From Pixels to Profits: The Digital Transformation of Indonesia’s FMCG Industry

This study examines the relationship between digital adoption and firm efficiency in the Indonesian FMCG sector. Using operating profit margin data from 31 companies for the period 2019 to 2023, the study assesses whether the use of digital technologies is associated with changes in firm efficiency. The data are drawn from companies annual reports, with the frequency of the word digital used as a straightforward measure of digital adoption. The regression results indicate a positive relationship between digital adoption and firm efficiency, although the effect remains still not much, the accounting for around 6 percent of the variation in operating profit margin. In practical terms a one unit increase in digital adoption is associated with an increase of approximately 0.165 units in firm efficiency. Because of tehse finding, the results suggest that while digital adoption is linked to efficiency improvements it does not fully explain differences in firm performance. Efficiency in the FMCG sector appears to be shaped by a combination of operational, managerial, and external factors, with digital initiatives acting more as a supporting element rather than the main driver.