Reasons for and perception of digitalisation in micro- and small-enterprises

Recent studies indicate that incumbent micro- and small-businesses are lagging in digital transformation. This qualitative study examines the triggers of digitalisation perceived by owner-managers in incumbent micro-businesses. Digital transformation is associated with enhancing business process efficiency, opportunities to expand the product and service portfolio, and to improve communication capabilities. However, incumbent micro-SMEs tend to avoid adopting complex digital technologies and radical changes to their business model. This reluctance poses risks, including a lack of recognition of new threats, inadequate strategic thinking, and low innovation efforts. Moreover, digital transformation efforts may lead to a decrease in the profitability of micro-SMEs due to the necessity of higher wages for highly skilled employees. The findings suggest owner-managers should focus on creating an innovative environment to attract educated and skilled employees who are essential for effectively navigating the challenges posed by digital transformation and ensuring the long-term success and competitiveness of their micro-SMEs.