Purpose – The digitization efforts for small and medium enterprises (SMEs) as a result of advances in

information technology are challenging, with one of them being the creation of digital ecosystems for SMEs.

This study aims to develop a model of the relationship between SMEs’ readiness to change, agile leadership

and dynamic capability to implement a digital ecosystem for SMEs in the creative industry in Semarang,

Central Java, Indonesia.

Design/methodology/approach – A survey methodology was used in this study. Respondents in this

study were creative industry SMEs in Semarang, Central Java, Indonesia. SMEs in the creative industry

sector were chosen as samples as they require digital technology to manage their business development,

production and distribution, customer relationships and to innovate in their businesses. In total, 250 creative

SMEs, selected based on a purposive random sampling method, were included in this study. Data were

analyzed using structural equation model-partial least square.

Findings – This study provides current insights and future needs for implementing digital ecosystems in

SMEs in Indonesia’s creative industries. It also identifies three critical conditions for dealing with Industry

4.0: organizational readiness to change, agile leadership and dynamic capability.

Originality/value – In response to information technology advancements, this study proposes a new

model for implementing digital ecosystems for SMEs. Furthermore, this study adds knowledge about the

concept of a service-oriented technology ecosystem to help SMEs operate more efficiently. It focuses on the

interaction of entities to improve the system’s utility, gain benefits and promote information exchange.