The Impact of Digital Technologies on Business Performance Enhancement: Toward Promoting the Adoption of Effective Digital Transformation in Malaysian SMEs

Small and medium-sized enterprises (SMEs) are a cornerstone of the global economy, representing approximately 90% of businesses worldwide. Their significant market presence underscores the importance of understanding the challenges and opportunities they face, particularly in the context of digital transformation (DT). The 2030 Digital Compass, aligned with the European Green Deal, emphasises the role of DT in transitioning SMEs toward sustainable production models, highlighting the need for transparency and innovation in this process. However, SMEs often struggle with limited resources, including financial constraints and a lack of specialised capabilities, which hinder their ability to fully leverage DT. This, in turn, negatively impacts their operational efficiency, innovation potential, and overall business performance. Moreover, sustainability—often treated as a peripheral concern in DT discussions—remains underprioritised, further limiting SMEs' growth and resilience. Addressing these challenges is critical for achieving Sustainable Development Goals (SDGs) 1, 5, 8, 9, 10, and 12, underscoring the critical role of taking sustainability into account in the digital transformation journey of SMEs.