HOW DO GOVERNMENT POLICIES AFFECT INNOVATION AND TECHNOLOGICAL ADOPTION IN SMALL AND MEDIUM ENTERPRISES (SMES)?

Small and Medium Enterprises (SMEs) are one of the major drivers of economic developement. However they have to face several challenges when it comes to adopting new technologies. These are mainly due to limited financial resources as well as complex regulations, making it tough for them to keep up with advancements. This study looks into the impact of government policies on SME innovation and technology adoption in terms of financial incentives and regulatory reforms, as well as collaborative initiatives. Through case studies and comparative analysis, successful implementations of policies are highlighted with the critical obstacles identified that have resulted in damaging the growth of SMEs. Welldesigned policies, including streamlined regulations and funding availability, will help SMEs innovate and compete heavily in a digital economy; however, the extent cannot be realized under inefficiencies in policy execution. This paper, through evidence, recommends policymakers to develop a nurturing ecosystem for sustained SME innovation.