Determinants of Digital Transformation Adoption: An Empirical Investigation of SMEs in Viet Nam

In the era of the digital economy, digital transformation (DT) has become a critical approach for firms to gain competitive advantages in the context of intense and dynamic market competition. Companies across almost all industries have undergone or are currently undergoing digital transformation. Due to their limited resources and capabilities, the digitalization process of small and medium-sized enterprises (SMEs) tends to be relatively slow. It is, therefore, crucial to identify the key factors and mechanisms that affect the success of digital transformation for SMEs, in order to optimize the allocation of their resources. However, there is a notable lack of research on the digital transformation of SMEs. To address this literature gap, the purpose of this study is to discover the key factors influencing digital transformation adoption in SMEs. From a holistic perspective, the authors have identified nine key factors across three dimensions: technology, organization, and environment. Based on the Technology-Organization-Environment framework and Diffusion of Innovation theory, the study constructed an action mechanism model. Structural equation modeling was used to analyze data collected from 594 SMEs in Thanh Hoa, Vietnam. The results show that technological and environmental factors have a positive impact on organizational capabilities, which in turn promote the success of digital transformation adoption in SMEs. Organizational capabilities were found to play an intermediary role in the influence of technological and environmental factors on digital transformation adoption. Additionally, the study found that employee skills positively moderate the relationship between organizational capabilities and the success of digital transformation adoption.