Leveraging Digital Technology for Competitiveness: A Study of SMEs in Kenya

The proliferation of new technologies has significantly revolutionised nearly every aspect of life, including how business operations are undertaken. Notably, digital technologies are changing competitive paradigms, with the existing literature indicating that enterprises that adopt these technologies enhance their competitiveness and improve their performance. Like other entities, many SMEs around the world are integrating digital technologies into their operations to leverage these advantages. Anchored in the Resource-Based View (RBV) and Dynamic Capabilities Theory, this study investigated the impact of Digital Technology Adoption (DTA) on the competitiveness of Small and Medium Enterprises (SMEs) in Kenya. The RBV emphasises the strategic value of firm-specific assets such as digital infrastructure and skills, while the Dynamic Capabilities Theory advances this view by concentrating on a firm’s ability to adapt, reconfigure, and renew resources in response to a changing business landscape. Using an explanatory research design, cross-sectional approach, and stratified, proportional, and random sampling techniques, data were collected using a closed-ended questionnaire and analysed using descriptive analysis and regression analysis. Descriptive statistics showed moderate to high levels of digital technology adoption (mean = 3.89) and higher competitiveness levels (mean = 4.23), reflecting a strong and consistent perception of competitiveness among the SMEs. Regression analysis indicated that digital technology adoption significantly and positively predicted SME competitiveness (β = 0.578, p < 0.001), explaining 30.3% of the variance (R² = 0.303). The model was statistically significant (F = 136.617, p < 0.001), with diagnostic tests affirming the assumptions of linear regression. These findings led to the rejection of the null hypothesis, corroborating the theoretical discourse by empirically validating that digital technologies serve as both valuable strategic assets and dynamic capabilities that enhance SME competitiveness and accentuate the importance of fostering a digital culture within SMEs to sustain competitive advantage.