Gen Z Workforce Competencies and SME Competitiveness: The Moderating Role of Digital Adaptability

Abstract

Generation Z is now beginning to take on roles as entrepreneurs and owners of Small and medium-sized businesses (SMEs) in Jember Regency, bringing unique competencies that have the potential to boost their businesses’ competitiveness. This study aims to analyze the impact of Generation Z’s competencies as SME owners on business competitiveness within the Jember SME ecosystem, as well as to examine the moderating role of digital adaptability in this relationship. The competitiveness of SMEs is measured using indicators of productivity, operational efficiency, and the ability to adapt to market changes. The study employed a quantitative approach using a survey method, targeting Gen Z SME owners in Jember, and was analyzed using Structural Equation Modeling-Partial Least Squares (SEM-PLS). The results indicate that the competencies of Generation Z SME owners have a positive and significant impact on business competitiveness. Furthermore, digital adaptability has been shown to strengthen these relationships, suggesting that Generation Z’s competencies can be leveraged more effectively within a business ecosystem supported by adequate digital infrastructure and culture in a developing regional context like Jember. These findings have practical implications for local policymakers and SME actors in Jember for the development of a digital-based SME ecosystem aimed at fostering sustainable business growth.