Collaborative Digital Literacy and MSME Empowerment Through CommunityBased AI Training: A Participatory Social Innovation Program in Urban InformalCommunities

Abstract

The acceleration of digital transformation and artificial intelligence (AI) adoption has intensified socioeconomic inequality among micro, small, and medium enterprises (MSMEs), particularly within urban
informal communities characterized by low digital literacy, limited institutional access, and weak
technological adaptation capacity. This article analyzes a participatory community service program aimed at
strengthening digital literacy, AI utilization, and collaborative economic empowerment among women-led
and youth-based MSMEs in a low-income urban community in Metro Manila, Philippines. Using a
participatory action research and collaborative governance framework, the program integrated universitycommunity partnerships, local government collaboration, digital entrepreneurship training, AI-assisted
business mentoring, and community-based peer learning mechanisms over a six-month implementation
period. Empirical findings indicate that participatory training models and institutional collaboration
significantly improved digital competency, online market participation, financial literacy, and adaptive
business resilience among participating MSMEs. The results further demonstrate that sustainable
empowerment depended not only on technical training but also on trust-based collaboration, community
ownership, institutional coordination, and social innovation mechanisms. The article contributes to
community engagement and social innovation scholarship by developing an analytical model linking
community participation, collaborative governance, digital capacity building, and sustainable local economic
transformation. The study additionally highlights the importance of inclusive AI literacy and participatory
digital governance in reducing urban socio-economic vulnerability and supporting sustainable community resilience in developing urban economies.