

Kupang City is low, making it difficult for businesses to develop in the current era, namely 4.0

or the era of digital technology. So the third hypothesis that denies digital literacy affects the

profitability of MSME businesses is rejected.

Financial management does not affect the profitability of MSME businesses. This means

that if business actors in terms of financial management are still minimal from their educational

background and experience so that they are still unable to think creatively and create

innovations that will increase business profits, planning and money management are inefficient

and effective and cause excessive costs in operating the business. So the fourth hypothesis that

prosecutes that financial management affects the profitability of MSME businesses is rejected.

Digital marketing does not affect the profitability of MSME businesses, This means that

it shows that business actors in Kupang City are still unable to utilize digital technology such

as social media, from the observations of researchers, business actors are able to operate digital

technology but still lack knowledge of the use of features in creating business ideas such as

creating or building online markets for products offered to consumers so that businesses are

difficult to develop. So the fifth hypothesis that proposes digital marketing has an effect on

the profitability of MSME businesses is rejected.

Based on the results of data analysis, it was found that product quality, financial iteration

and digital literacy together have an R Square value of 41.7%, affecting the profitability of

MSME businesses in Kupang City. So the higher the quality of products resulting from product

innovation and knowledge of financial literacy, understanding and utilization of digital literacy,

effective and efficient financial management and being able to operate social media or digital

marketing that will increase the profitability of the business being run. So the sixth hypothesis

states that product quality, financial literacy, digital literacy, financial management, and digital

marketing affect the profitability of MSME businesses in Kupang City.

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