The role of the regulatory framework in enhancing SMEs’ digital transformation

This paper aims at exploring the current process of SMEs’ digital transformation in order to contribute to effective policy development. We first provide a definition of firms’ digital transformation and then investigate its fundamental determinants, so responding to the call for further research and more comprehensive understandings of the digital transformation process. The objective is to verify the impact of the regulatory environment on digital transformation of SMEs. The empirical analysis, based on data taken from the Flash Eurobarometer Survey of the European Commission, shows that the regulatory framework is strongly significant in explaining firms’ digital transformation. Specifically, SMEs’ awareness of the regulatory context and anticipated digital standards: 1) expedites their process of digital transformation; 2) positively moderates the relationship between any strategic plan and their digital transformation; 3) generates a relatively greater impact on the digital transformation of firms mainly involved in the adoption of more advanced digital technologies. Some policy implications conclude the work. • This paper investigates the role of the regulatory environment in enhancing SMEs’ digital transformation. • SMEs with a deep awareness of the regulatory challenges are more inclined to expedite their digital transformation. • Policymakers should consider the regulatory barriers when designing policies aimed at fostering digital transformation.