The world is going digital. Similarly, digital technology is becoming an integral part of life in Indonesia.

This paper estimates the impact of digitalisation on the performance of micro and small enterprises (MSEs), one of the major foundations of the Indonesian economy. Relying on primary data collected from a survey of MSEs in Yogyakarta and exploiting geographical variation in cellular signal strength, we find that adoption of information and communications technology has assisted MSEs to engage in the digital economy and improve their productivity. Internet utilisation is also associated with greater export flows. The paper also provides a discussion of the extent of digitalisation among MSEs in Indonesia.