EMPLOYEE DIGITAL SKILLS AND WORK ENGAGEMENT FOR ORGANIZATIONAL PERFORMANCE

EVIDENCE FROM MSMEs IN KUNINGAN REGENCY, WEST JAVA, INDONESIA

Abstract

In the era of digital transformation, the ability of employees to effectively utilize digital technologies and maintain high levels of work engagement are increasingly recognized as critical drivers of organizational performance, particularly among Micro, Small, and Medium Enterprises (MSMEs) operating in regionally distinct economic contexts. This  research investigates the influence of employee digital skills and work engagement on organizational performance, with learning culture serving as a parallel antecedent and work engagement functioning as a mediating mechanism, among MSMEs in Kuningan Regency, West Java a predominantly agricultural and agroindustrial regency known for its salak (snake fruit), manggis (mangosteen), and traditional craft industries. Drawing on the Job Demands-Resources (JD-R) model (Bakker & Demerouti, 2007), Self-Determination Theory (Ryan & Deci, 2000), and the Resource-Based View (Barney, 1991), a comprehensive conceptual model is developed and tested using Partial Least Squares Structural Equation Modeling (PLS-SEM) on a stratified random sample of 311 MSME employees and owner-managers. Results demonstrate that digital skills (β = 0.317, p < 0.001), work engagement (β = 0.421, p < 0.001), and learning culture (β = 0.289, p < 0.001) all significantly predict organizational performance, with work engagement emerging as the dominant predictor. Digital skills (β = 0.448) and learning culture (β = 0.372) are significant antecedents of work engagement. Work engagement partially mediates both the digital skills–performance path (indirect β = 0.189, CI [0.121, 0.259]) and the learning culture–performance path (indirect β = 0.157, CI [0.094, 0.222]). The model explains 61.2% of variance in organizational performance (R² = 0.612). MSMEs with high levels of all three constructs achieve 27.3% average revenue growth and 48.7% digital sales share   substantially outperforming counterparts with low levels. The  research proposes the Digital Engagement–Performance (DEP) framework and provides evidence-based recommendations for MSME practitioners, government development agencies, and human resource development policymakers in Kuningan and analogous regency-level MSME ecosystems across Indonesia