Digital Transformation of Malaysian Small and Medium-Sized Enterprises: A Review and Research Direction

Abstract

Digital transformation refers to redefining the business process via digital technology. The innovation and digital revolution have remarkable effects on the global economy by affecting organisational relevancy in the marketplace. SMEs are considered as a nation’s growth engine and seriously affected due to tech-adaptation challenges that arise at a fast pace such as COVID-19 outbreaks severely affected the SMEs businesses by the drop in demand and scarcity of resources all across the globe, including ASEAN region such as Malaysia, Indonesia, Singapore, Philippine, Thailand etc. Thus, to begin with digital transformation, enterprises must be aware of the factors influencing it as only few countries are lagging in digital transformation in the ASEAN region. This paper aims to highlight the factors influencing the digital transformation of SMEs focusing on internal and external factors. The Innovation and Technology Adoption Theory was selected as the underpinning theory for this research, along with the holistic Technology-Organisation-Environment (TOE) Model as the chosen framework to reflect technology adoption theory. The present study raises some practical implications for policymakers, government and industries. It will help accelerate the rapid adaptation of digital technology for SMEs and directly affect the growth of SMEs. The present study singled out that organisational, technological and environmental factors provide a widespread view of digital transformation of SMEs.