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JEC
17,2 Digitalization and rural
entrepreneurial attitude in
Indonesia: a capability approach
454 Fikri Zul Fahmi and Medina Savira
School of Architecture, Planning and Policy Development,
Received 14 June 2021 Institut Teknologi Bandung, Bandung, Indonesia
Revised 13 October 2021
Accepted 13 October 2021

Abstract
Purpose – This paper aims to identify how digitalization affects entrepreneurial attitudes in rural areas in
Indonesia, a country in the Global South. The development of digital technology can help entrepreneurs, in
that faster and easier information acquisition helps rural communities to identify new opportunities and
innovate. Yet, digital development generates higher disparity, and thus, not all people can benefit from
digitalization. Although digital technology can facilitate the development of entrepreneurship, its benefits
depend on individual preferences. In this regard, the capability approach is used so as to reflect how different
valuations of digital technology in rural entrepreneurs influence their attitude with regard to recognizing
business opportunities and taking risks.
Design/methodology/approach – A double case study approach is used in which this study examines
two cases of rural entrepreneurs in Indonesia that represent different uses of digital technologies and socio-
economic rural contexts: coffee entrepreneurs in Kintamani and craft producers in Kamasan village. In so
doing, semi-structured interviews were conducted with local entrepreneurs and communities according to
purposive and snowball sampling techniques. The qualitative data were then analysed using a constant
comparative technique which allows us to develop a conceptual argument by observing patterns within and
between the cases.
Findings – The findings show that digitalization shapes the attitude of rural entrepreneurs differently,
although the same opportunity from using digital technology is present in the village. Social and
environmental factors facilitate the rural entrepreneurs to consider using digital technology to develop their
businesses. However, as each individual entrepreneur has a different valuation of digital technology, the
benefits it offers – such as broader market opportunities and new business ideas – vary. Entrepreneurs who
consider digital technology to be a valuable resource for developing their businesses are more curious to
explore its benefits.
Originality/value – The capability approach provides a new perspective in understanding rural
entrepreneurship. First, the authors demonstrate that the success of rural entrepreneurship is influenced not
only by concrete things (e.g. resources) but also the individual perspective on these resources which may vary
across entrepreneurs. Second, the authors show not only the potential differences in socio-cultural contexts in
which the capability approach is applied but also how socio-cultural values and collectivism influence the
individual valuation of resources that could benefit entrepreneurs.
Keywords Digitalization, Capability approach, Entrepreneurial attitude, Rural entrepreneurship,
Indonesia
Paper type Research paper

Journal of Enterprising
Communities: People and Places in
the Global Economy The authors are grateful for the funding assistance from the Ministry of Education, Culture, Research
Vol. 17 No. 2, 2023
pp. 454-478 and Technology of the Republic of Indonesia.
© Emerald Publishing Limited An earlier version of this paper was presented at the 5th PlanoCosmo International Conference,
1750-6204
DOI 10.1108/JEC-06-2021-0082 Bandung, 20-21 October 2020.
Introduction Capability
The role of entrepreneurship has been one of the important questions in studies of approach
agricultural transition and rural transformation (Benedikter et al., 2013; Jia and Desa, 2020;
Koyana and Mason, 2017; Rigg, 2001). The concept of rural entrepreneurship introduces a
perspective on agricultural development in rural areas which is associated with some
features, such as large-scale production, profit maximization and risk-taking behaviours
(Niska et al., 2012 in Korsgaard et al., 2015). As globalization fosters the development of
agriculture, sustainability of this sector in the future – whether it survives capitalist 455
expansion and agro-industrialization – has become a concern for academics and
policymakers (Hebinck, 2018; Rigg, 2001). Along with this, rural areas have witnessed
livelihood diversification and labour shifts from agricultural to non-agricultural sectors. In
Southeast Asia, the agricultural sector often is characterized by family-based, subsistence
farming, which does not generate high profits for farmers’ livelihoods or contribute
significant value to the economy (Rigg, 1998, 2001). In this regard, scholars contend that
entrepreneurship plays a role in fixing this problem, namely, through the adaptation of
agricultural development methods (Rigg, 2001) and commercialization of the agricultural
sector through entrepreneurial activities (Bryant, 1989; Korsgaard et al., 2015; Wortman,
1990). Previous studies have examined the role of entrepreneurship in nurturing rural
economies (Bryant, 1989; Delfmann, 2015; Wortman, 1990) and the role of entrepreneurial
attitude in improving the rural economy (Lindsay, 2005; Lunnan et al., 2006; Nybakk and
Hansen, 2008). Nevertheless, it is important to note that rural entrepreneurship is not just
about making profits in a rural space where it is located, but more precisely it has a
relationship with “the locality as a meaningful location” and is, thus, strongly embedded in a
place (Korsgaard et al., 2015, p. 11).
Digital technology has advanced rapidly and affects the development of rural areas,
including rural entrepreneurship. Previous studies have shown that digital technology
stimulates rural economies in Europe by strengthening the relationship between urban and
rural areas and generating profit productivity for rural businesses (Salemink et al., 2017).
More recent attention has focused on how the provision of digital technology is improving
information accessibility and opening up opportunities for innovation in rural areas (Bowen
and Morris, 2019; Lekhanya, 2018). The development of digital technology helps
entrepreneurs to cope with uncertainty in entrepreneurship activity and face the future with
confidence (Nambisan, 2017; Shukla et al., 2021). In the context of rural entrepreneurship,
faster and easier information acquisition helps rural communities to identify new
opportunities and innovate (Lekhanya, 2018).
These conditions have partly been recorded in some countries in the Global South (Chitla,
2012; Johnston et al., 2015; Pramanik et al., 2017). The availability of digital technology
contributes to the improvement of rural communities’ well-being in this context (Fahmi and
Sari, 2020). Yet, the development of digital technology in rural areas is still a persistent
debate, both in developed and developing countries. It is still an issue because uneven digital
development generates higher disparity. This happens when rural communities are not able
to access digital technology due to high costs or a limited choice of broadband providers
(Ashmore et al., 2017; Räisänen and Tuovinen, 2020; Townsend et al., 2013). In the Global
South, such as in Indonesia, the development of digital technology is useful for empowering
rural communities’ entrepreneurial activity and offering them new livelihood strategies
(Fahmi and Sari, 2020; Tremblay, 2018). On the other hand, digital technology may have
negative impacts on rural development. A recent study by Tremblay (2018) shows that the
availability of digital technology in Cyber Kampong (Kampung Internet in Yogyakarta,
Indonesia) may be disrupting Javanese culture and inhibiting the social cohesion of their
JEC community. Other authors (Deichmann et al., 2016) have shown that the availability of
17,2 digital technology cannot resolve all rural livelihood problems in developing countries. In
this regard, it remains unclear how digitalization affects rural entrepreneurship in the
context of the Global South. Considering the potentially differing human and cultural
contexts pertaining to digital technology use in the Global South, it is still a question:

Q1. How do digital technologies and the internet facilitate rural entrepreneurs to
456 develop their businesses?
It is clear that digital technology provides benefits if entrepreneurs are able to use it
properly.
A concept that potentially helps us understand rural entrepreneurs’ success is the extent
to which agricultural producers and businesses have an “entrepreneurial attitude”, that is,
their attitude towards risk and ability to recognize opportunities that fulfil unmet needs
(Mccline et al., 2000). New information that entrepreneurs access via digital technology helps
expand their knowledge base so that they can make more informed risks (Kraus et al., 2019;
Lekhanya, 2018). Nevertheless, digital technology will not deliver these positive impacts if
entrepreneurs do not use it well, as previous studies have shown that the ability to use the
digital technology effectively is necessary to help rural communities grow (Alam et al., 2018;
Malecki, 2003; Räisänen and Tuovinen, 2020; Salemink et al., 2017).
This study aims to identify the impact of digitalization on entrepreneurial attitude in
rural areas in the context of the Global South. The capability approach (Nambiar, 2013;
Nussbaum, 2000; Robeyns, 2005; Sen, 1985, 2000, 2001, 2008) is used, which allows us to
focus on satisfaction, interest and things that a person considers valuable to them. While the
capability approach is generally used in the context of individualist societies, we argue that
it is suitable for our study in the Global South, which usually has stronger collectivism and
clearly, for two reasons. Firstly, the capability approach can be used to understand
individuals’ perspectives about digitalization in rural communities, such as whether they
consider digital technology to be a valuable resource (Sen, 2000, 2008). If they see digital
technology as a valuable resource for improving their business, it will affect their attitude
towards using it. Secondly, the capability approach can capture the digital divide
phenomenon in rural areas at an individual level. Other studies that consider this issue show
that the rural digital divide is strongly related to expensive costs and limited broadband
providers (Park, 2017; Räisänen and Tuovinen, 2020; Salemink et al., 2017; Townsend et al.,
2013). However, there could be other factors pertaining to individuals’ valuation of digital
technology use in rural areas. Cost and digital infrastructure are not the only issues anymore
for rural communities. Some rural communities might consider digital technology a
disadvantage because it is not enough to support the online activities they want to do;
therefore, digital expansion is also related to their perceived benefits of internet use (Philip
and Williams, 2019).
In examining these issues we focus on Indonesia, a country in the Global South, to
explore how entrepreneurship has been central to the ongoing process of rural
transformation and deagrarianization and how it has made the agricultural sector more
profitable (Belton and Filipski, 2019; Bryant, 1989; Hebinck, 2018; Korsgaard et al., 2015;
Rigg, 1998, 2001; Tu et al., 2018; Wortman, 1990). We examine two cases, namely, the
Kamasan and Kintamani areas in Bali, which represent differing contexts of economic
restructuring and scopes of digitalization in rural areas. This paper contributes to the
conceptual argument on rural entrepreneurship which is relatively underdeveloped
(Avramenko and Silver, 2010). The use of the capability approach, which is still seldom used
in entrepreneurship studies (Gries and Naudé, 2011), provides an insight that the success of
rural entrepreneurship is related not only to the presence of “concrete” things but also the Capability
individual perspective on these. This paper will provide empirical evidence of the approach
applicability of the capability approach beyond the “Western” context not only by showing
the potential differences in socio-cultural contexts in which the capability approach is
applied. More importantly, our findings show how the strong collectivism and cultural
values influence the individual valuations of and capability to use digital technology, which,
in turn, affect entrepreneurial attitudes.
The remainder of this paper is structured as follows. The next part lays out the
457
theoretical framework for using the capability approach to analyse rural entrepreneurial
attitude, followed by an explanation of methodology. We then present the results of our
analyses and our conclusion.

Developing a framework for analyzing digitalization and entrepreneurial

attitude: the capability approach
Entrepreneurship has become one of the survival strategies for rural communities who are
unable and unwilling to leave rural areas but require alternative sources of income
(Wortman, 1990). The notion of rural entrepreneurship has emerged as a paradigm that
agriculture must be able to create more profits and reduce poverty by stressing cross-
sectoral views (Belton and Filipski, 2019; Berdegué et al., 2014; Ellis and Biggs, 2001; Rigg,
1998; Tu et al., 2018). Rural entrepreneurship reflects the activities involved in a location
characterized by rurality, so that it appears to be different from mainstream
entrepreneurship and entrepreneurship in urban contexts (Fortunato, 2014). Nonetheless,
Korsgaard et al. (2015) note the importance to differentiate between “rural entrepreneurship”
and “entrepreneurship in the rural”. The latter term represents the “immediate spatial
context” that becomes a location for entrepreneurial activities, in which a rural area is just
the location where economic actors seek profits (Korsgaard et al., 2015). In comparison, rural
entrepreneurship reflects a more intimate relationship between the entrepreneurial activity
and the rurality of the place (Dal Bello et al., 2021; Korsgaard et al., 2015). Rural
entrepreneurship involves a new combination of place-based resources comprising natural,
history, human, social and financial resources (Müller and Korsgaard, 2018). The utilization
of these resources for developing rural entrepreneurship potentially delivers positive
impacts on the rural economy by creating new jobs, reducing poverty, enhancing incomes,
diversifying the economy so that community does not depend on one economic sector and
improving the quality of life by providing goods and services in rural areas (Belton and
Filipski, 2019; Bowen and Morris, 2019; Bryant, 1989; Delfmann, 2015; Lekhanya, 2018).
While rural entrepreneurship has been studied for over two decades, the topic is
relatively undertheorized (Pato and Teixeira, 2016). Previous studies have focused on
entrepreneurs’ psychological traits and embeddedness (Pato and Teixeira, 2016). Moreover,
most studies of rural entrepreneurship, analyses on psychological traits and entrepreneurial
attitudes are usually performed at the individual (micro) level (Lindsay, 2005; Lunnan et al.,
2006; Nybakk and Hansen, 2008). Studies of embeddedness usually look into the aspect of
rurality and networks and their relationships with local resources, thereby requiring an
understanding of socio-cultural and spatial (macro) contexts (Kalantaridis and Bika, 2006;
Müller and Korsgaard, 2018; Muñoz and Kimmitt, 2019; Stathopoulou et al., 2004). However,
little is known as to how these macro-micro levels are interrelated and yield outcomes for
rural entrepreneurship (Muñoz and Kimmitt, 2019). For instance, it is a question as to
whether the same resources and networks available in rural areas will generate the same
impact on each individual entrepreneur.
JEC In the literature, the use of information and communication technologies (ICT) and
17,2 digitalization in rural entrepreneurship has drawn increasing attention (Avramenko and
Silver, 2010; Belton and Filipski, 2019; Bowen and Morris, 2019; Stathopoulou et al., 2004).
The advance in ICT plays a role in nurturing innovation in the context of a knowledge-based
transition economy (Gërguri-Rashiti et al., 2017). The use of the internet or “internetization”,
is increasingly useful for encouraging the internationalization of entrepreneurship in that it
458 facilitates the process of adoption, diffusion and dissemination of technology, especially for
innovative entrepreneurs (Etemad et al., 2010). Digital technology has also become a solution
for entrepreneurs to develop an adequate strategy for dealing with difficult situations, for
instance when facing the COVID-19 pandemic (Saleh, 2021). Reflecting on this ongoing
discussion, it remains unclear as to how both individual and regional circumstances mediate
the role of ICT in rural entrepreneurship. What is more important than merely describing
the outcome of digitalization in rural areas is investigating how these outcomes occur and
how these processes differ among individuals. The use of the capability approach in this
paper does not only help to explain the outcome of digitalization but also explains how each
individual can convert the same resource that is available in a region into valuable resources
(Sen, 2000, 2008). As such, this approach can provide a comprehensive overview of how
regional socio-cultural contexts are related to the individual perspective in performing rural
entrepreneurship. Previous studies of rural digitalization and entrepreneurship have not
dealt with individual perspectives fully; they have only focused on individual impacts of
digitalization as they pertain to the formation of an entrepreneurial attitude. This research
extends our knowledge of the importance of understanding individual perspectives to foster
the development of rural entrepreneurship.
In this paper, we use the notion of entrepreneurial attitude to examine the core tenets of
entrepreneurship, including risk perception and opportunity recognition (Mccline et al.,
2000). Both elements complement the entrepreneurial attitude measurement scale developed
by Robinson et al. (1991). Opportunity recognition and risk-taking are identified as
entrepreneurial characteristics because they indicate whether individuals are able to start
new economic activities or not. An entrepreneur must be able to recognize opportunities and
take risks (Beugelsdijk and Noorderhaven, 2004; Bosma and Schutjens, 2011; Lindsay, 2005;
Lunnan et al., 2006; Nybakk and Hansen, 2008). Before decision-making and innovation,
they must identify new opportunities precisely and accurately (Wang et al., 2013). Previous
studies report that business performance increases when the company or entrepreneur takes
on challenges and recognizes chances for change and expansion (Beugelsdijk and
Noorderhaven, 2004; Lunnan et al., 2006; Nybakk and Hansen, 2008). It has also been
demonstrated that a strong entrepreneurial attitude aids success in entrepreneurial activities
and has a positive impact on life satisfaction (Krishnan and Kamalnabhan, 2015). The
studies presented, thus, far provide evidence that entrepreneurial attitude affects
entrepreneurial activity.
Accordingly, we develop a framework based on the capability approach by Sen (1985,
2001, 2000) and Nussbaum (2000) to understand individual perspectives of digital
technology. A capability approach focuses on what a person does and can do by using the
available resources (Sen, 1985, 2000, 2001, 2008). In this paper, we analyse the components of
the capability approach in this order:
 conversion factors;
 capability set; and
 achieved functioning (Robeyns, 2005; Sen, 2000).
In short, conversion factors influence the conversion of the available resources into valuable Capability
resources, so that people can achieve what they want depending on their valuation. This can approach
also be referred to as “functioning” (Sen, 2000, 2008). The conversion process is a necessity
through which available resources come to serve valuable functions influenced by personal
factors, social factors and environmental factors (Nambiar, 2013; Robeyns, 2005; Sen, 2000,
2008). After the conversion process, the individual will have many chances to use these
resources to achieve a worthwhile goal. The capability set consists of a combination of what
can be achieved and what entrepreneurs can do to achieve their desired goal (Sen, 2000, 459
2008). The capability of a person to use a resource reflects the freedom that relies on her/his
competence to recognize the opportunity and take a risk. Everyone has the freedom and
chance to direct themselves towards chosen goals, activities and aspirations (Robeyns,
2005). In this study’s model of the capability approach, digital technology serves as the good
or resource that enables functioning and the capability of an entrepreneur to use digital
technology represents their personal wishes. We use this framework to analyse how
digitalization affects entrepreneurial attitude (Figure 1).

Conversion factors
The availability of goods and services cannot provide information about what a person can do
with these goods and services (Sen, 2008). Therefore, an analysis of a person’s well-being has
to consider what a person does successfully with the available goods and services. Goods have
specific characteristics that make them attractive to people and these characteristics allow
them to achieve functioning. People have different abilities to seize an opportunity, in this
case, the opportunity that arises from digitalization. Sen (1985) argues that everyone has a
different capacity to convert the same resource into a valuable resource. The same resource
may be presented to various groups of people, but the value it has depends on the individual’s
ability to convert it into something valuable. Throughout this paper, the term resources refer
to the availability of digital technology in rural areas. The rural community must convert
digital technology to become valuable so it can help them improve their business performance.
Various factors influence this conversion process: personal factors, social factors and
environmental factors (Nambiar, 2013; Robeyns, 2005; Sen, 2001, 2008):
(1) Personal factors are characteristics that influence an individual’s physical and
psychological condition (Nambiar, 2013; Robeyns, 2005; Sen, 2000). Individual
personal characteristics that may influence these conditions include age,
educational background and personal experience (Polas et al., 2021).

Conversion factors:
Personal factor
Social factor
Environmental factor

Freedom to achieve Achievement (achieved

Goods and services: (capability): funconing):
The availability of digital Entrepreneurs’ capability in Entrepreneurial atude
technology in rural areas ulizing technology to develop (opportunity recognion and
their businesses risk-taking) Figure 1.
Conceptual
framework
Source: Based on Sen (2008) and Robeyns (2005)
JEC (2) Social factors refer to norms, government policies and the nature of community
17,2 relationships (Sen, 2000).
(3) Environmental factors consist of public goods and infrastructure, climate
conditions and geographical conditions (Nambiar, 2013; Robeyns, 2005; Sen, 2000).

To conclude, reflecting on the above concept, analyzing conversion factors of digitalization

460 in rural entrepreneurship should look into personal, social and environmental factors.
Personal factors can explain how the different conditions of individual lives influence the
use of digital technology, such as age, educational background and experience. Further,
social and environmental factors provide insight into situations outside of personal
conditions that may influence the use of digital technology. Similar studies show that
personal factors might influence digital technology use and raise the digital divide between
urban and rural areas (van Dijk and Hacker, 2003; Mills and Whitacre, 2003). It has
conclusively been shown that those from lower educational backgrounds and older people
have no or very few computer skills, including the internet (van Dijk and Hacker, 2003).
However, younger members of the family can help them build a network using social media
(Michailidis et al., 2011), which can be classified as a social factor. Other factors that may
influence someone to be able to use digital technology include experiences in a workplace
that uses online applications (Mills and Whitacre, 2003), which is a social factor that may
intervene in a personal capacity (Nambiar, 2013; Robeyns, 2005; Sen, 2000). The availability
of infrastructure also influences the penetration level of digital technology use – this can be
categorized as an environmental factor (Michailidis et al., 2011). The evidence presented in
this section suggests that many factors potentially affect individual resource conversion. It
is necessary to identify the factors that affect the conversion of digital resources in rural
areas.

Freedom to achieve (capability set)

A capability set is one of the main components of the capability approach. Sen (2000)
explains that capability represents a set of valuable functionings that can be accessed
effectively by everyone. Moreover, capability reflects someone’s freedom to choose their
desired goal according to their valuation (Robeyns, 2005; Sen, 2000). Sen and Nussbaum’s
understandings of this capability set differ. While Sen neglects to define what constitutes
the set, Nussbaum (2000) adds some ideas to enrich the capability approach developed by
Sen by giving a list of central human functional capabilities. Nussbaum (2000) explains
capability by differentiating capabilities into three forms, namely, basic capabilities, internal
capabilities and combined capabilities. Regardless of this difference, this paper focuses on
entrepreneurs’ capability, which represents entrepreneurs’ freedom to choose whether they
will use digital technology in developing their business. The term capability set refers to
entrepreneurs’ capability. After the conversion process, entrepreneurs choose whether or not
they will use digital technology in developing their business. Entrepreneur’s capability
depends upon the weight of their evaluation. If entrepreneurs consider digital technology to
be a valuable resource they will try to build the capability to use digital technology and vice
versa. This view is supported by Nikou et al. (2020), who use the capability approach to
understand elderly people’s choices regarding digital health-care technologies. Rather than
decide to use digital health-care technologies based on their usefulness, Nikou et al. (2020)
argue that elderly people prefer to make their decision based on their evaluation of whether
digital technology can help them to achieve their goals or not. In this paper, we explore how
entrepreneurs’ capability set allows them to choose whether they will use digital technology
or not. It is expected that entrepreneurs who try to build their digital capabilities will be Capability
encouraged to take more risks and look for opportunities. approach
Achieved functioning
Functioning refers to people’s achievements (Sen, 2000). After someone has converted the
available resources, they are able to choose their desired goal according to their valuation;
then, finally, they reach achieved functioning (Robeyns, 2005; Sen, 2000, 2008). The
conversion process produces a set of capabilities consisting of various combinations of what
461
can be achieved and what can be done by entrepreneurs to achieve the desired goals. The
capability of entrepreneurs to take advantage of digital technology in entrepreneurial
activities reflects their entrepreneurial freedom, which has implications for their ability to
recognize opportunities and take risks. Everyone has the freedom and valuable
opportunities to direct themselves towards chosen goals, act, however, they desire and
become what they want (Robeyns, 2005). Therefore, entrepreneurial capability to use digital
technology in economic activities represents personal desire. In this paper, achieved
functioning refers to the formation of an entrepreneurial attitude in rural areas, that is, the
entrepreneurs’ capability to use digital technology to formulate an entrepreneurial attitude.
This capability encourages entrepreneurs to use the available resource, digital technology,
to recognize opportunities and take risks so that business performance increases. This view
is supported by several studies that show entrepreneurs who can identify new opportunities
and take some risks will improve the business performance, as mentioned before
(Beugelsdijk and Noorderhaven, 2004; Lunnan et al., 2006; Nybakk and Hansen, 2008). As
explained earlier, opportunity recognition and risk-taking are the cores of entrepreneurship
(Mccline et al., 2000). Having an entrepreneurial attitude improves entrepreneurs’ life
satisfaction because it leads to entrepreneurial success (Krishnan and Kamalnabhan, 2015).
This paper attempts to show that conversion factors and entrepreneurs’ capability sets
affect entrepreneurs’ ability to identify new opportunities and take risks by using digital
technology.

Methodology
To examine how the use of digital technology influences entrepreneurial attitude in rural
areas we used a multiple case study approach. This approach is appropriate because it helps
understand how different rural contexts influence the ways digitalization helps to form
entrepreneurial attitudes (Yin, 2014). In this regard, we established the criteria for selecting
our cases to consider different types of rural livelihoods and the varied availability of digital
technology. As there are several types of rural livelihoods, this paper considers the
agricultural and non-agricultural sectors as the basis of rural economic activity. The second
criterion for selecting the cases was the presence of digital technology use, such as online
marketing and searches for business-related information. The first case study focuses on
coffee producers in Kintamani, Bali and examines digital technology use in agriculture-
based entrepreneurship. The second case study focuses on producers of wayang paintings
in Kamasan village, Bali and examines digital technology use in non-agricultural-based
entrepreneurship, particularly in long-established traditional cultural industries.

Data collection
Semi-structured, in-depth interviews were conducted in both villages to obtain information
about how entrepreneurs use digital technology to improve their business performance. In
asking about this issue we were able to understand the factors that influence digital
technology use, entrepreneurs’ valuations of digital technology and the impacts of digital
JEC technology use on entrepreneurial attitudes. Interviews in Kintamani and Kamasan were
17,2 conducted in March 2020 using purposive sampling and snowballing sampling. The
interview process began by selecting key informants through the information available on
social media of the rural enterprises and the internet, as well as the recommendations from
the local leaders. The entrepreneurs who were being interviewed should meet three criteria:
(1) they were able to explain the development of entrepreneurial activities in each
462 case;
(2) they were currently running a business; and
(3) they had considered using digital technology in their businesses, which included
entrepreneurs who both use and do not use digital technology presently (see an
overview of the interviewees in Appendix).

After some interviews were conducted, we asked for recommendations from informants
until saturation was reached, in that no more potential informants were mentioned or no
new information was found (Hennink et al., 2019). As we implemented this procedure, in
Kintamani, nine entrepreneurs were interviewed; in Kamasan village there were 10
interviewees: three government representatives and seven craft entrepreneurs.

Qualitative data analysis

All collected information was analysed at an individual level using a constant comparative
technique, which allows us to produce an integrated, consistent and logical theory (Glaser,
1965). Analysis at the individual level was useful and necessary because it captures the
different entrepreneurs’ valuation of digital technology in line with the capability approach
(Sen, 1985, 2000, 2001, 2008). Understanding entrepreneurs’ valuation allows us to
understand that successful entrepreneurship is not only affected by concrete things (such as
the availability of resources) but also affected by individuals’ opinions and judgements. It is
important to intervene in things that may affect individuals’ valuation and personal
capacity so that they are able to recognize opportunities and take risks. The analysis process
follows the standard flow of activities in qualitative data analysis, namely, data reduction,
data display and drawing of conclusions (Miles et al., 2014). The analysis began with a
coding process to organize the collected data so that we were able to understand the
collected information easily. Our coding process was drawn from the conceptual framework
of this research regarding conversion factors, opportunity recognition and risk-taking. After
the coding process, we started to analyse and display the data. We conducted an inductive
process to extract the collected data both during and after the field survey. The inductive
process was useful to help understand the impact of digital technology use on the formation
of entrepreneurial attitudes and the social-economic activities in each case. The analysis
began by extracting the collected data and organizing it according to our conceptual
framework, resulting in a set of meaningful data.
According to Yin (2014), analyses that use case studies can be assisted by pattern
matching and explanation building. Pattern matching techniques allow us to match our
findings with the conceptual framework, illuminating the kind of conversion factors that
influence digital technology use, opportunity recognition and risk-taking (Appendix). At the
same time, using the technique of explanation building was useful to explore entrepreneurs’
capabilities and impacts on their entrepreneurial attitudes. These techniques help us to draw
our conclusions. Firstly, we built the pattern based on our analysis of each case study. This
step allowed us to compare differences and similarities between individuals within each case
study (Appendix). Secondly, we compared the pattern between the case studies to examine
the differences and similarities between them. To ensure the validity of our conclusions, we Capability
conducted triangulation by asking or confirming the information from earlier informants approach
with other informants. The triangulation process was conducted by the researchers during
the field. This strategy is useful to ensure internal validity throughout this research.

Case overview
Kintamani 463
Kintamani is a rural area that borders the districts of Badung and Bangli, located about
58 km from Denpasar, the provincial capital of Bali. The local people rely on the agricultural
sector to fulfil their daily needs. In total, 39.84% of workers are used in the agricultural,
fisheries and forestry sectors of the Bangli District – these workers make up the majority of
the working population in the Bangli Regency. The villagers who depend on the agricultural
sector in the Badung District make up about 7.44% of the working population, the third-
highest percentage (BPS-Statistics of Bali Province, 2020). Nevertheless, the coffee industry
has been long-established since the 1960s. In the beginning, the farmers only sold coffee to
distributors (pengepul) or the market and did not gain much profit. Due to these problems,
they decided to plant oranges and other vegetables. Finally, they realized that coffee
was more profitable in the long term, so they switched back to coffee. Since 2013, they have
used digital technology to develop agriculture-based entrepreneurship, particularly
e-commerce and e-businesses which were useful to the whole business processes, as well as
to support transactions (Bukht and Heeks, 2017). The coffee farmers started to learn about
digital technology and use it to expand their business. This phenomenon shows that digital
technology matters in improving agriculture-based entrepreneurship in Kintamani. Even
though their location is quite far from city centres and not all of the locals have sufficient
educational backgrounds, they learned how to use digital technology to improve their
business due to a combination of driving factors. Firstly, younger entrepreneurs tended to
use digital technology easier than older entrepreneurs. The younger entrepreneurs had more
experience of using digital technology either in daily life or for specific events, such as
through participating in e-commerce training and information technology education in
school. Secondly, external support from family members, offline guests/buyers, friends and
the government encouraged coffee entrepreneurs to use digital technology. Thirdly, the
availability of internet connections in their area. Regarding these driving factors, they
consider digital technology as a valuable resource to help them improve business
performance. Digital technology allows them to recognize more opportunities and take
calculated risks in their business. By using digital technology, they are able to promote their
business, sell their products, understand the consumers’ behaviour, build a network of
coffee entrepreneurs and learn about coffee development all around the world. One farmer,
Mr Adi from Bali Beans, can even use digital technology to support coffee production by
connecting an advanced engine to a handphone.

Kamasan
Kamasan Village is located in the Klungkung District, 31 km from Denpasar City, the capital
of Bali. This case represents cultural-based entrepreneurship, which has been the rural
community’s livelihood for a long time. The entrepreneurs in Kamasan Village specialize in
craft production, most famously creating Wayang Kamasan. Wayang Kamasan is classified
as adiluhung art, meaning it is a cultural product that has high value and is important for
preserving tradition. In the beginning, craft products from Kamasan Village were strongly
associated with religion, as they have historically been used for religious rituals. However,
the village’s crafts have undergone commercialization and diversification of products to
JEC include items such as wallets, bags and fans. Even though craft entrepreneurs still use
17,2 original motifs on daily functional products, they only try to paint Wayang Kamasan in
some media. Other craft products from Kamasan Village include kain songket and silver
crafts. The village has used digital technology since 2013 for e-business and e-commerce
purposes (Bukht and Heeks, 2017). However, only some entrepreneurs use digital technology
to sell products and search for useful information. Even though they get external support
464 from family members, the government and offline consumers, not all craft entrepreneurs are
willing to use digital technology. The older entrepreneurs tend to have difficulties using
digital technology because they lack skill and knowledge about the trends nowadays. This
case shows that every entrepreneur has different valuations of digital technology. Some of
them do not consider digital technology to be a valuable resource to improve their craft
business. This valuation affects their ability to identify new opportunities and take risks in
their business (Table 1).

Analysis
In the following section, we present our analysis on how digital technology influences
entrepreneurial attitude by examining conversion factors, freedom to achieve and achieved
functioning as proposed by the capability approach.

Conversion factors
As everyone has a different capacity to convert the same goods into valuable resources, we
examine how digital resources are shaped by personal, social and environmental factors,
thereby providing a driving force for recognizing opportunities and taking risks in their
businesses (Nambiar, 2013; Robeyns, 2005; Sen, 2000, 2008). The result of our analysis
shows that personal and environmental factors determine the ways in which digital
resources are being considered across individual rural entrepreneurs. The cases of
Kintamani and Kamasan have similar conversion factors regarding digital resources, as
they are situated in the same region.
The first set of conversion factors are personal factors, comprising age, experience and
educational background, which are associated with each other. As shown in both cases, age
was shown to matter: younger entrepreneurs tend to find it easier than older entrepreneurs
to use digital technology. This is illustrated by our interview with one of the younger
entrepreneurs who explained that it is fiendishly difficult for their parents to learn how to
use digital technology.
“My father is now 70, he doesn’t know the internet at all at his age, I even taught him how to use
WhatsApp, but it’s too difficult [. . .].” (female, Kintamani entrepreneur, younger than 40).
Another interviewee mentioned that it is his daughter who took charge of using digital
technology in their family business:
“I don’t understand (the internet/digital technology). Yet, nowadays kids are sophisticated, so I
learned from my daughter” (male, Kamasan entrepreneur, older than 40).
There is quite a difference between the two cases. The entrepreneurs who were older than 40
in Kamasan tend to rely on their family members, either their children or nieces and
nephews, to adopt digital technology into their businesses. They do not have experience of
using this technology in their daily life, either from past schooling or in the present. It is,
thus, arduous for older entrepreneurs to use digital technology in their business. While this
is similar to the older entrepreneurs in Kintamani, some of them actually show a little bit of
curiosity to learn about digital technology use. Yet, it is hard to keep up with the rapid
 Kamasan Kintamani

General
information
Type of Non-agricultural based entrepreneurship (cultural industries) Agricultural-based entrepreneurship
entrepreneurship
Use of digital  Use the internet to search for information about market  Use the internet to search for information about market
technology development, develop new ideas understand the market development, develop new ideas understand the market
and build a network with other entrepreneurs and build a network with other entrepreneurs
 Use e-commerce to sell the products  Use e-commerce to sell the products
 Automation/use of advanced engines to produce coffee
beans

Conversion
factors
Age  Younger ages (20–40 years) tend to find it easier to take  Younger ages (20–40 years) tend to find it easier to take
advantage of digital technology advantage of digital technology
 Older ages (40 years and over) tend to face difficulty in  Older ages (40 years and over) tend to face difficulty in
using digital technology using digital technology

Experience  Using the internet in everyday life  Using the internet in everyday life
 Seeing other people’s efforts from social media  Visiting other countries
 Joining e-commerce training  Joining technology-based entrepreneurship training

Education The entrepreneurs have relatively good educational backgrounds
(i.e. senior high school, diplomas and bachelor degrees). This
educational background affects the behaviour and general
knowledge of entrepreneurs, encouraging them to keep up with
developments
The entrepreneurs have relatively good educational backgrounds
(i.e. senior high school, diplomas, bachelor’s, master’s and even
doctoral degrees). This educational background affects the
behaviour and general knowledge of entrepreneurs, encouraging
them to keep up with developments
(continued)
approach
Capability

two cases
Table 1.
Comparison of the
465
 JEC
17,2

466

Table 1.
Kamasan Kintamani

Social and  Family support (cousins and children)  Consumer suggestions

Environmental
 Environmental conditions that offer inspiration (seeing  Support from friends
Factors
other people use digital technology)  Training from the government
 Training from the government  Good mobile network
 The availability of Wi-Fi in some banjars

Capability set Entrepreneurs, in general, do not value digital technology as a
useful resource to develop their businesses
Functioning Entrepreneurs who have the capability to use digital technology
can recognize more opportunities, but they are not able to take
risks or sacrifice resources
Entrepreneurs in general regard digital technology as valuable, as
it provides various advantages and opportunities
Entrepreneurs who have the capability to use digital technology
can recognize more opportunities and take risks
development of digital technology and accordingly, they ask younger family members for Capability
assistance. approach
Our findings show that age is also linked to personal experience and educational
background. In line with the findings of other studies, the younger and extended family
members help older members overcome the challenges posed by digital development in the
villages (Salemink et al., 2017). It is not computer courses or other relevant subjects
pertaining to digital technology or even higher education, that facilitates the younger
generation’s digital literacy. Rather, it is about the development of digital technology itself. 467
When the older entrepreneurs were in school, digital technology was nowhere near as
widespread as it is now and their schooling did not incorporate digital tools. However, the
younger entrepreneurs’ education did use these technologies. They also commonly socialize
with their friends via social media.
The second set of conversion factors is social and environmental factors. These factors
are related to any situations outside a person’s condition that affects their use of resources,
both in terms of social relations and supporting infrastructure. Both cases show similar
social and environmental factors as they are located in the same region, which has full
network telecommunication coverage of sufficient quality. This facilitates entrepreneurs’
direct and indirect exposure to digital technologies and the internet.
We found that the social relationships between entrepreneurs and other stakeholders,
including younger family members, the government, customers at their offline stores and
entrepreneur colleagues affect digital technology use. The government encouraged
entrepreneurs to join e-commerce workshops and other training related to digital technology
use in business. Additionally, offline customers and colleagues suggested entrepreneurs
adapt their businesses digitally. Some consumers requested that they use e-commerce
because they wanted to purchase their products online. This suggestion naturally acted as
encouragement for entrepreneurs from both case studies to learn more about digital
technology.
Social factors play a crucial role in affecting digital technology use. In both cases, many
of the businesses are characterized as hereditary. The craft entrepreneurs in Kamasan began
their businesses around the 1990s. Most of the villagers have learned how to paint Wayang
Kamasan and to make other traditional crafts displaying the Wayang Kamasan motif. They
have maintained the tradition across generations. The interactions between these hereditary
family businesses are important. It is common for these neighbouring entrepreneurs to share
information and business knowledge. They share suggestions among them, such as using
new media to add value to their products. For example, one interviewee said that other craft
entrepreneurs told him to expand his product range to include fans, calendars and
traditional bags. They keep the original motif of Wayang Kamasan but produce more varied
products rather than only producing canvas prints. Their wider range of unique products
attracts both local and international customers. Furthermore, some craft entrepreneurs in
Kamasan recommended others to sell their products using social media. At firstly, older
entrepreneurs, the owners of their family businesses, were confused by the idea, but younger
family members helped carry out the process smoothly.
Similarly, in Kintamani, many businesses are run hereditarily; interviewees mentioned
that coffee production was started around the 1990s by their parents. However, their parents
had difficulty selling the coffee. Back then, they were only sold to collectors (pengepul) at a
cheap price. They shifted from coffee to orange production to increase profit. In 2017, some
older entrepreneurs asked the younger villagers in the area to help promote the coffee
product. It encouraged the younger villagers to learn about and use digital technology to
improve the Kintamani coffee business. Finally, some younger villagers decided to quit their
JEC jobs and start focusing on coffee full-time. Like the Kamasan entrepreneurs, entrepreneurs
17,2 in Kintamani share information about industry trends and social media management.
To sum up, despite their different entrepreneurial sectors, we found similar conversion
factors in both cases which influence digital technology use in the rural entrepreneurs. The
most important factor to note is that family support helps older family members in the
enterprise to comprehend digital technology (Michailidis et al., 2011; Salemink et al., 2017).
468 These similarities could be attributed to the fact Kamasan and Kintamani are located in the
same region. Nonetheless, this actually reflects a common situation throughout rural
Indonesia, in which the use of technology presents challenges in rural areas and among
traditional enterprises (Fahmi et al., 2016).

Capability set (freedom to achieve)

In this paper, the capability set refers to the entrepreneurs’ freedom to use digital technology
based on their valuation of it (Sen, 2000). In the following section, we explain that
entrepreneurs in each case study have different capabilities to use digital technology. This
corresponds to different valuations of digital technology, as stimulated by various
motivations. To understand their valuation of digital technology, we first identify the forms
of digitalization in both cases. We portray the individual patterns of digital technology use
and preferences to understand the differences within and between cases (Appendix).
Generally speaking, entrepreneurs in Kamasan only use digital technology to sell products
and search for information. Meanwhile, in Kintamani digital technology is more prevalent:
coffee entrepreneurs also use digital technology to understand consumers’ behaviour, build
a network with other colleagues and improve coffee production. Having outlined digital
technology’s uses, we now consider the degree to which entrepreneurs consider it a valuable
resource and to what extent they try to build their capacity to use it.
Although Kintamani entrepreneurs have varied attitudes towards digital technology
(Appendix), a common view among interviewees is that they consider it a valuable resource
for developing their business. They value it for a number of reasons. Firstly, digital
technology helps them dramatically expand their market and reach new potential
customers. Secondly, digital technology is a beneficial tool for seeking information that
helps them improve their business such as trends in coffee development, new ideas for
marketing their product and new ways to produce coffee. It is important to highlight that
digital technology is not the only way for them to sell their products and search for
information. Entrepreneurs in Kintamani can sell their products without using e-commerce
and also have an in-person network to discuss coffee development. Even though they have
other choices, they realize that digital technology is valuable for them and decide to use it.
They believe digital technology makes marketing and business research easier, and
therefore, choose to incorporate it into their businesses. This theme arose in discussions
about the benefits of using the internet.
“Because of the ease that the internet offered. It reduced costs associated with visiting customers
to offer our product. The internet makes it easier to reach people. It all becomes easier” (Male,
Kintamani entrepreneur, younger than 40).

“Using the internet (online store) is much more comfortable. We don’t have to go to the office. We
can manage other things while also managing coffee production. We just have to wait. In fact, the
online store is easier” (Male, Kintamani entrepreneur, younger than 40).
Another interviewee also explained the use of digital technology can facilitate his
motivation to develop the business:
 “I’m still young and open to something new like the internet so that we, the small businesses, can Capability
compete with large companies” (Male, Kintamani entrepreneur, younger than 40).
approach
Digital technology allows them to access information and customer bases they could not
before, reduces time and costs of production and encourages them to compete with large
producers. These benefits are related to the value they give to digital technology. They have
a choice between using online and offline methods to develop their business, but they
decided to combine both methods because this combination aligns with their values and 469
goals. It is also interesting to note that in Kintamani, all interviewees were influenced by a
combination of personal, social and environmental factors that worked together to facilitate
the proactive use of digital technology in their businesses.
In comparison, the situation in Kamasan is quite different. In general, Kamasan
entrepreneurs do not have the capability to use digital technology. They tend to ask their
family members to help them. The interviews show that these entrepreneurs did not
originally consider using digital technology but some of them eventually decided to use e-
commerce and social media. However, they do not use it very intensively and require
assistance to do so. In this case, conversion factors influence the Kamasan entrepreneurs
differently; they do not use digital technology out of their own desires but because of
support from others. There are several explanations for this. Firstly, they think digital
technology does not have a significant impact on product sales. For instance, one of them
was afraid that other sellers would duplicate their motifs if they sold products via
e-commerce. He only posts partial pictures to prevent his work from being copied. As one
interviewee said:
“Yes, that’s what I was told. I uploaded a picture of songket. I posted a photo but I didn’t show it
entirely” (male, Kamasan entrepreneur, older than 40).
Secondly, as Wayang Kamasan designs follow strict religious and cultural rules, digital
technology is not considered a valuable resource for exploring new motifs. As one
interviewee explained:
“(the increase in sales due to digital technology is) 10% more or less. It’s rare, but still, there’s an
improvement” (Male, Kamasan entrepreneur, older than 40).
As such, although these rural entrepreneurs agreed to adopt digital technology, this decision
does not reflect “freedom” as explained by Sen (2000, 2008). The nature of Kamasan
entrepreneurs’ work, which is strongly related to local religious tradition, means digital
technology is not valuable to them. Nevertheless, younger family members (a conversion
factor) urged these entrepreneurs to increase their digital visibility and adopt e-commerce.
Although both cases have similar conversion factors, the capabilities of the entrepreneurs
differ due to the nature of work in each case, which, in turn, influences how the rural
entrepreneurs value digital technology as a resource.

Achieved functioning
The term functioning in our study refers to the entrepreneur’s ability to recognize
opportunities and take risks in their business. Our analysis shows a significant difference in
entrepreneurial attitudes between the case studies: entrepreneurs in Kintamani show a
stronger ability to recognize opportunities and take risks than in Kamasan. Most of the
interviewees in Kintamani demonstrated they were able to innovate and respond to
challenges to improve their coffee business performance. They value digital technology
because they realize it creates useful opportunities. These perspectives were expressed by
some interviewees.
JEC “This is the advantage of the internet rather than doing door-to-door promotion which takes a
long time. For example, we are still processing our products, but we can post them on social
17,2 media. We tell our online customers that this product will be ready next month. It helps us a lot
with the promotion” (Male, Kintamani entrepreneur, younger than 40).

“The internet can be useful for expanding the market as well as promotion. For example, if we
want to sell certain products next year then we can do early promotion. By doing this early
470 promotion, it encourages our potential customers to buy this coffee next year” (Male, Kintamani
entrepreneur, younger than 40).
The coffee entrepreneurs in Kintamani realize that using digital technology in their business
has many advantages for their businesses. Two broad themes emerged from the analysis.
Firstly, the entrepreneurs were able to expand their market by using e-commerce. This is
possible because the internet helps them reach new potential customers and access broader
market opportunities. Secondly, entrepreneurs are able to search for information about
coffee development trends across the world. This information helps them understand
market demand and predict what products will be popular in the future. Also, it allows them
to improve techniques in the production process and develop ideas for new products. The
entrepreneurs become able to take calculated risks so that their businesses can expand.
They are not afraid to do something new and sacrifice certain resources without knowing
what the results will be. The interviews detail the kinds of resources that they sacrifice to
improve their business, namely, time and resigning from other jobs to conduct more market
research. The entrepreneurs did not mention financial capital specifically as something they
sacrifice because they believe it is normal to spend more to ensure initial business growth.
One interviewee told us that digital technology use reduces the margin of error in coffee
production:
“The internet may allow us [. . .] The margin of error becomes smaller than it would be without
using the internet. If we did not use the internet, we would sacrifice more resources because we
wouldn’t have any guidelines. When we use the internet, we have a big overview of online
information. Without the internet, we would have no guidelines for coffee production. On the
contrary, when we use the internet we already know what we want to achieve. Still, we have to
make some sacrifices to use the internet, but there are only a few sacrifices because we already
know what we want to search and achieve” (Male, Kintamani entrepreneur, younger than 40).
Digital technology offers specific knowledge that can be beneficial to their businesses, for
instance in making coffee. It helps entrepreneurs access resources that increase their
business performance. Even though their trials and production experiments are a form of
risk-taking, they can expect good results as they learn more and follow the online guidelines.
Still, there is a sacrifice of resources. This is in line with what another interviewee said:
“I like to try something new. Coffee doesn’t have to be produced in large quantities. If the
production fails, I can take the coffee home. It’s not a big deal because the coffee won’t get rotten. I
lose my time, but I gain new knowledge” (Male, Kintamani entrepreneur, younger than 40).
The situation is quite different with entrepreneurs in Kamasan. Only a few interviewees
were able to recognize the opportunities digital technology offers, namely, those who were
capable of using it. There was one interviewee who could use it but did not have an
entrepreneurial attitude due to his limited personal capacity. Most of the interviewees from
Kamasan Village do not value digital technology as a valuable resource so they do not
explore its benefits for their businesses. On the contrary, they consider digital technology a
threat because it leads to product duplication and overload orders. As one interviewee said:
 “I was handling some orders back then. I am worried that there will be many orders if we use Capability
computers (online marketing), I am afraid that I can’t handle it. Usually, there is an agreement
between the seller and the customers that the products must be finished at some specific time,
approach
such as one month” (Male, Kamasan entrepreneur, younger than 40).
While another interviewee expressed her curiosity to explore new opportunities through
digital technology:
“Since the number of visitors is decreasing, I wonder how I can improve the demand for craft 471
products. The number of sales is stuck at the moment, so I am trying to use online platforms
(digital technology)” (Female, Kamasan entrepreneur, younger than 40).
“Nowadays, guests and tourists rarely visit this village. Many people prefer e-commerce because
it is easier. So I am figuring out how to create an online store which is easier than selling at
offline stores. So I created an online store on Instagram” (Female, Kamasan entrepreneur, younger
than 40).
The entrepreneurs from Kamasan Village did not dare enough to sacrifice any resources.
Digital technology is not widely seen as a useful tool, rather, it threatens their businesses for
several reasons. As one of the interviewees said:
“I’m afraid of fraud on online shopping. That’s why I always ask the customer to make a down
payment first. We process the order when we receive the down payment” (Female, Kamasan
entrepreneur, younger than 40).
They worry that the customers will run away without paying. Also, one interviewee told us
that she is afraid of producing crafts before getting any orders. She prefers to do a pre-order
system rather than make her products and store them. If she produces crafts before getting
any orders, she worries that will not have money to run the business and survive in daily
life.
“Someone offered to sell my products, but I didn’t dare enough to allow him to do it. I adjust the
number of products based on the number of orders, also known as a pre-order system. Usually, I
collect orders, maybe until 12 pieces, then I start the production process. My ability to manage
money is not good enough” (Female, Kamasan entrepreneur, younger than 40).
It appears that different valuations of digital technology lead to differing attitudes regarding
recognizing opportunities and taking risks. This valuation significantly affects their
willingness to try to use digital technology and explore its benefits. As many entrepreneurs
in Kamasan do not value digital technology, they have not seen new opportunities from
using social media and e-commerce, nor do they feel the urge to sacrifice other resources in
favour of digital technology. In comparison, entrepreneurs in Kintamani value digital
technology because it opens up new opportunities. Thus, they are willing to sacrifice their
time and previous jobs to improve their digital literacy. While this risk-taking behaviour
does not include sacrificing financial capital as the literature suggests (Beugelsdijk and
Noorderhaven, 2004; Bosma and Schutjens, 2011; Lindsay, 2005; Lunnan et al., 2006; Nybakk
and Hansen, 2008), the Kintamani case indeed shows that by using digital technology the
rural entrepreneurs improved their entrepreneurial attitudes.

Discussion and conclusion

Using the capability approach, we have shown how digital technology influences rural
entrepreneurial attitudes in Kintamani and Kamasan in Bali, Indonesia. The use of this
approach offers a new perspective on understanding rural entrepreneurship, demonstrating
that the success of entrepreneurs in improving their standard of living in rural areas is not
JEC only influenced by materiality, such as the availability of resources. In general, previous
17,2 studies have considered the aspect of resources in rural entrepreneurship (Bowen and
Morris, 2019; Delfmann, 2015; Lindsay, 2005; Lunnan et al., 2006; Nybakk and Hansen,
2008), but they neglect the individual perspective on these resources which could vary. The
capability approach also helps bridge the macro-micro approaches to rural entrepreneurship
by showing holistically how social and environmental factors influence the capability and
472 functioning of individual rural entrepreneurs (Robeyns, 2005; Sen, 2000). This can facilitate
to better understand entrepreneurial processes in collectivist rural communities, particularly
in the Global South, in which cultural values influence behaviours and decisions in
individual enterprises (Lindsay, 2005).
The results of our study support the idea that entrepreneurs’ capability is an important
element that encourages entrepreneurs to recognize opportunities and take risks (Lunnan
et al., 2006; Nybakk and Hansen, 2008, 2008; Wang et al., 2013). Personal, social and
environmental conversion factors play an important role in introducing and enabling the use
of digital technology by entrepreneurs in both cases. Social and family relationships can
facilitate the use and adoption of digital technology in rural areas (Salemink et al., 2017). The
conversion factors in both cases are similar, given they are located in the same geographical
and socio-cultural situation. Even though they have similar conversion factors,
entrepreneurs’ capability to use digital technology appears to differ in both cases and even
within each individual region. The entrepreneurs who consider digital technology to be a
valuable resource for developing their businesses are more curious to explore its benefits.
This suggests that the decision to use this technology in rural enterprises resides at the
individual level, which in the capability approach is due to entrepreneurs’ freedom (Sen,
2000, 2008). In line with Robeyns (2005), everyone has the freedom and opportunity to direct
themselves towards the goals they want, do what they want and become what they want to
be. Although there is some variation among individuals, entrepreneurs in Kintamani
generally value digital technology as important for developing their businesses because it
facilitates new opportunities for innovation and helps them improve their marketing
strategies. This view encourages Kintamani entrepreneurs to use digital technology or, in
other words, they have the freedom to use the internet and e-commerce and using the
knowledge gained from the internet, they improve their ability to recognize market
opportunities and new business ideas. They are also willing to sacrifice resources, especially
time and their previous jobs, to experiment further with digitalization in their enterprises.
This is not the case in Kamasan, wherein only a few entrepreneurs decided to use digital
technology in their businesses. Despite the assistance of younger family members and the
government, many of them do not regard digital technology as valuable. The nature of
enterprise and craft products in Kamasan is very strictly tied to religion and traditional
culture. Kamasan entrepreneurs do not see digital technology as useful because they do not
intend to innovate or change anything about their crafts. As such, these entrepreneurs do
not have the “freedom” to use digital technology. Moreover, they are unlikely to benefit from
the new business opportunities that digital development offers.
Our findings suggest an important implication for both the growing literature and policy
on digitalization in rural entrepreneurship. Digitalization in rural areas is assumed to affect
entrepreneurial attitudes and activities (Bowen and Morris, 2019; Lekhanya, 2018). However,
from our examples of collectivist societies in the Global South, it is clear that not all rural
communities can take advantage of the availability of digital technology, as each individual
has a different valuation that affects their willingness and ability to adopt digital technology
into their business. As digital technology is valued differently by each individual, it
provides different benefits for entrepreneurial development. Therefore, we suggest that it
might not be relevant to force the use of digital technology in rural enterprises. This study Capability
demonstrates how socio-environmental conditions facilitate the spread of digitalization; approach
thus, the socio-environmental policy could prove a fruitful arena for intervention and
innovation. More specifically, it would be more appropriate to nurture social and
environmental conditions that enable knowledge sharing about how digital technology can
be valuable to each individual.
473
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Corresponding author
Fikri Zul Fahmi can be contacted at: f.z.fahmi@itb.ac.id
 Conversion factors Freedom Entrepreneurial attitude (functioning)
Seeking Recognizing Seeking new
Social and information Online Offline market business Sacrificed
Interviewee Personal environment Valuation of digital technology online marketing marketing opportunities ideas resources Appendix
Kamasan
W1(religious and x v Not valuable for selling nor to x v v x x None
nonreligious crafts) explore new ideas
W2 (religious and x v Useful to enhance marketing, x v v x x None
nonreligious crafts) but not very significant. Not
valuable for seeking new ideas,
as the motifs cannot be modified
W3 (nonreligious crafts) v x Valuable to develop business v v x v v None
and seek new ideas without the
need to spend much money to
do so
W4 (religious and x v Believes it is “dangerous” to x v v x x None, but
nonreligious crafts) post the motifs online due to afraid of
potential imitations imitations
of the
motifs
W5 (religious and v x Digital technology can help with v v v v v None
nonreligious crafts) marketing in the face of
declining demand
W6 (religious and x v Worries that if digital v v v x v None
nonreligious crafts) technology is used then orders
will increase beyond what they
can handle
W7 (religious and v v Valuable to accelerate business v v v v v None
nonreligious crafts)
Kintamani
W8 v v Valuable so as to compete with v v v x x Time to
larger producers and learn
about the dynamic coffee culture
experiment
W9 v v Valuable to boot sales, avoid v v v x x Time
trade intermediaries and access
information to innovate
(learning consumer behaviour)

(continued)

level
approach
Capability

Table A1.
477

at the individual
Summary of analysis
 JEC
17,2

478

Table A1.
Conversion factors Freedom Entrepreneurial attitude (functioning)
Seeking Recognizing Seeking new
Social and information Online Offline market business Sacrificed
Interviewee Personal environment Valuation of digital technology online marketing marketing opportunities ideas resources

W10 v v Valuable to record the business v v v v v None

history, provide an up-to-date
impression to consumers and
learn new knowledge about
coffee
W11 v v Valuable to boost sales, avoid v v x x x Time and
trade intermediaries and learn money
about the development of coffee
markets
W12 v v Provides a motivation to v v v v v Leaving
introduce local coffee and helps the
access information easily previous
job
W13 v v Valuable so as to understand v v v x v Leaving
consumer psychology the
previous
job
W14 v v Facilitates marketing and helps v v v v v Time to
get information to improve the
coffee taste
experiment
W15 v v Facilitates marketing and helps v v v v v None
get new information
W16 v v Facilitates marketing and helps v v v v v Leaving
get new information the
previous
job