Digital Transformation in SMEs: A Comparative Study of Developing and Developed Economies
DOI:
https://doi.org/10.64137/31080080/IJFEMS-V2I1P104Keywords:
Digital transformation, Small and medium-Sized enterprises, Developing economies, Developed economies, Digital adoption, Firm performance, Digital infrastructure, Institutional support, Mixed-methods researchAbstract
Digital transformation has become a critical driver of competitiveness, productivity, and resilience for small and medium-sized enterprises (SMEs). However, the extent and impact of digital transformation vary significantly between developing and developed economies due to differences in infrastructure, skills, institutional support, and resource availability. The purpose of this study is to comparatively examine the drivers, adoption levels, challenges, and performance outcomes of digital transformation in SMEs operating in developing and developed economies.
The study adopts a comparative research design using a mixed-methods approach. Quantitative data were collected through structured surveys administered to SMEs in selected developing and developed countries, while qualitative insights were obtained through semi-structured interviews with SME owners and managers. Statistical techniques, including descriptive analysis and regression modeling, were used to assess the relationship between digital transformation initiatives and firm performance.
The findings reveal that SMEs in developed economies demonstrate higher levels of digital adoption, supported by advanced digital infrastructure, skilled labor, and stronger institutional frameworks. In contrast, SMEs in developing economies face significant barriers such as limited financial resources, inadequate digital skills, and weak technological ecosystems. Despite these challenges, digital transformation positively influences operational efficiency, market reach, and innovation in SMEs across both contexts.
The study concludes that while digital transformation offers substantial benefits for SMEs regardless of economic context, targeted policy interventions, capacity-building initiatives, and affordable digital solutions are essential to bridge the digital divide and enhance SME competitiveness, particularly in developing economies.
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