Conceptualizing MSME Adaptability in Social Commerce Ecosystems: A System Dynamics Perspective on Innovation, Platform Dependency, and Regulatory Constraints

Abstract This study aims to develop a System Dynamics-based conceptual framework to analyze MSME adaptability within social commerce ecosystems. The research integrates a system diagram and a Causal Loop Diagram (CLD) to capture the dynamic interactions among platform dynamics, regulatory conditions, innovation capacity, and market factors. The results identify six key feedback loops, consisting of three reinforcing loops that drive growth and adaptability, and three balancing loops that impose structural constraints. The findings indicate that MSME adaptability is shaped by the dynamic interplay between innovation capacity, platform dependency, regulatory fragmentation, and market saturation. The study highlights that while platform visibility and collaboration enhance short-term performance, excessive platform dependency and regulatory complexity can limit long-term adaptability. Several leverage points are identified, including innovation capacity development, regulatory harmonization, platform governance transparency, and ecosystem collaboration. This research contributes to the literature by providing a systemic perspective on MSME adaptability and demonstrating the application of System Dynamics in digital business ecosystems. The findings offer valuable insights for policymakers and practitioners in designing strategies to enhance MSME resilience and sustainability. KEYWORDS : MSME Adaptability; System Dynamics; Social Commerce; Conceptual Model; Regulatory Fragmentation