Digital transformation is arguably one of the most discussed concepts in European politics in recent years, always ranking quite high on the list of priorities for each government. There is, however, a question we rarely hear about: how are SMEs dealing with this new digital world? And, more importantly, how can we increase competitiveness in small companies through technology?
In their study “Exploring Digital Transformation Journey Among Micro, Small-, and Medium-Sized Enterprises,”1 experts from the University of Maribor (Slovenia) examined how micro, small-, and medium-sized enterprises (MSMEs) navigate digital transformation, identifying key inhibitors and accelerators influencing their progress. They did this by conducting surveys on more than 65 MSMEs across various industries and six in-depth interviews with MSME managers/owners.
They found three different paths MSMEs followed when it came to their engagement in digital transformation:
- The path of necessary engagement: A limited commitment to digital transformation. Their adoption of digital technologies is often focused on technologies that are easy to implement, low cost, and quick to adopt, driven by external pressures rather than internal strategic decisions.
- The path of experimental engagement: MSMEs are more aware of digitalization and are willing to adopt new technologies but often lack a comprehensive strategy. These companies are experimenting with affordable digital technologies to achieve rapid successes, but they remain in the preliminary phases of digital transformation.
- The path of committed engagement: Companies are now more strategically driven, incorporating digital technologies into essential aspects of their operations. These MSMEs view digitalization as a fundamental pillar of their long-term business strategy.
What is stopping many MSMEs from actively adopting digitalization in a strategic and sustainable way? According to the study:
- Financial Constraints: Limited funds and lack of access to financial support.
- Low Digital Skills: Employees and managers struggle with digital adoption.
- Technology Gaps: MSMEs often lack the necessary digital infrastructure.
- Change Management Challenges: Digitalization is not a priority for many MSMEs, and strategic planning is often lacking.
And what can policymakers and companies do to help mitigate the effects of these barriers? Researchers have identified three key factors in digital transformation success:
- Market and Environmental Changes: Shifts in customer behavior and supply chain disruptions (e.g., COVID-19) have pushed MSMEs toward digital solutions.
- Government Support: MSMEs that apply for government support are better positioned to navigate challenges such as the allocation of financial resources for digital transformation and digitalization of their internal core.
- Technology Partners: Collaboration with tech providers helps overcome technical challenges.
The study highlights that digital transformation is not just about technology adoption but requires strategic planning, investment, and skill development. While MSMEs face significant barriers, targeted support from governments and technology partners can help them progress toward a more digitally mature state.
The New European’s vision is aligned with the findings of the article inasmuch as we emphasise the importance of digital transformation for Europe’s future, highlighting the need for strategic planning and investment to ensure that businesses and citizens can fully benefit from new technologies. The New European highlights the importance of inclusivity, ensuring that all segments of society have equal access to digital opportunities and resources.
1 Marolt, M., Lenart, G., Kljajić Borštnar, M., & Pucihar, A. (2025). Exploring Digital Transformation Journey Among Micro, Small-, and Medium-Sized Enterprises. Systems, 13(1), 1. https://doi.org/10.3390/systems13010001