Institutional Governance, Digital Transformation, and Sustainable Industrial Competitiveness: A Comparative Analysis of Indonesian MSME Digitalization and Vietnam’s Platform-Driven Manufacturing Ecosystem

Abstract

This article examines how institutional governance structures shape digital-economic transformation, business resilience, and sustainable development outcomes through a comparative analysis of Indonesia’s MSME digitalization ecosystem and Vietnam’s platform-integrated manufacturing economy. The study argues that digital transformation in emerging economies is not determined solely by technological adoption, but by the interaction between institutional coordination, regulatory governance, innovation ecosystems, financial intermediation, and industrial policy coherence. Drawing on comparative institutional economics, business systems theory, and innovation governance frameworks, the article investigates how state capacity, digital infrastructure, fintech expansion, platform governance, and industrial coordination influence economic competitiveness and socio-economic resilience. Using comparative economic analysis supported by data from BPS Statistics Indonesia, Bank Indonesia, OJK, the World Bank, OECD, ASEAN, IMF, and industrial competitiveness datasets, the findings reveal substantial divergence between Indonesia and Vietnam in the governance architecture of digital transformation. Indonesia demonstrates stronger digital consumption growth and fintech inclusion, particularly among MSMEs, but continues to face fragmentation in innovation coordination, uneven regional digital capacity, and institutional asymmetry across local governments. Vietnam exhibits more centralized industrial coordination and export-oriented technological integration, enabling greater manufacturing productivity and supply-chain upgrading, although with weaker MSME-oriented digital inclusivity. The article contributes to the literature by integrating institutional governance analysis with comparative digital business systems in Southeast Asia. It proposes a conceptual model linking institutional coherence, innovation coordination, business adaptability, and sustainable economic resilience. The study further demonstrates that sustainable digital-economic transformation requires coordinated governance mechanisms that integrate technological innovation, financial inclusion, industrial upgrading, and socio-economic equity within emerging-market development trajectories.