Impact of Digital Transformation on the Performance of SMEs

Abstract

Most businesses are connected with modern technology and run their business activities using technical equipment nowadays. With the development of ICT, businesses had to face various challenges and for other businesses, it was an opportunity for the growth of their business. Because of that, most businesses were approaching digital transformation today. With recent advancements in digital transformation resulting in increased capacity, improved performance, information accessibility, and lower technological costs, every organization must seize this opportunity and engage in digital transformation. Adoption of digital transformation would assist SMEs in growing, developing, increasing market share, and gaining a competitive edge. The purpose of this study was to determine digital transformation adoption among SMEs in the Rathnapura District to determine the impact of Digital Transformation adoption on the business performance of small and medium-scale entrepreneurs. In this study, authors have used the cost of digital transformation, Digital literacy, and the establishment of digital strategy to measure digital transformation (Independent variable) while the performance of SMEs is used as the dependent variable. The study adopted a quantitative approach using 1o0 SMEs in the Rathnapura district. The surveys were conducted at convenience to these SMEs, who are registered in Small Enterprise Development Division in Rathnapura District which are in the manufacturing and service industries. The data was then cleared and sorted before being entered into SPSS for analysis. This study provides a solid foundation for future research on Digital Transformation and its impact on SMEs’ performance in Sri Lanka. Moreover, the findings of this study revealed that there was a significant positive impact of digital transformation on the performance of SMEs.