The Role of Digital Transformation Capability and Local Wisdom in Driving Industrial Competitiveness and Sustainable Economic Growth
DOI:
https://doi.org/10.29407/0hmqer95Keywords:
digital transformation capability; , local wisdom, industri competitivenesss, sustainable economic growth, community well-being, PLS-SEMAbstract
This study analyzes the role of Digital Transformation Capability and Local Wisdom in enhancing Industry Competitiveness, as well as their impact on Sustainable Economic Growth and Community Well-Being in industries based on local wisdom in the Special Region of Yogyakarta. The study employed a quantitative cross-sectional approach using 101 valid responses from business owners/managers. Five reflective constructs, each measured by five indicators, were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) via SmartPLS 4. Measurement quality was evaluated through indicator loadings, internal consistency, convergent validity, discriminant validity, and structural model diagnostics. Findings: DTC had a positive effect on IC (beta = 0.416; p < 0.001), as did LW (beta = 0.346; p < 0.001). IC is a strong predictor of SEG (beta = 0.720; p < 0.001), which in turn predicts CWB (beta = 0.647; p < 0.001). The model explains 37.1% of the variance in IC, 51.8% of the variance in SEG, and 41.9% of the variance in CWB. The Q² values were positive for all endogenous constructs. Reliability was considered adequate, although the LW-AVE (0.490) was slightly below conventional criteria with 100 respondents and was analyzed using PLS-SEM via SmartPLS 4. The results indicate that digital capabilities and local wisdom have a positive effect on industrial competitiveness. Industrial competitiveness has the strongest influence on sustainable economic growth, while sustainable economic growth has a positive effect on community well-being. These findings indicate that digitalization and local wisdom can complement each other in strengthening competitiveness, driving sustainable economic growth, and increasing economic benefits for the community.
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Copyright (c) 2026 Try Ssa Devi Safitri, Rini Raharti, Nabella Maya Anugerah, Najwa Laudia Syaharani, Oktaviani Laila Nu Rahmawati (Author)
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