Understanding determinants of digital transformation and digitizing management functions in incumbent SMEs

This study focused on the factors enabling digital transformation and the digitization of management functions in small- and medium-sized enterprises (SMEs). Empirical evidence was derived from case studies involving 22 incumbent SMEs. The findings indicate that while employee capabilities and digital know-how are essential enablers of digital transformation, they also present challenges, including skill gaps, resistance to change, and reliance on legacy systems. To facilitate effective digital transformation, we propose that SMEs enhance technological skills within their workforce, cultivate innovation-friendly cultures, and address the disconnect between public discourse and actual digital tool adoption. Companies should adopt a cautious approach when integrating new technologies, emphasizing sustainable and human-centric transition. Furthermore, developing leadership skills that promote data-driven decision-making, collaborative problem-solving, and adaptive management is crucial. This study provides valuable insights into the dual role of employee capabilities in both facilitating and obstructing digital transformation within SMEs, offering guidance on strategies to successfully overcome the challenges that this transformation brings. • Examine factors enabling digital transformation in small & medium-sized enterprises. • Employee skills and digital expertise have dual roles in digital transformation. • Key challenges are skill gaps, resistance to change, and reliance on legacy systems. • Small & medium-sized enterprises focus on enhancing data processing and automation. • Human-centric management practices and developing leadership skills are crucial.