Harnessing performance through digital technology adoption: an empirical analysis of SMEs in the Tanzanian fruit juice processing industry

Abstract

This study examines the effect of digital technology adoption (DTA) on the performance of small and medium-sized enterprises (SMEs) in the Tanzanian fruit juice processing industry. The study uses data from 390 SMEs across Dar es Salaam, Arusha and Mbeya regions. Utilising a quantitative approach, it employed Partial Least Squares Structural Equation Modelling to analyse the data. The results show that DTA significantly improves the performance. Furthermore, entrepreneurial orientation, organisational readiness and external environmenteach exert a significant direct influence on the performance. However, the external environment negatively moderates the adoption–performance relationship, suggesting that highly supportive environments may lead SMEs to adopt digital tools superficially. In contrast, more challenging environments motivate SMEs to leverage digital tools strategically. Entrepreneurial orientation slightly diminishes the benefits of adoptionamong resource-constrained SMEs, whereas organisational readiness shows no significant moderation effect. This study extends the Resource-Based View Theory by demonstrating DTA’s potential to enhance SMEs’ performance. Empirically, it offers sector-specific evidence on the effect of DTA on SMEs’ performance in Tanzania. The study also provides practical insights for SMEs, policymakers and development stakeholders, recommending that SMEs incorporate digital tools into their core functions. Additionally, government and private-sector entities should invest in SME-focused training programmes to build the skills needed for effective digital transformation. Business development actors, service providers and incubators should foster entrepreneurial mindsets through bootcamps, mentoring and accelerators. Policymakers should cultivate an enabling environment by investing in digital infrastructure and providing regulatory support for digital transformation.