Abstract.

SMEs in Indonesia play a crucial role in the national economy; thereby, the government has established a Long-Term Development Plan (2005–2025). One of its strategic programs is to strengthen the position of SMEs so that they have a competitive value. The problem faced by SMEs is economic factors. It has a weak corporate governance mechanism, which families mostly manage. Accordingly, the monitoring mechanism and good family governance will enable SMEs to carry out financial accountability by preparing comprehensive financial reports as a form of modern business management. In addition, SMEs’ awareness of digital transformation can improve workforce competence, provide technical and financial support to SMEs, and strengthen data communication infrastructure. Thus the digital transformation approach with agile innovation for SMEs can quickly adapt to existing and sustainable changes, mainly for increasing competitiveness.

Keywords: Family governance · Agile innovation · Increasing competitiveness · SMEs