Drivers of Digital Transformation in SMEs

Abstract

This study aims to identify and analyze factors determining the adoption of digital technologies in SMEs. Drawing on the technology-organization-environment framework, the study highlights enabling factors from three different contexts and hypothesizes their relationship with digital technology adoption. The data used were collected from 15 346 European Union and non-European Union SMEs to test an ordered logit regression model that highlights the factors associated with an increased level of digital technologies adoption in SMEs. The empirical results show that the technology context (IT infrastructure and digital tools) along with the existing level of innovation are the main drivers that act as stepping stones in digital technology adoption. Corporate regulation, available skills, and financial resources (as organizational variables) also play a significant role in the adoption decision. Unexpectedly, the influence of the environmental context is marginal. The implications of this study are emphasized for theory and practice, laying a foundation for further empirical studies in this field. Managerial relevance statement: This article reviews the empirical research on digital technologies adoption and examines the drivers of such adoption in SMEs. The factors identified provide guidance for practitioners adopting digital technologies in SMEs, by suggesting they assess the readiness of their firms before investing in digital technology. This research helps advance the conversation on digitalization drivers especially by bringing the discussion into the organization boundaries, as our findings highlight the predominance of organizational drivers over the technological and environmental ones. SMEs have to overcome the challenges associated with constructing an IT infrastructure capable of implementing new technologies. Indeed, while striving to adopt new digital technologies (e.g., AI, big data, IoT), many SMEs are still unprepared. Therefore, rather than adopting mimetic behaviors based on external pressure, SMEs that aim for digitalization should first assess their existing technologies, and further develop

Digital transformation of work: Swiss MSEs working from home behaviour during COVID-19 – pioneers leading the pack

“…However, senior management often does not possess the required digital knowledge and skills (Scheurer, 2005; Omrani et al , 2022) for effective (strategic) decision-making. Therefore, we further recommend digital capability development for senior executives.…”

“…Furthermore, MSEs have encountered particular challenges due to sudden changes to business operations caused by COVID-19 (Cotterell and Bowen, 2021). To conclude, the degree to which WFH is practised depends on industry group association [Adams-Prassl et al, 2020;Etheridge et al, 2020;Felstead and Reuschke, 2020;Federal Statistical Office (FSO), 2020b]; and at the same time, ICT are an important enabler of value creation and service delivery (Kali canin, 2008;Omrani et al, 2022;Pantano et al, 2022;Peter et al, 2020;Zhani et al, 2021). Therefore, H2 tests the association between the proportions of employees WFH in Swiss MSEs and industry groups:…”

“…Economically, DT is understood as using information and communication technologies (ICT) to achieve increased economic value (Reddy and Reinartz, 2017). As such, digital applications allow location-independent online collaborations and communication between employees and managers, enabling WFH (Omrani et al , 2022; Panteli et al , 2022). However, the DT of work exceeds the digital evolution of technologies in the workplace and constitutes a strategic initiative transforming organisations and how people work together (Schallmo and Williams, 2018).…”

“…The last generation of “new ICT” was enabled by networks and the cloud to store information, leading to “virtual offices” allowing employees to work outside the employer’s premises (Messenger, 2019). With DT, technological infrastructure (among others) is required to provide (virtual) offices and internet connectivity (Omrani et al , 2022), enabling future work settings, including WFH.…”

Adoption Behaviour of Digital Technologies by Firms: Evidence from South Africa’s Manufacturing Sector

“…Li et al (2021) assert that the adoption of digital technology requires organizational attention towards digital transformation. Omrani et al (2022) argue that the strategic imperatives of digital transformation are digital resources, a digital change-adaptive organizational structure and whether the firm has a digital growth strategy. Other studies (Chen et al, 2015; Yang et al, 2021) emphasize how the pressure from consumers and other stakeholders, as well as competitors, play a part in the business’s choice to adopt digital technologies.…”