The systemic transformation of small and medium enterprises (SMEs) in the era of digitalization

Wu Chaoqi and Tóth Arnold (2025) The systemic transformation of small and medium enterprises (SMEs) in the era of digitalization. Prosperitas, 12 (4). pp. 1-16. ISSN 2786-4359 (Online)

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Official URL: https://prosperitas.uni-bge.hu/

Abstract

This study explores critical factors influencing digital transformation in small and medium-sized enterprises (SMEs), focusing on management support, employee skill development, and technology adoption. Drawing on the Technology-Organization-Environment (TOE) framework and Organizational Learning Theory, three hypotheses were tested using survey data from 303 SMEs across manufacturing, services, retail, and IT sectors in emerging industrial regions of central and western of China. Through correlation analysis and multiple regression analysis, results reveal that (1) digital leadership enhances technology adoption, (2) employee skill development is vital to transformation success, and (3) technology adoption improves financial performance. The study highlights challenges such as uneven digital infrastructure and policy disparities and offers region-specific strategies to address them. These insights serve as a practical roadmap for policymakers and SME leaders, stressing the need to align digital initiatives with local socio-economic conditions. The findings also have global relevance, as SMEs in developing regions like Southeast Asia, Latin America, Eastern Europe, and Africa face similar obstacles including limited infrastructure, skill shortages, uneven policy support, and resource constraints. This makes these findings widely applicable insights for international policymakers and business leaders.