Digital Transformation among Saudi SMEs: ExploringContextual Factors

Digital Transformation (DT) and its technologies such as artificial intelligence (AI), big data, data analytics, the Internet of Things (IoT), cyber security, and robotic machines play a crucial role in the success of organizations, particularly for small and medium-sized enterprises (SMEs). The business environment is becoming more challenging for SMEs and they must navigate this complexity by adopting digitalization. Nonetheless, prior research has indicated that many SMEs face difficulties in this process. Although there has been much study on digital transformation in large organisations, there is little awareness of the variables that influence the adoption of DT among SMEs, especially in emerging nations and in the post COVID-19 pandemic. This empirical study explored the contextual determinants of DT within Saudi SMEs. Using activity theory (AT) as a theoretical lens, a qualitative case study of 25 Saudi SMEs was conducted across various sectors. Data were collected through semi-structured interviews with SMEs owners/managers and analysed using abductive thematic analysis. The findings revealed that awareness and education, technical and operational challenges, resource constraints, adaptive leadership and management, innovation and vision, and challenges in change management were key drivers related to Saudi SMEs’ owners and managers as subjects in the AT. Key rules and regulations-related drivers shaping DT adoption include regulatory and legislative challenges, government support, and regulatory environment. Important community-related drivers of DT adoption include capability and competence development, technological infrastructure and support, technology education and awareness, and collaborative ecosystem and stakeholder engagement. Crucial division of labour-related drivers of DT adoption was strategic business development, leadership and guidance, and user-centred design and engagement. This research contributes to the topic of DT adoption in the context of emerging economies from both theoretical and practical implications. It offers practical implications for Saudi SMEs owners/managers and policymakers.