Digitalization adoption for digital economy: an examination of Malaysian small medium-sized enterprises through the technology–organization–environment framework

Abstract

PurposeThis research is set to assess the achievement of digital economy through digitalization adoption (DA) among Small Medium-sized Enterprises (SMEs). For more insightful findings, a comparison between the service-based and non-service-based industries was performed. Besides, it endeavours to identify the important and performing dimension of the Technology-Organization-Environment (TOE) framework. The purpose of this paper is to address these issues.Design/methodology/approachQuantitative approach through purposive sampling technique was used to collect data from the SMEs. Variance-based structural equation modeling was adopted to assess the model and multi-group analysis (MGA) was executed to examine the difference between the two classified industries. For the identification of the dimension, Importance-Performance Map Aanalysis (IPMA) was carried out.FindingsTechnology and organization recorded significant positive influence on digitalization adoption but not environment. Digitalization adoption between the two classified industries shows divergent results. IPMA concur the importance and performance of the technology and organization dimension, in which SMEs shall focus on for digitalization adoption.Research limitations/implicationsThis is cross sectional research and data were collected at a single time frame. Hence, the result is a state-or-art finding. Assuming that if there are changes in government policies, the results may differ. Besides, there are other possible groupings that could affect the results in which is not covered in the present research.Practical implicationsThe findings imply that the DA amongst SMEs has yet to achieve its full spectrum, which indicates Malaysia has yet to fully embrace digital economy. Nevertheless, DA is the fundamental for a successful digital economy.Social implicationsThis research provides the general public an overview that SMEs are adopting digitalization with various degree. This specifies that the society is paving towards digitalization with the SMEs actively adopting more digital technologies.Originality/valueThe novelty of this research arises from the utilization of the TOE framework to link to the achievement of the national digital economy. Additionally, current research adopted a rigorous approach to investigate the issue by using MGA, the hierarchical component model (HCM) and IPMA for holistic findings.