Digital Transformation Process and the Capability and Capacity Implications for Small and Medium Enterprises

Abstract

This study investigates the concept of the digital transformation process and related capability implications for small and medium enterprises (SMEs) in developing economies. A qualitative exploratory study was conducted, involving eight SMEs on an e-commerce platform in Ghana. The findings show that digital transformation among SMEs follows a four-stage process of digital technology initiation, changes to functions and processes, management of the resulting skills gap, and a strategic shift, which is also driven by managerial cognition, social capital development, human capital development, and organizational capacity building. These findings resulted in an inductively-derived process framework for the digital transformation of SMEs that expands the knowledge and understanding of digital transformation for SMEs. The study also provides users of digital platforms with dynamic managerial capability strategies for achieving digital transformation and effective e-commerce platform utilization in developing economies, which are essential for research, practice, and policy.