Purpose: This study investigates the micro-level process through which system features are transformed into digital resources and activated through sensing, seizing, and reconfiguring capabilities to generate emerging competitive positioning in Indonesian MSMEs.
Research Methodology: A multiple-case embedded design involving six Indonesian Micro, Small, Medium Enterprises (MSMEs) was employed. Data were collected over six weeks through semi-structured interviews with twelve informants, participatory observation, and system log analysis. Data analysis followed within-case analysis, cross-case pattern matching, and analytical generalization stages.
Results: Routine embedding and managerial decision commitment are decisive in determining whether digital artifacts acquire strategic value. Data utilization intensity stimulates sensing capability; however, without managerial commitment, sensing does not evolve into seizing. Cases with high activation show improved customer retention, faster market response, and fewer operational errors, while low-activation cases remain at basic administrative use.
Conclusions: Digital transformation in MSMEs is a staged process where competitive advantage emerges when resources, capabilities, and managerial practices align. Technology investment alone is insufficient without behavioral adoption and managerial commitment.
Limitations: The study is limited to six MSMEs in a single regional ecosystem, restricting statistical generalization. The observation period captures early-stage activation effects rather than sustained competitive advantage.
Contributions: This study proposes a staged resource activation mechanism integrating Resource Based View (RBV) digital resource scholarship and dynamic capability theory within digitally emerging MSME contexts, offering theoretical refinement and practical guidance for policymakers and Small and Medium Enterprise (SME) leaders in developing economies