Research on the Digital Transformation and Organizational Performance of Traditional SMEs in the Context of the Digital Economy

Abstract

Introduction: The digital economy is thriving in China, driven by rapid advancements in technology, innovative business models, and the emergence of new industries. However, traditional small and medium-sized enterprises (SMEs) face significant challenges in adapting to this evolving landscape. Digital transformation is increasingly recognised as a crucial driver of growth for these enterprises. This study explores the impact of digital transformation on organisational performance in traditional Chinese SMEs, aiming to provide both theoretical and practical insights for business leaders. Methods: This research examines a sample of 3,410 Chinese traditional SMEs to assess the effects of digital transformation on their organisational performance. The study employs quantitative methods, analysing data collected through surveys and financial reports. A comparative approach is used to evaluate how digital transformation influences SMEs across different industries and business scales. Results: The findings indicate that digital transformation has a significant positive impact on organisational performance in traditional SMEs. However, the effects vary depending on the scale of the enterprise and the industry in which it operates. While some businesses experience substantial improvements in efficiency and profitability, others face challenges in fully leveraging digital technologies. Discussion: The results highlight the necessity for SME managers to develop tailored digital transformation strategies based on their industry-specific requirements and business scale. Factors such as investment in digital infrastructure, workforce digital literacy, and strategic alignment with emerging market trends play a critical role in determining success. Additionally, businesses that proactively integrate digital solutions tend to gain a competitive advantage in the evolving economy. Conclusion: Digital transformation serves as a powerful enabler of growth for traditional SMEs in China. While the transition presents challenges, businesses that embrace digital innovation strategically can achieve significant improvements in organisational performance. This study provides valuable guidance for SME managers, policymakers, and industry stakeholders, emphasising the need for customised digital transformation strategies to ensure sustainable growth in the digital economy.