Digital transformation in small and medium-sized enterprises: An empirical study of organizational readiness in SMEs

Abstract

The globalization of markets, rapidly changing economic environment, and increasing technological change are presenting companies with various challenges, one of which is digital transformation (DT). While large companies have long launched extensive programs on the topic, small and medium-sized enterprises (SMEs) are falling behind. The main objective of this study is to understand the factors that are influencing SMEs' readiness for DT in the German marketplace. This study presents a model that explains the different factors of DT and how they affect a company's readiness for DT. The empirical validation of the model was performed through a quantitative approach using the partial least squares/structural equation modeling (PLS/SEM) technique based on data collected from 159 SMEs across Germany. The findings reveal that readiness for DT is directly influenced by digital platform usage, digital skills, and organizational agility. In addition, business process innovation and customer engagement only have an indirect impact through digital platform usage, and digital strategy has no impact on readiness for DT.